Enjin (ENJ) | Coin Review |
Enjin Coin is a cryptocurrency for virtual goods created by Enjin. Enjin is the largest online gaming community platform with over 250,000 gaming communities over 18 million registered users. Since 2009 Enjin has enabled gamers to create websites for clans and guilds, forums, wikis, chat groups, and much more. Enjin Coin itself was developed to support the companies vision of putting gaming on the blockchain. The goal of the Enjin team is to make the Enjin Coin the most usable and therefore most widely adopted cryptocurrency for gaming and gamers. Besides the coin itself, Enjin has also created dozens of software development kits (SDKs) that will help developers, game publishers, and communities to integrate new, blockchain based features to manage virtual goods and in-game items across multiple platforms.
What problem does Enjin solve?
One of the major issues that Enjin aims to address and resolve with its platform is the lack of true ownership and genuine transparency that is missing in today’s gaming industry. The largest value Enjin Coin brings to the gaming community is in its creation and management of virtual goods. Developers on each platform can easily create a currency unique to their community and gaming experience. These currencies will be backed by Enjin Coin as the parent currency. This allows the coins to leverage the benefits of blockchain, such as speed, cost, and security, while still staying customized to their respective platforms. Another significant benefit being promoted by Enjin is that by bringing gaming onto the blockchain, they will be able to help gamers avoid the extremely high levels of fraud happening in the transfer of virtual goods, giving power back to gamers and creative developers, as they have stated in their “Manifesto”:
“To enrich gamers’ experiences, protect them from malicious players, and enable them to truly own their items and characters. To help game developers utilize ethical monetization models that do not prey upon human psychology, but are powered by intrinsic value. To aid them in their quest to discover, explore and create new genres of games that have art at their very core.”
Because each asset is recorded on a single registry smart contract, all Enjin Smart Wallets (more details below), recognize them. This means that users can exchange virtual goods for Enjin Coins at any time and therefore create an interconnected ecosystem of games and communities in which gamers can even transfer assets and currencies across platforms and games.
Product and Vision
As mentioned before, the most significant value Enjin is hoping to bring to the gaming community with its token is in the growing market of virtual goods, and interoperability between platforms. However, there are additional features the team has been working on. In this report, we will focus on the two of them, the Payment Gateway, and the Smart Wallet.
The ENji Software Development Kits also includes a decentralized payment gateway. This gateway allows communities, developers and publishers, to create customized online shop functionality such as carts, invoices, refunds, etc., on top of their websites. It also provides a widget to accept Enjin Coin and/or customized coins as a means of payment. This feature will not only benefit gamers, as they can now choose their preferred currency as a payment method across multiple platforms but will also cut down on expensive and time-consuming platform development for game publishers, thus allowing for a faster and more streamlined monetization of their work. Another exciting aspect for both sides of the transaction is payment fraud prevention through a secured network. Merchants also stand to receive 5–10% higher revenue from lower transaction cost.
One slightly overlooked but very useful feature of this application is that payment gateways built on Enjin can pay multiple people in one transaction. Funds are divided up to the relevant users based on the smart contract agreement already in place. A great use of this would be for profit sharing from pools where tokens are distributed automatically to multiple parties based on an agreed distribution.
Enjin has spent a lot of effort building a secure, multicoin, also ERC-721 and ERC-1155, native mobile wallets for Android and iOS devices, which in my opinion looks and feels fantastic. Security features include the Enjin Secure Keyboard, a keyboard that is natively built into the app and prevents any snooping software capture your passwords. The hardware level includes Advanced Encryption Standard (AES), and the software uses custom software encryption to encrypt any data processed by the wallet.
You could view the Enjin Smart Wallet as the component that connects everything within the network. The wallet supports virtual goods and unique currencies from every trusted platform and is synced to the users Ethereum address. It enables users to trade coins and virtual game items with any other Smart Wallet user, through transaction requests, these requests are sent out to other users and then will be either approve or denied.
Enjin Coin features also include e-commerce virtual goods stores, a global marketplace, subscription services, trading escrows, and “top lists” for items, servers, teams, and games.
