The past few months have seen decentralized finance (DeFi) platforms gain a cult-like following on the backdrop of a bullish cryptocurrency market. That revolution of digital money is now moving into the gaming industry, creating an intersection between DeFi and the gaming experience that experts now predict will play a huge role in the next generation of games.
DeFi-focused tokens such as Polkadot (DOT), Solana (SOL) and Chainlink (INK), to mention a few, have had euphoric moments in the markets, gaining major traction as major developments continue.
Investors and speculators should expect even more going forward, given the bold move made by the likes of Solana Foundation and Houbi Ventures to invest in early-stage blockchain-based gaming platforms that incorporate DeFi into their system.
The emerging play-to-earn model is primed to highlight the benefits of blockchain technology in the gaming industry and beyond. In this article, we look at some of the latest developments in the DeFi gaming space with a discussion on what the future holds for this emerging sector.
Games simplifying DeFi
DeFi Land, a game designed as a multi-chain agriculture simulation aimed at enabling a gamified decentralized finance experience, just raised $4.1 million in a funding round that saw the participation of over 40 investors.
Founded in 2021, DeFi Land is privately held by a company whose headquarters are in India with a primary focus on creating educational and entertaining solutions for users looking to explore the DeFi space.
DeFi Land’s agriculture simulation is designed with all the features you would find on a conventional DeFi platform. Unlike most DeFi platforms, however, DeFi Land features an interoperable ecosystem that is capable of running on other established platforms such as Uniswap or even Binance Smart Chain’s PancakeSwap.
This approach is set to help DeFi Land avoid reinventing the wheel, thus allowing its users to access automated market-making protocols, decentralized exchanges and leading protocols on other blockchain networks. On DeFi Land, each digital asset is represented in the form of a plant. For instance, Solana’s SOL token is a sunflower and the USDC stablecoin is a corn plant. Users can farm these tokens and earn an annual percentage yield that comes in the form of a bountiful harvest.
To make it even easier for users to learn the ins and outs of DeFi, DeFi Land features a practice mode where users can learn all about DeFi using fake assets while playing within a guided version of the game.
Brian Lee, a senior executive at Alameda Research — one of the firms that participated in DeFi Land’s investment round — said that DeFi Land blends “two of the most interesting things happening in crypto right now — gaming and DeFi.”
Huobi Ventures betting big on DeFi gaming
With an increasing wave of institutional capital flowing into the DeFi space, more companies are starting to pay serious attention to the sector, and Huobi Ventures is one of them.
The investment arm of Huobi cryptocurrency exchange, Huobi Ventures, just recently announced a $10 million fund that will invest in early-stage projects that combine a gaming experience with decentralized finance features, i.e., GameFi.
In addition to the financial support from Huobi Ventures, startups that take up the challenge will also receive Huobi’s backing in terms of legal and technical support for their project, not to mention PR and commercial assistance.
Huobi Ventures director Unica Yin said, “blockchain technology has the potential to revolutionize the gaming business model and will play a core role in the next generation of games.”
Huobi Ventures also announced a $100 million fund dedicated to DeFi projects, which will reportedly help Huobi establish strategic mergers and acquisitions in the blockchain and crypto space.
The play-to-earn model
Apart from investors and project developers fueling the furnace that is play-to-earn, communities of gamers and nonfungible token (NFT) lovers are also joining the fray as seen with recent developments such as Crypto Gaming United and Zebedee managing to close $5 million and $11.5 million funding rounds, respectively.
Crypto Gaming United — a startup aiming to build a global guild community of gamers in the play-to-earn space — raised $5 million in an oversubscribed seed funding round. The round was led by Australia’s top venture capital firms Mark Carnegie and Chrono.tech.
Crypto Gaming United is a gamers guild of NFT-based games with more than 1,500 members. The guild works across multiple gaming platforms, providing gamers with education as well as financial literacy on the digital economy. It makes money by splitting the revenue generated within sponsored gaming platforms with its members.
With its headquarters in Singapore, the guild predominantly features players from South Africa, India and Indonesia with a common theme of players hailing from low-income economies. Given that most players are not able to buy expensive gaming gear and assets, sponsors in the guild can provide financing that allows the players to generate revenue. The founders of the guild also acknowledge the fact that Singapore is a forward-looking jurisdiction in terms of digital assets and cryptocurrencies.
“At Crypto Gaming United, we are overcoming the cost required for admission to play, thereby allowing players to generate income through their gaming exploits” noted Carnegie.
Crypto Gaming United is not the only organization in the race. Zebedee is also taking part in the action as seen with its Series A funding that garnered $11.5 million.
Zebedee provides a suite of tools and products that enables developers to integrate Bitcoin (BTC) into their games while giving gamers access to wallets, streaming tools and other gaming infrastructure that improves performance.
Gaming is a tipping point
The relationship between the DeFi sector and the gaming industry is mutually beneficial. On one hand, gamers who spend endless hours and money on gaming platforms will now be able to monetize their time and progress. DeFi platforms and the entire industry as a whole will also have an easy process of onboarding new users, thus increasing mainstream adoption.
Experts already predict that the play-to-earn trend will further blur the lines between financial assets and in-game collectibles that were once viewed as valueless. This will allow a new generation of gamers to exchange in-game assets beyond the gaming platform.
DeFi mechanisms make it possible for various gaming platforms to not only make the gaming experience entertaining but also lucrative as gamers will be able to earn from simply playing.
