A Short Guide to GameFi: Blockchain Gaming and Play-to-Earn
With the advancement of smart contracts and the proliferation of asset forms like NFTs, we've begun to adapt activities traditionally done offline to blockchain platforms. Notably, video games have quickly caught up with this trend. The gaming ecosystem, fueled by widespread personal computer usage, has evolved into a massive industry valued at over $250 billion. Consequently, the inevitable intersection of these games with blockchain, a technology facilitating financial transactions, was bound to occur.
One of the earliest examples of this genre, CryptoKitties, emerged in 2017. Utilizing ERC-721 standard NFTs, these digital cards allowed for simple in-game actions. Most importantly, your CryptoKitty was entirely yours, secure in your wallet from unauthorized access.
However, as these games proliferated on the network, a fundamental issue in the blockchain ecosystem resurfaced: scalability. As a result, many game developers began creating games on less congested chains than Ethereum, allowing for lower transaction fees and quicker actions.
By late 2020, Axie Infinity, a game outside of the Ethereum network, took the lead. This card game, through its rise, essentially kick-started the play-to-earn wave. Play-to-Earn (P2E) models enable players to earn an income by simply playing games, though the economic dynamics, strategies, and methodologies within each game can vary widely. A simple example might be spending 10 hours in front of a screen to acquire a valuable game resource, which you could then sell for real money.
However, the P2E hype of 2020-21 was short-lived due to the generally low quality of player experiences, unsustainable reward mechanisms, and the fact that the games attracted more interest from DeFi farmers than from traditional gamers. Yet, over the past two years, significant developments have been made, and the ecosystem has evolved. Let's take a closer look at the GameFi ecosystem.
Pioneers of the Ecosystem
Like many fields, GameFi encompasses various categories; including RPG, Farming, Shooter, Move-to-earn, Card games, Racing, Metaverse, Pet Breeding-battling, Strategy, and sports, among others. Games that stood out in these categories attracted significant attention and user engagement, becoming what some might call the OGs of GameFi projects.
Most Active Gaming Chains
According to CoinGecko's 2023 Gaming Report, as of November 30, 2023, the most active blockchain is Skale, primarily due to its gasless nature, boasting 230K daily active players and an overall 1.05M active GameFi addresses. It's noteworthy that the main traffic on these chains typically comes from one or two successful games, highlighting the significant impact a successful product can have on a chain.
Top 10 GameFi Tokens by Market Cap
The top 10 GameFi tokens by market cap, according to CMC data before this post, are:
Today and Beyond
GameFi is no longer in its infancy, with nearly 3,000 GameFi games launched to date. More significant funds are being allocated to develop long-term economies and enhanced user experiences. A particularly eye-catching metric is the interest traditional gaming companies are showing in this space. As highlighted in the February-published article "Why 70% of top gaming studios are investing in web3 gaming," many billion-dollar gaming giants are investing in the ecosystem. Some are developing in-house, while others are acquiring small studios. While not originally a gaming or blockchain enterprise, Nike made a significant move into the digital realm by acquiring RTFKT, a pioneer in virtual sneakers and collectibles, highlighting its dive into the NFT and metaverse sectors. Therefore, we can expect to see more cross-sector partnerships in the future.
If you're interested in closely following this exciting ecosystem, including updates on news, blogs, and podcasts, consider checking out our GameFi dashboard.