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    Gate.io Blog Where Is the Future of GameFi
    Industry Analysis

    Where Is the Future of GameFi

    03 August 18:32


    • GameFi (Game Finance), in short, is the Gamification of the financial system, which creates value by playing "play-to-earn" crypto games;

    • GameFi 1.0's gameplay is extremely poor, and players become ruthless "gold-chasing machines" driven by interests;

    • GameFi 2.0 provides users with a sense of satisfaction through real-world interaction through the combination of life attitude marketing and off-line interaction scenes;

    • How to quickly identify the Ponzi scheme of GameFi; Whether in the physical world or the virtual world, the demands of players' social interaction, increase of intangible assets and affirmation of self-worth can all be satisfied, which is the key development direction of GameFi in the future.

    What is GameFi?

    Do you really know GameFi?

    Gamefi (game Finance), that is, the compound word of "game" and "finance". In short, it is the Gamification of the financial system, which creates value by playing "play-to-earn" crypto games.

    GameFi's most disruptive feature is that it allows gamers to add real-world value to the props they buy in the game.

    The goods and products in the game can be stored in the distributed public ledger or run on the blockchain of the crypto network. Then, tokens and items in the game are allowed to be traded into cryptocurrencies and finally monetized through the blockchain technology.

    From 1.0 to 2.0

    As for the development of GameFi 1.0 and 2.0, we have to mention Axie and STEPN. In a sense, these two companies led the trend of GameFi 1.0 and GameFi 2.0 respectively.

    Axie Infinity

    Axie Infinity is a decentralized round strategy game based on the Ethereum blockchain. It was originally the Ethereum main chain, and then moved to the self-built Ronin sidechain due to the high gad fee and delay issue. The main carrier is the web side, and the developer is Vietnam Sky Mavis.

    The game revolves around collecting, reproducing and fighting a kind of cartoon character called Axies. These cartoon characters are NFTs that exist on the Ethereum blockchain. Players can use Axies to harvest a currency called SLP, and then reproduce it to create more Axies. Importantly, both Axies and SLP can trade in real-world fiat currencies on the open market.

    Thus, Axie Infinity has naturally become a highly financial game community, but many new players can't buy Axies directly, so some hardcore players rent their Axies to beginners to help them practice grading in the game. The poor exchange time for money, and the rich use money to leverage the time lever.

    In the Axie community, the senior players who rent Axies are called "managers", while the workers who are responsible for playing games are called "learners", and the ones who are responsible for the overall arrangement and operation are called "guilds". Because many low-level players, mostly from the poor in the Philippines or other places who rely on gold for a living, the model is also called "digital colonialism" by some.

    In the past of 2021, the number of players in Axie Infinity increased by more than 100 times, leading to the new P2E game earning mechanism. The huge number is also consistent with their rapid growth in social media channels. Axie Infinity continues to dominate the field of continuously welcoming new users. Before Ronin was stolen, Axie had more than one million players online every day.

    So it can be said that because of Axie Infinity, GameFi 1.0 has become popular. It is worth mentioning that on July 29 of 21 years, the total revenue of Axie Infinity in the past 30 days was $167.3 million, a record high. It is far more than the mobile game "Honor Of Kings" owned by Tencent, the world's No. 1 game company, which caused a great sensation at that time and became a conversation in the gaming space.

    However, good times do not last long. In the early morning of March 30, 2022, Ronin (Axie cross-chain bridge) officially announced that the core private key of the cross-chain bridge had been stolen, and its lost assets included 170000 ETHs and 25.5 million USDCs. What is more unimaginable is that the assets of nearly $700 million were not stolen on the 30th, but six days ago. If not for the information provided by the community members, the official has not found it hacked! Isn't this funny? The incident was undoubtedly a heavy blow to the whole GameFi ecosystem at that time. Since then, Axie has been difficult to return to the peak.


    Unlike GameFi 1.0, which has poor entertainment interaction, players become ruthless “gold-chasing machines” driven by interests. GameFi 2 .0 games represented by STEPN are starting to improve the off-line scalability and social attributes of virtual space, and the interoperability between virtual and physical space.

    STEPN users satisfy the psychological demands of dual identity anxiety of virtual world and physical world that have been neglected for a long time in the context of GameFi 1.0 by combining spiritual value embodiment, sports concept and social attributes, and thus complete the construction of consensus culture and practical integrity.

