GameFi is in a way a shining light, with new games and new concepts emerging from Axie to StepN. There is no denying that the last bull market saw a lot of great GameFi projects that created huge amounts of wealth.
Recaps on the highs of GameFi
Looking at the numbers, Huobi 2022 Crypto Industry Report revealed GameFi and metaverse dominated investments in 2022. For a second year in a row, GameFi and Metaverse collectively exceeded the number of investments compared with categories such as tooling, trading and lending. In these two categories, capital investment was raised from $874 million in 2021 to $2.4 billion in 2022. In the next six years, the GameFi industry alone is estimated to have a valuation of $2.8 billion.
GameFi is the intersection of gaming and finance in an environment driven by the use of blockchain, non-fungible tokens (NFTs) and smart contracts. GameFi runs on blockchain financial system in a more intuitive way through the combination of DeFi and NFT concepts and is presented as a game.
The reason that makes GameFi popular is that the NFT attribute makes all assets, props, and characters within the game unique and collectible, and combined with onchain attribute settings, it allows players to take full ownership of these assets in a decentralized game.
In a sense, GameFi breaks the convention that game assets only belong to the game development company and allows players to earn through gaming. In addition, compared to DeFi transactions, GameFi enhances the entertainment and interactivity of blockchain finance and NFT, allowing participants to profit from it through matchmaking, replicas and social gameplay.
Not all glory
Although Axie Inifinity and StepN brought GameFi to high peaks, resulting Play to Earn to a surge of enthusiasm for onchain games among users in Southeast Asia. In fact, there are currently just over 2,000 GameFi-related protocols deployed on the blockchain. As this market still lacks game development teams with proven experience, a large number of games lack quality with a short lifecycle. At present, most GameFi projects are only decentralized in terms of core assets (NFTs and game coins), and other data is still on chain using Web2 tools, resulting in a very low degree of decentralization. In the future, the degree of decentralization gaming will probably continue to increase, including game rules, game props and other data, and there may even be many fully onchain games, enhancing the playability of blockchain games and improving the sense of participation and experience of players.
“Play to Earn” is misleading the GameFi Industry
In a recent Twitter Space held by Game Space, Grant Zhang, CMO of Yeeha Games shared insights on the topic of User Engagement in the Bear Market. Grant noted one of the challenges of managing the community is user expectations. With the rise of Play to Earn, many new players join the community and expect to earn money through GameFi which is unsustainable for most projects. The Yeeha games member mentioned that Play to Earn derails developers from the core purpose of games, including gamefi, which is to provide fun experiences. The Yeeha Games team uses blockchain technology to allow gamers to better interact and trade assets, which does not replace but rather adds to the gaming experience. Although it can lead to potential profits, “Play-to Earn” is not a reasonable ultimate goal for quality Web3 gaming development.
Grant also noted that Yeeha Games’s community managers are often more in depth with conversations in their community. Based on the day-to-day interaction, Yeeha Games seeks improvements by creating products with the community rather than creating a game and forcing it upon the community. The ultimate goal is to improve and make experiences for the target users rather than forcing users into certain experiences.
Micheal Cameron, CEO of Game Space shared his opinion with the ever changing industry, GameFi projects also need to take action on consistent marketing appraoches to retain true gamers. There are many variables that can affect the GameFi industry, and often the game itself might not be the problem. In the current market, where there are undeniable mass Web3 gamers, creating relevant topics is important to keep gamers on top of their heads.
Cameron shared that Game Space will hold 2023’s first Web3 Gaming Tournament “Player One Tournament” in Febuary with industry’s leading Web3 Games, including Spinterlands, God’s Unchained by ImmutableX, Big Time, Superpower Squad to create topics and conversations again for Web3 gaming.
Why GameFi is still relevant? Stepping into GameFi 3.0
From “Play to Earn” to “X to Earn”, aka GameFi 2.0, games have extended the application of GameFi and provided more value to player’s experience. “X to Earn” type of project expands the scenario of GameFi to be more diversified, and may also combine different attributes such as social and lifestyle. At the same time, the design of token economics is in the process of being refined. However, it is important to note that in GameFi 2.0, despite the expansion of the application scenario, financial gain is still the main driver and sometimes still requires significant cost investment from new users. GameFi 3.0 projects should bear in mind to improve in the areas of playablility that creates more in-game value, providing more value to tokens for economic sustainability, lower barier of entry for user growth and balancing the gaming experience and financial gain to increase user loyalty.
In summary, GameFi has emerged as one of the industry’s most promising segments. Despite the bear market, the potential of GameFi has yet to explode in terms of the overall marketsize and its strengths in asset interaction. After all, it has only been a few years since the GameFi concept was introduced, and the future growth and prospects of GameFi, which is still at the beginning of the field, are certainly something to look forward to.
I’m a Crypto author and I take great interest in the Blockchain technology. I have been writing since 2014 on various aspects of the Bitcoin protocol and the Ethereum network. I’m also a regular contributor to Decrypt, where I cover news and offer analysis on the latest trends in the cryptocurrency industry.