Table of Contents

Background

With the rise of blockchain technology and decentralized applications (dApp), we have seen the rise and fall of decentralized finance (DeFi) over the past few years. During that time, we have seen the volatile nature of society’s perception of said technology. Because these DeFi dApps were largely not based on any tangible value, this perception played a large role in the success and failure of DeFi. Many events, both positive and negative, helped shape said perception and thus affected how much people interacted with DeFi dApps. Therefore, analyzing these events would reveal the resilience of DeFi markets and different strategies for increasing or maintaining activity.

However, alongside DeFi, GameFi faced the same dilemma. As the name implies, GameFi is similar to DeFi but has a gaming element. Games are built as dApps that use a blockchain to manage in-game asset ownership. Gamification in the blockchain space has been highly legitimized recently, even being used by the Andiami project to fix the problem of centralization in decentralized blockchains [1]. One of the most successful GameFi dApps was Axie Infinity1 in which players battled with monsters called Axies. A player’s in-game items and monsters were tracked on the Ronin blockchain as NFTs. The in-game currency also took the form of a token. This gives players complete control over their game assets, opening up the possibility of selling those assets to other players or investors to make a profit. Thus, these GameFi games enable players to earn value by playing them. This is known as the play-to-earn model, and it proved to be lucrative for many players worldwide for a while, and many even started playing these games full-time [2]. However, the GameFi market crashed along with DeFi, leaving many of these players out of a job [3]. On top of this, Axie Infinity later suffered a massive hack named the Ronin hack, which further crashed the GameFi market [4]. This reflected a shift in public opinion on blockchain in general. However, a separate GameFi dApp existed by the name of The Sandbox2 .

A. The Sandbox

The Sandbox is a unique GameFi dApp because it is not so much a game as a marketplace and game engine for developers to create games and assets for players to interact with [5]. It is more so a competitor to Roblox3 than to any traditional game. The Sandbox is hosted on the Ethereum blockchain. In The Sandbox, developers can buy LAND NFTs representing plots of land in the game’s map that the players can explore. The Sandbox’s world is designed and populated by its LAND owners, so they have to host games and events on said LAND to attract players [5]. By doing this, these developers can profit by monetizing their visitors via entrance fees or possibly selling them in-game items. Other developers can also profit by creating ASSETs, assets that can be used in games hosted by LAND owners [5]. ASSETs can also target players, such as clothing or equipment. All of this is tied together with the SAND token, which is the currency that is used by players and developers alike when purchasing goods and services in The Sandbox [5]. This creates a marketplace with many different types of users that interact with each other. It is not just the LAND owners that can make money in The Sandbox, but also any developers willing to put time into creating ASSETs targeted at players and LAND owners. As a result, The Sandbox has a unique marketplace with many different types of users, making it a more notable topic of study than other types of GameFi dApps.

Authors:

  1. Fernando Spade
  2. Oshani Seneviratne

This paper is available on arxiv under CC by 4.0 Deed (Attribution 4.0 International) license.