Key decisions ahead to shape blockchain era, photo source: freepik

For the past year, many Vietnamese startups have been in a race to develop blockchain games.

According to Lithuania-based DappRadar which provides a global app store for decentralised applications, Vietnam’s non-fungible token (NFT) game market entered its most exciting phase to date in April 2021, when the total value of NFT transactions on global blockchain platforms reached $1.24 billion, with market capitalisation reaching $11.72 billion.

After Sky Mavis, Axie Infinity’s creator, successfully bagged $152 million last October to become valued at $3 billion, Vietnam suddenly gained its place in the blockchain game industry and became even more of a hotspot for foreign investors.

Within the span of 10 months, at least seven new games have been launched in the country. Ten Vietnamese blockchain startups have reached a capitalisation of over $100 million, among the top 100 blockchain companies in the world.

Vietnam’s game developer Sipher at the end of last year raised $6.8 million from investors in the crypto sector in the United States and South Korea to release its combat game World of Sipheria. Also, Whydah, a company specialising in blockchain games, also attracted an investment of $25 million only 10 days after announcing the IronSail project.

And nearly a year ago Faraland, a multiplayer game developed by MoonKnight Labs, received $2.4 million in a seed round, while HeroVerse, developed by Hiker Studio, attained $1.7 million last September.

In terms of crypto acceptance, Vietnam was ranked number one in US-backed software company Chainalysis’ 2021 Global Crypto Adoption Index. This combination is believed to have attracted foreign investors as big as Andreessen Horowitz and Hong Kong-based Animoca Brands to enter the fray, transforming it into a thriving sector.

Pham Minh Tri, CEO of Whydah and co-founder of KardiaChain, assessed, “Blockchain is bringing many competitive advantages and community value to Vietnam compared to the world. I think NFT games have opened up great opportunities for the domestic gaming industry.”

Binh Nguyen, blockchain expert and lecturer at RMIT University, noted that Vietnam already had somewhat of a track record in game development. However, he assessed that the appeal of the Vietnamese blockchain game market does not depend solely on gamers in the region.

“Players often times do not choose NFT games for leisure, as most of these games are still in the early stages and are not that interesting in terms of design or storyline. They are attractive mostly due to the monetisation capability of in-game assets,” Nguyen said.

Many of the games have spawned their own in-game economy, to adjust themselves to the financial level of their target customers. For example, Axie Infinity, which requires the purchase of three ‘Axies’ or tokens in order to play, can be out of reach for the average Vietnamese or Southeast Asian. Lending Axies, on the other hand, has become a lucrative business for many.

“Generally speaking, the Vietnamese population is more open to taking risks and trying out new technologies as a way to make money. Being able to monetise your gaming time often seems like a real win-win solution,” Nguyen added.

William Do, CEO of HOBBIT Investment, credited the appeal of the blockchain game market to the exponential benefits that come with a fast payback period.

“Blockchain game projects can be considered a next-step version of startup projects. It is clearly divided into two phases: pre-IDO before the token is released and post-IDO after the token is released. The advantage is that project owners and investors can quickly regain their capital after issuing tokens, even if the products have not been launched or widely used,” William said.

In terms of legality, crypto-based transactions are still in a grey area in the country. While cryptocurrency purchases have not been fully legalised, using it as an investment is allowed. As a result, NFT players can enter the games by purchasing tokens with mined cryptos, but not with traditional internet purchases. The laws governing NFTs are similarly ambiguous. In June last year, the prime minister assigned the State Bank of Vietnam to further study cryptocurrency and experiment using blockchain technology as part of an e-government orientation for the 2021-2025 period.

“The move shows that the government is open to this trend and is willing to become a pioneer in blockchain. I hope to see concrete actions to follow,” said David Tran, director of the Network Computing Lab at the University of Massachusetts.

To date, more than 80 countries have considered deploying a central bank digital currency. Many large banks in the world have set up funds, networks and programmes to support cryptocurrency operations.

The Vietnamese government’s decision on whether or not to legalise crypto-based transactions will have a big impact on the blockchain gaming industry, which is still in its infancy. Cryptocurrency ownership is in high demand, partly due to the growing popularity of NFT games, and if crypto transactions were to be banned, the entire industry and its investment flow may have to shift to other Southeast Asian countries.

Lynn Hoang, country director of blockchain company Binance Vietnam said, “The country is always one of the major markets and we will continue leveraging our resources and networks to support more projects from Vietnam.”

Elsewhere, FOTA is a newcomer in the NFT game market that HOBBIT Investment has successfully raised a whopping $8.3 million in funding for. Its social media has also been attracting thousands of crypto-enthusiasts as well as traditional gamers. FOTA’s investors/players own Heroes as NFTs and can interact with them in the real world, having absolute ownership over their digital assets.