Although all categories of blockchain will be hot in 2021, the gaming industry takes the top spot with almost 13% of total investment.

Number of investments by portfolio | Source: Footprint Analytics

After months of massive growth at DeFi and NFT, now is the time for GameFi. The second half of the year saw a lot of game-related announcements and big numbers. For example, on August 6th, Axie Infinity had sales of $ 17 million, surpassing the Honor of Kings.

What makes GameFi so convincing and what happens when this initial dynamic is gone?

The term GameFi is an abbreviation for Game Finance (roughly translated: Game Finance), coined by Mary Ma during the Wuzhen World Blockchain Conference 2019. At the 8BTC and the CSO of MixMarvel the organizers are and relate to the financial integration with the game .

The main means that games use to create their own financial ecosystem is through NFT and liquidity mining. In this way, the game formed the Play to Earn (P2E) trend.

Features that distinguish GameFi from conventional games:

Ownership: In GameFi, through on-chain smart contracts, the game’s assets belong to the player, not the developer.

– Assets tradable on the cryptocurrency market: Players who own the assets are allowed to trade them (NFTs or tokens) with other players on the open cryptocurrency market.

– Data transparency: All of the game code in GameFi is open source and transparent. Developers cannot change these codes. The players can also jointly decide on upgrades and changes in the game via the DAO, so that they can get more involved.

Current status of GameFi

Despite its promising status, there are still some major issues that most projects in the GameFi industry face. As an investor, you should evaluate projects based on their ability to meet these challenges.

Small player base

While traditional games have 3 billion players, GameFi’s user base is still a fraction of DeFi’s 1.33 million. In the flourishing era of mobile gaming, on-chain games were primarily web-based, which means that these types of games are unlikely to go mainstream until significant developments are made on mobile devices.

Another reason traditional gamers don’t flock to GameFi is because players need to understand concepts like crypto wallets, key phrases, and gas fees.

Traffic jams and high gas charges

Trending games often have denser transactions, which places high demands on the TPS (transactions per second) of the network and gas charges. For example, the popular CryptoKitties caused severe congestion on the Ethereum network in 2017. The way to improve on this is to build special infrastructure to support popular games such as: B. Ethereum, which Axie Infinity relocated to the sidechain.

Bad gameplay

Even the most popular GameFi projects still look like traditional 3A games. In many cases, there is still room for improvement in gameplay – gaming is becoming a mere monetization method rather than a fun, income-generating activity for many gamers.

This begs the question, does incorporating monetization engines into games necessarily make them less interesting? When a particular game in the GameFi space does not generate enough revenue, players switch to another game. This creates a cycle in which developers who focus more on the financial side of the project are often more successful.

A good example are CryptoBlades. This game lost a large number of players in July after the game reduced the SKILL reward (original token), which caused the token price to collapse. As a result, it takes players longer than expected to regain their initial investment, resulting in ever larger losses.

Number of daily users | Source: footprint Analytics

The same goes for Axie Infinity. In this game, the Smooth Love Potion (SLP) token is an important source of income for the players. As the price of SLP goes down, so does the revenue from the game. Axie Infinity started out as the main source of income for people in countries like the Philippines, but now daily income is below the local minimum wage.

SLP token price | Source: footprint Analytics

GameFi developed on BSC

According to Dappradar, BSC occupies 4 places in the top 10 games. With a TPS that is almost six times that of Ethereum, BSC continues to cause a sensation in GameFi with 195 game projects that have already been made available on this blockchain.

Although Ethereum makes up the bulk of the TVL, low transaction speeds and high gas fees have become obstacles for ordinary users to enter the blockchain world. In comparison, BSC appears to be a better blockchain for GameFi to develop for the following reasons.

Reason 1: The BSC ecosystem is favorable for GameFi to develop

In terms of TVL and total number of unique addresses, Ethereum has always held its first place, but in terms of daily transaction volume and the number of active addresses, BSC completely overtook Ethereum in February and April of this year.

In terms of the number of active addresses, Ethereum fluctuates between 400,000 and 600,000 per day while BSC has between 1.5 million and 2 million per day, which is almost 3 to 5 times that of Ethereum. The difference between these two daily trading volumes is even up to 13 times.

Daily transactions | Source: Footprint Analytics

Total number of unique active addresses | Source: Footprint Analytics

Compared to Ethereum, BSC has higher transaction efficiency, lower gas fees and is also compatible with Ethereum Virtual Machine (EVM), which enables Ethereum developers to switch to BSC inexpensively and attract many small distributed users to the blockchain world. Across BSC’s ecosystem, from resources to infrastructure, it is considered friendlier for game project development.

Reason 2: Most GameFi projects are funded from the BSC Incentive Program

To stimulate the growth of the entire NFT ecosystem, BSC introduced Most Valuable Builder (MVB) II. Select projects can receive a $ 10,000 grant, a comprehensive security audit from Certik, and an exclusive incubation workshop with industry experts.

In July of this year, BSC announced the list of winning projects, including well-known game projects such as CryptoBlades, MyDeFiPet, MOBOX, X World Games … waves in this arena.

BSC regularly hosts hackathons around the world and also starts Learn & Earn events, with 4 of the 9 projects of the two Learn & Earn events so far relating to games or NFTs, including both CryptoBlades, Thrives July NFTs and bonuses to encourage participation Creating on award-winning projects, BSC is practically a natural breeding ground for GameFi to thrive.

The top 5 games of the last 30 days on BSC are CryptoMines (ETERNAL), Mobox (MBOX), Bomb Crypto (BCOIN), BinaryX (BNX) and MetaverseMiner (META).

As the number of users and transactions continues to grow, the price of game tokens will also skyrocket. For example, the wildest win ever for the ETERNAL token from CryptoMines surpassed the price of Axie Infinity’s AXS. On October 24th, ETERNAL is trading at $ 572, 16 times higher than a month ago. For those who gamble for P2E purposes, they make significant profits.

Token price of the top 5 GameFi on BSC | Source: Footprint Analytics

Conclude

GameFi enables players to:

– Own in-game assets through NFT and tokens.

– Use NFT as a tool to reduce liquidity.

– Make assets liquid through DeFi.

Although these advantages can make GameFi more interesting and increase the adoption of blockchain, there are still many problems to be solved with GameFi. A cheap ecosystem is very important for GameFi and there is still a lot of ecological optimization in Ethereum.

In the current era with lots of different blockchains popping up, they are constantly innovating to stand out, like Terra with its innovation from stablecoins and Celo which focuses on decentralized mobile payments.

GameFi can also support its own environment and bring traffic to some unusual blockchains. Ronin, a sidechain built by Ethrereum for Axie Infinity, has grown in popularity thanks to Axie’s success, and WAX and Flow have become two of the most popular blockchains due to their primary focus on GameFi and NFT.

According to DeFi, GameFi is likely to lead the next wave of blockchain development when projects can balance infrastructure, game functionality and profitability.

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