In the last few days, those in the cryptosphere of Twitter may have noticed a new term (there’s one per week at this point,) “Free-to-Own”. So, what is it, who is using it, and why is it being criticized?
Limit Break, a Web3 gaming start-up aiming to build blockchain-based MMORPGs (expect a call from me!), has raised — and brace yourself, because these numbers are getting ridiculous — $200 million across two rounds led by Josh Buckley, Paradigm, and Standard Crypto. The company is in “stealth mode” at present, which means I can’t sniff out the volume of information I’d like, but it’s safe to say that whatever their pitch deck shows, it’s enticing.
However, Limit Break’s lack of public information is not what set crypto Twitter alight; it’s the Free-to-Own model they’re coining.
What Is Free-to-Own?
Free-to-Own is as it sounds insofar as it enables players to join the games and communities for free by receiving NFTs that are owned by said players. It does, however, get more complicated than that. I would recommend reading 0xRyze’s thread, but I will summarize the value below.
I will first preface by saying that my initial impression is that Free-to-Own aims to do what the Free-to-Play model did; at the time of Free-to-Play’s conception, many thought it was insanity, but it has proven to be one of the greatest gaming industry business innovations in history.
By NFTs being free from the get-go, there are benefits such as no frontloaded revenue (something I’ve grown to loathe in Web3), no whitelists that segregate communities, reduced risk of scams (at least short term, and scams are getting quicker in lifecycle), the NFTs have high utility (“factory NFTs” that produce other NFTs), and early adopters are still rewarded.
The value of the Free-to-Own model, as proposed, is tied up in the factory NFTs. Early adopters will create more NFTs than later adopters. However, it’s difficult to visualize this model in action. I do not feel I have enough information or a working example to analyze, so I can’t decide one way or the other as to its efficacy for a long-term Web3 game economy.
Others, however, have arrived at a conclusion much faster:
https://twitter.com/cz_binance/status/1564515115923382272
Nothing is absolutely free. Binance offer 0 fee #BTC and #ETH trading because our other pairs can support it.
You want to give people value they create, otherwise they won’t be there forever.
For new projects, you enjoy free by being the early adopter, high risk.
— CZ 🔶 Binance (@cz_binance) August 30, 2022
My initial reaction to Changpeng Zhao’s Tweets was that he’s likely right. But, the more I think about it, the more I draw parallels with the initial derision fired at the Free-to-Play business model. Something being free does not necessarily entail a lack of value, even in the warped world of crypto and NFTs. For instance, CryptoPunks were initially given to anyone with an Ethereum wallet, for free, and few collections are more valuable. Likewise, League of Legends is a free game, and yet it generates multiple billions of dollars in revenue every year.
The discussion, for me at least, comes back to the factory NFTs; the whole concept hinges on them. If the utility of these meta-NFTs is profound enough, then as there is with ordinary NFT collections, there will be a race for early adoption. Nevertheless, many of the benefits the Free-to-Own model brings also erode innate value found in scarcity, for instance.
I apologize to anyone who got this far and wanted me to do what we’ve all come to expect from opinion pieces: put a 1 or a 0 next to the concept. Sadly, we just don’t have enough information yet, but I will be closely following Limit Break and the Free-to-Own model from herein.
