Table of Contents

What is Enjin?

Enjin is a cryptocurrency used to purchase virtual goods like swords and shields on gaming platforms. 

Enjin coin was developed by the Enjin network. Enjin network was launched in 2009 as a gamer forum with support for chat, e-commerce digital marketplace.

Gaming NFT

NFT stands for non-fungible token. Fungible is a legal term – we say two things are fungible when they can be interchanged eg two 10 dollar bill can be interchanged, both carry the same value and a particular note does not have anything special about it.

Nonfungible means that the two things are not the same – I cannot change my dog with yours because each pet is unique and the owner has an attachment towards their particular dog.

In the gaming context, non-fungibility can mean that my weapon is unique ie different from others because it may be better, I may have customized it, it may be a rare weapon, or it may have a history.

So the next question that comes to mind is how the value of gaming NFT can be calculated?

The value of gaming NFT is determined by:

  • Rarity: Is the stuff rare to find in the game or is it common.
  • Framing: How does the stuff look
  • Origin: Is it a limited edition, was it used by a world-renowned player to win a league
  • Usefulness: Can the boss in the level only be beaten by using this 

ERC 1155

Enjin was developed by Enjin network in 2018 when there were limited options for developing smart contracts. One of the best options at that time was Etherium, even the gas fees were bearable at that time.

At that time there were:

  • ERC 20 tokens: which were all fungible like Eth
  • ERC 721 tokens: each of which was unique like a painting

But the stuff in games can be fungible like gold coins or nonfungible like a particular sword. Hence a need was felt to develop a new standard.

Enjin network developed a new standard for gaming NFTs: ERC 1155 which gave developers the freedom to mint gaming NFTs and also had other features like reduced gas fees etc.

What problems does it solve ?

Enjin token opens up a whole new economic world for game developers:

  • Developers can fund their projects by selling NFTs of games that have not even been released – like a founder edition sword. Or the developers can code the NFTs in such a way that they get a share whenever NFT is traded giving them an evergreen passive source of income. 
  • Enjin marketplace can be a common trusted platform where players can easily search and buy particular stuff for the game they are interested in.
  • Once a player is done playing a game he can get rewarded by selling all the goods that he had collected by playing the games for countless hours.
  • A sword that a person collects in one game can be used in another game. You can read about the Enjin multiverse here.
  • True ownership: The NFT exists on the blockchain and the player has complete ownership over the NFT which can not be taken away.
  • Enjin platform will provide a common place for gamers to see, organize and show off all their NFTs of different games in a single place.
  • Players can also rent out their NFTs and earn passive income if they do not want to sell the NFT.

How does it work ?

The life cycle of the enjin coin can be summarised as under:

  • Acquisition: Developers buy enjin tokens from the marketplace
  • Minting: Developers design NFTs like swords, shields, etc for the game they are developing. The process of making an NFT is called minting and costs enjin tokens
  • Gaming: Once the game is released players play the game and collect NFTs during the gameplay
  • Trading: Once an NFT has been acquired by the player, he has the option to continue using it in the game, store it or sell it on the enjin marketplace
  • Melting: It is expected that the NFT will have much more value than the enjin that was used to make the NFT. But still in the worst-case scenario if a player holding NFT does not want to sell the NFT in an open market place he can always melt the NFT to get the initial enjin token back

White paper

Enjin white paper was published on 26 Sep 2017. You can read the white paper here.

Working Demo

Enjin is a fully functional project some of the games using Enjin are:

You can see more games that are using enjin here.

Most of the games that are using enjin are quite basic that’s actually a good thing because Enjin has got a working product and the full potential of token has still not been realized 

Founders & Team

You can check out the founders here and the team here.

Most of the leadership consists of original founders, however they have been hiring after they launched enjin token.

Their CTO is awesome and has a ton of youtube interviews that you can check out here.

Community

You can checkout the popularity and follow enjin on various platforms here:

Level of decentralization

Presently enjin company is responsible for maintaining and upgrading the protocol. There is no decentralization and the company can be a single point of failure in terms of government regulation, making changes to protocol like increasing the token max supply, etc.

The company has plans to make the token decentralized, however the presently the network remains centralized.

Governance model

Because enjin protocol is not decentralized. The company makes all the changes that they want. There is no scope of voting like other DAOs. The company is not bound to keep its word. That is why it becomes even more important to learn more about their leadership thought process.

Competitors

I could not find many competitors who are going head-on with enjin token. Some tokens that come close are:

However, none of the competitors have made as much progress. Enjin also has an advantage over the others of having an existing gaming community and experience in being in the industry since 2009.

Future plans

  • See the timeline given by the enjin team here.

Some of the major plans are:

Efinity

Enjin has decided to migrate from Etherium to Polkadot. The para chain they are deploying will be custom-built for NFTs. This will overcome the problems of gas fees and scaling issues with Etherium.

