The Decline of Crypto-Based Games in the GameFi Market
In recent months, the GameFi market category, which combines game theory and blockchain technology in the decentralized finance ecosystem, has experienced a noticeable downturn in crypto-based games. A recent analysis by Coingecko reveals that 75% of GameFi ventures have failed, highlighting the challenges faced by initiatives that attempt to merge these innovative concepts with gaming and decentralized money.
Crypto-Based Games Survival Metrics
According to the analysis, only 690 out of 2,817 games released between 2018 and 2023 still maintain a reasonably active user base. CoinGecko defines a Web3 game as “failed” if its 14-day moving average of active users drops by 99% or more from its peak. Since the emergence of GameFi five years ago, three out of every four Web3 games have ceased operations. Additionally, another study revealed that 95% of NFTs are now essentially worthless.
The Rise and Fall of Web3 Games
In 2018, the blockchain game CryptoKitties brought GameFi to the forefront. This led to a surge in popularity for play-to-earn (P2E) gaming, resulting in the release of 422 Web3 games that year alone. However, over time, many of these games lost their appeal. Some popular crypto-based games that are still active today include Axie Infinity, The Sandbox, and Decentraland.
The Play-to-Earn Strategy
A business strategy called Play-to-Earn (P2E) offers players fair compensation for their time and labor in video games. Incentives such as in-game cryptocurrency and non-fungible tokens (NFTs) provide opportunities for players to sell, trade, or utilize them in other financial applications.
The Future of Web3 Games
Last year, the number of dying Web3 and crypto-based games reached a record high of 742, with a failure rate of 107.1%. This trend was attributed to the cryptocurrency market recession in mid-June 2022. Moving forward, it will be crucial for projects in this space to overcome challenges and ensure their survival amid fierce competition to avoid the threat of extinction.
Hot Take: The Uncertain Fate of Crypto-Based Games
The decline in crypto-based games within the GameFi market raises concerns about their long-term viability. While some games have managed to maintain a user base and generate interest, many others have failed to do so. This highlights the challenges faced by projects that aim to combine gaming and blockchain technology. As the industry evolves and adapts, only time will tell which projects can overcome these obstacles and secure their place in the ever-changing landscape of crypto-based games.
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