Enjin Coin has a strong technical and commercial team with a successful track record of customer focus in the gaming industry. Enjin, the company behind Enjin Coin, is the largest online gaming community creation platform. The company started in 2019 and even before the creation of Enjin Coin, they had over 60 million monthly page views, 18 million registered users, and 250,000 gaming websites. That will fuel the adoption of the Enjin Coin, since the team will be rolling it out across the entire ecosystem. This is a substantial competitive advantage, as there are several gaming-related projects, such as WAX and GameCredits, but none of them has such a significant user base right from the beginning. According to Enjin CMO Elija Rolovic, Enjin Coin is the “Ethereum of Gaming” while the competitors are just simply “tokenizing their centralized games/marketplaces.”
Enjin has a strong team, the resources, and experience to back up their ambitious roadmap and plans. I didn’t focus on individual team members in this report, because I think, that a company which has delivered valuable services to a large user base over a long period, should be evaluated as a whole, but two things stand out to me, The Enjin CTO, Witek Radomski, is recognized as having introduced the premier digital collectible token standard ERC-1155 and one of the Advisors to the project is Anthony Diiorio (Ethereum co-founder). Furthermore, Enjin has formed partnerships with Unity, PC Gamer, and NRG eSports.
Tokenomics: What is the ENJ Token?
The Enjin Coin is an ERC-20 token built on the Ethereum network. That means that the project not only brings the benefit of the blockchain to gaming, but also the benefits of smart contracts. The team has published a detailed Howey Test which categorized its token as “unlikely” to be security. Besides, Enjin has developed Efinity, Efinity will add a sidechain to the Enjin blockchain that will act similarly to the Lightning Network for Bitcoin.
There’s a total supply of 1 billion Enjin Coins (ENJ) with just over 762 million currently in circulation. The team distributed 80 percent of ENJ to crowdsale participants and split the remaining tokens between themselves, advisors, and incentive programs. When users create custom assets, the corresponding value in ENJ is removed from the ecosystem decreasing the circulating supply. This, in turn, should increase the value of individual ENJ tokens. According to their website, there are currently just over 7 million ENJ locked up in items.
Growth potential and Roadmap
The Enjin team hasn’t published a 2019 roadmap yet but delivered on their 2018 goals.
The Enjin Coin is looking to provide a benefit to the $17 billion virtual goods market, which is not only a fast-growing industry but first movers such as GameCredits and MobileGo also showed that virtual currency focused on gaming industry is a viable concept. We have also seen a successful example of virtual currency on Minecraft, Minecraft is the largest gaming community on Enjin. Enjin already has a vast user base, creating websites and communities around games that are extremely popular with today’s gaming culture or rather younger demographics as a whole. The team understands the problems and needs of gamers and game developers alike and will build upcoming products and services based on this knowledge. Both factors represent a solid basis for further adoption of ENJ.
By placing game assets on the blockchain, the Enjin team hopes to prevent fraud in the industry, which some measures have suggested affect roughly 80% of all transactions. That would be a significant improvement for the gaming industry and gamers. With the huge customer base that Enjin already has, the coin should be able to reach large scale adoption fairly quickly. However, let’s take a look at some downsides and risks involved in a potential investment in ENJ:
One key factor for Enjin Coins success will be partnerships. Enjin needs developers to integrate ENJ into their in-app purchases or incentive systems. Their partnership with Unity is a big first step considering the size of the platform, but they will need to build out their network further if they want to succeed.
Not highly concerning but still important to mention is the priority of the team. Team members also have roles in existing Enjin business. This doesn’t necessarily mean higher development times but could lead to conflicts in the future.
Competition is not sleeping and the gaming industry, especially when it comes to interoperability of items and currencies, could see a winner takes it all scenario. As you can see, this is the only consistent concern I see in regards to adoption from developers. It’s something investors need to keep an eye on as competitors attempt to enter the same space.
Nothing is proven yet, but overall, the project does look to have a bright future. I think the project has good potential for both, in the short term, as well as in the long term because it brings interesting differentiating features, has a more than capable team and a big community to build on.
Enjin scored 54 out of 76 Points in our evaluation program.