1. #DeFi、#NFT: Setting the Stage for GameFi Growth

DeFi and NFTs Build the Foundation for GameFi

Since the Ethereum mainnet launched on July 30, 2015, it has heralded the arrival of the Web3 era. Ethereum’s smart contract functionality enabled the design and operation of DApps (decentralized applications). This foundation gave rise to a host of popular DeFi (decentralized finance) projects, such as Uniswap, which implemented decentralized exchanges (DEX) through automated market makers, and MakerDAO, which enabled contract-based lending. These DeFi platforms attracted substantial capital with their high investment returns, transparency, strong privacy features, and open accessibility. The total market capitalization of DeFi has surged from $50 million in 2015 to $100 billion in 2023.

DeFi Market Capitalization Growth Trend

As DeFi flourished, capital began to explore synergies between decentralized finance and other fields. During this period, the NFT market exploded. In 2017, CryptoKitties—a blockchain-based NFT project on Ethereum—allowed players to buy, breed, and trade digital cats, gaining widespread attention and marking the onset of the NFT boom. The total market capitalization of NFTs rose from a few million dollars in 2018 to $8 billion in 2023.

NFT Market Capitalization Growth Trend

While DeFi brought a continuous influx of capital to the crypto market, NFTs shifted the blockchain focus towards entertainment and gaming. Together, these factors created a fertile ground for blockchain gaming, leading to the emergence of GameFi, which integrates DeFi with blockchain gaming concepts.

The Genesis of GameFi

In the latter half of 2019, Mary Ma, Chief Strategy Officer of MixMarvel, introduced the concept of GameFi—“gamified finance” and “new gamified business.” This concept merges gaming and finance, aiming to introduce new business models and economic systems to the gaming industry through blockchain technology. According to Mary Ma, future games will not only serve as entertainment tools but also as financial instruments. Virtual items within games can become valuable digital assets, which players can acquire, trade, and appreciate. In this model, game companies and players can participate in economic activities within a decentralized environment, achieving mutual benefits.

However, at that time, blockchain technology and its application paradigms were not yet mature, so the concept of GameFi did not immediately gain widespread attention and adoption.

The Onset of the GameFi Boom

In September 2020, Andre Cronje, founder of Yearn.finance, elaborated on his understanding and vision of GameFi in a speech and public statement. With Andre Cronje’s authority in the DeFi industry, the concept of GameFi began to enter the public consciousness. Cronje’s insights also clarified the future direction of GameFi.

According to Cronje, the DeFi industry was in the “TradeFi” (traditional finance) stage, where user funds were mainly used for trading, staking, and lending, lacking the distinguishing features of cryptocurrencies compared to traditional finance. GameFi, as the future direction of DeFi, would offer more than financial transactions. User funds could have real-world value within virtual game worlds, providing substantial token rewards through in-game activities, similar to earning wages in the real world.

Thus, the GameFi sector began to experience its first wave of growth!

GameFi Promotional Image

2. GameFi Reshapes the Gaming Sector

GameFi combines DeFi, NFTs, and blockchain technology to integrate game assets and some game mechanics into blockchain-based smart contracts. Managed by #DAOs (Decentralized Autonomous Organizations), GameFi ensures user ownership of in-game assets and governance over the game ecosystem. It emphasizes building a comprehensive financial system, supporting transactions of in-game items using native tokens, and allowing users to earn token rewards from gameplay, sharing in the benefits of the game’s development.

Addressing Traditional Gaming Issues

In traditional gaming, items such as skins and props hold significant value, which has long been acknowledged. For example, CSGO’s annual prop sales from 2018 to 2023 averaged over $420 million, with a consistent increase each year. Similarly, League of Legends saw its skin sales grow from $1.4 billion in 2018 to $2.5 billion in 2023. Honor of Kings’ skin sales even reached an impressive $2.74 billion in 2023. This indicates a substantial market for in-game items both domestically and internationally.

However, the trading of these items often harms game publishers’ profits and, due to their financial nature, may conflict with legal regulations in some regions. Consequently, game publishers adopt two main strategies: either monopolizing the item trading market with high transaction fees, as seen with CSGO and Steam, or enforcing unlimited supply with uniform purchase channels and strict prohibitions on account trading, as seen with League of Legends and Honor of Kings.

