### A Comprehensive Review of the GameFi Industry: How Will It Foster New Brilliance in the Future?

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1. #DeFi and #NFT Cultivate the Soil for GameFi Development

DeFi and NFT Lay the Foundation for GameFi

Since the launch of the Ethereum mainnet on July 30, 2015, the Web3 era has officially begun. The smart contract deployment capabilities of the Ethereum mainnet have supported the design and operation of DAPPs (decentralized applications). On this foundation, a large number of popular DeFi (decentralized finance) projects emerged, such as Uniswap, which realized DEX (decentralized exchanges) through automated market-making, and MakerDAO, which enables contract lending. These DeFi projects attracted a large influx of capital with their characteristics of high investment returns, transparency, strong anonymity, and complete openness. The total market capitalization of DeFi has grown from $50 million in 2015 to $100 billion in 2023.

**DeFi Market Capitalization Growth**

While DeFi was flourishing, capital began to explore the potential for synergistic development between decentralized finance and other sectors. During this period, the NFT market exploded. In 2017, CryptoKitties, an NFT project based on Ethereum, allowed players to buy, breed, and trade digital cats, garnering widespread attention and often regarded as the starting point of the NFT boom. The total market capitalization of the NFT market surged from several million dollars in 2018 to $8 billion in 2023.

**NFT Market Capitalization Growth**

If DeFi brought a continuous influx of funds to the crypto market, then NFTs shifted the blockchain's focus toward entertainment and gaming. Together, they provided fertile ground for the development of blockchain games. Under this context, GameFi, which combines the concepts of DeFi and blockchain gaming, began to emerge.

**The Starting Point of the GameFi Dream**

In the second half of 2019, Mary Ma, Chief Strategy Officer of MixMarvel, first proposed the concept of GameFi—"gamified finance" and "a 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. In Mary Ma's view, future games will not only be tools for entertainment but can also become financial tools. Through blockchain technology, virtual items in games can become valuable digital assets, allowing players to acquire, trade, and appreciate these assets through gameplay. In this model, game companies and players can jointly participate in economic activities in a decentralized environment, achieving mutual benefits.

However, due to the immaturity of blockchain technology and its application paradigms at the time, the concept of GameFi did not immediately attract widespread attention and application.

**The Beginning of GameFi's Explosion**

In September 2020, Andre Cronje, the founder of https://t.co/kCR5Ea6j54, elaborated on his understanding and outlook of GameFi in a speech and public statement. With Andre Cronje's authority in the DeFi industry, the concept of GameFi began to truly enter the public eye. Many of Andre Cronje's insights on GameFi clarified the future development direction of GameFi.

In Andre Cronje's view, the DeFi industry is in the "TradeFi" (trade finance) stage, where users' funds are primarily used for trading, staking, and lending activities, failing to reflect the distinctions of cryptocurrencies compared to traditional finance. GameFi will serve as the future direction for DeFi, where user funds will not only be used for financial transactions but will also have actual application value in virtual gaming worlds. Users can earn substantial token rewards through activities in these virtual worlds, akin to real-life work.

Since then, the GameFi sector has begun to experience its first wave of growth!

**GameFi Promotional Image**

2. GameFi Reshapes the Gaming Landscape

GameFi is a blockchain technology that combines DeFi, NFT, and Blockchain Game (chain games), integrating game assets and part of the logic into smart contracts on the blockchain, managed by #DAO (Decentralized Autonomous Organization) to ensure users' ownership of game assets and governance rights over the game. GameFi focuses on constructing a complete financial system that supports using native game tokens for item transactions and other activities. Users can earn token rewards through gameplay and share in the benefits of game development.

**Thoroughly Addressing the Issues of Traditional Gaming**

In traditional games, items such as props and skins hold certain value, which has long been a consensus. The average annual sales of CSGO items from 2018 to 2023 exceeded $420 million and grew year by year; the annual sales of League of Legends skin items increased from $1.4 billion in 2018 to $2.5 billion in 2023; the annual sales of Honor of Kings skin items even reached an astonishing $2.74 billion in 2023. Whether domestically or internationally, there is a vast market space for game items.

