GameFi has become the hottest buzz in the blockchain industry. data from DappRadar shows that in October this year, the number of active wallets related to games accounted for 55% of the total blockchain industry, and more than 20 game projects received investment during the month.

The leader of this round of GameFi boom is undoubtedly Axie Infinity, a pokemon raising battle game that generated staggering revenues from July to August this year, at one point surpassing the explosive handheld game King of Glory in terms of single-day revenue. However, according to a recent report by blockchain researcher Naavik, Axie Infinity’s player revenue is showing a downward trend, and its civilian players’ daily income has dropped below the minimum wage in the Philippines.

The analysis found that the fall in the price of Axie Infinity’s game output pass SLP and the growth in the number of players are the main factors contributing to the overall decline in player revenue. the Naavik researcher said that Axie Infinity’s user growth is trending slower and its lack of playability is starting to show its downside.

Blockchain analysis platform Nansen believes that GameFi is still in a relatively early stage of development, limited by blockchain performance, the quality of the game is mixed, and developers and players are more interested in the value of the assets involved than in the gameplay. This status quo inevitably brings a negative effect – when the game playing gold effect is weakened, players will quickly lose.

In Nansen’s view, improving game quality is the next phase of GameFi’s development theme. As players continue to join, the demand for game quality will become higher and higher, and the overall level of chain games is expected to continue to improve.

Axie Infinity’s declining revenue reduces its attractiveness to players

After the outbreak of DeFi, the blockchain application ecology has entered an unprecedented high-speed development phase, and GameFi, which integrates DeFi (decentralized finance), NFT (non-homogenized token) and Game (game), has gradually become another star track on the chain.

How hot has GameFi become?

DappRadar data shows that the number of active wallets related to gaming accounted for 55% of the total number of wallet addresses in October this year. Meanwhile, the booming GameFi projects have attracted a lot of venture capital attention, with data showing that VCs invested more than $127 million in GameFi-related projects in October and more than 20 game projects completed funding.

From the ranking of GameFi projects, Axie Infinity is still the leader of this track, and its development status can be regarded as the wind vane of the track to some extent.

As a representative of Play To Earn games, Axie Infinity’s revenue exceeded $780 million in the third quarter of this year, a figure that puts it in the top echelon of single games worldwide, and in August, its single-day revenue once exceeded that of the explosive hand game King of Glory.

However, according to a recent report by research and consulting firm Naavik, Axie Infinity’s revenue from regular players is gradually declining.

Naavik researchers wrote in the report that after months of incredible growth, Axie Infinity’s civilian players’ daily income has dropped below the Philippine minimum wage (the average daily minimum wage for people in the country is Php537, equivalent to $11.17, according to 2021 data from the Philippine Department of Labor and Employment). These civilian players are the “hitmen” of the game. Since you must collect at least three pokemon to participate in the game for gold, but each pokemon is very expensive, there are “sponsors” who provide these civilian players with pokemon and take a cut of them.

During the initial development of Axie Infinity, the gold-beating nature of the game was the main driving force behind it becoming a phenomenon. At the time, large numbers of Filipino masses earned well over the average local wage by participating in the game, and today, the game’s wealth effect is shrinking.

Data from blockchain data analysis firm tokenterminal shows that Axie Infinity’s game revenue peaked in July-August this year, when its daily revenue typically exceeded $10 million. In the last two months, however, the game’s overall revenue has dropped significantly, and on Nov. 14, the game’s total revenue was $6.9 million, only about half of what it was at its peak.

The game’s revenue has decreased, and player revenue has followed suit. Some analysts believe that the decline in player revenue is mainly related to the decline in the game’s output of “love potion” SLP passes.

Axie Infinity’s revenue declined in the past two months

In the game, SLP is one of the main income players get in the game, and its also a consumable item for breeding elves. And between July and October, SLP fell from a high of $0.41 to around $0.07, a drop of 82.9%. Meanwhile, the number of players kept increasing, and Naavik reported that Axie Infinity’s cumulative DAU (daily active users) from September to October was about 1.45 million to 1.95 million.

When the ‘in-roll’ is getting serious, it creates a situation where there are too many monks and too few players. And with player revenue declining, Naavik’s researchers found that Axie Infinity’s user growth is starting to slow down. According to the researchers, most Axie Infinity players are from low-income areas and “the primary motivation is to make money,” so the game’s retention rate is more like “retention for work than for play.

While Axie Infinity remains the breakout game in the GameFi space, it also reflects the fact that if the game’s ‘hit gold’ effect begins to wane, the game will become less attractive to players. Some industry insiders point out that although Axie Infinity has been successful at the blockchain application level of meaning, the game content it presents to players is still very shallow – the only gameplay is reproduction and combat, “the simple game mechanics lower the threshold of playing gold in the game and sacrifice the playability.

Game quality determines GameFi’s development ceiling

It is undeniable that GameFi is still in the early stage of development. Both Axie Infinity and Alien Worlds, the popular card game, have not yet left the “mining” gameplay of the DeFi era, but the mode has changed from liquidity mining to “game is mining”.

Looking at the whole chain game segment, most of the current Play To Earn games have defects such as insufficient playability and simple game mechanics compared with traditional games. Although a large number of chain games have been born on BSC, Polygon and other chains in recent months, the gameplay is similar, whether it is role-playing, card collecting or nurturing games, all have similar settings that require mining through battles and competitions.

With limited game quality, players come more for the rewards and don’t pay much attention to the gameplay itself. Developers are often in a hurry to catch the GameFi craze, lowering the standard of development and exploration of the game scene. This has led to the emergence of a large number of games with short lifecycles – when the price of the “mining” output in the game falls, the chain game becomes a chicken feed that is neither profitable nor fun, and the traffic quickly leaves in search of the next early dividend.

Researchers from blockchain analysis platform Nansen believe that if GameFi is to reach higher heights, it should also focus on upgrading the quality of “Game” in addition to the financial attributes of value circulation.

Nansen divides GameFi into four stages of development. In the first stage, the market was dominated by innovative NFTs mini-games and nurturing mini-games, which did not have strong game attributes, but thus opened up the market for chain games; in the second stage, Play To Earn type games became mainstream, which have certain game attributes, have a shorter development difficulty and cycle, and focus more on their asset value rather than on gameplay; in the third stage, more high-quality game products began to be developed, compared with the previous In the fourth stage, more high-quality 3A game manufacturers will enter, or they will develop new high-quality chain games, or they will add blockchain technology or elements to their original ecological chain.

“The current GameFi ecology is between the second and third stages, and the main features are reflected in the small number of mature products in the market and the uneven quality of games.” Nansen believes that only with the continuous addition of high-quality players, the requirements for game quality will become higher and higher, and the overall level of chain games will continue to improve.

Of course, mature game development technology is only one element for the rise of GameFi, and high-performance GameFi carriers are also essential.

Blockchain performance is currently in another round of big upgrade period, from Ether to BSC, to Solana, Fantom and other higher performance public chains have been introduced, the efficiency of blockchain processing transactions and transfers has been greatly improved, but the existing public chain as the infrastructure of the game is still far from enough to support the operation of MOBA-type competitive games and FPS-type first-person games. Therefore, GameFi needs a more efficient blockchain solution if it wants to reach the same level of volume as traditional games.

In any case, GameFi is one of the chapters of the on-chain ecology. From the early crypto-cat to today’s Axie Infinity, the chain game companion has gradually started to come out of the small circle with the meta-universe concept, and even become one of the national income in some countries, and its evolution deserves a longer-term expectation.

Do you think GameFi has the potential to catch up with traditional games?


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