The rise of GameFi
Now GameFi has become an independent sector in the crypto market, and they tend to go out of their market without changing with the mainstream market. If we observe, the market trend of each game is also different. This is often related to the economic model constructed by GameFi and Token Economics. At the same time, the independent trend also means that GameFi has achieved success in a certain sense.
It is difficult for us to perfectly restore the reasons behind the success of a thing, but some key factors can be found in the end. These factors will help us to see and understand the pace of development of GameFi more clearly, and will not miss the opportunities in the future encryption industry and the GameFi track.
In the past ten years, the new crown epidemic has become the largest black swan event in the global market. Its impact is far-reaching and has changed the life and destiny of every resident in the world.
The most intuitive impact of the new crown epidemic is to “maintain social distancing.” People’s “long at home” has spawned the rapid expansion of industries such as encryption, games, and live broadcasting. Especially in the context of the new crown epidemic that has not yet been resolved, people’s desire for real experience is gradually reduced, and the demand and imagination for the virtual world are gradually increasing, and the virtual world can also bring more novel experiences to ordinary people.
Therefore, the narrative structure developed by the combination of games and encryption arouses people’s thinking about the future world. The narrative logic of the game industry lies in “entertainment” and “social”, while the narrative logic of the encryption industry lies in “Web3.0” and “decentralization” and “assets are under self-control.”
The resulting GameFi narrative logic lies in two points:
First, the old age chain game owners promoted “players’ ownership of in-game assets”.
The “definition” of game assets by major manufacturers such as Tencent is also strengthening players’ desire to own “game assets.” The previous account deletion incident of Tencent game “Tianya Mingyuedao” is proof. A certain player account of “End of the World and Moon Knife” appeared in the next version of the props. After the event was fermented, many players who spent a lot of money in the game deleted their accounts in protest. The backhand of “End of the World and Moon Knife” will be deleted and the account will be returned and responded that: What the player has is the “right to use” of the game account, not the “ownership”.
The chain game hopes to solve this problem, and the GameFi protocol that emerged later also implements this point.
The second is “Play2Earn”.
Due to the impact of the epidemic, the number of jobs in various countries has fallen to a large extent. The increase in unemployment has further contributed to the development of the game industry, and the “Play2Earn” model initiated by Axie Infinity is undoubtedly a revolutionary innovation.
The background of the new crown epidemic and Play2Earn complemented each other to promote the rise of GameFi. This is also the reason behind the explosion of GameFi protocols such as Axie Infinity.
A documentary called “Play-to-Earn” on Youtube showed us how Axie Infinity has changed people’s lives and became the support of ordinary people in the Philippines. These ordinary people include single mothers, college graduates who cannot find a job, and elderly couples who run small convenience stores.
The rise of goldsmithing studios
In addition to the GameFi agreement mentioned above, the rise of the gold studio has maintained the momentum and popularity of GameFi’s rise.
According to the September report issued by Yield Guild Games, the most famous GameFi goldsmithing union, as of the end of September, YGG had 62,545 community members on Discord, an increase of 16.4% from August 2021. Since its launch at the end of July, 14,161 members of the YGG community have officially become members of the guild by casting their YGG guild badge.
While the community members are growing rapidly, Yield Guild Games is also participating in the investment of some potential game NFT assets and other NFT assets through increasing financial strength and influence, and at the same time utilizes the profitability of these assets to achieve the growth of the number of community members And the spread of community culture.
In addition to Yield Guild Games, some influential gold studios include Merit Circle, MetaGame Guild, GuildFi, and so on. They all provide early help to community members, including providing game NFT assets and game teaching, etc., to retain community users, to achieve community development. As the community develops, the GameFi market also develops.
At the same time, the ability of gold studios and communities to make money in the virtual world has driven the Fomo mood of many groups, and many people outside the blockchain industry have also begun to learn encryption knowledge and participate in it. This is also one of the reasons why GameFi can achieve an independent market. Participants outside the circle only participate in “Play2Earn” GameFi products, and hope to achieve sustained revenue, and have little interest in another cryptocurrency.
Sustainability of the game economy system
While praising “Play2Earn”, we also need to think about some of the problems with “Play2Earn”.
The essence of GameFi’s gold draw is to add liquidity to the second pool. The rapid development of liquidity will bring rich returns to participants. However, the withdrawal of liquidity and the fall of Token Price can easily cause a stampede and trigger a series of links reaction.
This type of incident has occurred once in the GameFi protocol Crypto miners.
Relying on the market’s optimism and Fomo sentiment, the price of $ETERNAL (Cryptomines Token) has risen, and at once rose to 800 US dollars. But just a few days ago, the panic selling in the market caused $ETERNAL to quickly fall from its highest point to its lowest point of $47.
Although, Cryptomines has done enough work on the sustainability of the economic system. In addition to providing Stake $ETERNAL channels, market transactions charging a 15% fee, and returning the prize pool, Cryptomines also increased the withdrawal fee-players need to pay a 30% fee when withdrawing game revenue if the player wants To fully obtain their benefits, they need to wait for 15 days-this reduces the selling pressure of $ETERNAL to a certain extent. But they still cannot stop the current decline of $ETERNAL.
This is related to the unsustainability of “Play2Earn”. The investment institution IOSG Ventures pointed out in the research report:
“P2E is a great marketing tool, but it is not the core driving force for the rapid development of chain games. Gameplay is incompatible with P2E to a certain extent, and P2E will greatly reduce the marginal effect of gameplay. Therefore, those projects that excessively fantasize about gameplay and play and earn money are likely to face the dilemma that the transaction volume can’t exceed the mining game, and the user volume can’t compare with the traditional game. At the same time, from an economic point of view, P2E is unsustainable.”
The lack of gameplay is also a problem that cannot be circumvented by the GameFi protocol. In the case of Cryptomines, the game itself is not entertaining. In addition to the early-stage formation of spaceships and workers in Cryptomines, there are only two operations in the game process: “Select Fleet” and “Select Planet”. After the operation is over, you can get the reward of the game token if you win, and you can only get a part of the experience if you fail. Once a day.
The gameplay of RadioCaca’s Metamon Island, endorsed by the richest man Musk’s mother, is also a problem-the game content is just a few simple mouse clicks and Metamon upgrades. Not to mention traditional games, the gameplay of these games can’t even compare to mobile games.
This confirms to a certain extent the lack of high-quality games and the lack of high-quality game talents in the market.
If GameFi wants to develop in the long term, rich gameplay is essential. If it only relies on the “Fomo emotion” brought about by concepts such as “Play2Earn” and Metaverse, GameFi will not be able to achieve longer-term development. How to achieve a sustainable economic system is currently unknown.
However, we can also imagine what GameFi will look like in the future:
High playability, driving player behavior with gameplay;
Players are highly sticky, and players are willing to spend time playing games;
With paying players, players are willing to pay for some content in the game, such as accessories and skins;
There is room for profit;
Different types of players have different choices of game routes, game players can enjoy the game content, and goldsmiths can make money by moving bricks;
Pacific is a decentralized NFT marketplace and an integrated platform for metaverse/GameFi assets. The project has received endorsement from some of the most eminent institutions and investors, including the Web3.0 Foundation, NGC, Gate.io, Krypital Group, PAKA, Candaq etc.