A multi-criteria approach to rating Metaverse games

Year 2022, Volume: 2 Issue: 2, 42 - 55, 31.12.2022

Jalal Seifoddini

https://doi.org/10.57019/jmv.1053778

Cited By: 3

Abstract

Non-Fungible Tokens (NFTs) took the already profitable gaming industry to a whole new level. Before that, people would pay to buy games, and there were also some in-game purchases. But now every item in games is an NFT, and different NFTs have different prices. A lot of users consider NFT metaverse games an investment opportunity. Therefore, it is vital to evaluate these metaverse games and rate them to find the most attractive investment opportunities. In this paper, we develop a framework for rating NFT metaverse games by considering their various risks and potential upsides through the PROMETHEE II method. Specially, we design a flip ratio that can take into account both the opportunity to flip another cryptocurrency and the risk of being flipped by another cryptocurrency. Our new flip ratio could be a very useful measure of risk-opportunity analysis. We also analyze the crash risk of NFT game tokens' prices through a non-parametric value at risk analysis, which is compatible with the volatile nature of cryptocurrency prices.

Keywords

Non-Fungible Tokens, PROMETHEE II, Metaverse, Flip Ratio, Non-Parametric Value at Risk

References

• M. Intelligence, "GAMING MARKET - GROWTH, TRENDS, COVID-19 IMPACT, AND FORECASTS (2021 - 2026)," Mordor Intelligence, 2020.
• R. Rachmadi, R. Chairullah, V. Levina, M. R. Pambudi, H. L. H. S. Warnars and T. Matsuo, "Online Game Marketplace for Online Game Virtual Item Transaction," in 8th International Congress on Advanced Applied Informatics (IIAI-AAI), 2019.
• E. Penttinen, M. Halme, P. Malo, T. Saarinen and V.-M. Vilén, "Playing for fun or for profit: how extrinsically-motivated and intrinsically-motivated players make the choice between competing dual-purposed gaming platforms," Electronic markets, vol. 29, no. 3, pp. 337-358, 2019.
• P. B. Lowry, J. Gaskin, N. Twyman, B. Hammer and T. Roberts, "Taking ‘fun and games’ seriously: Proposing the hedonic-motivation system adoption model (HMSAM)," Journal of the association for information systems, vol. 14, no. 11, pp. 617-671, 2012.
• F. Valeonti, A. Bikakis, M. Terras, C. Speed, A. Hudson-Smith and K. Chalkias, "Crypto Collectibles, Museum Funding and OpenGLAM: Challenges, Opportunities and the Potential of Non-Fungible Tokens (NFTs)," Applied Sciences, vol. 11, no. 21, p. 5, 2021.
• Q. Terry and M. Fortnow, The NFT Handbook: How to Create, Sell and Buy Non-fungible Tokens, Wiley, 2021, pp. 39-41.
• M. Nadini, L. Alessandretti, F. Di Giacinto, M. Martino, L. M. Aiello and A. Baronchelli, "Mapping the NFT revolution: market trends, trade networks and visual features," arXiv preprint arXiv:2106.00647, 1 June 2021.
• C. Staff, "What Is a Crypto Metaverse?," Cryptopedia, 2021.
• W. J. Davis, Metaverse Explained for Beginners: A Complete Guide to Investing in Cryptocurrency, NFT, Blockchain, Digital Assets, Web 3 & Future Technologies, 2021.
• C. Staff, "Gaming and Non-Fungible Tokens," Cryptopedia, 2021.
• D. Boreiko and G. Vidusso, "New blockchain intermediaries: do ICO rating websites do their job well?," The Journal of Alternative Investments, vol. 21, no. 4, pp. 67-79, 2019.
• F. Regner, N. Urbach and A. Schweizer, "NFTs in practice–non-fungible tokens as core component of a blockchain-based event ticketing application," in Fortieth International Conference on Information Systems, 2019.
• S. Nanayakkara, S. Perera, S. Senaratne, G. T. Weerasuriya and H. M. N. D. Bandara, "Blockchain and Smart Contracts: A Solution for Payment Issues in Construction Supply Chains," Informatics, vol. 8, no. 2, 2021.
• ethereum.org, "Ethereum use cases: Non-fungible tokens (NFT)," 21 5 2022. [Online]. Available: https://ethereum.org/en/nft/#:~:text=NFTs%20are%20minted%20through%20smart,the%20NFT%20is%20being%20managed..
• M. Mukhopadhyay and K. Ghosh, "Market Microstructure of Non Fungible Tokens," arXiv preprint arXiv:2112.03172, 2021.
• P. Kireyev, "NFT Marketplace Design and Market Intelligence," INSEAD Working Paper No. 2022/03/MKT, 2022.
