GameStop (GME) announced that it would form a partnership with the crypto exchange platform FTX. The company declared it on September 8, 2022, which means GME will be tradable in the FTX app. According to MarketWatch research, GameStop shares spiked to 11.06% at the $26.48 zone. It could continue to spike for the next several days until the trend following the announcement is over.
GameStop and FTX have never commented about the partnership as of press time. However, on its official website, GameStop will provide FTX gift cards in select stores. The gaming retailer released a digital wallet in early 2022, which enables users to access a gamer-exclusive marketplace where members can sell, trade, and display non-fungible tokens.
What This Could Mean for GameFi
Gaming finance has not had a good reputation with the large gaming demographic primarily for the consecutive announcements and releases of play-to-earn (P2E) games that are either uninteresting or too tedious to play.
The GameStop announcement may bring new opportunities for metaverse game developers to collaborate with the gaming retailer, although GME is a stock, not crypto. FTX focuses on cryptocurrencies, but it also includes stocks for users to buy and sell.
Contrarily, 2021 sparked the most successful year for P2E gaming, especially with Axie Infinity gaining massive popularity in third-world countries like Vietnam and the Philippines. The game provided a new lucrative source of income for players, allowing some to buy houses for their families and pay off their debts. However, as Axie Infinity turned mainstream, its cryptocurrencies, AXS and SLP, plummeted beyond 100% of their all-time highs. AXS reached $166.09 in November 2021 and is currently revolving in the $13.8 area, while SLP peaked at $0.41 and crashed to a current $0.003. Many factors influenced the price fluctuation, including repetitive gameplay, developers not catering to players’ concerns, and minimal rewards.
This game was just one example. Other metaverse game-focused tokens, including Enjin Coin (ENJ), My Neighbor Alice (ALICE), The Sandbox (SAND), and Decentraland (MANA), peaked in October and November 2021 after Mark Zuckerberg announced that Facebook’s official company name would turn into Meta.
However, attempts by gaming industry giants such as Ubisoft and Square Enix to include NFTs in existing traditional games were met with extreme negative feedback from the gaming community. To many, gaming is not about profits but rather an escape from reality and an immersive experience filled with story and gameplay.
As for feedback, gamers are unhappy with how current NFT games treat players like slaves that grind the games daily to keep the economies running. The value of NFTs has also decreased since the crypto winter of 2022 and the consecutive hacking incidents throughout the year.
GameStop is not a gaming company per se but rather a supplier and trader of physical and digital video game products.
The GameStop Short Squeeze of 2021
January 2021 marked one of the biggest upsets in stock history as a short squeeze of GME happened, causing massive losses for short sellers and hedge funds. Around 140% of the public float was sold but was quickly bought to cover the positions and rise significantly.
The people behind the short squeeze were members of the r/wallstreetbets, a community from Reddit, a social news forum. The price went to the moon, starting from $17.25 to a pre-market value of $500 per share. This caused a panic among brokerages, especially with Robinhood, which halted the purchase of GME, claiming it did it to make up for the company’s “inability to post sufficient collateral at clearing houses to execute their clients’ orders.”