Leveling Up NFT Games with MagicSwap šŖ
What to know about Treasureās new NFT AMM!
Metaversal is a Bankless newsletter for weekly level-ups on NFTs, virtual worlds, & collectibles
Dear Bankless Nation,
With teeming DeFi and NFT scenes, Arbitrum is currently the leading Ethereum L2 scaling solution.
That said, at the top of Arbitrumās NFT ecosystem right now is Treasure DAO, a collective thatās building a ādecentralized Nintendoā and the tools needed to make that vision a reality.Ā
The newest of Treasureās NFT tools? MagicSwap v2.Ā
This optimized MagicSwap has the potential to revolutionize the game economies of web3 games, so letās run through what you can expect from this unprecedented NFT exchange for todayās post!
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MagicSwap 2.0: Gamechanger for Web3 Games?
The 101 š
Treasure just announced its plans to launch its MagicSwap v2 NFT automated market maker (AMM) in Q2 2023. Treasure has designed the new and improved exchange to be the āfirst AMM in crypto to support pools for ERC-20s and NFTs through a single router.ā
Why it matters š§
Previously, there hasnāt been shared decentralized exchange infra for fungible tokens and non-fungible tokens.Ā
For example, you can currently go to Uniswap and trade ERC-20s like MATIC or you can sweep NFTs like Lil Pudgys. Yet the underlying infra is separate right now: the ERC-20s trade on Uniswapās traditional DEX protocol, while the NFTs trade on a marketplace aggregator evolved from Genie.Ā
Of course, Uniswap has said it plans to create āmore interoperable experiencesā between NFTs and ERC-20s, so itās no stretch to assume the DEX giant plans to introduce universal token compatibility in some capacity in the near future.Ā
What makes MagicSwap v2 notable, then, is that itās the first confirmed universal DEX that we know of and that itās been custom-tailored for web3 gaming, which is Treasureās speciality.Ā
The details šÆ
āTreasure is building a ādecentralized Nintendo,ā a collection of on-chain games that are interconnected via the interoperability of in-game assets and MAGIC, Treasureās native token, as a shared currency. The most popular of these games include Bridgeworld, a strategy game, RPG games like The Beacon and Smolverse, and Realm, a resource management and strategy game.ā ā Ben Giove, Arbitrum Is Mooning
Treasure is working to foster a decentralized gaming ecosystem where many different games, each with their own unique worlds and economies, can develop and grow alongside each other.Ā
Toward that end, the new MagicSwap has been designed to be a flexible and open game economy resource that many projects can tap into.Ā
Beyond the universal token compatibility infra that weāve already discussed, MagicSwap will also notably offer NFT-to-NFT pools via ERC-1155s, NFT-based liquidity provider rewards, dynamic price adjustments, automated royalties, and āsweepingā batch buys.Ā Ā
On the gaming side of things, MagicSwap will provide a range of new possibilities, including:
ā² Pool permissioning ā game creators will have the option to permission how tokens can be traded out of pools, thus allowing for more tightly controlled game economies + mitigating hyper-speculative trading
šŖ Location-based markets ā spatial and geography-based trading constraints will be possible so games can use MagicSwap to have in-game location-specific marketplacesĀ
š± Non-financial trading ā MagicSwapās pool customization options will allow game creators to facilitate players trading a āweb of different tokensā without an easy off-ramp, thus offering the ability to fine-tune which parts of a game will and wonāt be financialized
The big picture š”
At Metaversal, Iāve written at length about how web3 games that make their in-game assets too easily tradable routinely lack economic levers and thus struggle with economic outflows and overspeculation.
These problems can be game killers! As such, one of the reasons why MagicSwap v2 is so compelling is because itāll give web3 game developers an open resource for capably and flexibly managing their game economies as needed.Ā
Earlier this year, I also wrote about how one of my wishes for NFT gaming in 2023 was to see more āno-token games,ā in which only NFTs, and not ERC-20s, were centrally employed. The ability to launch NFT-to-NFT pools with MagicSwap is certainly an interesting step in that direction, I think. As the Treasure team noted in their latest announcement:
āFor example, a game can allow players to swap various resources but not convert into USD. The game could still include a degree of financialization if players can craft ways to upgrade their character or produce rare items. These rare items could be sold peer-to-peer on the Trove marketplace, thereby introducing friction to the collectible trading experience but not to trivial items like a cheap in-game resource.ā
What to watch š
With MagicSwap v2 on the way and Treasureās ecosystem continuing to rise, here are three things to watch in this area over the next few months:
1ā£ļø Treasureās $MAGIC ā $MAGIC is the governance and fee token of Treasure and MagicSwap, and itās also currently one of the most-traded tokens on Arbitrum, so keep an eye on it this year as a sort of proxy for the early Arbitrum gaming sector!
2ā£ļø The 1st MagicSwap game experiments ā NFT-to-NFT pools and the other customization options MagicSwap will pave the way to more sophisticated and skill-based web3 game economies and hence richer gameplay, so track the projects that break ground here early!
3ā£ļø Which chains? ā Treasure has said it plans to deploy MagicSwap to Arbitrum One and Arbitrum Nova first with other chain deployments to follow; Iād be interested to see this infra on Ethereum too, for instance, so watch where MagicSwap launches going forward because it can be useful anywhere NFTs are traded!
Action steps
Follow Treasure for MagicSwap updates: track The Compass newsletter by Treasure to learn when exactly the new NFT AMM drops šŖ
Check out my previous write-up if you missed it: Minting on Manifold 101 š
Author Bio
William M. Peaster is a professional writer and creator of Metaversalāa Bankless newsletter focused on the emergence of NFTs in the cryptoeconomy. Heās also recently been contributing content to Bankless, JPG, and beyond!
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