Play-to-ear games enabled by blockchain technology have grown exponentially over the past few years.
Game players have got the opportunity to collect cryptocurrencies or nonfungible tokens (NFTs) that have been produced in blockchain-based games.
Through the advent of this new technology, players can generate income by selling in-game NFTs or earning cryptocurrency rewards, both of which can be exchanged for fiat cash.
Because of this, according to data from Absolute Reports, the value of the GameFi industry will grow to $2.8 billion by 2028, with a compound annual growth rate of 20.4% over the same period. But these predictions may be unfounded.
Given the exponential growth rate in recent years, one might think that there is no reason to believe that the trend will not continue until 2023 and beyond. correct? incorrect.
As we have seen with the ignominious case of the former crypto king Sam Bankman-Fried and the implosion of FTX, a castle built on a flimsy foundation of sand can easily be washed away when the tide comes in and back out again.
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Or, as the legendary investor Warren Buffett likes to say: “Only when the tide goes out do you find out who is swimming naked.”
We may soon find out who these people are. The fact is that the play-to-win game industry is not built on a firm foundation. The foundations are fragile and thin, and this could cause problems in 2023. The whole building looks like it will collapse.
GameFi’s current market structure is token-centric and this can create some problems. Project owners issue tokens that are listed on the exchange first before announcing that they will create a game. Game is a means of issuing tokens. So tokens first, and content later. This is why the quality and design of games in the blockchain space is underestimated.
An environment has been created in which the players are not all interested in the game itself, which is a strange country for the game industry to find itself in. More and more players, in fact, investors who want to return. investment.
The current structure creates the wrong incentives and this is one of the reasons why the system does not work. I would argue that DeFi Kingdom, which is one of the most popular blockchain games out there, has created tokenomics relentlessly by creating the wrong incentives.
Currently, in general, the token market is in a downward trend and the speculative trading market is dead. The industry survives for a certain period of time on unfair promises, expectations and hype. However, it can only last so long. Eventually, people began to realize that they had not received what they had promised. Patience is starting to wear thin. He got angry, frustrated and began to withdraw. It starts as a trickle of the smartest players, but it can turn into a flood.
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Those who have planned to secure funds by listing the token should reevaluate. Many will be forced to close projects due to insufficient funds. The situation is so acute that now crypto venture capitalists (VC) are also pausing new investments.
So who will survive this investment drought? It seems unlikely that GameFi will. However, other blockchain games may do so.
One example is NFT-based fantasy football league operator Sorare, which has become a Web3 unicorn. While many of its competitors struggled, Sorare continued to grow users and revenue through its darkest times. The daily auction volume is impressive, around 300-400 Ether (]), and the number of users is constantly increasing.
Although the back end depends on the block, users do not consider it a GameFi project. They don’t offer native tokens, but instead offer content first on Ethereum, which seems like the way to go for the industry.
So GameFi may be dead in 2023, but that doesn’t mean all is lost. Death is an important part of evolution. From that, a new life may have begun.
Shinnosuke “Shin” Murata is the founder of blockchain game developer Murasaki. He joined the Japanese conglomerate Mitsui & Co. in 2014, doing automotive finance and trading in Malaysia, Venezuela and Bolivia. He left Mitsui to join a second-year startup called Jiraffe as the company’s first sales representative and later joined STVV, a Belgian soccer club, as head of operations and helped the club create a community token. He founded Murasaki in the Netherlands in 2019.
This article is for general information purposes and is not intended and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.