Phantasma: The Rise of SmartNFTs
Updated: Dec 16, 2021
Computer gaming has greatly accelerated the innovation of computational hardware such as Graphics Processing Units (GPUs) and Central Processing Units (CPUs). Both the GPU and CPU industries have skyrocketed in value since 2016. The recent increased demand for GPUs by crypto miners has made every serious gamer aware of both the crypto industry and the value GPUs can create through mining on Proof of Work (PoW) blockchains. If we factor this in with the innate technical knowledge most gamers possess, we can extrapolate that gamers can and will be the early adopters of functional crypto currency. This will most likely happen through Non-Fungible Tokens (NFTs) being integrated into games via in-game items. Non-Fungible Tokens are assets on the blockchain that cannot be divided. They are wonderful at proving ownership and tokenizing assets, yet they traditionally lack the malleability that non-blockchain in-game assets have. Non-malleability is a feature for traditional NFTs, but a bug for in-game NFTs. Gamers are used to the immersion of in-game assets reacting to their environment. This could be through an in-game sword wearing out after too much use or the combination of two in-game assets to create a third more powerful one. This malleability is a ubiquitous feature throughout the gaming space that gamers love. Providing a seamless transition into the blockchain space would allow for value transfer between players while allowing developers to capture value from every subsequent sale of in-game assets. Free to Play is already the predominant business model in gaming today because of the massive revenue in-game assets have been proven to create. In 2019 Fortnite made $3.7 billion in revenue from in-game asset sales and Apex Legends CEO Vince Zampella has predicted $5.1 billion in revenue after cost in 2022. Both of these games are Free to Play and have a massive user base. Though Fortnite and Apex Legends assets are purely cosmetic, revenue continues to soar. Currently, in-game assets are non transferable and all ownership is subject to the whims of the gaming studios. NFTs have the power to assign ownership while taking a fraction of every sale and depositing it in the original creator's wallet. Now imagine if players had a market to trade and bid on these in-game assets and even had the chance to earn valuable assets while playing their favorite game. The secondary market on in-game assets has the capacity to be huge and NFTs allow for developer capture of this subsequent revenue. This is a reality that blockchain technology can realize.
In order for gamers to truly welcome crypto into their space, NFTs must fundamentally change. Programmable NFTs that can react to player and environmental interaction are the future of gaming. Phantasma calls them SmartNFTs. Phantasma has created an ecosystem of SmartNFTs that are fundamentally malleable. This is cryptos avenue into the approximately $40 billion gaming market. Most of the meta-verse projects I have seen are building games that look and feel dated. Blockchain projects stand to benefit greatly by bringing established players into the fold. Phantasma is building a tool that can be used to bridge established players from the traditional gaming market into the crypto market. I’ve elaborated on why NFTs are superior to traditional in-game assets in this article and my article on Wax. In short, NFTs allow for creators to capture residuals from secondary markets and give gamers or art consumers liquidity for their purchased items. Giving in-game currency real world value is a win-win for creators and consumers.
Who is behind Phantasma?
Sergio Flores is one of two original founders of Phantasma and is currently its chief engineer. Sergio has been a graphics engineer focusing on video game development since 2010. He has an extensive history in tech and has been a blockchain developer since early 2015 when he founded Lunar labs, a blockchain specific gaming studio. Since then, Sergio has been all about blockchain development, growing Phantasma into a powerhouse of a project. Sergio was an early visionary in the blockchain gaming space and has perfectly positioned Phantasma to take advantage of the recent metaverse hype. The rest of Phantasma’s team consists of veteran blockchain development engineers who have been consistently pushing new features while improving and innovating the SmartNFT smart contract code. Phantasma was initially funded by Signal Ventures, 100&100 Venture Capital, and MW Partners along with other individual investors and VCs.
What is behind Phantasma?
Initially Phantasma seems like another fully independent layer 1 proof of stake (PoS) blockchain protocol but behind the scenes is a network of oracles and sidechains which allow Phantasma to have asset flow on the Binance Smart Chain, Ethereum, and NEO blockchains. This means that Phantasma’s governance token ($SOUL), the gas token ($KCAL), and any subsequent NFTs can be moved seamlessly from mainnet to mainnet. Phantasma calls this perpetual bidirectional swapping. Phantasma’s network of oracles track and maintain the price and supply on all four mainnets in order to maintain the exact same price across blockchains. The sidechains then write blocks on the required blockchains. This incredible utilization of multiple popular blockchains is what makes Phantasma stand out amongst its competitors in the multiverse-gaming/NFT space.
Phantasma mainnet also happens to be easy to use. The Phantasma team has created a thriving NFT marketplace called Ghost Market which is meant to be usable by those new to crypto and even has a fiat onramp powered by an open-source software called Onramper. Everything about Phantasma’s user experience is meant to suit the blockchain naive. Phantasma’s native wallets allow for cross-chain swaps and have user-friendly wallet addresses similar to Wax’s Cloud Wallet. Phantasma has also partnered with Goati Entertainment in starting a blockchain gaming marketplace called Pavilion Hub.
I believe that Phantasma as a project is entirely undervalued. $SOUL currently sports a low market cap comparatively in this space but has recently grabbed the attention of investors. Phantasma is chock full of utility. It seems to be the perfect solution to a lot of game developer’s problems blockchain integration. The liquidity available for users on BSC, ETH, and NEO is extremely bullish for the long-term potential for $SOUL. Phantasma is in the position to be a pillar of crypto gaming. At a current $300 million market cap Phantasma has potential for astronomic growth and has already shown shocking gains. Multiverse tokens like $SAND are already at a $5 billion market cap. Phantasma is suited to reach those levels very soon.
Written by David Coryat, Crypto native and Analyst at Istari Capital LP.
This Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this report constitutes a solicitation, recommendation, endorsement, or offer by Istari or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. Please be advised that Istari Capital LP is invested in the project discussed in this article or in projects related to this article.