Recently, many bloggers on Twitter have been discussing the topic of the rise of Gamefi. I would like to share my personal opinion. The article is quite long, so you can like it before reading it. If you have any ideas, you can also leave a message to discuss.
Will GameFi rise? The answer is yes, and it may be relatively close in time, but it still needs market verification. Why do I say that? Here is my logic.
GameFi originated in 2019, and the specific concept took shape in 2021. In 2021, GameFi became a comprehensive concept of Game+NFT+Defi, and then began to grow wildly by trial and error.
There are some well-known games such as Axie, SandBox, and STEPN, as well as game guilds such as YGG and PathDAO, which are based on games, and some game platforms.
Then it started to decline from the beginning of 2022, which is also the inevitable result of some unreasonable mechanisms of GameFi. There are several reasons
1. Play to Earn gives players too high expectations.
The blockchain game project owners like to give players a high return expectation, making it a driving force for playing games, and then set the entry threshold for the output in the game, which is usually NFT. The payback period for early players is very short, but as the output grows, the payback period for new players will become longer, and eventually it will become a Ponzi scheme, with old players and project owners making money and new players losing money. The original intention of playing blockchain games is to Play to Earn. The project owners want to make money, and the players want to make money. Who loses money? Of course, the new players.
2. Using Defi as the core of the game
Most of the GameFi we see now are still Defi disguised as games, and the basic process is roughly the same.
1) Purchase the project’s NFT
2) Use in games (staking)
3) Game gold farming (liquidity mining)
The upgrade and split operations that may be extended later are all a kind of liquidity mining, the purpose is to consume tokens to obtain more tokens. When the final profit reaches a certain threshold, the game begins to go downhill because the game itself can no longer provide more profits. Of course, there are many project parties such as BNX that continue to make new games and repeat this process to maintain their vitality. However, this has deviated from the game itself and only allows the game-based Defi to survive.
3. Use NFT as the threshold for gaming
You may not feel anything about the game using NFT as a threshold, because traditional games also use point cards, special game tokens, and tickets as the threshold for a specific book. This is fine in traditional games, because everyone's purpose is not necessarily to make money, so there is no difference between entering the game early and entering the game late, and the game officials will conduct macro-control of the output in the game to ensure that specific props or the economy in the game do not collapse. But in web3, with NFT as the game threshold, everyone certainly hopes that it will maintain its value, but maintaining its value is not good for the project party. The project party hopes that more players will participate in the game, then NFT will become non-value-preserving. The players of the chain game are not just players who play games. I prefer to be miners. They will calculate the cost and output. If the investment cost payback period or output is relatively low, then they will leave the market, and the market will think that the game has reached its end. Of course, the departure of some people will cause the output to return to a certain level, which means that the number of players that this chain game can withstand is so many. If there are more, it will start to fall, which is unhealthy for the game and very deformed.
4. The economic model is flawed
Traditional games can macro-control the in-game economic model through game updates, such as Fantasy Westward Journey, DNF, QQ Three Kingdoms, etc. They can adjust the in-game token consumption or add new game content through an update to make the token props in the game basically stable in a certain range. Even if some whales try to manipulate the market, it will only affect the stability of the tokens, and will not affect the value of the key props themselves, which is anchored by the game itself. After the next update, merchants who hoard goods or use the same currency may lose all their money. This is a centralized approach.
However, in the pursuit of decentralized blockchain, doing so would not be so halal, and if the currency price collapses, no one will care whether your props are anchored to the game itself, and the game will still fall.
5. No new users
This is the most critical issue in my opinion. In the past, blockchain games were aimed at the existing users of web3 itself, and it was difficult to break through the circle. There are many influencing factors here. The first is the entry threshold of web3 itself, which cannot make web2 players enter without feeling. The second is the restrictions of other reasons such as the control of large players mentioned earlier, too high threshold, low game quality, etc. Without a large user base, it is very difficult to extend the life cycle, and then return to the previous cycle. Without new users, new demands are created to maintain the status quo.
The above are some of the reasons why blockchain games are declining, so why do I still think that blockchain games will rise?
The first is infrastructure construction. Since last year, we have seen a lot of blockchain game infrastructure being promoted, which can make it easier for web2 players to enter the blockchain games. For example, various low-gas L2 public chains, MPC wallets, login SDKs built into the game engine, etc. These are the basis for allowing more non-circle users to enter the market, although they are still being improved.
The second is traffic growth. Since last year, we have seen many games being listed on traditional gaming platforms such as Steam and Epic. In addition, TON is also promoting its own ecological development based on Telegram, which is also a very good traffic entrance. However, it still lacks a display and search portal. If it is improved, it can also gain users who use Telegram.
Finally, traditional game manufacturers are entering the market. Compared with some unknown blockchain game project parties, I am more optimistic about traditional game manufacturers. First of all, in terms of game quality, traditional game manufacturers are more likely to make games with high playability, solid content and higher quality. Secondly, traffic. Traditional game manufacturers have been deeply involved in web2 for many years, and their own brands have their own audiences. They don’t need to give players a high expected return to attract players to enter the market like most blockchain games. They only need to ensure the quality of their own games. Finally, there are various restrictions. In China, many game manufacturers suffer from the lack of version numbers. Even good games may not be available on the shelves, but it is still a blue ocean in web3. However, there are still some problems. Traditional game manufacturers still need to consider the problems of economic models because they need to adapt to the rules of web3.
To sum up, I am optimistic about whether blockchain games can have a large player base. As long as a game can accommodate enough players at the beginning, then the project party only needs to consider the game content and quality and do their own job well. Players who focus on gameplay are consumers, and players or studios who are purely for making money are producers. The project party only needs to control the intermediate links to regulate the output of the game and consume the game content to obtain revenue.
In addition, you can also learn from various open world and open game editors, add more content creators, and segment users.
I have seen some well-known companies enter the web3 layout. Can the traffic they bring break the curse of gamefi? I will wait and see. I also hope that 2024 will be a gamefi summer. As for whether gamefi summer is coming? I can only say that it is coming.
