- Momentum around NFTs is on the rise with over $300 million in sales taking place in the last 7 days.
- A significant amount of excitement is building around play-to-earn NFT game Axie Infinity.
- Craig Russo from blockchain investment firm Polyient explains the buzz and his NFT gaming outlook.
Non-fungible tokens are garnering momentum again.
In the last week, there have been $314 million in NFT sales, with one CryptoPunk NFT selling for $4 million, according to NonFungible.com.
An NFT is a cryptographic token that exists on the blockchain and can represent items such as art, music, and real estate. Each token represents a unique digital item and can’t be exchanged for another in the way a cryptocurrency can.
A massive bull rally in NFTs took place in the spring as the assets entered the mainstream and investors started asking what they were.
Much of the rally was brought on by influencers as well as legacy firms entering the marketplace, from Paris Hilton to the legendary Christie’s auction house. It also coincided with a sudden rise in cryptocurrency prices. Bitcoin (BTC) reached around $64,800 in mid-April.
A second rally in NFTs is once again coinciding with a surge in cryptocurrency prices. After weeks of trading sideways, bitcoin (BTC) is up around 14% and ether (ETH) is up around 38% in the space of two weeks.
“I think a lot of capital from DeFi and people who have significant winnings from the crypto space are beginning to sink their teeth into it as it’s seen as an alternative vehicle for participating in the cryptocurrency market,” said Craig Russo, co-creator of PolyientX and director of innovation at investment firm, Polyient.
The momentum is particularly being driven by CryptoPunks, a digital art collection of 24 by 24 pixel art pieces representing pixelated punk people. These were among the first NFT assets on the ethereum blockchain in 2017.
Prospective buyers who can’t afford their exorbitant prices are now hunting for the next best thing, Russo said.
A close second in popularity to CryptoPunks is Axie Infinity, an earn-to-play NFT game. Players build up a collection of Axie creatures and use them across a universe of games. Users are rewarded for their engagement.
Axie Infinity’s total number of daily users jumped by 233% since the end of June, reaching 900,000. The game’s governance token, AXS has also surged 250% over 30 days. However, the platform is struggling with the demand.
“Infinity had a very good inflection point of adoption of their game,” Russo said. ” I think they hit [almost a] million users recently, which is very impressive. I think most of the Philippines is playing Infinity right now and so they definitely were integral in spurring this next inflection point that we’ve had.”
Russo is an investor with blockchain gaming investment firm, Polyient, which touches almost every aspect of the NFT world from incubating startups to venture investing and launching its own decentralized NFT marketplace and platform, PolyientX.
However Polyient is probably best known for its massive bet on the decentralized game Mirandus by spending $800,000 on a key piece of virtual real estate, which up until February of this year was the largest amount paid for virtual land.
Polyient’s thesis is to invest in NFT projects that are offering utility or to invest in infrastructure — whether it be marketplaces, wallets, analytics, and pricing services — that have been underserved so far and solve the pain points for NFT entrepreneurs.
“We want to invest in projects that aren’t just creating collectibles that people just buy them and hope that they go up later,” Russo said. “We want to see people pushing the envelope of what can you do with a scarce representation of an asset and an NFT.”
Gaming is one of the areas that is nailing achieving utility through NFTs, and it’s going to be a major inflection point for the space, Russo said.
While Russo’s firm didn’t invest in Axie Infinity’s initial token offering, they own both their token and assets from the secondary markets.
Russo expects Axie Infinity to remain a major player in the digital pet space.
“The idea that players can own their assets and really leverage them to create revenue on their activities playing in the game, Axie Infinity has been one of the first major entities to push for that concept,” Russo said.
Blockchain gaming outlook
Going forward, Russo expects more AAA-rated gaming experiences on the blockchain. One example is Gala Games, which was founded by Zynga Inc.
“We’re hyper bullish on the long-term prospects of what they have been building, which is essentially an ecosystem suite of games that can bring in mainstream users and introduce them to cryptocurrency in a very friendly way,” Russo said. “I think Gala Games is one of those games and groups to really keep an eye on.”
Browser-based games have carried the torch for NFT gaming, Russo said. He suspects that there will be a transition to more mainstream AAA-type games.
“I wouldn’t be surprised if someone likehas their own little twist on this play-to-earn or NFT-based gaming narrative, given all that they have built out in this metaverse-type approach,” Russo said.
Despite Russo’s investments predominantly focus on the ethereum network, he has also put $500,000 into Exordium, a firm which is behind a massive multiplayer online strategy game called Infinite Fleet that leverages a side chain of the bitcoin network.
“They’re another gaming-related group that we’re very excited about and have an all-star cast,” said Russo, describing both the veteran game developers and earlier bitcoiners who make up the team.
It’s hard to pick winners and losers in the space as it’s so early, Russo said. Instead, it’s about backing innovators thinking about problems in the right way.