New report: GameFi is showing signs of mature development
Blockchain games are poised to surpass decentralized finance (DeFi) as the leading contributor to decentralized application (DApp) activity measured by the number of active wallets (UAW), according to ‘The evolution of blockchain games, a new DappRadar report.
Play-to-earn blockchain games
The report includes findings on how the current market is fueling the rise of blockchain games. It noted that Blockchain games emerged with its play-to-earn model which quickly rose in popularity during the COVID-19 pandemic and offered players from developing economies a new income revenue. The growth of UAW is most significant in Q2 of 2021 with a quarter growth-on-growth of 503%.
GameFi on layer-1 ecosystems
The development of GameFi on layer-1 ecosystems are documented in the report, stating that some gaming platforms matured enough to stand alone as their own blockchains such as Axie Infinity with its Ronin blockchain and DeFi kingdoms with its Harmony Protocol. Migrating to standalone blockchains is a solution to scalability issues that hinder blockchain games.
For example, Polygon emerged as a layer-2 solution to counter Ethereum’s scaling problems and high gas fees, but was not able to operate smoothly against the transaction volume of GameFi. It dealt a heavy blow when the Sunflower Farmers NFTs sent up transaction fees and caused heavy congestion on Polygon in January this year.
Venture capital investments bolstering GameFi growth
Moreover, the growing number of venture capital investments is also spurring the growth of GameFi and an indicator that the industry is reaching its mature stages.
The GameFi industry gained US$ 2 billion in Q1 of 2022, on top of US$ 70 million raised in 2020. The amount of venture capital investment highlights a positive trend for GameFi. Hong Kong game publisher, Animoca Brands became a leading player in the Web3 ecosystem. Not only has it reached a US$5 billion valuation, it also became a strategic partner in developing blockchain projects. For example, Korean entertainment company, The AniCube joint venture with Cube entertainment is seeking to create a K-pop themed NFT marketplace.
The increasing interoperability, scaling of layer-2 solutions and decentralization brought about by GameFi technologies are heralding a bright future for the industry. Read the full report here.