Hey Readers! I am back with another blog on Web3 gaming. This time it's about how games add liquidity and value to their assets. So, if you want to know more about it, keep reading!

With every product in Web3 coming up, there is always some Token associated with it, but what utilities do these FT and NFT projects have behind them?

Let’s learn about them and their utilities!

The utility can be defined as the value an asset holds or the use-case it provides on top of the visual. Assets can be anything like NFTs, cryptocurrencies, abilities, etc.

For example: Valorant- one of the examples of web2 gaming - has various in-game assets like agents, abilities, maps, weapons, etc. They all possess some or the other utility in the game.

But how are these assets different from those in Web3 gaming?

Ownership

Gaming has largely been a centralized entity with data, assets, and in-game currency typically confined to the original game and ownership being retailed by the developers. If the servers get shut down or you decide to discontinue playing, all your in-game collectibles are gone because you don’t own them.

However, in web3 gaming Blockchain brought decentralized ownership to the in-game assets. So, now users can not only own these assets but also make earnings through their sales.

That’s bringing real-world economics into the game!

Trade

When it comes to gaming, the concept of having in-game assets is not very new. People have always paid to buy assets in the game and also the exchange of assets whether in the grey market or in-game has always existed.

However, Web3 brought the revolution from Pay to Play to Play to Earn.

In web3, the value of each asset is determined based on their demand and supply which are set by the players of the game and NOT by the creators of the game.

Value

There are mainly three types of users of a token-based game: *1. Players who play the game and earn,

1. Investors who see the potential in the token
2. Traders who provide liquidity and leverage price volatility for profits*

Suppose Traders and Investors decide to invest in in-game assets in a Web2 game. Now, if the assets lose their value, they will be losing all their investment because there is no economy to back them up. That’s an economic design failure.

But If the value of an asset is captured, it can be compounded slowly given the fact games are good and have a solid foundation. So, the games that add value over time, driven by utilities have a more sustainable game economy

NFTs and FTs as in-game assets!!

Everyone is running behind NFTs Can FTs not do everything an NFT does?

At the moment, most NFTs are being created as vanity projects i.e monetizing the hype rather than finding long-term utility for the assets. For NFTs to reach their full potential, they need to be used for more than just digital collectibles.

During a bear market, NFT in-game assets will face liquidity issues which slows down the growth of the game economy. For example, if someone wants to trade 5 NFTs from the game, that's easy. But trading 500 NFTs will be an issue as that entails 500 unique orders and executions.

Developers will need to store the ID of each NFT to map to the player. This makes it hard to enable high-frequency trading on the asset since each NFT would have to be individually listed on a marketplace.

To solve this problem, FTs (Fungible Tokens) come into the picture. Since all units of a fungible token are the same (NOT unique like NFTs). The only metric that requires it to be measured is the count of the token per owner. This allows a player to quickly list some or all of their assets in a single listing and no longer will have to buy individually.

FTs are a big deal. FTs help maintains highly liquid markets at all times which attracts more capital. Hence, FTs help strike the balance to create a sustainable economy.

Conclusion

Every Token associated with a product must hold some utility. It shouldn't be just vanity. The ownership and value must be highlighted. A product must customize its token according to the need.