AI and NFTs: A Match Made in GameFi Heaven

Dear Subscriber,

AI has crossed a new frontier.

Among the other developments stealing the spotlight, AI is now in the toolbox of video game developers.

And I don’t just mean as a way to enhance gameplay.

I’m talking about AI that can develop a new game … from scratch and without a game engine!

Projects like Oasis and GameNGen are already deep in their attempts to recreate Minecraft and DOOM from scratch using AI.

And, as a proof of concept, it works!

This is big.

And no one in the web3 space has attempted to replicate this. Not even those in the GameFi space, which has typically been on the cutting edge of what is possible with online gaming.

That could be due to how new this development is and how tricky new tech can be. Especially with AI, which often has its grandiose promises dragged back to reality when new projects roll out.

That said, I believe there is a lot of potential in the idea.

And if combined with a forgotten and often overlooked crypto sector, there could be ways for traders to benefit, too.

Current Limitations of AI-Generated Games

Here's the thing about current AI models: Even the most advanced ones still struggle to maintain a consistent game state over time.

Sure, they can handle immediate interactions. But once you ask them to track complex game progression or visual consistency or remember specific player choices, they quickly lose track.

That castle you spent hours building in an AI-Minecraft clone? It might look completely different or even disappear when you return to it later.

The unique character you created could suddenly have a different face or outfit, even though you never changed anything.

And even if you solve those issues, you’d have to overcome the hurdle of updates.

Traditional games can push a code patch quickly when something breaks. But with AI games, developers will likely need to do a full model fine-tuning before they can fix their code.

That would require more AI model training and much more time and money than a traditional patch.

All the while, players grow frustrated with the wait.

In short, is not a practical approach to running a dynamic gaming economy with real money at stake.

At least, not the way developers are using it now.

A Different Approach: NFTs as Cross-Game Visual Modifications

It’s clear to me that the pure AI approach to gaming is flawed.

But that got me thinking: Rather than rely solely on AI, what if we used it instead to enhance existing games with the help of non-fungible tokens, or NFTs?

If you’ve been in crypto for a while, you may recall the NFT craze that swept through the markets in the last bull cycle.

NFTs are cryptos that have non-fungible (i.e., non-interchangeable) value.

For example, 1 Bitcoin is just the same as any other Bitcoin. But no two NFTs are exactly alike with the same exact value. Each is a distinct crypto asset.

They also play a huge role in securing digital ownership, which I’ve written about in the past. That’s why they are primarily used as digital art.

So, how can these NFTs help AI level up its game development?

By turning basic game assets into stunning visuals in real time.

It’s not completely unheard of.

NFTs are already used in web3 games as assets, weapons or skins that players can own, use in other games or sell.

And while they have never been used as visual modifiers before, that functionality is similar to how NVIDIA's DLSS AI chips improve rendering.

Basically, the idea is not to rely solely on AI. But to use it to enhance the technology and functionality we already have.

Unlike Nvidia’s TradFi solution, though, an NFT would make your visual enhancements uniquely yours.

Where a traditional approach would see these AI-enhanced chips added to a game’s servers to impact all players, AI-enhanced NFT mods would belong only to one player.

They could work across multiple games. And you could even sell them.

Want your medieval castle to look like it was sketched by Da Vinci himself? There's an NFT for that.

What about character faces that look real? There’s an NFT for that, too.

AI and NFTs: A Match Made in GameFi Heaven

NFT modifications solve several problems with AI-developed games at once.

It’s not hard to see the appeal for game developers, AI enthusiasts and NFT creators.

But what may be harder to grasp at this early stage is the world of possibility this approach offers casual traders.

My colleague Mark Gough covered how players can earn real value through web3 games. And investors who buy those games’ tokens can get a piece of their success.

Instead of betting on a single game to reach viral popularity, though, NFT mods allow you to invest in visual assets that can be used in any game, on any platform.

These NFTs could appreciate based on their artistic value, rarity, quality of execution, compatibility with popular games and the reputation of their creators.

Just think about the Minecraft or Roblox player in your life. How much have they spent on the latest skin or an exclusive in-game item?

I’d guess it’s more than you’d likely think.

Since the launch of Minecraft Marketplace in April 2017, the creator community has generated more than $500 million in revenue from 26,193 skin packs, and 11,126 world templates.

Numbers like that make me think successful and profitable NFT mods in an AI game are not a pie-in-the-sky goal.

The technology for this already exists to make AI-created games a reality. We just need to wrap it in the right web3 framework.

Developers that chose to support this new breed of AI games with NFT mods could create new revenue streams for several key groups within the crypto ecosystem.

And it would do wonders for broader crypto adoption.

What Investors Should Look For

For crypto investors, this means looking beyond pure GameFi plays. You want to peer past the horizon to see what’s at work on the other side.

Here’s an early tip: The real opportunity here will be in the core technology that would power what might become gaming's next major evolution.

You’ll want to start with web3 games that have started or are looking to dip their developmental toes into AI.

The potential here is massive. Projects that focus on this approach would be building the foundation for a new kind of game modification market, one that could potentially rival the traditional mod marketplace.

And unlike existing mod platforms, this one would have built-in monetization, cross-game compatibility and the power of AI behind it.

The potential is clear, but I'm curious about your perspective.

Do you think web3 games are ready for AI? Or have you already seen or heard of projects that may shift to an AI approach?

I'd love to hear your thoughts on this exciting new frontier.

So, drop me a line on X by tagging @weisscrypto and @JuricaDujmovic.

Whether you're a developer interested in building an AI game, an investor interested in GameFi or AI, or just fascinated by the potential of this technology, I want to hear where you stand on this topic.

Best,

Jurica Dujmovic