Read more
The Disruptive Potential of Blockchain in the Gaming Industry
Read more
![The Disruptive Potential of Blockchain in the Gaming Industry](http://koreablockchainweek.com/cdn/shop/articles/Blog-Banner_607a5b27-f271-4780-97ee-1afd206b735f.jpg?v=1687938707&width=1100)
In the past, only a handful of traditional games like World of Warcraft and RuneScape offered limited opportunities for players to earn real money through activities like gold farming. However, with the advent of blockchain technology, GameFi has emerged as a game-changer. This fusion of gaming and decentralized finance (DeFi) is revolutionizing the gaming industry by allowing players to earn cryptocurrency through play-to-earn (P2E) blockchain games, diverging from the traditional pay-to-play approach.
How is Blockchain Changing the Gaming Industry?
Let us give you a brief overview of GameFi.
GameFi utilizes blockchain to create decentralized gaming platforms where players can earn cryptocurrency through P2E games. By participating in various in-game activities, players can earn gaming tokens or NFTs that can be used as assets or traded on cryptocurrency exchanges.
Consider these advantages of a blockchain-based game:
- Secure digital identities and reputations for players are established, which helps prevent fraud and build trust within the gaming ecosystem.
- Players gain greater control over their gaming experience by having actual ownership of unique and verifiable in-game assets (NFTs), with the ability to monetize their assets and influence game rules and mechanics.
- The interoperability of blockchain allows players to use their public addresses for transactions across different platforms, enhancing convenience and flexibility.
- Blockchain technology in gaming offers secure and transparent transactions, protecting players' assets and earnings from cyberattacks. It also provides a secure working environment for developers and entrepreneurs through data encryption and decentralization.
- Indie game studios can raise funds through tokens instead of relying on acquisition by larger companies.
- In an ideal world when games are to be interconnected, players will have the flexibility to transfer their assets from Game A to Game B without the need to purchase new in-game assets or sell their assets in Game A.
On-chain Overview
Data as of June 23, 2023
The decline in Monthly Active Users (MAU) from 43.7 million in January 2022 to 18.3 million by June 2023 (Figure 1) may seem worrisome at first because it highlights the challenges faced by the blockchain gaming ecosystem in attracting and retaining users.
Nevertheless, the stability in Monthly Transaction Count, averaging around 650 million YTD 2023 (Figure 2), indicates that the existing user base remains actively involved in transactions within blockchain gaming platforms. This resilience suggests that despite the decrease in user numbers, the sector maintains a dedicated and engaged community of gamers.
Figure 1. GameFi Monthly Active Addresses. Source: Footprint. Visualized by m3talab.io
Figure 2. GameFi Monthly Transactions. Source: Footprint. Visualized by m3talab.io
When it comes to transaction volume, it is crucial to consider the broader market context. The 2022 bear market has probably fueled the drastic dip (Figure 3), alongside diminished prices of GameFi assets like NFTs or tokens, as their value directly impacts the volume. Factoring in the sector's steady user base, there are possibilities that if the market is in the bull run, GameFi’s volume will definitely rise once again.
Figure 3. GameFi Weekly Volume. Source: Footprint. Visualized by m3talab.io
While overall transaction volume may have declined this year, it is essential to highlight the success stories within the GameFi sector. One remarkable example is League Of Kingdoms (LOKA), an Ethereum-based MMO Strategy game. LOKA has experienced a significant increase in its reward volume payout over time (Figure 4), showcasing the potential for similar games to thrive within the blockchain gaming space.
Figure 4. League Of Kingdoms Rewards Payout in USD. Source: m3talab.io
The Future of GameFi
Despite the challenges faced by the blockchain gaming industry, the substantial investments made by VCs and funds in May 2023 demonstrate a growing belief in the potential of Web3 gaming.
These investments, totaling an astounding $476 million, signify a vote of confidence in the transformative power of blockchain technology within the gaming sector. The ability to create immersive experiences, leverage NFTs for ownership and trading, and foster decentralized economies within games has captured the attention of investors (1).
Figure 5. Investment in Web3 Gaming Projects since the Beginning of 2023. Source: DappRadar. Visualized by m3talab.io
Conclusion
May 2023 has proven to be a defining month for blockchain gaming, marked by substantial investments and renewed optimism for the future of Web3 gaming. While certain metrics may present challenges, the overall trajectory indicates a promising path forward. With growing investments and the transformative capabilities of blockchain technology, it is increasingly clear that blockchain gaming holds the key to revolutionizing the gaming industry and shaping its future.
Reference
- DappRadar, Web3 Games Flourishing on iOS Despite Resistance: Axie Infinity Leading the Charge, June 08, 2023
M3TA Analytics — Website | Twitter | Telegram | Substack | CoinMarketCap | Threads
Established in 2022, M3TA is an AI-enabled data analytics platform dedicated to Web3 & emerging blockchains. Our team, composed of experts from Stanford, MIT, and Fortune 300 companies and seasoned in Defi, NFT, Metaverse & Gaming and Web3, distills over 10TB of data, covering 500+ projects and 5K+ tokens to produce clear insights for all audience levels. Boasting a robust presence in Korea, Vietnam, and South-East Asia, and spanning an evolving partner network, most currently with Google Cloud and FactBlock, M3TA is your trusted partner in unraveling blockchain complexities.
Writer & Reviewer: Research Analysts & Content Writers at M3TA Analytics
#GameFi #Gaming #Web3 #Web3VC #NFT #M3TA