• D. W. Arner, J. N. Barberis and R. P. Buckley, “The Evolution of Fintech: A New Post-Crisis Paradigm?,” University of Hong Kong Faculty of Law Research Paper No. 2015/047, 2015.
• J. Ehrentraud, D. G. Ocampo, L. Garzoni and M. Piccolo, "Policy responses to fintech: a cross-country overview," FSI Insights on policy implementation, no. 23, 2020.
• W. Lu, "Blockchain Technology and Its Applications in FinTech," in International Conference on Intelligent, Secure, and Dependable Systems in Distributed and Cloud Environments, 2018.
• O. Ali, M. Ally and Y. Dwivedi, "The state of play of blockchain technology in the financial services sector: A systematic literature review," International Journal of Information Management, vol. 54, p. 102199, 2020.
• M. M. Queiroz and S. F. Wamba, "Blockchain adoption challenges in supply chain: An empirical investigation of the main drivers in India and the USA," nternational Journal of Information Management, pp. 70-82, 2019.
• F. Panisi, "Blockchain and'Smart Contracts': FinTech Innovations to Reduce the Costs of Trust," Available at SSRN 3066543, p. https://dx.doi.org/10.2139/ssrn.3066543, 2017.
• D.-R. Kong and T.-C. Lin, "Alternative investments in the Fintech era: The risk and return of Non-Fungible Token (NFT)," Available at SSRN 3914085, 2021.
• E.-T. Cheah and J. Fry, "Speculative bubbles in Bitcoin markets? An empirical investigation into the fundamental value of Bitcoin," Economics letters, vol. 130, pp. 32-36, 2015.
• A. Urquhart, "The inefficiency of Bitcoin," Economics Letters, vol. 148, pp. 80-82, 2016.
• M. Franceschet, "HITS hits art," arXiv:1907.07758v5, 2021.
• M. Dowling, "Fertile LAND: Pricing non-fungible tokens," Finance Research Letters, vol. 44, p. 102096, 2021a.
• L. Ante, "Non-fungible Token (NFT) Markets on the Ethereum Blockchain: Temporal Development, Cointegration and Interrelations," Available at SSRN 3904683, 2021a.
• L. Ante, "The non-fungible token (NFT) market and its relationship with Bitcoin and Ethereum," Available at SSRN 3861106, 2021b.
• M. Dowling, "Is non-fungible token pricing driven by cryptocurrencies?," Finance Research Letters, vol. 44, p. 102097, 2021b.
• M. Dash, "A Model for Bank Performance Measurement Integrating Multivariate Factor Structure with Multi-Criteria PROMETHEE Methodology," Asian Journal of Finance & Accounting, vol. 9, no. 1, pp. 310-332, 2017.
• A. Vlachvei, O. Notta, K. Karantininis and N. Tsounis, Eds., Factors Affecting Firm Competitiveness and Performance in the Modern Business World, IGI Global, 2016, p. 133.
• K. Kądziołka, "The Promethee II Method in Multi-Criteria Evaluation of Cryptocurrency Exchanges," Economic and Regional Studies/Studia Ekonomiczne i Regionalne, vol. 14, no. 2, pp. 131-145, 2021.
• Z. Aljinović, B. Marasović and T. Šestanović, "Cryptocurrency Portfolio Selection—A Multicriteria Approach," Mathematics, vol. 9, no. 14, p. 1677, 2021.
• F. Ülengin, Y. I. Topcu and Ş. Ö. Şahin, "An integrated decision aid system for Bosphorus water-crossing problem," European Journal of Operational Research, vol. 134, no. 1, pp. 179-192, 2001.
• J. Papathanasiou and N. Ploskas, Multiple Criteria Decision Aid: Methods, Examples and Python Implementations, Springer Cham, 2018.
• G. M. Protonotarios, Bitcoin & Ethereum Trader: Trading Bitcoin and Ethereum Based on Technical Analysis, Market Sentiment, and On-Chain Data, GEORGE M. PROTONOTARIOS, 2021, p. 100.
• J. Ma, "Flippening," 2022. [Online]. Available: https://academy.binance.com/en/glossary/flippening. [Accessed 2022].
• A. Furlan, "An analysis of arbitrage and cointegration based pairs trading in the cryptocurrency market," Luiss Guido Carli, 2019.
• Z. Pál, "Cryptocurrencies as payment alternatives," in Aspects of Financial Literacy, Sumy State University, 2021, p. 343.
• E. K. Clemons, D. C. Croson and B. W. Weber, "Market Dominance as a Precursor of a Firm’s Failure: Emerging Technologies and the Competitive Advantage of New Entrants," Journal of Management Information Systems, vol. 13, no. 2, pp. 59-75, 1996.
• S. Athey and A. Schmutzler, "Investment and Market Dominance," The RAND Journal of Economics, vol. 32, no. 1, pp. 1-26, 2001.