Due to these restrictions and regulatory challenges, the black market for in-game items has become a highly profitable business. As game publishers and local regulations increase their crackdown on black market transactions, the supply line for these items has shifted, increasing selling profits.

GameFi, built on blockchain technology, inherently possesses DeFi characteristics, which can effectively address the issues of publisher monopolies and black market activities. GameFi functions as both a game and a market, with game skins and items existing as NFTs, and all transactions adhering to market principles and striving for transparency.

Additionally, DAO governance of game development is a notable feature of GameFi. This model allows players to share in the governance power of the game, addressing issues such as manipulative practices by game publishers who may alter lottery probabilities or reduce the prices of previously expensive items, potentially harming existing players. DAO governance can counteract the absolute authority of game publishers, allowing users to enjoy the overall economic benefits of game development without constant concerns about detrimental changes.

Aligning with the Evolution of Gaming

The history of gaming is marked by advancements in computer technology, hardware upgrades, and innovative game concepts.

• Early Computer Games (1970s-1980s): The early stages of video game development, primarily in laboratory and university environments, saw games like “Spacewar!” and “Pong,” with “Pong” marking the start of commercial video games.
• Home Consoles Era (1980s-1990s): Nintendo’s release of the NES brought classic games such as “Super Mario Bros.”
• 16-Bit Console Era (1990s): Sony’s PlayStation introduced the CD-ROM era, with “Final Fantasy VII” sparking a gaming craze.
• 3D Gaming Era (Late 1990s-early 2000s): Valve’s release of “Half-Life,” praised for its deep storyline and immersive experience, earned widespread acclaim.
• Online Games and MMORPGs Era (2000s): Blizzard Entertainment’s “World of Warcraft” became one of the most successful MMORPGs, driving the development of online multiplayer games.
• Mobile and Social Games Era (2010-present): Supercell’s “Clash of Clans” became a leading mobile strategy game, and Niantic’s “Pokémon GO” combined augmented reality (AR) with mobile gaming, creating a global sensation.

Historically, gaming has evolved through advances in computer technology, hardware upgrades, and innovative game concepts. Today, GameFi represents a powerful combination of DeFi and NFTs, making it one of the most exciting and cutting-edge blockchain technologies. It also exemplifies the intersection of computer science and finance, featuring a novel “play-to-earn” model and offering a new example for financial market research. GameFi aligns with two of the three key elements in gaming’s evolution and follows the historical trajectory of game development.

In recent years, GameFi has rapidly developed, introducing innovative concepts and top projects:

• Early Exploration (2018): Decentraland launched as one of the early GameFi projects, allowing players to buy, develop, and trade virtual land, achieving true ownership through blockchain technology. Gods Unchained introduced a blockchain-based trading card game, showcasing the potential of NFTs in gaming.
• Concept Introduction (2019): Mary Ma introduced the concepts of “gamified finance” and “new gamified business,” marking the birth of the GameFi idea. The same year, Sky Mavis launched Axie Infinity, gaining public attention.
• Initial Surge (2020): In September 2020, Yearn.finance founder Andre Cronje elaborated on GameFi, predicting its future development and integration with DeFi, where user funds would be used as in-game equipment. This period also saw DeFi and NFT markets enter a golden age, setting the stage for GameFi’s explosive growth.
• Explosive Growth (2021): Axie Infinity achieved massive success, attracting millions of players and reaching a daily trading volume of $1 million in August. Its “play-to-earn” model became a primary income source for hundreds of thousands in Southeast Asia during the COVID-19 pandemic. The Sandbox also gained popularity, allowing users to create, own, and trade virtual assets and land, drawing significant venture capital interest.
• Sharp Decline (2022-present): Affected by the overall downturn in the crypto market, GameFi’s popularity has declined sharply. Axie Infinity’s daily active users plummeted from 740,000 in August 2021 to 35,000 in August 2022. Additionally, many GameFi projects faced severe inflation issues, with DeFi Kingdoms’ token supply increasing from 60 million at the start of 2022 to 100 million by mid-year.

