WHY TOKENOMICS IS HOLDING BLOCKCHAIN & NFT GAMING PROJECTS BACK

Speculators muddying the water

Compounding matters is the natural trajectory of NFT and blockchain game project launches. This often sees new mints of NFTs sell out at high prices, and then subsequently either crash or gradually sink over time. Of course, it’s no mystery and is easily explained by speculation from the NFT investing community.

Yes, there is probably an element of genuine novelty and excitement for some new projects, but the truth is that most people buying NFTs from any project in the first few months couldn’t give a hoot about ‘utility, gaming, or collecting’ and are just trying to make a quick buck.

Now, I’m not saying there’s anything fundamentally wrong with speculators, just that it muddies the waters when looking at performance as a whole. Indeed, the main problem with this is that it causes the teams behind the projects to get caught up with certain aspects of projects, and neglect others.

Stories and worlds

And, this brings us to the crux of the matter. The thing that most blockchain games and NFT projects pay little more than lip service to. The story. Indeed, the blockchain and NFT development community have repeatedly displayed a shocking lack of understanding about entertainment.

Think about the AAA video games, movies, television, books, or even traditional gaming (board games, trading cards, tabletop war games etc.) industries for a moment. They have long understood that the key to success is in building products around deep stories and creating rich worlds to go along with them. This is most apparent when thinking of major franchises like Star Wars, League of Legends, World of Warcraft, Fast & Furious, Dungeons & Dragons, Harry Potter, Monopoly, etc. but is actually true for almost every successful project - even standalone titles.

Though I could write an essay just on this subject, I’ll keep it short for this blog, and just say that, at the most fundamental level, human beings respond to relatable stories. And, for those relatable stories to maintain interest, it helps to set them in relatable but sufficiently intriguing environments.

For example, we’ve all seen how both games and movie studios sometimes make the mistake of throwing huge effects and acting talent budgets at bad screenplays, only to make expensive, slick flops. Conversely, we’ve all seen those breakthroughs that do incredibly well, despite being on limited budgets, because they have an engaging story and world at their core.

Do you see where I’m going with this?

Because most of the teams behind blockchain and NFT projects are approaching things from within the hardcore blockchain and NFT communities themselves, they are missing the entertainment aspect. And, it is this aspect that is critical if any of these projects are going to make it truly mainstream and sustainable in the long run.

Yes, I know, lots of projects do have elements of what I’m talking about. Some have started to flesh out worlds, or even universes, with a nod to lore and real storylines. They are going in the right direction. But, right now, they are still far from creating anything attractive enough to go mainstream.

Lessons from iGaming

And, it’s not just those forms of mainstream entertainment that blockchain and NFT projects should learn from either. iGaming (online gambling) could teach them a thing or two.

As anyone who’s worked in the huge iGaming industry, especially online casinos, will know, acquiring and retaining new players is ‘challenging’ to say the least. It is one of the most hyper-competitive fields in terms of search, with thousands of operators offering essentially the same games and products. Furthermore, there’s a veritable smorgasbord of regulations and widespread hostility from the mainstream press and politicians.

Attracting and keeping new players is hard. You have to provide the very best experience possible. This means offering high-quality slots and other games, but also world-class UX (user experience). Of course, this is not easy considering the often complicated onboarding processes required in various jurisdictions. Hence, successful iGaming operators, go to great lengths to make sure their UX is the best it can be.

Now, think back to blockchain and NFT gaming projects. UX is usually awful. Awful, that is, for someone not already immersed in the blockchain, crypto, and NFT space. Yes, some would argue that the rapidly changing nature of the Web3 space in general means UX is often inevitably messier than it should be. But, really, this is an excuse that doesn’t stand up. I’d argue that it’s so messy because again, most Web3 apps have been designed in echo chambers.

And, talking of echo chambers, let's move on to another problem with blockchain and NFT gaming projects - communication.

‘Discord Syndrome’

The closed thinking of many blockchain and NFT projects also, unsurprisingly, extends to communication. Many of these projects are extremely reliant on Discord. Considering it is the most popular communication platform amongst certain groups, this seems to make sense, at first. But, they are falling victim to ‘Discord syndrome.’ This is a kind of echo chamber where those who love Discord think that anyone who doesn’t is some old troglodyte who doesn’t matter.

But, the truth is, according to most estimates, in 2022, Discord had about 150 million global monthly users, with around 65% being male. Impressive, but hardly a truly mainstream, representative way to reach the masses! Discord’s UX is terrible. There, I’ve said it. Yes, I personally use Discord, but I am not blinkered enough to ignore its shortcomings. Yes, it's great for certain things. World-class, in fact. But, no project wanting to break into the mainstream gaming/entertainment world should rely on it.

The future of blockchain and NFT gaming

So, what does the future hold for blockchain and NFT gaming projects? Well, I believe they will indeed become part of the fabric of mainstream gaming and entertainment. Indeed, the technologies will be critical in building the bridge between gaming and other forms of entertainment. And, when it matures, the UX will be seamless.

But, unless teams start understanding that, as foundational as the technicals and tokenomics are to such projects, most people don’t care. Most people play, collect, trade, and build because it is entertaining. It is fun. It is relaxing. It is escapism. Projects need to realize they are (or should be) in the entertainment space first and foremost, not the economics space.

Yes, entire digital economies will rise within successful projects. In fact, I’d hazard a guess that we’ll see economies far bigger than anyone can imagine. But, this will only happen once truly strong foundations have been laid. Worlds need to be imagined and built. Characters and lore need to be introduced and continuously fleshed out. Narratives need to evolve. User-generated content needs to be given space. Art, videos, written stories, maps, music - there’s a limitless amount of content that can be developed.

Most people will watch, listen, interact with, and collect, because they fall in love with these stories and worlds - not because they think they can earn from the tokenomics.

Emotions drive most human beings, not cold logic. Get people to fall in love with characters and be curious to find out more about worlds (past, present, and future), and you’ve got something. From there, a robust tokenomics system can thrive, gamification can achieve its potential, and partnerships and merchandising will be effortlessly successful.

But hey, what do I know? Maybe Star Wars would have been even bigger if George Lucas had started with the merch and tacked on a half-baked two-page story.