Indeed, the game ChainGuardians were ahead of their time in many ways, yielding passive income from deploying rare and popular NFTs to earn $CGC, the in-game currency. By simply showing proof of membership of an NFT in your wallet, it is possible to have a chance of receiving an in-game block reward.
At the end of 2020, Rplanet used roughly the same principle, but with a big difference. The game requires the player to mix items together to create new ones (DoodleGod also uses the same concept). The first items can be purchased with Aether which can be obtained by storing NFTs from partner projects with Rplanet.
While ChainGuardians only checks for proof that you actually hold NFTs, those staked in Rplanet are frozen in the project until they are unstaked.
By asking the user to actively participate in the project, he is rewarded in the form of NFT, tokens or even cryptos and this acts as time-stamped proof of his investment in the project. It is therefore possible to publicly check whether the information coming from a user is reliable based on their experience in the project.
The most telling example is that of blockchain games, which is sometimes referred to as ‘Proof of Gameplay’ since depending on the level of decentralization of the game, a greater or lesser number of actions will be recorded on the blockchain.
Some examples of video games using NFTs as the pivotal elements of this use:
The challenge for the developers of these games is to find a balance between a ‘pay to win’ game model and a fair reward for the ‘early adopters’ of the game so that everyone can have a chance to advance in the game without having to spend a fortune to catch up with the first who arrived.
We will come back to the concepts of ‘Play to Earn’, ‘Blockchain and Crypto Gaming’ in more detail in other chapters.
Apart from video games, other industries have considered another way to use NFTs: to certify that a task has been completed, a skill acquired or a goal achieved.
Here are a few examples:
Because of their form of standard on the blockchain, these certifications can be obtained in a secondary market and one would think that this facilitates fraud. But since the only way to get them initially is to work hard, recruiters who want to verify the origin of the certificate will only have to take a quick glance at the blockchain!
These two are obvious bed mates, as financial services require collateral to secure loans and other financial derivatives. NFTs are perfect collateral items as they are digital assets with assessable value and can ultimately back any real asset as well as digital. It’s clear that DeFi can make NFTs more liquid, for example your Crypto Art NFT could one day back a home loan with this set up.
Not just this but the possibilities for DeFi and NFT intersection are enormous, with a world of traditional finance saturated with derivatives, options and bonds, the nature of NFTs offers the potential for digital versions but in a decentralized system, not controlled by a bank or centralized body.
With various layer 2 projects coming into maturity during 2021, it’s likely we will see even more interesting ways to use NFTs within the DeFi infrastructure.
As an example, the Polygon team recently suggested the possibility of being able to yield farm NFTs to earn NFT rewards, it’s sure we will see much more complex ways to utilize NFTs within DeFi than with simply being used as collateral alone.