The concept of yield farming has received a lot of attention over the past year or so, not least because it allows cryptocurrency owners to pledge assets in return for a tangible asset in a short period of time. While the idea of profiting from an investment may not be new at all, the idea behind liquidity mining – that users can be rewarded by using a specific DeFi application – is largely limited to the DeFi space.
Moreover, just like yield farming, NFTs (non-homogenized tokens) have become very popular in the last few years. This is because these crypto entities (whose value is directly tied to a specific asset) are ideal for owning physical objects such as artwork, property deeds, collectibles (e.g. CryptoKitties), and digital goods (e.g. game skins, trading cards, etc.).
How can NFT be used in the yield farming space?
Since the Napster debacle decades ago – when legendary rock band Metallica took the file-sharing giant to court for allowing users to illegally download their music – conversations about digital content ownership and rights management are becoming increasingly commonplace around the globe.
In this regard, in 2020 alone, NFTs seem to have captured the imagination of crypto enthusiasts around the world, largely because they allow for a highly streamlined and efficient way to facilitate digital data ownership processes.
Various blockchain-based digital card collecting games are now available online. They allow players to operate in fantasy scenarios and even allow them to create novel props and collectibles, which can be used in the game in exchange for various digital goods, or even sell them on various marketplaces for monetary compensation.
Why combining NFT with yield farming could have a huge impact
Most of the world’s leading video game developers (e.g. Electronic Arts, Activision, UbiSoft) tend to adopt a profit maximization model that focuses primarily on making as much money as possible with each game release. In this regard it is worth mentioning that the microtransaction problem seems to have plagued the entire gaming market over the last 4-5 years, with players now having to pay a small fee to unlock every little feature in many popular games, such as FIFA 2021, NBA 2k21, etc.
Blockchain games, on the other hand, seem to be more concerned with providing players with as much value and playability as possible. For example, in the vast majority of blockchain games, users have the option to cast and sell their in-game items at will, thus shifting the balance of power from the game developers to the players, especially from a financial perspective.
What happens next in the future?
As the market for gamified liquidity mining continues to mature, it is only natural that the industry will move to a framework where the rules of the game can be modified by the players themselves. For example, if a game typically assigns certain properties to in-game items (e.g., a factory can only produce 80 cars or 50 motorcycles per day), then over time users will be able to change these rules as well as increase/decrease the production capacity of these defined entities, depending on the governing tokens they have.
In the long run, this means that players will eventually be able to influence the core rules of the game through governance in a way that was previously unthinkable in traditional video games. Likewise, from a monetary perspective, this model could completely change the gaming industry as users may change the productivity, inflation criteria, etc. in the game so that their governance tokens become more and more valuable over time.
Finally, the ability to change game protocols means that players with large amounts of governance tokens could easily tweak certain parts of the game’s economy, which is revolutionary, especially considering that blockchain games are completely decentralized by design and operability.
The future of gaming lies in NFT gamified yield farming
Empire-building games, such as Sid Meier’s Civilization, Command & Conquer, and Age of Empires, have captured the imagination of millions of people around the world for decades. have captured the imagination of millions of people around the world for decades. However, as fun as these games are, they do not allow players to generate any kind of monetary return for the time and effort they spend.
The concept of NFT gamified liquidity mining can change all that, as it enables users to profit from every game asset they own. Not only that, but depending on a player’s individual skills, they may earn thousands of dollars for something they enjoy doing every day.
For example, in fantasy scenarios, players are able to purchase collectible NFT game cards that can be used in-game to earn a variety of digital goods, which can also be sold in cryptocurrency on various NFT marketplaces. It is also possible to rent out NFTs to other players in a liquid mining fashion to passively earn revenue from NFT assets.
Having said that, traditional PC/console games still have an advantage over blockchain games that