For the gaming development world, developing the project has become more innovative as blockchain technology and cryptocurrencies are reshaping how developers fund their projects. A major player in blockchain platforms, Ethereum has kicked off as a game changer for crowdfunding projects in the gaming industry. Thanks to Ethereum and its currency Ether (ETH), developers are discovering new, decentralized means to finance their games without the need to rely on traditional financing.
For instance, the Ethereum price today will dictate how much a game developer can raise with it. In this article we will take a closer look at how game developers fund their projects, how crowdfunding works in blockchain ecosystem and how Ethereum’s price impacts on the success of these projects.
Crowdfunding in the Traditional Gaming Industry
Game developers traditionally have funded their projects through publishers, investors or Kickstarter and Indiegogo. The methods also come with big challenges. Publishers may restrict the creative freedom of developers that they work with, and, while traditional crowdfunding platforms are used, the campaigns may not make their funding goals.
Along came Ethereum, a decentralized platform where developers can crowdsource funds from their community via Initial Coin Offerings (ICOs), token sales, and, more recently non-fungible tokens (NFTs). However, these blockchain based methods give developers more autonomy and control within their process, so they can bring their vision to life without letting third party stakeholders come in the way.
Crowdfunding on the Ethereum Blockchain
The blockchain of Ethereum allows the development of smart contracts, which are self-executing agreements with terms built directly into code. These are contracts that allow the developers to create custom tokens or NFTs, which they can sell to friends who need to raise funds. Here’s how game developers are using Ethereum to revolutionize the crowdfunding process:
Initial Coin Offerings (ICOs): Developers can sell tokens that represent a stake in the project or in-game benefits using ICOs. These tokens can be purchased by investors who invest money directly into the game’s development in exchange for future rewards. These rewards can be anything from early access to the game, in game currency, or unique items associated with the game’s ecosystem.
Non-Fungible Tokens (NFTs): Game crowdfunding has turned into something of a popular pursuit among NFTs. When developers create NFTs representing rare in-game assets like rare characters, weapons, or digital land, developers can now sell the NFTs allowing consumers to use them in games. These NFTs are an early source of funding for the game from its early supporters, who purchase them at a premium and receive valuable and collectible assets within the game.
Tokenized Game Economies: Ethereum powers many blockchain-based games using tokenized economies within the game itself. You buy tokens (in ETH), which are in-game currency or a governance tool. Developers raise funds through token sales, but they also build an active community that has some skin in the game and wants to see it succeed over the long term.
Ethereum Price and Its Impact on Game Crowdfunding
Today’s Ethereum price is crucial to the success of crowdfunding campaigns. Since most blockchain based crowdfunding depends on ETH as its main currency, the worth of Ethereum has a direct relation to how much funding a developer can raise at any given moment.
Price Fluctuations: Ethereum’s price is very volatile, which can be a good thing or a bad thing for game developers. Ethereum values going up is good because the ETH raised during a crowdfunding campaign will increase in value, and developers will have more capital to work with. But, with that said, if Ethereum’s price plummets following a successful campaign, the liquidated funds will also lose value and will be worth less than initially anticipated on the part of the developers.
Investor Confidence: Investor confidence is also tied to the state of Ethereum’s market. While this certainly holds true, if Ethereum continues to rise while investors are investing in ICOs or buying NFTs, it’s safe to believe they will see the value of their investment rise with the cryptocurrency. On the other hand, the market is down and it may be tough for developers to get funding; investors are more reluctant to give their ETH away.
Market Timing: Developers also need to think about when to launch their campaigns in relation to Ethereum’s market trends. If a crowdfunding campaign is launched during the bullish market, it will attract more investors to a campaign as against the bearish market where participation is limited. As a result, many developers will keep a close eye on the price and sentiment of Ethereum during the planning of their funding efforts.
Conclusion
Ethereum has proven to be a useful tool for game developers who seek to crowdfund their projects using blockchain based crowdfunding methods. ICOs, NFTs, and tokenized economies are being used to raise funds directly from the community without giving up creative control. But these crowdfunding campaigns often depend on Ethereum price today because price fluctuations can affect both funds raised and investor confidence.
As more people adopt Ethereum, it is likely to be a key player in future game development. It will continue to offer a decentralized, transparent, and innovative way for game developers to bring their gaming vision to life.
