A Comprehensive Exploration of the Evolution of GameFi: How Far Are We from the Next Hottest Game?

DeFi, NFT cultivate the development soil for GameFi

DeFi and NFT lay the foundation for GameFi

The Ethereum mainnet was launched on July 30, 2015, marking the arrival of the Web3 era. Ethereum's smart contract functionality supports the development and operation of decentralized applications (DAPPs). On this basis, numerous popular DeFi projects have emerged, such as Uniswap and MakerDAO. These DeFi projects attract significant funds due to their high returns, high transparency, and strong privacy features. The total market value of the DeFi space has grown from $50 million in 2015 to $100 billion in 2023.

At the same time, the NFT market has also experienced an explosion. In 2017, the Ethereum-based NFT project CryptoKitties attracted widespread attention and was regarded as the starting point of the NFT boom. The total market value of the NFT market rose from a few million dollars in 2018 to 8 billion dollars in 2023.

DeFi has brought ample funding to the cryptocurrency market, while NFTs have shifted the focus of blockchain towards the entertainment and gaming sectors. Together, they provide the soil for the development of blockchain games, and on this basis, the concept of GameFi, which combines DeFi and blockchain gaming, is beginning to emerge.

The Starting Point of the GameFi Dream

In the second half of 2019, Mary Ma, the Chief Strategy Officer of MixMarvel, first proposed the concept of GameFi, which means "gamified finance" and "new gamified business." This concept combines elements of gaming and finance, aiming to introduce new business models and economic systems to the gaming industry through blockchain technology. Mary Ma believes that future games will not only serve as entertainment tools but can also become financial tools. Through blockchain technology, virtual items in games can be transformed into valuable digital assets, allowing players to acquire, trade, and appreciate these assets through gaming.

The Beginning of GameFi Explosion

In September 2020, Yearn.finance founder Andre Cronje elaborated on his understanding and outlook on GameFi, marking the true entry of the GameFi concept into the public eye. Andre Cronje believes that the DeFi industry is in the "TradeFi" stage, where user funds are primarily used for trading, staking, and lending operations. GameFi will become the future development direction of DeFi, where user funds can not only be used for financial transactions but will also have practical application value in the virtual gaming world. Users can earn substantial token rewards through activities in the virtual gaming world, similar to working in real life.

GameFi is reshaping the gaming track

GameFi is a technology that combines DeFi, NFT, and blockchain gaming, running game assets and some logic on the blockchain, and managed by the decentralized autonomous organization (DAO) for the development of the game ecosystem. GameFi focuses on building a complete financial system that supports activities such as item trading using the game's native token. Users can earn token rewards through the game and share in the benefits of game development.

Completely solve the problems of traditional games

In traditional games, items such as props and skins have certain values. However, due to monopolies by game manufacturers or regulatory restrictions, the trading of game items is often limited. This has led to rampant black market trading, posing risks to players.

GameFi inherently possesses DeFi attributes, which can perfectly solve the problems of monopoly by game developers and rampant black markets. In GameFi, game skins and items exist in the form of NFTs, and all transactions follow market rules and maintain transparency.

Through DAO governance for game development, allowing all players to share in the governance power of the game is also a major feature of GameFi. This can prevent game developers from taking actions that are detrimental to players in order to increase sales, protecting player interests.

Perfectly aligns with the development history of the game.

The development of games mainly relies on three key elements: advancements in computer technology, hardware upgrades, and innovations in gaming concepts. GameFi represents the cutting-edge application of blockchain technology, which is an intersection of computer science and finance, introducing the novel "play-to-earn" gaming concept. It can be said that GameFi perfectly aligns with two major elements in the history of game development, reflecting the evolution of gaming.

GameFi 1.0 era, fast-running Ponzi games

CryptoKitties, Crazy Cats Start the GameFi 1.0 Era

On November 28, 2017, CryptoKitties landed on the Ethereum blockchain, becoming the first phenomenal DAPP. It showed users that Ethereum could not only be used for token issuance but also for developing simple and fun NFT games. CryptoKitties offered a range of innovative gameplay, such as purchasing unique cat NFTs and breeding new generations of kittens.

The groundbreaking gameplay and high return expectations of CryptoKitties quickly attracted the attention of speculators. However, since mid-2018, the trading volume of CryptoKitties has seen a dramatic decline and is now completely off the market hotspot.

