As interest in cartoon avatars cools, operators are looking at NFT-based games as their next big bet

As global fervour for cartoon avatar non-fungible tokens (NFTs) cools, more companies are betting on video gaming as the NFT market’s next potential growth driver even though some analysts have questioned the sustainability of such a business model.

Magic Eden, a marketplace for NFTs based on the Solana blockchain, is hoping that US$27 million of fresh funding raised last month will help “supercharge” the company’s next phase of growth, and “a lot of that is through pushing into gaming,” co-founder and chief executive Jack Lu told the Post in late March.

The company, started in September last year, is now the second-biggest NFT marketplace in the world by trading volume over the past 30 days, ranking behind only OpenSea, according to market tracker DappRadar. Last month, it launched Eden Games, which hosts mini games made by third-party creators who want to sell their game assets as NFTs.

NFTs are data added to a blockchain that represent the uniqueness and ownership of a digital file. Their value has shot up over the past year as enthusiasts tout their ability to allow the trading of digital assets, with collections of cartoon avatars and digital artworks being sold for millions of dollars in some cases.

However, after a surge in interest earlier this year, there are some signs that the global NFT market is cooling, with unique buyers of NFTs in March dropping to 664,077 from a peak of 998,271 in January, and global sales also falling to US$2.4 billion from US$4.6 billion in January, according to data from market tracker CryptoSlam.

An NFT of Twitter founder Jack Dorsey’s first tweet, once sold for US$2.9 million, is currently subject to a top bid of roughly US$300,000.

But NFT-based games, often dubbed as play-to-earn games because they encourage players to earn money through trading game NFTs and game currencies, are still attracting huge player numbers.