Investing in NFT Games

Non-fungible tokens (NFTs) are exploding in popularity. Trading volume for NFTs hit $10.67 billion in the third quarter of 2021, up a whopping 704% from the previous quarter, according to analytics platform DappRadar. One factor driving the skyrocketing trading volume is the growing popularity of NFT games. In-game items generated $2.3 billion of trading volume in that period, representing 22% of the total.

NFTs games are still in their early days. Because of that, many believe there's significant upside ahead as NFTs become more mainstream. Here's a look at how investors can get in on this action.

How do NFT games work?

The simple answer is that NFT games allow users to earn money as they play. Blending video games with finance, or GameFi as players call it, these games use NFTs -- unique digital collectibles on the blockchain -- that gamers can sell in games to other collectors and players. Gamers can also earn NFTs in certain pay-to-earn gaming models. This setup allows gamers to invest in NFTs, which have the potential to appreciate in value.

NFT games to keep an eye on 

Several NFT games have emerged as popular platforms among gamers as a way to earn and buy NFTs to make a profit:

Data source: NFT game websites.

Here's a closer look at these top NFT games.

Alien Worlds

Alien Worlds is one of the most popular NFT games. It was the first game on the blockchain to top 100,000 users. It now has more than 2.5 million users and is growing.

It's a metaverse -- a shared virtual world environment -- spread over seven planets. The game uses NFTs, and players mine for the game's cryptocurrency, known as Trilium.

Alien Worlds is a play-to-earn game. Players can earn the local cryptocurrency by mining, battling other users, going on quests, or receiving rental income from their digital land. The game uses digital items created as NFTs such as avatars for fighting and tools for mining. Players make money on the game by cashing out their Trilium.

Arc8

Arc8 is a play-to-earn mobile esports platform that launched in October 2021. It allows users to play 10 casual games where they can participate in one-on-one matches and group tournaments to win tokens. The NFT gaming platform quickly amassed 1.3 million registered users shortly after launching.

The platform uses GMEE as its utility token. Users pay it as an entrance fee for in-game tournaments and to make purchases in the game. They can also win GMEE as prizes.

Arc8 also plans to launch G-Bots, which are upgradable NFT game characters. They will unlock greater functionality as gamers go up in levels. G-Bots will also provide owners access to exclusive play-to-earn tournaments.

Axie Infinity

Axie Infinity is the dominant player in the NFT gaming world. It saw an explosion of trading volume in the third quarter of 2021, generating $2.08 billion of the entire $2.3 billion in NFT gaming trading volume in the period. That quarter alone represented 83% of the game's historical trading volume of $2.5 billion. The main factor driving all that interest is that users are making money on the platform, with some reportedly earning as much as $100 per day.

Axie Infinity is a digital pet universe. New players must buy at least three Axies -- digital fantasy creatures -- which are NFTs. They raise their Axies, use them to battle against other players, and sell them. Axie Infinity's play-to-earn gaming model incentivizes users to build Axies with the best in-game equipment so they can sell them to other users at a profit, which can include the rising price of cryptocurrency, primarily Ethereum. 

CryptoBlades

CryptoBlades is an NFT game where players use weapons to defeat opponents. They collect SKILL tokens, the in-game currency. They can use the SKILL to upgrade and level up their characters. The game uses an NFT marketplace where players can advertise their manufactured goods for sale, increasing their profits.

CryptoBlades has seen its popularity fluctuate wildly. At one point in 2021, it was the most widely played game, with more than 400,000 Unique Active Wallets (UAW). However, user engagement plummeted due to a decline in the price of SKILL, affecting the earning potential of users.

The team behind CryptoBlades has announced a stand-alone sequel, CryptoBlades Kingdoms, that will feature strategy-based land building. That could drive improved user engagement and potentially turn it into a profitable investment for gamers.

Splinterlands

Splinterland is a digital collectible card game that uses blockchain technology. Users build up a collection of cards that have different stats and abilities. Players can use them to battle others in the game in skill-based matches. Players can also buy, sell, and trade their NFTs.

Splinterlands has exploded in popularity, quickly becoming one of the most-played blockchain games. It attracted more than 245,000 daily UAW in September 2021, up a jaw-dropping 3,267% from the end of the second quarter. It generated more than 150 million transactions during the third quarter, producing $1.18 million in transaction volume, which is up 1,200% over the prior quarter. One factor driving that growth was the launch of its own token in August 2021, Splinterlands Shards, which will allow holders to vote on the game's future.

MOMO Farmer

MOMO Farmer, by Mobox, is a free-to-play, play-to-earn NFT game. Users benefit through yield farming, a free market for NFTs, and governance tokens. Users can buy and sell their MOMO NFTs through its exchange.

The game attracted 30,700 daily UAW in September 2021, generating $67 million of transaction volume. Meanwhile, its overall trading volume hit $280 million in the third quarter, up 28% from the second quarter.

NFT games are growing in popularity

NFT games are one way investors are cashing in on the NFT craze. Many NFT games incorporate financial models, allowing players to make money as they play. As NFT gaming popularity increases, the economic potential could rise. Several games are beginning to stand out as potential money makers for players, making them interesting ones to watch.