The rise of GameFi has also fueled the concept of the Metaverse, which aims to create a virtual shared space through AR and VR technologies, combined with decentralized technologies like blockchain. GameFi’s open ecosystem often represents the Metaverse in various contexts. In 2021 and 2022, many traditional tech companies began to invest in GameFi and Metaverse concepts:

• Facebook rebranded as Meta to reflect its long-term vision for the Metaverse.
• Tencent established TiMi Studios, focusing on developing Metaverse-related games and investing in The Sandbox and Decentraland.
• Microsoft acquired Blizzard for $68.7 billion, planning to merge traditional popular games with blockchain technology to create a new generation of GameFi.
• Goldman Sachs and SoftBank increased investments in GameFi, supporting well-known projects like Axie Infinity and The Sandbox.

The overall market capitalization of GameFi has grown from $200 million in 2018 to $24.52 billion in 2023, with a growth rate of 733.3% from 2020 to 2021.

Despite current challenges, the substantial involvement of traditional tech companies and the gradual maturation of technology present endless possibilities for the future of GameFi.

3. The Narrative of Consolidated Excellence

GameFi itself is a fusion of DeFi, NFT, and Blockchain Games, transforming the traditionally dull DeFi landscape into something vibrant, offering practical applications for NFT technology, and providing a chance to implement DAO governance models. Coupled with the burgeoning concepts of the Metaverse, AR (Augmented Reality) and VR (Virtual Reality) are expected to become integral parts of future GameFi AAA titles. Thus, GameFi represents a significant application area where blockchain technology is deeply integrated with virtual technologies.

DeFi + NFT Token Economy: Building a Standalone Financial Ecosystem

The primary distinction between GameFi and Blockchain Games lies in their financial attributes. While Blockchain Games generally focus on leveraging blockchain technology to enhance transparency, fairness, and asset ownership within games, GameFi integrates a complete financial system into the game, creating Blockchain Games with inherent financial characteristics. Therefore, while a Blockchain Game might be a simple blockchain-based application, GameFi inevitably encompasses financial functions and economic systems.

• From a Technical Perspective: The uniqueness and indivisibility of NFTs grant each in-game item unique value. By limiting the issuance of NFT items, scarcity can be created, adding value to these items.
• From a Rights Perspective: In GameFi, the project team functions primarily as game developers, bug fixers, and decision-makers. At the game’s inception, they sell Tokens and NFT items to players, while transferring substantial governance power to ordinary players. Decisions regarding game updates, development, and profit distribution are made by a DAO organization composed of both players and project developers.
• From a Mechanistic Perspective: The “play-to-earn” model in GameFi allows players to earn NFT items or tokens through time investment and initial financial input, which can be exchanged with real-world currencies, generating economic benefits.

Integrating a financial system into games is not a novel concept exclusive to GameFi. Traditional games have long featured complex financial systems, demonstrating the feasibility of such measures. For example:

• MMORPG (Massively Multiplayer Online Role-Playing Game) “EVE Online”: Known for its complex financial system, the game simulates real-world markets with elements like production, trade, and resource management. It features over 40,000 items, allowing players to mine, manufacture, establish companies, and even manipulate markets. CCP Games, the developer of “EVE Online,” employs economist Eyjólfur Guðmundsson to study and manage the in-game economy to prevent market collapse.

Although GameFi’s financial system is not yet as intricate as those in “EVE Online,” “World of Warcraft,” or “Second Life,” its decentralized nature ensures players’ ownership of assets without the need to trust game developers.

Cross-Chain Asset Interoperability + Multi-Platform Operation: Creating a Larger Financial Ecosystem

Single GameFi projects might face issues such as low user numbers, low engagement, and unstable funding. Cross-chain asset interoperability and multi-platform operation could address these challenges. Each GameFi operates as an economic entity, and when interconnected, they can form a large economic market. This requires the integration of cross-chain, cross-platform compatibility, data synchronization, and decentralized account management technologies.

