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(The Rose and the Beetle, Van Gogh)

The development of encrypted games in 2021 has many comprehensive factors, among which two aspects are very important, one is the combination of Play-to-earn, NFT and guilds; the other is the development of Ethereum scalability (such as Layer2 or side chain, etc.).

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Play-to-earn mode and game guilds

With the evolution and development of the software and Internet industries, games have undergone iterations of business models, from selling game software, to paid games, and then to playing games for free. Now that it has entered the stage of encrypted games, it is the Play-to-earn model, that is, playing games can earn income. Users can earn NFT virtual items or tokens by playing games, and sell them on the open market for income. In traditional Internet games, players can also obtain item rewards from the game, but the player has no real control over these items and can only trade them within the game.

The development of Axie Infinity has something to do with the promotion of the game guild in the Philippines. Game Guild and Play-to-earn mode are complementary. When the new crown epidemic came, many people in the Philippines lost their jobs and had no source of income. At this time, someone told them that by playing Axie's games, they could earn hundreds of dollars a month. This is about 2-3 times higher than the local minimum wage.

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(There are hundreds of people playing Axie on a certain street in the Philippines. The picture comes from the short documentary of "PLAY-TO-EARN: NFT GAMES IN THE PHILLIPINES")

It is the player community that introduces Axie games to local people. Some players lease their Axie to new players so that these new players don't have to invest in it in the first place. After all, three Axies will cost hundreds or even thousands of dollars in the future, and the investment cost is relatively high, which is difficult for ordinary players to bear. With Axie Leasing, the financial threshold for new players is kept to a minimum.

In this way, new players do not need to invest any costs, but only need to invest time and energy to obtain benefits, which is also a kind of PoHW (Proof of Human Work). Through the Axie game, players can obtain SLP, and earn income after selling SLP, so as to solve the income source problem of some local people under the epidemic situation.

In YGG's guild design, it has three roles: Scholar, Community Manager, and Yield Guild. Among them, Scholar is the player, who gets 70% of the revenue, the community manager is responsible for expanding and training newcomers, and gets 20% of the revenue, and the Yield Guild is the guild organization, which gets the remaining 10% of the revenue. Yield Guild does not directly contact Scholar players, but mainly contacts with community managers. Various players are organized and managed by community managers.

In addition, the encrypted game association may gradually develop into a DAO organization. DAO is a decentralized organization that can organize people based on a certain purpose. It can be a DAO for investment or a DAO for various tasks. With the rise of the encrypted game Play-to-earn mode, encrypted game guilds have gained new opportunities. In the future, DAO may be developed and practiced, and eventually become the game guild layer in the entire encrypted game field, serving the cold start of the entire encrypted game and subsequent development.

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People spend more and more time in the virtual world every day, and various virtual items worth tens of billions of dollars are stored on the network, and it has been growing. Among these virtual items, the fastest-growing category is NFT assets, of which the transaction volume in the first half of 2021 exceeded 2.5 billion US dollars. From the figure below, we can also see that compared with June and July, the transaction volume of some major NFT trading markets has grown very rapidly.

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(The trading volume of encrypted games and NFT is growing rapidly, according to a report from TokenInsight)

Blue Fox Notes has also mentioned encrypted collections such as NBA Top Shot and CryptoPunks before, and also introduced encrypted artworks by encrypted artists such as Beeple. These NFTs are scarce and have a certain community consensus. However, relatively speaking, encrypted collectibles and encrypted artworks have a certain threshold, and the arrival of encrypted games may change the NFT landscape.

From these games, we can see some similar frameworks and models. The combination of assets in encrypted games and NFT makes Play-to-earn a reality.

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Scalability provides the foundation for the explosion of crypto games

The number of Aixie Infinity users has been less than 40,000 DAU since the end of April. After the introduction of the side chain Ronin, the number of daily active users has soared to more than 250,000. The side chain Ronin can improve the confirmation speed of transactions and greatly reduce gas costs. Users can also transfer assets such as Axie from the side chain to Ethereum Layer 1 to meet higher security requirements.

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(Axie DAU has increased sharply since the end of April, data from Dappradar)

In order to solve the scalability problem of encrypted games and NFT, a Layer 2 solution dedicated to NFT was born, such as the Layer 2 technology of immutable X. At present, illuvium game plans to adopt the Layer2 technology of immutable X, which is a solution developed based on StarkWare. The security of current sidechains, such as Matic, Ronin, and xDai depends on the situation of their respective sidechains, and there is a big gap with the security of Ethereum Layer 1. On sidechains, transaction speed and fees have been greatly improved , but some trade-offs have been made in terms of security. This is also something to pay attention to.