NFTs: The Game is Afoot

TL;DR

This paper analyzes the structure and stability of NFT games, introduces simplified models, discusses financial-inspired design constraints, and explores three methods for extracting value from NFT-based digital assets.

Contribution

It presents a simplified model of NFT games, integrates ideas from finance to inform game design, and proposes three novel methods for value extraction from NFTs.

Findings

NFT game structures are influenced by financial stability considerations.

Three methods for extracting value from NFTs are proposed and analyzed.

Financial concepts like collateral and risk tolerance inform NFT game design.

Abstract

On the blockchain, NFT games have risen in popularity, spawning new types of digital assets. We present a simplified version of well-known NFT games, followed by a discussion of issues influencing the structure and stability of generic games. Where applicable, ideas from quantitative finance are incorporated, suggesting various design constraints. Following that, we explain three distinct methods for extracting value from NFT games. The first is to utilise NFT tokens as collateral outside of the game's walled garden; the second is to construct mutual beneficial games based on the participants' risk tolerance, and the third is to use Siegel's paradox in the case of multiple numeraires.