The GameFi industry has evolved so far that they have moved from the earliest single, unsustainable to more complex play, with financial attributes always being one of the most important factors influencing their boom and bust.
The global base of 3 billion gamers has failed to flock to Web3, and the short lifespan of most GameFi projects. neither Axie Infinity (the first cryptocurrency game to become a household name through all the news coverage), nor STEPN (the first mobile money-making game) are currently in the top 3 by average active users. They’ve come and gone.
All practitioners and players are wondering how this industry can become more sustainable in the future.
The 2022 gamefi highlights the fundamental contradiction of combining two verticals. Gaming and Finance. Gamers play games to have fun, while people engage in financial incentives to make money. The direct manifestation of this is that projects built on hype and unsustainable models of making money from games have collapsed the most in this recession, and the mainstream hype during the bull market is no longer a good indicator of future success . Obviously the tokenomics of the game is an important factor (e.g., the number of coins in the game), but other factors, such as funding and game quality, are also critical.
DeFi Kingdoms and STEPN expanded to 2 chains each in March 2022 to gain users and diversify risk, but ran into problems involving tokenomics. stepN was initially launched on Solana. When it expanded to the BNB chain, the GST price gap on the BNB chain grew to 9x that of GST on Solana, largely due to the lack of cross-chain bridges and differing demand bias towards the BNB chain. While the price difference of GST on both chains decreased dramatically after the cryptocurrency shrinkage, the latest launch of GST on Ether once again shows the price difference, highlighting one of the challenges of creating a multi-chain ecosystem.
The 2022 gamefi highlights the fundamental contradiction of combining two verticals. Gaming and Finance. Gamers play games to have fun, while people engage in financial incentives to make money. The direct manifestation of this is that projects built on hype and unsustainable models of making money from games have collapsed the most in this recession, and the mainstream hype during the bull market is no longer a good indicator of future success . Obviously the tokenomics of the game is an important factor (e.g., the number of coins in the game), but other factors, such as funding and game quality, are also critical.
DeFi Kingdoms and STEPN expanded to 2 chains each in March 2022 to gain users and diversify risk, but ran into problems involving tokenomics. stepN was initially launched on Solana. When it expanded to the BNB chain, the GST price gap on the BNB chain grew to 9x that of GST on Solana, largely due to the lack of cross-chain bridges and differing demand bias towards the BNB chain. While the price difference of GST on both chains decreased dramatically after the cryptocurrency shrinkage, the latest launch of GST on Ether once again shows the price difference, highlighting one of the challenges of creating a multi-chain ecosystem.
Since the beginning of 2022, the entire market has been trending downward amid harsh macro conditions and rising inflation. The decline in the stock market, represented by the S&P 500, has taken BTC — which has now absorbed billions in institutional money — down with it. And in turn, BTC has taken the altcoin market down with it.
The bear market arrived in May, but sentiment in the GameFi market has been uncertain since December 2021. We interviewed hundreds of crypto users and found out something very interesting.
Users are already aware of how GameFi’s death spiral works, and most of them have already experienced a drop in token prices and player numbers.
When we mentioned some kind of interesting game as a title, the general response from users was: that’s too hard, that’s a waste of time.
Users have become accustomed to treating Gamefi as a lucrative labor. Under this premise, people want to put in as little time and effort as possible and get as much financial reward as possible. The irony is that fun and playability are inseparable from a certain level of difficulty and time investment in the game.
This is not entirely a bad thing, in a way, it forces developers to make choices. A game surviving in the moment means having to give up some of its users, especially teams that don’t have winner-take-all capabilities. This purge is one of the things that the bull market brings to the table.
Venture capital firms are starting to focus more on investments in the Web3 space, especially GameFi and Metaverse, which can be seen in the changes below as GameFi and Metaverse take a larger share of investments. Venture capital firms have increased their investments in these two categories from $874 million in 2021 to $2.4 billion in 2022. The market is still in the early stages of development and the future of Gamefi remains positive.
New Innovations
Several projects started to innovate the economic model, and despite the environment, there was an explosion of positive activity from February to March. StarSharks used its support from Binance in the early stages to keep its popularity high, and “Genesis Mystery Boxes” — a kind of in-game NFT — had a high price even before the game launched.
Unfortunately, the game’s launch coincided with GameFi’s winter. As a result, StarSharks had very few players in its early stages.
However, StarSharks’ support, economic model and quality of gameplay — as well as its active community — led to steady growth throughout the first quarter. After peaking in April, it began a gradual decline.
AAA Games
Recognized 3A games include BigTime, Illuvium, StarTerra, Sidus, Shrapnel, and Phantom Galaxies.These 3A games have obvious advantages, often gaining huge attention early in the project, but still have various problems criticized by players.
And the development process is too slow, the content and picture quality are only slightly better than Web3 and far from the level of traditional games. IDO and INO are not enough to give the game assets. The roadmap is ambiguous or not fully implemented.
X2E Games
StepN launched the “mobile revenue” trend. It also created the “X2E” subcategory, which includes a variety of activities that may be compensated through the game’s symbolic model. For example, from learning to earning, from sleeping to earning, from watching to earning, and from singing to earning.
While other models of X2E are still in the early concept stage, M2E’s StepN led the wave in May, and other imitators are emerging. However, X2E games such as StepN, SNKRZ, Melody, and FitR are more like Web3 products with profitable attributes.
More attention needs to be paid to the social attributes brought to users, and all such games are essentially more on the side of SocialFi, where users seek to enrich their daily lives and bring convenience and interactivity to various habits.
Most blockchain games still revolve around P2E, and the dual token model is the most stable and mature system available. As such, future GameFi models can still use this model, but we are stepping away from a model that relies on new players coming in to achieve game growth.
GameFi before went through a cycle that confirmed that Web2 and Web3 players still have very different attributes. Ponzi economics can attract traffic in the early stages of a project, but relying solely on an external cycle model doesn’t work, and it’s hard to escape the death spiral if the project can’t find its own internal cycle to absorb the previous bubble. If you’re interested in this, check out our last article, which details how we used advertising revenue to achieve a positive internal cycle.