Already, blockchain-based collectible and trading games such as AXIE Infinity and Splinterlands demonstrate that a play-to-earn business model not only has the potential to disrupt the gaming industry but also change how users learn and interact with DeFi platforms.
Because the video gaming industry is valued at $175 billion and the DeFi space currently sits on nearly $100 billion in total locked value, an intersection of both industries could be a real game-changer.
New Order Collaborates with Outlier Ventures to launch new DeFi projects
An emerging community-led Decentralized Autonomous Organization (or DAO) incubator that is dedicated to early-stage Decentralized Finance projects in the market called New Order has recently announced a partnership with Outlier Venture’s Base Camp which is a renowned web3 accelerator. Together, both New Order and Outlier Ventures would release more than 30 different DeFi projects within the next two years.
The partnership was made possible after New Order managed to raise a total of $4 million through a private fundraising round which saw participation from several top-tier venture capital firms as well as certain angel investors. This private funding round was ultimately led by Outlier Ventures, Digital Finance Group, and also LedgerPrime.
According to the DAO incubator company, the funds would support the launch of incoming DeFi projects during their early stages. New Order is set to go live in December as a DAO incubator to start working on its initiative of releasing up to 30 new DeFi projects each year.
Layer-1 networks along with DeFi projects are on New Order’s radar at the moment to create its original venture platform in the future. The co-founder of New Order, Eden Dhaliwal agrees that their DAO structure is committed to bringing together some of the best DeFi builders available while taking care of funding and building with the support of their community from the very beginning.
As DAO models continue to be a symbol of successful initiatives that gain not only support and popularity among other blockchain-powered projects, New Order presents an advantageous opportunity to democratize access to investing. It is permissionless and equally open-source to provide resources to next-gen DeFi projects. New Order would be opening up a DeFi marketplace for revenue in the form of BTC, ETH, and supported stablecoins, thus making it an increasingly diversified DAO Treasury.
The partnership between New Order and Outlier Ventures is a positive indication, especially when the DeFi incubator is already on its way to becoming one of the key innovators within the Decentralized Finance space. New Order is assisted by its existing community of builders, smart contract devs, and interested investors to give rise to the next-gen DeFi apps (some of which would also support the Metaverse).
The long list of corporate supporters who have joined New Order as investors would help extend the reach of the incubator’s to build a bridge between offline and online worlds and also design DeFi startups with untapped potential.
One of the leading investors of the recent private fundraiser, LedgerPrime’s CIO, Shiliang Tang said that the changes in coordination through DAOs have led to this collaboration among early-stage venture creators. The company’s involvement with New Order is in fact an important aspect of empowering builders to redesign structures located outside orthodox venture models.
SEC Chair: Innovation Around DeFi “Could Be Real”
Gary Gensler believes that DeFi could offer “real innovation,” but he is convinced that the sector will not survive without regulatory compliance.
U.S. Securities and Exchange Chair Gary Gensler said that new technologies do not tend to persist if they fail to come into compliance with the law during a fireside chat with Jay Clayton at the Digital Asset Compliance & Market Integrity Summit.
While Gensler believes that decentralized finance could be the source of innovation, he claims that it has to fall within the existing regulatory framework:
The innovation around DeFi could be real, but they won’t persist if they stay outside of the regulatory framework.
Gensler also voiced his concerns about the centralization of some DeFi projects and implied that the goal of such projects might be to skirt existing anti-money laundering laws.
Speaking of the regulator’s reluctance to approve a spot Bitcoin exchange-traded fund, Gensler told No. 42 that trading around the globe is not inside the U.S. regulatory register. He urged the trading and lending platform to “come in and talk”:
Trading and lending platforms are really in an important place for investor and consumer protection. Come in and talk to us… work with us. Where appropriate we’ll use the enforcement tool. Work to get registered with the law.
The SEC boss has reiterated that stablecoins remind him of poker chips at a casino:
[Stablecoins] made it more efficient within the ecosystem. But it also allowed people around the globe, the people who tried to, to avoid money laundering and tax compliance in jurisdiction after jurisdiction.
According to Gensler, stablecoins are responsible for 80% of trading on the crypto market.
Huobi Primelist-Supported DeFi Project Drained of $31 Million
Days since the last DeFi hack: 0
Decentralized finance protocol MonoX Finance has been drained of $31 million as the result of a hack that occurred earlier today.
It was the third project to appear on Primelist, the token listing platform of major cryptocurrency exchange Huobi, earlier this month.
The team has already addressed the incident in a statement on Twitter, claiming that a vulnerability in the swap contract was used by the attacker to artificially inflate the price of the MONO token and then purchase all digital assets in the pool.
This morning our contract has been exploited. We are sorry to our users who have deposited funds. The team is investigating and will try our very best to get the stolen funds back. We thank our community for your support.— MonoX (@MonoXFinance) November 30, 2021
In a lengthy Twitter thread, MonoX also made a desperate plea to the hacker in an attempt to reach out to him/her:
We also really wish to have a chance in talking with the “hacker”. We value very much for what we’ve built for the current and future MonoX, and most importantly our users and their funds; PLEASE reach out to us.
The attacker pocketed $18.2 million worth of wrapped Ether (WETH) and $10.5 million worth of Polygon (MATIC).
In early August, $610 million worth of crypto was stolen from cross-chain DeFi project Poly Network, which marked the biggest DeFi heist to date. After several weeks of headline-grabbing drama, the hacker ended up returning the entire sum, which led to plenty of speculation about his real intentions.