How long can the popularity of GameFi last?

GameFi has become the hottest topic in the blockchain industry. According to DappRadar, the number of active gaming-related wallets accounted for 55% of the blockchain industry in October, with more than 20 gaming projects receiving funding during the month.

According to Blockchaingamer, a blockchain gaming platform, as of November 10, investment in blockchain gaming reached $2.56 billion this year. With capital, GameFi is booming, and early adopters are making millions.

In fact, the concept of GameFi has existed in the blockchain industry since CryptoKitties in 2017.

After several years of development, GameFi began to emerge in 2020, and some high-quality projects have entered the project plan stage. Chain games based on ancient myths, comics, novels, aerial worlds and other backgrounds appeared in early 2021, and once caused a boom in the industry.

In July this year, the concept of GameFi was formed, and the fusion concept of DeFi+NFT+Game, coupled with the blockchain rights confirmation capability of NFT, endowed the value attribute of Game assets. Moreover, thanks to the P2E(Play-to-earn) mode, chain games led by Axie Infinity quickly became popular. Driven by Axie Infinity, more and more funds poured into GameFi track.

Axie Infinity's declining revenue makes it less attractive to gamers

However, according to a recent report from blockchain research firm Naavik, Axie Infinity's revenue is on the decline, with the daily income of its civilian players dropping below the Philippines' minimum wage. The analysis found that the decline in the price of output token SLP of Axie Infinity game and the increase in the number of players were the main factors leading to the overall decline in player income. According to Naavik researchers, Axie Infinity's user growth is slowing down and its lack of playability is starting to show up.

While Axie Infinity is still a popular game in GameFi's space, it also reflects that if the money making effect of the game begins to weaken, the attraction of the game to players will also decline. Despite Axie Infinity's success in blockchain applications, the game is still very shallow -- the gameplay is only about breeding and fighting. "Simple game mechanics lower the barriers to making money and sacrifice playability," said an industry insider.

The quality of the game determines the upper limit of GameFi's growth

Vincent, a senior researcher at OKEx Research Institute, pointed out that there is a bubble behind the crazy influx of capital. For example, some teams make shoddy products to gain money quickly in order to share the popularity, and some teams raise funds in the name of GameFi, which will eventually hinder the healthy development of GameFi. GameFi is still very young in terms of its business model, focusing on the user's assets in the game, but it is a big step forward from traditional games.

According to Nansen, a blockchain analytics platform, GameFi is currently limited by blockchain performance, and the quality of its games is uneven, with developers and players focusing more on asset value than gameplay. One of the inevitable downsides of this situation is that when the monetization effect of a game wears off, players will quickly drop out.

Nansen sees improving the quality of games as the next phase of GameFi's development. As players continue to join, the quality of the game will be more and more high requirements, the overall level of the chain is expected to continue to improve. Of course, mature game development technology is only one factor in the rise of GameFi, but also a high-performance GameFi carrier. The existing public chain as a gaming infrastructure is far from adequate to support MOBA competitive games and FPS first-person games. Therefore, GameFi will need more efficient blockchain solutions if it is to reach the same magnitude as traditional games.

In the future, with the development and maturity of Web3.0, how will GameFi innovate in business model and playability, attract more players from outside the circle, and eat into the traditional game market? These are all worthy of our attention.