• X.-Z. He, P. Hamill and Y. Li, "Can Trend Followers Survive in the Long-Run% Insights from Agent-Based Modeling," in Natural computing in computational finance, Springer, Berlin, Heidelberg, 2008, p. 253–269.
• K. Gkillas and P. Katsiampa, "An application of extreme value theory to cryptocurrencies," Economics Letters, vol. 164, pp. 109-111, 2018.
• J. Seifoddini, "Evaluating The Top-30 Cryptocurrencies Based On Their Non-Parametric Value At Risk," 2021. [Online]. Available: https://www.publish0x.com/jalal-seifoddini/evaluating-the-top-30-cryptocurrencies-based-on-their-non-pa-xknwnmz.
• P. Artzner, F. Delbaen, . J. Eber and D. Heath, "Coherent measures of risk," Mathematical finance, vol. 9, no. 3, pp. 203-228, 1999.
• M. E. Falagas, E. I. Pitsouni, G. A. Malietzis and G. Pappas, "Comparison of PubMed, Scopus, web of science, and Google scholar: strengths and weaknesses," The FASEB journal, vol. 22, no. 2, pp. 338-342, 2008.
• A. Kati, J. Kinnunen, E. Koskinen and J. Paavilainen, "Free-to-Play Games: Paying Players' Perspective," in In Proceedings of the 22nd International Academic Mindtrek Conference, 2018.
• A. Seidl, J. P. Caulkins, R. F. Hartl and P. M. Kort, "Serious strategy for the makers of fun: Analyzing the option to switch from pay-to-play to free-to-play in a two-stage optimal control model with quadratic costs," European Journal of Operational Research, vol. 267, no. 2, pp. 700-715, 2018.
• F. García-Monleón, I. Danvila-del-Valle and F. . J. Lara, “Intrinsic value in crypto currencies,” Technological Forecasting and Social Change, vol. 162, p. 120393, 2021.
• S. T. Howell, M. Niessner and D. Yermack, "Initial coin offerings: Financing growth with cryptocurrency token sales," The Review of Financial Studies, vol. 33, no. 9, pp. 3925-3974, 2020.
• H. W. Park and Y. Lee, "How Are Twitter Activities Related to Top Cryptocurrencies' Performance? Evidence from Social Media Network and Sentiment Analysis," Društvena istraživanja: časopis za opća društvena pitanja, vol. 28, no. 3, pp. 435-460, 2019.
• Z. Li, Q. Lu, S. Chen, Y. Liu and X. Xu, "A landscape of cryptocurrencies," in 2019 IEEE International Conference on Blockchain and Cryptocurrency (ICBC), 2019.
• B. Ong, T. M. Lee, G. Li and D. L. K. Chuen, "Evaluating the potential of alternative cryptocurrencies," in Handbook of digital currency, Academic Press, 2015, pp. 81-135.
• R. Harris, "NFT game Alien Worlds records almost 760K users," App Developer Magazine, no. December, 2021.
• F. Shahzad, G. Xiu, J. Wang and M. Shahbaz, "An empirical investigation on the adoption of cryptocurrencies among the people of mainland China," Technology in Society, vol. 55, pp. 33-40, 2018.
• Y. Guan and N. Han, "Towards Verifying Ethereum Smart Contracts at Intermediate Language Level," in Formal Methods and Software Engineering: 21st International Conference on Formal Engineering Methods, Shenzhen, 2019.
• J. J. Yan and H. Choi, "Security issues in online games," The Electronic Library, vol. 20, no. 2, pp. 125-133, 2002.
• T. Min and W. Cai, "A security case study for blockchain games," in 2019 IEEE Games, Entertainment, Media Conference (GEM), 2019.
• M. Doumpos and C. Zopounidis, "A multicriteria decision support system for bank rating," Decision Support Systems, vol. 50, no. 1, pp. 50-63, 2010.
• J.-P. Brans and P. Vincke, "A Preference Ranking Organisation Method: (The PROMETHEE Method for Multiple Criteria Decision-Making)," Management science, vol. 31, no. 6, pp. 647-656, 1985.
• R. Binnekamp, Preference-based Design in Architecture, Delft University Press, 2010.
• F. Gökalp, "Comparing the Financial Performance of Banks in Turkey By Using Promethee Method," Ege Stratejik Araştırmalar Dergisi, vol. 6, no. 1, pp. 63-82, 2015.
• S. Paksoy and M. F. Traş, "Investigating Banks' performance For Turkey: An Application of PROMETHEE Method," Cumhuriyet Üniversitesi İktisadi ve İdari Bilimler Dergisi, vol. 18, no. 1, pp. 143-159, 2017.
• B. Mareschal, "Preference functions and thresholds," 2018. [Online]. Available: http://www.promethee-gaia.net/FR/assets/preffunctions.pdf. [Accessed 2022].
• U. B. Sapate, Econometric Analysis of Weak Form of Market Efficiency, eBooks2go Incorporated, 2017.