Non-fungible tokens (NFTs) have taken the crypto market by surprise.
According to the NFT Yearly Report 2020, NFTs had a market capitalization of $338 million last year, representing a year-over-year (YoY) growth of nearly 140% from 2019.
However, while $251 million NFTs were traded between buyers and sellers in 2020, the non-fungible token trading volume jumped to over $2 billion in the first quarter of 2021.
In the form of tokens on the blockchain, NFTs represent digital collectibles, artwork, memorabilia, and even personal data, which are unique, irreplaceable, and limited in quantity.
Due to the blockchain’s transparency, traceability, and decentralized architecture, both the ownership and authenticity of NFTs can be verified easily.
NFTs are also experiencing rising popularity in the video game industry, which has surged to a nearly $160 billion market size in 2020 and is expected to further grow to $200.8 billion by 2023.
In this article, we will introduce you to Enjin, an exciting cryptocurrency project that aims to innovate the video gaming industry by tokenizing in-game items in the form of NFTs.
What Is Enjin and How Does it Work?
Enjin is a cryptocurrency project that features a fully fledged blockchain gaming ecosystem with a focus on digital collectibles and NFTs.
While Enjin raised $19 million for its crypto products in November 2017, the project’s history dates back to 2009 when its team launched the gaming community platform Enjin Network.
Lack of Real Ownership and Gray Market Sales
Enjin aims to provide a solution to some of the video gaming industry’s issues.
One of them is related to the fact that the ecosystems of individual games – even those in big publishers’ networks – stay separate from the others.
As a result, if you earn a sword in one game, you can’t move the item or interact with it in any other way in a second video game.
Also, even though they purchased or earned them, players don’t have real ownership over their in-game assets as the publisher can block their accounts and revoke access to their items at any time.
Furthermore, since most publishers allow players to buy in-game assets exclusively from official stores at their prices, users can’t sell what they bought or rightfully earned while playing a video game.
For that reason, unauthorized secondary (gray) markets have been created for trading in-game assets – often for a fraction of the publishers’ costs –, which could take away as much as 40% of the developers’ revenue.
Minting, Melting, and Trading
Enjin seeks to solve the above issues by tokenizing in-game assets and infusing them with the project’s native ENJ token.
After injecting them with ENJ, the items are automatically converted into ERC-1155 tokens, an Ethereum-based token standard allowing creators to issue both fungible and NFT tokens via a single smart contract.
This process is called minting, which allows developers to convert virtually anything that resides in a video game’s ecosystem – from weapons, mounts, and armor to planets, characters, or even the actual game itself.
Since ERC-1155 tokens on Enjin are created using a specific amount of ENJ, digital assets minted via the project’s platform feature a real-life value.
After minting them, players can either purchase them directly from the publisher or via approved peer-to-peer (P2P) secondary marketplaces or earn them as rewards by, for example, completing a quest or referring friends.
For developers to generate revenue on marketplace, direct user-to-user, or third-party sales, they can set a specific trading fee for every transaction involving their in-game items, which Enjin automatically deducts and distributes to the publishers.
In terms of monetization, publishers on Enjin can also generate funds via in-game subscriptions, ethical microtransactions, and by tokenizing game accounts to sell them at a fixed price.
Unlike traditional in-game items that are kept on the game servers, all the assets developers tokenized via Enjin are stored securely in the users’ wallets.
As a result, players have real ownership of their in-game assets, which they are free to use in games, hold in their wallets, trade with others, or even move to other blockchain-based gaming solutions.
In addition to all the above, gamers can take advantage of a further mechanism to interact with their in-game items.
This process is called melting, in which players convert ENJ-backed digital items back to Enjin Coin. While they “destroy” their assets this way, they receive all or a portion of the ENJ developers used to create the items.
The percentage of ENJ players can get back by melting items is set by the developers, but it can never be less than 50% (e.g., at a 50% rate, minting costs 2 ENJ for the publisher, and the player gets back 1 ENJ after melting it).
By doing so, players could still extract value from items with an intrinsic value lower than the ENJ tokens’ infused in them. This mechanism comes especially handy when a game gets abandoned by the developers.
Furthermore, the melting feature guarantees players that the in-game items they purchased from publishers will be worth (at least) something in the future.
At the same time, developers can use melting as an opportunity to monetize their in-game assets by taking a cut from the ENJ tokens players receive after destroying their items.
Play to Earn vs. Pay to Win
Similar to other blockchain gaming solutions, Enjin allows developers to integrate the consumer-friendly business model Play to Earn into their games.