• Cross-Chain Technology: Utilizing cross-chain bridges or interoperability protocols allows users to trade and communicate across different blockchains directly.
• Cross-Platform Compatibility: During GameFi development, it is crucial to ensure compatibility across various hardware and software environments. Utilizing high-compatible game engines like Unity and Unreal Engine, along with standardized APIs, is essential for achieving cross-platform compatibility.
• Data Synchronization and Consistency: Technologies like State Channels allow users to conduct transactions off-chain and only submit final states to the blockchain for information synchronization, reducing data transfer pressure.
• Decentralized Account Management: In supporting cross-chain and multi-platform operations for GameFi, technologies like DID (Decentralized Identity), SSO (Single Sign-On), and distributed account storage are vital. These technologies alleviate user account management burdens and enhance security.

A unified and effective financial circulation can not only improve liquidity within the ecosystem but, as Andre Cronje hopes, may become the future direction of DeFi development. Moreover, GameFi’s financial circulation could model financial behaviors between countries and regions, providing examples for further economic research.

Integrating AR and VR Technologies: Turning “Ready Player One” into Reality

Benefiting from GameFi’s explosive growth in 2021, the Metaverse concept briefly dominated the A-share and U.S. stock markets. During this period, fraudulent schemes associated with the Metaverse emerged. In this context, GameFi is increasingly seen as a potential carrier of the Metaverse concept.

Simultaneously, AR and VR technologies associated with the Metaverse have been rapidly advancing. By 2023, the global AR and VR market size has exceeded $70 billion and is expected to surpass $400 billion by 2030.

AR and VR Market Estimates

Several projects are now focused on integrating blockchain with AR and VR technologies, making the vision of combining AR, VR, and GameFi a reality:

• Render Network: Provides distributed GPU rendering services supporting high-quality 3D rendering for AR and VR applications. Many applications, including Apple Vision Pro, already utilize this service.
• Ozone: Offers 3D applications and cloud computing services that support multi-chain and cross-chain compatibility.
• IOTX: Provides a secure, privacy-preserving, and scalable blockchain platform for connecting and managing IoT devices.

Given the future demand for virtual markets, combining AR and VR technologies with GameFi to create a new generation of AAA titles has become a growing consensus.

4. GameFi 1.0 Era: The Rapidly Evolving Ponzi Games

CryptoKitties: The Dawn of GameFi 1.0

On November 28, 2017, CryptoKitties made its debut on the Ethereum blockchain, becoming the first phenomenon-level DApp. Its arrival demonstrated to users that Ethereum was not just about token issuance but also hosted simple and engaging NFT games. CryptoKitties introduced a series of innovative gameplay features:

• Users could purchase their cat NFTs using ETH on the CryptoKitties marketplace.
• Each cat had a unique genetic code, allowing users to trace each cat’s parents, siblings, and past activities on the marketplace.
• Two cats could breed to produce a new generation of kittens. After breeding, cats entered a cooldown period, which lengthened with each subsequent breeding. The new kittens would inherit the cooldown time.
• Players could rent out their cats for breeding, gift them to others, or auction them on the marketplace.

The groundbreaking gameplay and high earning potential of CryptoKitties quickly attracted speculators. One cat named “Dragon” was sold for 600 ETH (about $170,000), setting a historic record. The CryptoKitties project also separated from its original developer, Axiom Zen, and received $12 million in investment from top venture capital firms a16z and USV.

As of 2024, CryptoKitties has conducted over 700,000 transactions, with a total trading volume of 67,818 ETH, equivalent to about $115 million. However, since mid-2018, the transaction volume of CryptoKitties has plummeted, and it has completely fallen out of market relevance.

Although the intention behind CryptoKitties was not to create a Ponzi scheme but to explore new avenues for Ethereum’s future development through NFT games, it did result in a significant economic bubble.

Fomo3D: A Pure Gambling Game

The popularity of CryptoKitties marked the early explosion of blockchain games, yet many of these early blockchain games lacked innovation. One of the most notable projects was Fomo3D. Fomo3D is a simple mechanism-based gambling game featuring four main types of gameplay. Its core mechanism involves a treasure hunt, combined with team dividend mechanisms, referral rewards, and a lucky candy mechanism to enhance profitability.

The treasure hunt mechanism targets gamblers. In Fomo3D, each game session includes a 24-hour countdown. During this countdown, players spend ETH to purchase tokens called “Keys.” Every time a player buys a “Key,” the countdown is extended by 90 seconds (if it exceeds 24 hours, it no longer increases). At the end of the 24-hour countdown, the player who bought a “Key” in the last minute (or whose purchase amount is greater than or equal to one “Key”) wins 48% of the prize pool. To ensure the game session concludes, Fomo3D continually adjusts the price of “Keys.” After each purchase, subsequent buyers must pay a higher price. Over time, as the cost for players increases, the countdown may end faster than the 90-second extension, leading to the game’s conclusion.

It is clear that Fomo3D is a classic example of a Ponzi game, where everyone hopes to be the last winner, but most end up losing their investments.

Games like Fomo3D, which are Ponzi schemes, were typical during the GameFi 1.0 era. These games often involved shifting funds from new users to reward old ones, creating a fragile balance prone to collapse due to factors such as native currency sell-offs, waning interest, and decreasing new user numbers. Furthermore, in terms of entertainment value, these blockchain games were completely inferior to traditional games. Therefore, in essence, these early blockchain games lacked a complete financial system and cannot be classified as true GameFi.

5. GameFi 2.0 Era: Inspired by “Play-to-Earn”

The GameFi 2.0 era represents a phase of robust development for the GameFi concept, evolving from “play-to-earn” to “x-to-earn,” gradually expanding the financial system of blockchain to include elements such as community, transactions, combat, and markets within GameFi.

Axie Infinity Sparks the “Play-to-Earn” Trend

Unlike previous blockchain games, Axie Infinity was the first to combine the “play-to-earn” concept with complex financial mechanisms, creating an engaging NFT-based world where players can collect, breed, battle, and trade creatures known as Axies.

• Early Stage (2018): Axie Infinity was launched by the Vietnamese startup Sky Mavis, inspired by Pokémon and CryptoKitties. The team aimed to create a player-governed world of creatures.
• Initial Development Phase (2019–2020): Axie Infinity officially launched on the Ethereum blockchain, allowing players to purchase Axies for breeding and selling in the marketplace. Subsequently, it introduced PVP and adventure modes, enhancing gameplay.
• Explosive Growth (2021): Due to its “play-to-earn” model, Axie Infinity attracted a large number of players. The game gained further visibility through a report titled “Play-to-Earn: The NFT Game Revolution in the Philippines,” showcasing its potential.
• Expansion Phase (2022–Present): Axie Infinity has continued to evolve and now includes several components: Axie Infinity Origins, Axie Infinity: Homeland, Axie Classic, Axie Infinity: Raylights, Defenders of Lunacian, and Project T prototype.

In the Axie Classic version, users start by purchasing three Axies to begin battling or breeding. Each Axie is unique and fully owned by the player. Axies are assigned randomly distributed attributes, such as health, skills, speed, and morale, and possess different species traits that provide various advantages in battles. There are many detailed game rules which are beyond the scope of this summary.

Axie Infinity employs a dual-token governance model, with AXS as the governance token and SLP as the in-game token.

AXS Functions:

• AXS holders have voting rights on the governance of the Axie Infinity ecosystem, including decisions on future game development and major decisions.
• Players can stake AXS tokens to earn rewards.
• A portion of AXS is required as a breeding fee for Axies.
• AXS also serves as a reward token in in-game events.

SLP Functions:

• SLP is primarily used for Axie breeding, with each breeding requiring a certain amount of SLP. The more breedings, the higher the SLP cost.
• Players can earn substantial SLP rewards by completing daily quests, participating in PVE (adventure mode), and PVP (arena mode).

Unique Scholarship Mechanism:

Axie Infinity features a unique scholarship mechanism where Axie holders can lend their Axies to scholars. Scholars use the Axies to battle and earn SLP, while the holders receive a share of the earnings. This mechanism allows diligent and knowledgeable players to enter the game with no initial investment, continuously earning AXS and SLP and expanding their Axie team. During the pandemic, many people in the Philippines used Axie Infinity to sustain their basic livelihoods, representing one of the few blockchain projects that has truly improved people’s lives.

Axie Infinity’s innovative achievements are reflected in its metrics, including monthly active users (MAU), transaction volume, and revenue. In August 2021, Axie Infinity’s total transaction volume surpassed $2 billion, with monthly revenue reaching $364 million, exceeding that of Honor of Kings for the first time. By the end of that year, monthly active users exceeded 2 million.

Although Axie Infinity has made groundbreaking contributions to GameFi, it has also been affected by economic bubbles and market downturns. Its active user base has decreased from a peak of 2.7 million in 2021 to 400,000 in 2023, with current monthly users around 100,000. Transaction volume has dropped from $4 billion in 2021 to $200 million in 2023.

Despite the significant economic bubble, Axie Infinity has withstood the turbulence and remains a leader in GameFi. In the past 30 days, Axie Infinity has recorded 387,232 transactions, with sales totaling 1,083.3 ETH, approximately $4 million, which is a remarkable achievement for a game that has been around for six years.

Axie Infinity was the first to implement the “play-to-earn” model, successfully embodying the GameFi concept and attracting genuine fans through its PEP and PVP modes, making it a successful example in the GameFi space.

The Sandbox: Shaping the Virtual World

If Axie Infinity represents a casual offering in GameFi, then The Sandbox is undoubtedly its grand masterpiece. The Sandbox evolved from two popular sandbox games, Sandbox and Sandbox Evolution, which together have amassed over 40 million downloads on iOS and Android. In 2018, publisher Pixowl decided to transition this successful user-generated content game IP and its vast creator community from mobile devices to the blockchain ecosystem. By leveraging NFTs, The Sandbox aimed to provide real intellectual property rights to creators and reward their contributions to the community with tokens. Thus, The Sandbox was born.

From a Technical Perspective: The Sandbox inherited the UGC (user-generated content) model from previous sandbox games and offers a comprehensive design experience through three integrated tools: VoxEdit, Marketplace, and Game Maker. It also supports blockchain and smart contracts to ensure copyright protection for successful designs.

From a Token Model Perspective: The Sandbox features three types of tokens to sustain its in-game economic cycle: SAND, LAND, and ASSETS.

• SAND follows the ERC-20 standard and is used for acquiring assets, purchasing land, and publishing content within The Sandbox. SAND also has governance functions and allows staking to earn SAND rewards.
• LAND follows the ERC-721 standard and represents in-game land assets. Each LAND is 96x96 units in size. After purchasing LAND, players can add games and assets and set their own game rules. Multiple LANDs can be combined to form larger ESTATES, suitable for creating expansive, content-rich sandbox games.
• ASSETS follows the ERC-1155 standard and are tokens generated by creators to prove ownership. These can be sold on The Sandbox’s front-end website.

The Sandbox’s strong IP effect, innovative game concept, and open financial system have attracted significant attention from investors. In 2018, Animoca Brands acquired Pixowl and provided long-term support for The Sandbox’s development. In 2019, The Sandbox raised $2.5 million in seed funding led by Hashed. In 2020, during its Series A funding round, The Sandbox secured $3 million from True Global Ventures, Square Enix, and other institutions. In 2021, The Sandbox’s robust ecosystem, distinguishing it from inferior blockchain games, was recognized by SoftBank, leading to a Series B funding round where it raised $93 million led by SoftBank.

The Sandbox has lived up to investors’ expectations. Since the sale of LAND began, the average price has continuously risen, with current floor prices on the NFT marketplace OpenSea still reaching 0.12 ETH.

Moreover, many prime LANDs have been sold for exorbitant prices. In November 2021, virtual real estate investment firm Republic Realm purchased a plot of virtual land in The Sandbox for $4.3 million. The following month, a LAND adjacent to Snoop Dogg’s was sold for approximately $450,000.

Since its ICO, The Sandbox’s market value has experienced significant fluctuations, peaking at $6.8 billion and currently standing at around $700 million. The returns for venture capital firms investing in The Sandbox are substantial and difficult to quantify.

Overall, The Sandbox has set an example for the integration of traditional IP and blockchain technology and demonstrated the powerful wealth aggregation effect of high-quality GameFi projects.

