Memecoins and AI are pushing Gamefi out of the spotlight

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Gaming’s intersection with finance and crypto — also known as Gamefi — has been a bit of a mixed bag in 2024.

Voices from across the industry have spoken to Cointelegraph to deliver their verdicts on the current state of the GameFi industry — and their conclusions are far from unanimous.

In December 2023, Cointelegraph asked industry experts to predict what 2024 would bring for the sector, and now that we’ve passed the halfway mark, we’re revisiting the subject once more.

GeeZee, head of gaming at layer-2 Ethereum rollup Mantle, viewed the past six months largely positively.

“2024 has been a dynamic year [...] largely exceeding our expectations for GameFi ecosystem expansion,” GeeZee told Cointelegraph. “Accelerated growth has outperformed initial projections in terms of blockchain adoption and mainstream acceptance of GameFi.”

GeeZee pointed to Mantle ecosystem partners such as Catizen and Metacene as evidence of that success, both of which reached 15 million users within 60 days of launch.

They did temper their positivity with a couple of caveats, saying institutional investors have cooled on the industry and touching on the ever-present specter of regulatory uncertainty.

Russell Bennett, CEO of Metacade, a gaming and Web3 environment, was lukewarm in his assessment, believing the picture in 2024 to be mixed.

“Initially, many believed the early surge in the first few months of the year was the real kickoff, but it transpired this was more a market mobilization phase testing out various altcoin narratives,” Bennett told Cointelegraph. “AI and memecoins captured the spotlight, pushing GameFi down the pecking order.”

This led to what Bennett described as a “bearish phase” for the industry.

“While gaming projects themselves are improving, price performance has indeed been below expectations,” Bennet added.

The good and bad for Gamefi

Rebecca Liao, co-founder and CEO at Saga — a layer-1 protocol supporting Web3 — finds GameFi in a less favorable position than some of her contemporaries.

“Web3 gaming is at an inflection point right now. Several major titles that started building in 2021 are coming out now and are not seeing the reception that they had hoped for. It’s clear that the model of launching a token or NFTs [non-fungible tokens] for a game is simply not enough to ensure game success. However, neither is a great game,” Liao told Cointelegraph.

Liao still has optimism for the future, however.

“In Web3, you have to be able to incorporate blockchain elements into the gameplay in a seamless way in order to get traction,” said Liao. “The games that are soon to come out have discovered this and will bring this space to a sustainable growth trajectory for the long term.”

When Cointelegraph spoke to him in December, Oleg Fomenko, the co-founder of the move-to-earn platform Sweat Economy, was highly skeptical of the sector. The intervening six months have done little to change his opinion.

“My forecast was that the GameFi segment was not going to have an easy ride, and this forecast has come to fruition — only the top four ‘games’ in the DappRadar rankings of most used DApps are in the global top 20,” Fomenko told Cointelegraph.

“This tells us that one of the most mass-market activities — gaming — is still not driving the growth and adoption of Web3[...] we still haven’t found that magic balance between the gameplay/fun and Web3/earn mechanics,” he added.

Surprises for GameFi

At the end of 2023, the industry was looking forward to the launch of ever more sophisticated games and gameplay.

In July 2024, the games gaining traction are surprisingly less involved. Gerard Colomer Castelló, head of product at the layer-1 Laos Network, highlighted the phenomenon when he spoke with Cointelegraph.

“Unexpectedly, simple games like Hamster Kombat and the ‘Banana’ game on Steam have made significant headlines. Hamster Kombat has attracted millions of followers on its YouTube channel with its ‘clicker’ gameplay, leaving blockchain and wallets in the background, potentially inspiring other games to use similar strategies to grow their communities,” Castelló said.

The success of simple tap-and-click games has not spread to the wider industry, however. In the current market, Bennet has been surprised that more complex titles have moved to launch.

“I’m particularly surprised at how larger projects with substantial funding have launched aggressively, securing listings on major exchanges like Coinbase and Binance, only to face significant drawdowns of 50–60%,” he said.

He went on to add, “I’m surprised that teams, knowing the market isn’t ready, have still pushed forward with launches. GameFi is dormant right now and needs active players and retail engagement to thrive.”

Bennet concluded that he expects a quieter Summer period “with real activation kicking off from September or October onward.”

What remains the same?

Though there have been some surprises in GameFi in 2024, some things have remained broadly the same. The industry is still seeking a title that captures the imagination of the mainstream gaming market.

As Liao said: “It’s clear that the audience for gaming is not in Web3. We have to expand the user base to include gamers that have not yet red-pilled into crypto. That is the challenge before GameFi projects building this cycle.”

That said, with the broader market in a bullish phase, the sector also has a fair degree of in-built optimism just beneath the surface. Ronen Kirsh, co-founder of the Web3 gaming platform Game7, epitomized that mood when he spoke with Cointelegraph:

“The broader market uptrend has positively impacted onchain gaming. It has injected optimism into the space, prompting teams to reassess their go-to-market strategies and overall business models. Many projects that were developing in stealth mode for months are now making a comeback or refreshing their tokenomics to adapt to the new market reality.”