Cayman Islands-registered cryptocurrency exchange Binance’s Smart Chain subsidiary launched a $200m blockchain gaming investment scheme with China-headquartered digital entertainment and blockchain technology developer Animoca Brands yesterday.
Animoca Brands and Binance Smart Chain (BSC), the company’s dual app and digital asset software subsidiary, are each putting $100m into the partnership. They will work together to shortlist and advance gaming finance (GameFi) projects to fruition.
BSC is contributing the capital through the $1bn Growth Programme it launched last month, with the capital split into $500m for investment, $100m for talent development, $100m for liquidity incentives and $300m for builder rewards, to boost areas such as social, sports logic, role-playing and adventure story-based crypto games.
Gaming is one of the areas of the crypto ecosystem that has caused the most excitement of late. The global gaming industry is projected to expand at a compound annual growth rate of 13.2% between 2021 and 2028, at which point it could be worth $546bn, according to a report from market research provider Fortune Business Insights.
The gaming sector has however been undermined by a limitation only recently recognised as a problem: countless hours and effort spent on games does not yield any monetary value for the players.
The advent of non-fungible tokens (NFTs) have shown a way forward by paving the way for pay-to-earn models where users can earn in-game rewards by playing that can be monetised in real life. It effectively expands revenue creation capabilities exclusively reserved creators into the hand of the gamers themselves.
Decentralised games will intersect with multiverse and web 3.0 applications to create a parallel economy that will itself come into constant contact with the traditional one, and investors are seeing ample opportunity in that interplay.
Gwendolyn Regina, investment director at Binance Smart Chain, said: “Gaming is one of the strong pillars of web 2.0, reaching billions of users. Its large-scale real-life use case makes it one of the core focus areas for crypto’s mass adoption to onboard retail consumers into the web 3.0 world.
“With this co-investment, projects building on BSC will get the opportunity to gain insights and expertise from leading gaming giants such as Animoca Brands, along with collaboration opportunities with blockchain experts from the BSC community.
“We look forward to working together with GameFi projects to build next-gen scalable blockchains and onboard the next one billion new users into crypto.”
At the early stages, these in-game economic ecosystems will be dependent on external capital flows to prop them up, but the long-term idea is to establish a self-sustaining economy where it will be supported by players spending within the games.
Animoca Brands took part in a $750m series B round for blockchain gaming technology developer Forte last month, investing alongside record company Warner Music Group and gaming studios OverWolf, Paystudios and Huuuge Games as well as blockchain developers Cosmos, Polygon Studios and Solana.
Earlier in November, Binance and fellow cryptocurrency exchange FTX had invested in a $150m series C round for another blockchain game studio, Mythical Games.
Animoca’s portfolio also includes game developers such as Blowfish Studios, nWay and Gamee, as well as NFT-focused companies such as digital card trading platform developers Dapper Labs and Quidd.
