To print this article, all you need is to be registered or login on Mondaq.com.
In addition to NFT Sweepstakes and NFT fantasy sports contest-like games, companies are developing various gamified NFT collections or “NFT videogames.” In such games, minters use NFTs in many ways, including as rewards for player participation (i.e., completion badges) and as the means of entry to gameplay (e.g., tokens that users may digitally insert to play a game). NFTs that offer holders added benefits, such as the right to play certain videogames, are otherwise known as “Utility NFTs.” It is important to note that companies which sell utility NFTs may face serious penalties if they refuse to follow through with advertised ownership benefits, including regulatory investigation and potential litagation.
NFT Videogame Platforms
While major videogame companies have proposed incorporating NFTs into existing web-based games, the most popular mechanism that mixes NFTs into games is through use of NFT dApps (short for “decentralized applications”). dApps are applications that operate automatically through smart contracts on a blockchain. NFT dApps incorporate the use of NFTs into their software. User activities are transmitted on the relevant blockchain via Internet Service Providers to other users.
It is important to note that NFT videogames have been banned from some mainstream platforms, including Steam.
Well-known NFT videogames include Splinterlands, Sorare, and CryptoBlades. One of the most successful NFT videogames to date is Axie Infinity. The Axie Infinity dApp is a Pokémon-style game where Pokémon-type fighting characters take the form of NFTs. To play the Axie Infinity NFT Game, character NFTs must be in player crypto wallets in order to participate and breed NFT characters.
Beyond creating a singular NFT videogame, some companies are creating videogame ecosystems that use and allow players to earn a shared cryptocurrency. In these ecosystems, players may earn digital currencies or NFTs for their accomplishments in applicable videogames (otherwise known as “play-to-earn” mechanics). For example, Netcreeper Media Limited has created one such NFT videogame ecosystem (named “FEAR”), which consists of multiple horror games, including Crypt, Clucking Hell, Araya, and Undead Neighbour. These games reward players with Fear tokens for achieving specific goals, which can be used to purchase FEAR NFTs that, among other things, unlock characters, certain abilities, and the pay-to-earn feature in Undead Neighbour.
Over the past few months, NFT minting controversies, including controversial launches (e.g., NBA’s Collection NFTs), phishing scams, and rug-pulls (e.g., the Frosties Scheme), have flooded the news cycle. Given the foregoing, it is advisable to obtain guidance from attorneys experienced with NFT marketing before offering NFTs to the public.
Similar Blog Posts:
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
POPULAR ARTICLES ON: Technology from United States
Bilzin Sumberg Baena Price & Axelrod LLP
The Eleventh Circuit Court of Appeals is considering an appeal from the United States District Court for the Middle District of Florida , in which the District Court ruled that a cyber insurance policy did not cover diversion of funds for a real estate closing.