The company will also launch a new token: Efinity Token(EFI). Efinity token will have a total supply of 2 billion and will be used to pay for transaction fees, staking reward for running node, and vote in governance events.

You can read more about Efinity here.

You can read the Efinity whitepaper here.

How much money do they have for future development ?

Although Enjin is a private company so does not need to show their balance sheet, income, and cash flow statement to the public but still, we can make an educated guess:

Although they cannot raise more money by distributing more tokens as the token was designed to have a fixed supply. 

The money raised should be sufficient for the next few years. It will be interesting to see what monetization strategy they use afterward.

Tailwinds

  • Community: Enjin already has a community of gamers that has been growing steadily since 2009
  • Experience: The founders and team have been in the gaming business since 2009
  • Good API: They have integrations with the most famous game engines like Unity and  Gadot ready
  • The gaming industry is set to boom over the coming years. Quality of games is only going to improve using VR etc The games will become more accessible on as mobiles become more powerfull and cloud gaming gets main stream.

Challenges

As of now, the enjin community seems to be stuck on etherium paying high gas fees and having limited transaction throughput.

The current model is inefficient and nonscalable – no games will accept to pay the gas fee just for collecting a gold coin in a game

Enjin is working on overcoming the problem by switching to Polkadot. It will be interesting to see how the future unfolds on Polkadot ecosystem and tokenomics interplay of Enjin token and Efinity

Risks

Enjin is a centralized protocol being maintained by a single private company. There is no guarantee that the company will not face difficulties like government regulations, lawsuits – for selling unregistered securities, internal disputes, etc.

Secondly, I also want to point out that I do not agree that most analysts agree that Enjin will give true ownership of assets to the player. The developer of the game can always change the code of the game to make any NFT unusable. It is possible but this takes a lot of effort and hurts the reputation.

Also, it will be interesting to see how the Enjin token evolves once Efinity tokens are released.

Tokenomics

Uses of token

  • Used for minting gaming NFTs
  • Used for nominating Efinity collators who will process the network transactions. Nominators will have to stake their Enjin token for nominating the collaborator.

Initial distribution

The initial distribution was done as under:

Demand

  • Developers will have to get Enjin for making NFTs for their games which will result in reduced circulating supply of Enjin tokens.
  • More and more Enjin tokens getting locked in gaming NFTs also means that the ecosystem is growing hence more gamers will get involved resulting in a positive feedback loop.
  • Once the Efinity network is launched on Polkadot Enjin token will be used for staking hence reducing the supply of Enjin even further.
  • Successful games will have to buy even more Enjin as more and more players start playing their games

Max supply & circulating supply

Max supply of Enjin token is capped at 1 billion out of which 90% is in circulation hence there is not much risk of whale dumping

Indicators to watch out for

Google trends result for block chain games:

Traffic to Enjin website also seems to be growing over past 6 months:

Enjin Twitter follower growth is as follows:

Enjin Instagram follower growth is as follows:

Enjin youtube subscribers are growing consistently:

Total Enjin addresses seem to be growing:

Whale ownership of Enjin is as under:

Growth of long term holders is as under:

Other indications to look out for:

  • More game engines integrations
  • More games and projects coming out using Enjin especially large popular games
  • Improvement of developer documentation and learning resources
  • Increase in number of Enjin holders
  • Staking once Efinity is launched
  • More NFTs being listed in Enjin marketplace

The natural progression of things will be as follows: 

  • Enjin team will develop Enjin
  • Developers will use Enjin to make games
  • Gamers will play the game resulting in the growth of Enjin economy ie token price.

Future possibilities

  • Imagine buying a NFT from NGO that gives a additional health to the character in the game.
  • Games can come up with geotagged NFT games like Pokemon go where people travel to to a special place to get the NFT.
  • A blockchain based ad service where advertisers buy a NFT which give them permission to place ad at a particular place.
  • Websites other than games can also use Enjin eg Wikipedia giving NFTs to authors.

Final remarks

It is a normal human tendency to collect stuff and show off. Gaming NFTs can take this activity to next level making collecting stuff even more cooler and showing off easier.

Developers can design the NFT to show its complete history of kills and owners etc to make it even more attractive. Some thing like Ronaldo’s shoe that he wore in the championship selling for millions.

Once the Digital NFT marketplace matures it will be very efficient as buyers will find it easy to filter the stuff they want and seller able to sell their NFT in a global market place as a result price discovery will take place much more quickly and there will be no scope of being cheated.

Finally, I believe that gaming NFTs are at least a better option than jpeg selling for 67 million dollars. By seeing at the the games running on Enjin it seems that they have a working product and we are at an early stage of Enjin development.

Do further research

You can continue your research on Enjin coin by following the following links: