According to Messari’s report, in 2023, approximately 3.4 billion gamers contributed $184 billion to the gaming industry. The industry is undergoing a paradigm shift once every decade, likening the growth of the GameFi sector to the spread of Free-to-Play.
Together with the developers of the post-apocalyptic game Undeads, we delve into the history of the GameFi segment, the state of the industry in 2024, and promising blockchain games.
Future and Past of GameFi
In 2017, Dapper Labs launched the game CryptoKitties on the Ethereum blockchain, which quickly gained popularity and caused network congestion within two months.
Following CryptoKitties, other notable GameFi projects emerged such as Decentraland, Gods Unchained, The Sandbox, Alien Worlds, the play-to-earn game Axie Infinity, and the metaverse-to-earn project STEPN.
By 2020, the segment saw active development, buoyed by the rise of NFTs and DeFi, reaching its peak in 2021 when GameFi tokens became leaders in market growth. Developers started deploying dapps on more efficient and cost-effective blockchains like Polygon and BNB Chain, while also creating networks specifically tailored for Web3 games.
However, by 2023, over 75% of GameFi projects failed due to simplistic gameplay and unbalanced tokenomics. According to CoinGecko, the number of active gamer addresses decreased by 58% compared to 2021.
The “crypto winter” catalyzed a qualitative transformation of the industry, with the segment’s market capitalization surpassing $31 billion in the first quarter of 2024. Surviving projects have served as prototypes for next-generation Web3 games characterized by sophisticated storytelling and engaging gameplay. Examples include Mines of Dalarnia, Pixels, Star Atlas, and Farmers World. Early-stage projects like Undeads, Illuvium, and Shrapnel are currently in testing phases.
Growth Troubles
Over the past few years, GameFi has experienced two major hacks. In March 2022, attackers stole $625 million from the Ronin sidechain used in Axie Infinity. Two years later, an unknown entity released and withdrew $210 million from the Gala Games platform.
These incidents prompted the establishment of unofficial security standards for Web3 projects. Game developers increasingly turn to companies like PeckShield, Trail of Bits, and OpenZeppelin to analyze transactional interactions and enhance security measures.
“Developers must engage audit firms. For instance, CertiK regularly audits Undeads’ smart contracts. Additionally, hiring cybersecurity experts and engaging white hat hackers to monitor abnormal loads and other hacking attempts in real-time is crucial,” explains Ash Hodges, Marketing Director at Undeads Games.
Hacks are not the only challenge in the segment. Often, GameFi projects are ill-prepared for surges in new players. In 2021, Gods Unchained users couldn’t receive rewards due to server connectivity issues.
To address scalability and network stability concerns in Web3 games, developers have turned to Layer 2 (L2) solutions. Axie Infinity developers were among the first to adopt these, migrating from Ethereum to the Ronin sidechain.
Projects increasingly launch dapps on more cost-effective and faster blockchains like WAX and Polygon. Illuvium utilizes zkEVM from Immutable, Shrapnel operates on Polygon and Avalanche, Undeads on BNB Chain, and Star Atlas on Solana.
Top Picks for Gaming in 2024
In 2024, according to CoinGecko’s report, the highest number of active addresses in 2023 were engaged in farming/mining, card games, and M2E (play-to-earn) games.
Strategy and shooter games ranked lower, likely due to early GameFi project developers not focusing enough on graphics, storyline, and optimization.
According to the Marketing Director of Undeads Games, the situation is rapidly changing:
“We are witnessing a pivotal moment in GameFi. Studios are creating a large number of AAA games on blockchain, developing game worlds and storylines, and investors are allocating significant funds to graphics.”
However, quality games are not solely defined by graphics alone, which is why projects like CryptoBlades and Alien Worlds are experiencing a downturn.
“An application must retain user attention through gameplay mechanics and storyline. Additionally, it’s crucial to maintain a balance between economy and gameplay to keep users engaged,” noted Hodges.
They highlighted five blockchain games with compelling gameplay.
- Defi Kingdoms
Defi Kingdoms is a role-playing game set in a medieval fantasy world, featuring DeFi mechanics and pixel art graphics.
Users enhance NFT characters, complete quests, and gather resources. They also earn JEWEL tokens by trading on the in-game marketplace and providing liquidity to The Gardens pools.
Launched in 2021 on the Harmony blockchain, the app later expanded to support Avalanche, Klaytn, and DFK Chain. The project received funding from Delphi Digital and Andreessen Horowitz.
https://www.coingecko.com/en/coins/defi-kingdoms
As of the publication date, JEWEL’s market capitalization stands at $13.2 million.
- Undeads
Undeads is a post-apocalyptic PvP and PvE shooter with a focus on resource gathering. Players engage in matches where top performers earn rewards in the game’s native currency.
Undeads Games has added the game to Steam and opened registration for beta testing.
“We’ve received support from Warner Brothers and ALT Animation. Undeads’ standout feature is its vast game world, pitting humans against zombies. The classic zombie apocalypse gameplay is enhanced with sound design by Wabi Sabi Sound and a wide selection of weapons, items, and loot boxes,” commented Hodges.
The company is led by former PayPal executive Leo Kan, with team members from WhimsyGames. The Undeads ecosystem also includes the racing shooter Undeads Rush and the Web3 game Viral.
https://www.coingecko.com/en/coins/undeads-games
As of the publication date, the market capitalization of Undeads Games token (UDS) is $24 million.
- King of Legends
King of Legends is a play-to-earn real-time strategy game with fantasy elements reminiscent of “Heroes of Might and Magic.” Players build kingdoms, gather resources, and battle opponents.
Players earn rewards in tokens King of Legends (KOL) and Land of Heroes (LOH), which can be staked.
The app was launched in 2022 on the BNB Chain network. The project’s team plans to migrate it to their own blockchain platform, Kingchain, in the future.
https://www.coingecko.com/en/coins/king-of-legends
As of the publication date, the market capitalization of KOL is $5.5 million.
- Kompete
Kompete is a multiplayer game powered by Unreal Engine 5, blending multiple genres including battle royale and kart racing.
Players can access the application via the Epic Games Store and Google Play. Top players earn rewards that can be sold on the Bazaar marketplace for KOMPETE tokens, launched on Ethereum and Base.
https://www.coingecko.com/en/coins/kompete
As of the time of writing, the market capitalization of KOMPETE is $12.1 million.
- Magic Craft
Magic Craft is a multiplayer Web3 game in the MOBA genre on the BNB Chain blockchain, launched in 2021.
Each match lasts five minutes: during this time, players must destroy enemies and complete objectives. The winner earns the MVP title and Magic Craft (MCRT) tokens. These tokens can be used for staking, purchasing characters, NFTs, and tournament tickets.
https://www.coingecko.com/en/coins/magiccraft
As of the time of writing, the market capitalization of MCRT is $5.4 million.
Advantages of Interacting GameFi Projects
Interaction among GameFi projects is crucial for their development and expansion. Here are several key advantages of such interaction:
- Increased User Activity: Integration between different projects allows users to transition between games using the same assets, stimulating activity and participation across various aspects of GameFi.
- Expanded Functionality: Collaboration between projects can broaden the functional capabilities of each. For instance, a resource-gathering game may offer its assets for use as currency or resources in another game.
- Enhanced Economy and Liquidity: Combining ecosystems increases liquidity of in-game assets and tokens, potentially reducing price volatility and stabilizing project economies.
- Joint Events and Competitions: Collaboration enables joint tournaments, events, and competitions, attracting more players and increasing overall interest in GameFi.
- Technological Exchange and Innovation: Development teams can share technologies and innovations, improving game quality, introducing new features, and enhancing overall competitiveness among projects.
Thus, interaction among GameFi projects not only fosters their growth and development but also creates a favorable environment for players and investors participating in this rapidly evolving field.
Conclusion
As GameFi continues to evolve in 2024, collaboration among projects emerges as a cornerstone for sustained growth and innovation. By integrating assets, enhancing functionality, and fostering a robust ecosystem, GameFi projects can collectively enrich user experiences, stabilize economies, and attract broader participation. This collaborative approach not only strengthens individual projects but also accelerates the maturation of the entire GameFi sector, promising a dynamic future where creativity and community thrive in equal measure.
FAQ
- What is GameFi? GameFi, short for Game Finance, refers to games that integrate decentralized finance (DeFi) mechanisms, allowing players to earn tokens or cryptocurrencies through gameplay, ownership of in-game assets (NFTs), and participation in decentralized ecosystems.
- How do GameFi projects benefit from collaboration? Collaboration among GameFi projects enhances user engagement by allowing seamless asset interoperability and shared functionalities. It also boosts liquidity, stabilizes economies, and fosters innovation through technological exchanges and joint initiatives.
- What are the risks associated with GameFi projects? GameFi projects face risks such as security vulnerabilities, market volatility of tokens, regulatory uncertainty, and scalability challenges. Investors and players should conduct thorough research and exercise caution before participating.
- How can players participate in GameFi projects? Players can participate by acquiring in-game assets (NFTs), earning tokens through gameplay, providing liquidity to decentralized platforms, and engaging in community-driven activities such as tournaments and events.
- What is the future outlook for GameFi? The future of GameFi looks promising with continued innovation in gameplay, enhanced security measures, broader adoption of blockchain technology, and increasing mainstream recognition. Continued collaboration and adaptation to user preferences are key factors driving its growth trajectory.