Contrary to the controversial Pay to Win model – in which gamers gain (a rather unfair) advantage over others by purchasing in-game items from developers –, players here can earn valuable items by simply playing a game and completing quests without spending any funds.
As a result, a much more fair gaming environment can be created, in which users are incentivized to play games and earn rewards in exchange for engagement and activity.
What Solutions Does Enjin Provide?
As part of a vast blockchain gaming ecosystem, Enjin offers a wide variety of solutions to video game developers and publishers.
The most important ones include:
- Enjin Platform: The Enjin Platform allows anyone to tokenize assets and create NFTs without coding as well as integrate them into their existing ecosystems. Furthermore, developers can use Enjin’s software development kits (SDKs) for Unity, Godot, and Java to create blockchain-powered games, apps, and websites from scratch.
- Enjin Wallet: Available on iOS and Android, the Enjin Wallet allows users to store various digital assets, such as Bitcoin, Polkadot, ETH, ERC-20 tokens, as well as ERC-721 and ERC-1155 NFTs. The most important features of the Enjin Wallet include claiming assets in blockchain-based games by scanning QR codes, trading NFTs with others, and linking wallets with gaming solutions.
- Marketplace: The Enjin marketplace is the primary platform for trading NFTs and other digital items players purchased from developers or earned in blockchain games. In addition to Enjin’s platform, publishers can create their own branded marketplaces with customized features to list NFTs.
- JumpNet: JumpNet is Enjin’s own Ethereum scaling solution that allows network participants to send ENJ and ERC-1155 tokens via instant, secure, and gasless on-chain transactions. However, while it was scheduled to release this month, JumpNet is still under development.
- Efinity: Along with JumpNet, Enjin aims to solve Ethereum’s scalability issues and high gas fees with Efinity. While it hasn’t been released yet, Efinity is a highly scalable Polkadot-based blockchain platform built specifically for NFTs.
- Beam: Beam is an early-access Enjin solution that allows developers, businesses, and service providers to embed NFTs into QR codes, which players can scan to claim as free rewards. Projects can launch Beam campaigns to engage their fans, convert more prospects into customers, and incentivize their communities for active participation.
What Is the Enjin Coin (ENJ) and How Did its Price Perform?
Enjin Coin (ENJ) is Enjin’s native cryptocurrency, which is currently based on Ethereum’s ERC-20 standard and supports ERC-1155 smart contracts.
Similar to Bitcoin, ENJ features a maximum supply, which is capped at 1 billion coins. However, unlike BTC, the blockchain gaming platform’s token is not mined. Instead, it’s minted and melted by game devs and users.
In addition to the minting and melting mechanism – which provides real-world value to NFTs on the platform –, ENJ is used for the following functionalities in the Enjin ecosystem:
- Purchasing and selling NFTs on the Enjin Marketplace, secondary markets, and P2P user transactions
- Receiving in-game rewards
- Staking ENJ to receive a passive income after the Efinity platform’s launch
Interestingly, when the project launches Efinity, all the ENJ infused into NFTs will be automatically staked, which will allow users to receive rewards in Efinity Token (EFI) – Efinity’s native governance token – by simply holding non-fungible tokens.
Now that you know the essentials about Enjin Coin let’s look at how ENJ performed in terms of price.
Since its launch in 2017, ENJ features an all-time ROI of nearly 10,000%, surging from its initial price of $0.0223 right to $2.25 as of April 25, 2021.
Interestingly, ENJ achieved most of its gains in 2021 as part of the NFT boom.
At the time of writing this article, the blockchain gaming project’s native token features an over 1,500% year-to-date (YTD) ROI, despite that its price took a significant hit after reaching the all-time high of $3.478 earlier this month.
Enjin: Innovating the Video Gaming Industry With NFTs
With an extensive ecosystem, Enjin has introduced innovative blockchain solutions to gamers by tokenizing in-game assets and bringing NFTs to the fast-growing video gaming industry.
Interestingly, Enjin features partnerships with multiple prominent tech companies, such as Samsung, Microsoft, and Ubisoft.
What makes Enjin unique is the ability to infuse NFTs with ENJ to provide in-game items a real-world value via the minting and melting mechanism.
In addition to its current offerings, the cryptocurrency project will soon release JumpNet to provide NFT holders a solution to Ethereum’s high gas fees along with its purpose-built Efinity blockchain platform, which will extend the use-cases of Enjin’s solutions.