Non-fever token-based projects like Loot and The N Project have helped drive interest in the Metaverse to an all-time high and re-fuel hope that the blockchain will eventually break through. Will it or will history repeat itself? The problem is, it is the very things that capture the public’s imagination that end up affecting the performance of the underlying platforms and increasing the barriers to entry like never before. In this article, I am going to examine the underlying problems that are responsible for creating this dynamic, with the aim of solving those problems once and for all.

The underlying problem is that legacy blockchain technology – Ethereum in particular – creates massive barriers to entry that hamper Metaverse’s ability to attract new users. These problems are then exacerbated by not allowing network users to statically rate their network usage.

Expensive monkeys and penguins

The fees for using popular NFT marketplaces can be a bit confusing, as projects often pass these costs on to users with often unrealistic expectations of profit potential. A quick look at Etherscan reveals an incredibly high transaction value paid per project. Projects like Bored Ape Yacht Club and Pudgy Penguins have asked their users to pay 106.7 and 111.4 Ether (ETH), respectively, to interact with their smart contract. Together, the users of these two projects alone paid nearly $ 1 million in transaction fees!

Axie Infinity, is it really NFT based?

But the point is, these projects aren’t actually NFT-based games! In Axie Infinity, players can fight and spawn small creatures that can then be sold or rented to other players precisely because they run as NFTs. This is what makes Axie Infinity such a great example of a true NFT-based game. The point is, the more a game takes advantage of NFT and the benefits of blockchain-based assets, the more ETH fees users have to pay.

Both the trading and breeding aspects of these games are subject to transaction fees on the Ethereum blockchain. Axie Infinity paid over 15,000 ETH in transaction fees, which is over $ 60,000,000! It’s the money developers could have spent improving their products, but more importantly, it’s the money users could have spent buying more digital assets from Axie Infinity and other game developers.

Secret 22 for new users and publishers

Many new users drawn to the NFT craze immediately head to a marketplace like OpenSea to list their own NFTs. In an ideal world, this would be a great opportunity to add another blockchain proponent to the ranks by delivering a great user experience. Unfortunately, the transaction fee for simply listing an item on OpenSea is currently around 0.1 ETH, or around $ 400. It’s not the kind of user experience that makes people think they’re using some futuristic technology!

Not only do these ridiculous fees hurt new users trying to figure out what this blockchain craze is about, but they also deter bigger companies from building on blockchain. Why should the major video game publishers build NFT interoperability into their video games when the end user of their product would have to pay around $ 100 for gun skins in their game? Certainly no consumer will be delighted with in-game NFT assets that have a higher transaction price than the base game.

Even if a major video game publisher strived to cover these blockchain transaction fees for its player base, those fees would still be very expensive and would increase proportionally with the life of the player. Effectively, the publisher of this game will be penalized if the replay value of their game increases! Given these shortcomings in the face of the current retail prices of blockchains, it is not surprising that video game developers and publishers are not starting to digitize in-game assets right away.

The blockchains are not charging

Obviously there are serious problems with current NFT-based games on legacy blockchains. This is mainly due to their transaction pricing mechanism, which hampers new user adoption and prevents video game publishers from incorporating NFT content into their games. Unfortunately, we’re nowhere near Triple-A video game titles using blockchain to track ownership of in-game assets. It would simply be too expensive for consumers or publishers to bear the transaction costs on a loaded blockchain.

There is hope, however. It is possible to remove fees from the user experience of a blockchain. The Steem blockchain (known to be forked in Hive to prevent a hostile takeover by Justin Sun) has been running on a free model since its inception in 2016. Splinterlands, one of the most successful blockchain-based games, took advantage of the lower fee from Steems Attribute, and now Hive, with spectacular effects.

Related: Apathy is the only way to enable blockchain adoption

The essence of the solution contained in these blockchains is the introduction of a token derivative or “asset” that is used to “pay” transaction fees, and not something like the gas of Ethereum that is “authorized” by a user (such as a developer) can be) to another user (such as a player).

Using token derivatives to cover transaction costs allows game developers to statically evaluate their network usage over time. If this sounds a little confusing, don’t worry; I will explain.

Think for a moment if Axie Infinity was built on a free blockchain and uses such a token derivative instead of forcing users to spend their funds. If it had, the developers could have bought a certain amount of native coins in proportion to the network bandwidth needed for the game and then delegated the network resources to the new users.

Boost growth

First of all, it will allow new users to get authorized resources to swap their axes and interact with in-game smart contracts without paying any transaction fees. This allows the game to naturally grow its player base as the players are not affected by the cost of the game. It will lower the barrier to entry, attract more new players to the ecosystem, and increase the demand for in-game assets.

Such a fee structure could allow game publishers and developers to pay a one-time flat fee for consistent network usage. With Ethereum, you pay per transaction, which is a big deal – around $ 60,000,000 as of November 2021 – an issue for games like Axie Infinity. Of course, what happens when the user uses up the token derivative? Won’t they be back to where they started? Well, not if it regenerates over time!

Related: Navigating the NFT Minefield: It should be easy for first-time buyers

Since it is a property of the token and not the token itself, it can be programmed as desired without significant economic consequences. The purpose of this asset is not to exchange values, but rather Promote network usage, and can be designed accordingly. If we don’t want the user to be forced to buy more and more tokens, all we have to do is regenerate the token property over time, which also gives us the static prices we want and theoretically unlimited offers for users! As a result, a game like Axie Infinity would only have to be purchased once and never have to pay transaction fees again – or paid by its players.

Resources can be continuously delegated directly to an active player or user base by publishers or developers, solving gamers for free and essentially smart contract interactions worth $ 60,000,000 worth of underperformance in NFT gaming.

The current paid transaction structure poses a direct threat to mass adoption. At Koinos Group, we’re not only working on developing the first consumer-friendly blockchain, we’re also working on a solution that will enable large companies to better estimate the costs associated with adopting this innovative technology.