6. GameFi 3.0 Era: Uncovering the Future of the GameFi Market

Mini Games Are Not GameFi

Recently, mini-games like Not and Hamster on Telegram have become immensely popular. With simple interactions on the screen, players can earn tokens. This simplicity has led to viral community growth, reaching millions of users in a short period. Since its launch in January 2024, Not has attracted over 30 million participants, with daily active users reaching 5 million. Following this, Notcoin successfully conducted an ICO on multiple exchanges, including Binance, with a price increase of over 400% within a week.

However, these games are built on Telegram and can only be classified as mini-games. They lack a comprehensive financial system and fall short in terms of IP effect and playability. Their popularity is largely supported by the “fair launch” concept. Unlike similar WeChat mini-games, Telegram mini-games are not restricted by platform limitations, and their benefits can be seen as an extension from Web2 to Web3.

Reexamining GameFi

Diverse Game Forms but a Blue Ocean Market

The years 2023 and 2024 have seen rapid development in the GameFi sector, with game types now encompassing Farming/Mining Games, Card Games, Move-to-Earn Games, MMORPGs, Metaverse Games, and Auto Battles.

On DappRadar, the most popular GameFi game by UAW (active users) is Matr1x, an MMORPG. It has 1.92 million active users over the past 30 days, yet its circulating market value is only $49 million. Currently, the market focus is primarily on foundational areas like Layer1 and Layer2, while GameFi leans towards technological integration. With breakthroughs in foundational fields, there remains a chance for a secondary surge in GameFi.

Full-Chain Games

Full-chain games operate with all game logic, data, and assets running and stored on the blockchain. In the GameFi 1.0 and 2.0 eras, most games had only their assets or some logic on-chain. Full-chain games emphasize complete decentralization and transparency, effectively avoiding issues like game cheats. Autonomous Worlds can be seen as a major example of full-chain games, where the entire virtual world is built on blockchain technology, making rules and operations auditable. The future goal of GameFi is undoubtedly full-chain games.

GameFi+?

In the current market, standalone GameFi projects struggle to gain traction, and integration with AI, IoT, and other technologies may be a breakthrough. A series of GameFi+AI projects, such as Colony, Nimnetwork, Futureverse, Palio, and Ultiverse, are making significant strides. For instance, Palio has secured $15 million in investment from Binance Labs to develop and integrate AI technology, highlighting the strong interest and endorsement from major VCs in GameFi+AI projects. Additionally, combining GameFi with IoT, cloud computing, and other hot technologies represents another development path.

From a Technical, IP Effect, and Playability Perspective

Axie Infinity’s pet battle game, inspired by Pokémon, and The Sandbox’s blockchain migration from Sand and Sand Evolution showcase the immense development potential of traditional IPs on blockchain. Despite experiencing significant economic bubbles, Axie Infinity and The Sandbox still maintain market values of $800 million and $700 million, respectively, proving their ability to attract genuine users. Moreover, several game companies are planning to introduce blockchain technology into classic games:

• Atari is collaborating with The Sandbox to bring classic games like Centipede and Pong to the metaverse platform. Players can use SAND tokens in The Sandbox to participate in and create experiences based on these classic games.
• Square Enix has announced plans to integrate its renowned game IPs, Final Fantasy and Dragon Quest, into blockchain platforms.
• Capcom has revealed intentions to explore integrating its well-known games like Street Fighter and Resident Evil into the blockchain gaming space.

In traditional gaming, the emergence of MOBA games like League of Legends and Honor of Kings often signifies a peak in game development. In the GameFi sector, the current breakthrough method is to create a highly playable game with a complete financial system. The first to integrate outstanding game IPs will have the opportunity to gain a competitive edge.

Conclusion

GameFi is essentially a fusion of DeFi, NFTs, and blockchain gaming, marking a new era in the integrated application of blockchain technology within the gaming industry.

• GameFi has evolved from the 1.0 and 2.0 eras, transitioning from past Ponzi schemes to game ecosystems that attract real users.
• The blockchain industry’s focus is currently on foundational ecological construction, with GameFi still in the buildup phase.
• “Full-chain games” and “GameFi+?” are the development trends for GameFi 3.0.
• Investment in GameFi should consider its IP, playability, and technology aspects. Only GameFi projects that truly attract players have long-term development potential.

Disclaimer: The data in this article is sourced from various annual reports and research studies across different platforms, and the reference standards may differ.

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