Written by Aditya Raghunath at The Motley Fool Canada
Macro-economic challenges in 2022 are expected to have a negative impact on the performance of cryptocurrencies This year. Although this asset class has generated exponential wealth for investors in the past, you should understand that holding cryptocurrencies comes with significant risks.
Alternatively, the widespread adoption of cryptocurrencies and the growing utility of blockchain networks are expected to drive up the prices of the underlying digital tokens.
Blockchain games attract $2.5 billion in investment in Q1
According to a report by DappRadar, gaming dApps (decentralized applications) and metaverse projects have attracted $2.5 billion in investment. Comparatively, blockchain games raised a total of US$4 billion in 2021.
In March, blockchain games attracted 1.22 million unique active wallets and blockchain game usage jumped 2,000% year over year. In fact, the decentralized metaverse could reach a value of US$8 trillion.
However, due to the decline in cryptocurrency prices, trading volume in virtual worlds fell 12% compared to the fourth quarter of 2021. The average prices of virtual land on gaming metaverses, such as Decentralized and The Sandbox, were also down 40%.
The Case of the Bull for The Sandbox
Valued at US$3.34 billion by market capitalization, The Sandbox has created a virtual world where users can build, create and trade digital assets. It incorporates features of decentralized autonomous organization and NFTs to gain traction in the blockchain gaming vertical.
The Sandbox focuses on facilitating a play-to-win model, where the SAND token will be used to enable transactions on the platform. In Q1 2022, the Sandbox completed its second Alpha season and attracted over 325,000 visitors across the 35 experiences available to players. It has distributed US$30 million in SAND tokens and partnered with several companies including Warner Bros and Ubisoft.
The bull case for Axie Infinity
Axie Infinity is another blockchain-based game, which means it is partially player-owned and operated. Here you can collect, breed, breed and trade Axies which are token-based creatures. Each Axie is an NFT and has different characteristics and attributes.
Additionally, users can earn tokens such as AXS, or Axie Infinity Shards, and SLP, or Smooth Love Potion. AXS tokens are used as a governance protocol and to facilitate payments in the marketplace.
In terms of daily active users, Axie Infinity is the most popular game on the Ethereum blockchain, as actors passed close to 4 billion US dollars in this market in the last year. The Axie Infinity platform also generated $1.3 billion in sales, which includes fees charged for breeding as well as market transactions.
The demand for the AXS token will depend on the popularity of the Axie Infinity game. Investors can also stake their AXS tokens to earn rewards and the payout currently stands at nearly 39%.
The insane takeaway
While it may seem like demand for these games has remained tepid since the start of 2022, gaming dApps have been driving the majority of on-chain activity in recent months. We can see that the potential of blockchain games remains robust, making their underlying tokens extremely valuable.
The post office 2 Gaming Cryptocurrencies That Could Offer Stellar Gains in 2022 and Beyond appeared first on Motley Fool Canada.
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Dumb Contributor Aditya Raghunath has no position in the stocks mentioned. The Motley Fool owns and recommends Ethereum.