Fomo3D - a pure gambling game

Fomo3D is a simple mechanism game of chance, mainly consisting of four gameplay modes: treasure grabbing, team dividends, referral rewards, and lucky candy. Its core mechanism is treasure grabbing, where players participate in the game by purchasing "Key", and the last buyer can receive 48% of the prize pool.

Fomo3D is a typical Ponzi scheme game, where everyone hopes to be the last winner, but most people will end up losing all their money. These types of Ponzi scheme blockchain games are the norm of GameFi 1.0 era, and are essentially Ponzi schemes that cannot compare with the entertainment value of traditional games.

GameFi 2.0 era, inspired by "play-to-earn"

Axie Infinity starts the "play-to-earn" mode craze

Axie Infinity was the first to combine the "play-to-earn" concept with complex financial mechanisms, creating an engaging NFT creature world. Players can collect, breed, battle, and trade creatures called Axie in the game.

Axie Infinity adopts a dual-token governance model, with AXS as the governance token and SLP as the game token. The game also introduces a unique scholarship mechanism, allowing players with no entry barriers to participate in the game and earn income. During the pandemic, Axie Infinity became a primary source of income for many people in the Philippines, demonstrating the potential of blockchain projects to improve livelihoods.

Although Axie Infinity has experienced an economic bubble, it still maintains its leading position in GameFi. In the past 30 days, the number of Axie transactions reached 387,232, with sales of approximately $4 million. Axie Infinity has successfully implemented the GameFi concept and attracted players who truly enjoy the game through PVE and PVP modes.

The Sandbox shapes the virtual world

The Sandbox originates from two popular mobile sandbox games and decided to introduce it into the blockchain ecosystem in 2018. The Sandbox inherits the UGC model and provides three tools: VoxEdit, MakeTPlace, and Game Maker, to offer users a comprehensive design experience.

The Sandbox uses three types of tokens, SAND, LAND, and ASSETS, to ensure the economic cycle within the game. Among them, LAND, as an in-game land asset, is highly sought after by investors. In 2021, a piece of virtual land was sold for $4.3 million, showcasing The Sandbox's powerful wealth accumulation effect.

The Sandbox provides a model for the integration of traditional IP and blockchain technology, showcasing the immense potential of high-quality GameFi.

GameFi 3.0 era, how to explore the future GameFi market

Re-examining GameFi

1. The forms of games are diverse, but the market is still a blue ocean.

Currently, GameFi mainly covers types such as farming mining, card games, sports rewards, MMORPG, metaverse, and auto-battles. With breakthroughs in basic areas, GameFi is expected to迎来二次爆发.

2. Full Chain Game

On-chain games run and store all game logic, data, and assets on the blockchain, achieving complete decentralization and transparency. Autonomous World( is a significant manifestation of on-chain games and is also the goal for the future development of GameFi.

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3. GameFi+?

Single GameFi struggles to gain market favor; combining with technologies like AI and the Internet of Things may be the current way to break the deadlock. A series of GameFi+AI projects such as colony, Nimnetwork, Futureverse, etc. are starting to emerge.

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4. From the perspectives of technology, IP effects, and playability

Traditional IP has unlimited development potential in blockchain. Many game companies plan to bring classic games to blockchain technology, such as Atari's collaboration with The Sandbox and Square Enix's plan to introduce Final Fantasy and Dragon Quest to blockchain platforms.

In the GameFi field, the current breakthrough method is to create a game with high playability that includes a complete financial system. Whoever can introduce excellent game IP first will have the opportunity to gain a first-mover advantage.

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) Summary

1. GameFi is a combination of DeFi + NFT + blockchain games, representing a unified application of blockchain technology and a new stage in game development.

2. GameFi has experienced the 1.0 and 2.0 eras, gradually transforming from a Ponzi scheme in the past to a gaming ecosystem that is attractive to real users.

3. Currently, the hot topics in the blockchain industry are focused on foundational ecosystem construction such as Layer1 and Layer2, while GameFi is still in the accumulation stage.

4. "On-chain games" and "GameFi+?" are the development trends of GameFi 3.0.

5. Investment in GameFi needs to focus on aspects such as its IP, playability, and technicality; only GameFi that can truly attract players has the potential for long-term development.

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