New free GameFi model is 'high risk', says CZ

The blockchain game company in question raised over $200 million on Monday to continue its NFT operations.

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Changpeng "CZ" Zhao, CEO of Binance, on Tuesday criticized the creation of a new "free to access" business model in the GameFi space, writing:

"If everything is free in the world, why do we have to work so hard..."

The Binance CEO went on to explain that nothing is absolutely free, pointing out that the exchange can offer zero trading fees for Bitcoin (BTC) and Ether (ETH) pairs due to adequate revenue generated by others trading pairs. He added that new projects that allow players to sign up for free may pose a high risk to early adopters.

The company that CZ is criticizing is gaming startup Limit Break, which raised $200 million in venture capital on Aug. 29. The project gained popularity with the launch of a free NFT collection called DigiDaigaku.

Initially, the community can start for free, owning ownership of NFTs which, in turn, act as factories that generate new NFTs for gameplay and cosmetics. The idea is that since NFTs are given away for free, players don't have to recoup the cost of their investment as quickly as possible, and can therefore stick around and play the game much longer.

Ryan Foo, Game Economist at Delphi Digital, says Limit Break only charges 10% transaction fees on NFTs. In the weeks since the NFTs were released, approximately 3,900 ETH worth of collectibles were traded, which generated book revenue of over $600,000.

In recent months, blockchain games have come under heavy criticism from gaming industry veterans for their focus on “making money” rather than having fun. For example, Mojang Studios, creator of Minecraft, said it would ban NFT integrations, citing "speculative pricing" and "investment mentality" that hurt the gaming experience.