    STEPN is a “move-to-earn” (M2E, earned by sports) NFT mobile game. It is a platform created by two developers from Australia, Yawn Rong and Jerry Huang, which combines tokens in chain games with games and sports. The game claims to be "based on the concept of environmental protection and carbon emission reduction". With the model of "running can make money", it has attracted many investors and runners. Its goal is to promote millions of people to live a healthier lifestyle, bring them into the Web 3.0 world, and make positive contributions to carbon and.

    STEPN tries to solve the contradiction between entertainment and investment of traditional GameFi 1.0. GameFi 1.0, which takes return on investment as the primary purpose, has the following two core problems for a long time:

    1. There is a general lack of a long-term economic model in the capital market. After experiencing the peak value, NFT value and the number of users cannot avoid the result of long-term slow decline and gradual decline;

    2. The sense of entertainment experience and innovative playing methods that ignore the core value of the game, and the lack of a benign operation mechanism in cultural construction and community construction, have become a short-term profiteering speculation tool of economic benefits, resulting in a huge value gap;

    GameFi 2.0, led by STEPN, through the combination of life attitude marketing and off-line interactive scenes, GameFi 2.0 projects need to provide users with a sense of satisfaction through actual interaction in the real world, which can make money and interact, and both economy and spirit can be satisfied.

    In addition, GameFi 2.0 should pay more attention to the establishment of community values and feelings in addition to game richness and economic feedback.

    P2E or P2P

    Since the birth of the play-to-earn mode of Axie Infinity and the x-to-earn mode derived from it, its ideal of inclusive public and the doubts of the outside world about its “play-to-Ponzi” Ponzi scheme have gone hand in hand. In the past bullish market, we have also witnessed the rapid explosion and extinction of GameFi projects using x-to-earn mode.

    Therefore, how do you quickly identify the P2P play-to-Ponzi project of GameFi?

    1. Are there other external sources of income?

    For GameFi, to judge whether it is a “play-to-Ponzi” Ponzi scheme, we don't need to study the complex game mechanism and economic model inside GameFi. You only need to regard GameFi as a whole and observe whether it can obtain income from the outside to eliminate the vast majority of Ponzi projects.

    If the so-called "income" of a project actually comes from the handling fee income of the NFT trading market inside GameFi, and all the service objects are game players, this is a typical internal income, which does not generate external value for the whole GameFi. Such projects should be carefully screened.

    Some projects such as STEPN have been aware of this problem for a long time, and even improve the overall business health of the company by setting up the post of "chief revenue officer". In addition, real external revenue can also be obtained by means of brand co-branding, advertising, physical consumption and so on. These are all positive attempts by external sources of income in the right direction.

    2. Are participants in investment or consumption?

    If most GameFi participants invest their funds into the system with a consumption mentality, these expenditures constitute the main income of the GameFi system. It also proves from the side that the project provides some externalities (interesting and entertaining) to encourage people to consume and pay for this externality.

    However, if the vast majority of participants in a GameFi project participate in the game with a speculative mentality, and the main goal is to make profits rather than entertainment, and attach great importance to indicators such as the current cycle, then this system is closer to a Ponzi scheme.

    What is the future of GameFi

    From obtaining entertainment services to GameFi 1.0, which emphasizes the financial attributes of assets, GameFi 2.0 opens up a new possibility for its future: that is, it is possible for players to "explore infinitely" in real life and the game value given by themselves, and it can well project value, so as to harvest real and active satisfaction.Whether in the physical world or the virtual world, the demands of players' social interaction, increase of intangible assets and affirmation of self-worth can all be satisfied, which is the key development direction of GameFi in the future.

    Future GameFi projects should pay more attention to the deep embodiment of enriching the spiritual core, and this playfulness can be well demonstrated. It has its unique value in the world of physical improvement, identity symbols, social relations, Web 2.0 and Web 3.0.


    GameFi has begun to occupy more and more shares in the global game market with a market share of nearly $200 billion. Game players have long been fond of and familiar with the concepts of in-game currency, rare digital props and tokenization, which have not gained corresponding financial value.

    The GameFi project, which includes blockchain technology, decentralized finance and gameplay, will be more attractive. The natural combination of NFT and games will give GameFi more imagination in the future. The “play-to-earn” mechanism will be more and more widely accepted, and the explosive and sustainable growth trend of GameFi is also predictable.

    With the increasing public attention and the influx of institutional capital, the future prospects of GameFi will have unlimited possibilities.

    Author: Gate.io Observer: Byron B. Translator: Joy Z.
    * This article represents only the views of the observers and does not constitute any investment suggestions.
    *Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all other cases, legal action will be taken due to copyright infringement.
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