However, due to the fact that item trading often harms the profits of game publishers and touches upon legal red lines in certain regions due to their financial nature, game developers have typically adopted two strategies regarding item trading. One is to monopolize the item trading market like CSGO with Steam, charging high transaction fees; the other is to adopt unlimited item supply, unify item purchase channels, and strictly prohibit game account trading, as seen in League of Legends and Honor of Kings.

It is precisely because of the prohibitions imposed by game developers and local regulations that the black market for game items has become a highly profitable business. To a certain extent, as game developers and local regulations increase their crackdown on black market transactions, the supply line of black market items shifts left, leading to increased selling profits.

Built on blockchain technology, GameFi inherently possesses DeFi attributes, which can perfectly resolve the current monopoly of game developers and rampant black market activities. GameFi is both a game and a market, where game skins and items exist in the form of NFTs, and all transactions will adhere to the rules of the market and strive to remain as transparent as possible.

In addition, the governance of game development through DAO, allowing all players to share in the governance rights of the game, is also a major feature of GameFi. Currently, game developers often manipulate lottery probabilities and reduce the prices of previously high-priced game items to boost sales, harming the interests of players who have already purchased these items. Player protests against such measures are often difficult to consolidate and are frequently obscured by these tech giants through traffic control. DAO governance measures can shatter the absolute discourse power of game developers, allowing users to no longer worry constantly about the game developing in ways that disadvantage them, and to enjoy the overall economic benefits brought about by the game's development.

Perfectly Aligning with the Development History of Games

Looking back at the history of game development, it often hinges on advancements in computer technology, hardware upgrades, and innovations in gaming concepts.

· Early Computer Game Stage (1970s-1980s): The early stage of video game development, primarily concentrated in laboratory and university environments. Notable early games include "Spacewar!" and "Pong," with the release of "Pong" marking the beginning of commercial video games.

· Home Console Era (1980s-1990s): Nintendo released the home console NES, bringing classic games like "Super Mario Brothers."
16-bit Console Era (1990s): Sony launched the PlayStation, ushering in the era of disc-based games, with the game "Final Fantasy VII" sparking a gaming craze.

· 3D Game Era (Late 1990s-early 2000s): Valve released "Half-Life," which received widespread acclaim from players for its deep storyline and immersive experience.

· Online Games and MMORPG Era (2000s): Blizzard Entertainment launched "World of Warcraft," becoming one of the most successful MMORPGs and driving the development of online multiplayer games.

· Mobile Games and Social Games Era (2010 to Present): Supercell launched "Clash of Clans," becoming one of the most successful mobile strategy games, while Niantic released "Pokémon GO," combining augmented reality (AR) technology with mobile gaming, sparking a global craze.

In the past, the development of games primarily relied on three key factors: advancements in computer technology, hardware upgrades, and innovations in gaming concepts. Today, GameFi represents a powerful collaboration of DeFi and NFTs, standing as one of the most cutting-edge and intriguing technologies in blockchain; it also embodies the intersection of computer science and finance, offering a novel "play-to-earn" gaming concept; while providing examples for research in financial markets; it can be said that GameFi perfectly aligns with two of the three key elements in the history of game development, conforming to the historical trajectory of games.

Moreover, GameFi has developed rapidly in recent years, proposing innovative concepts and designs, leading to the birth of many top projects.

· Early Exploration (2018): Decentraland was launched as one of the early GameFi projects, allowing players to purchase, develop, and trade virtual land, achieving true ownership through blockchain technology. Gods Unchained launched a blockchain-based collectible card game, showcasing the potential applications of NFTs in gaming.

· Concept Introduction (2019): Mary Ma introduced the concepts of "gamified finance" and "new gamified business," marking the birth of the GameFi idea. In the same year, Sky Mavis launched Axie Infinity, bringing it closer to public awareness.

· Initial Surge (2020): Andre Cronje, founder of https://t.co/kCR5Ea6j54, reaffirmed the concept of GameFi in September 2020, predicting that DeFi would evolve towards gamified finance, with user funds utilized as equipment in games. During this period, the DeFi and NFT markets also experienced a golden age, laying the groundwork for the explosive growth of GameFi.

· Explosive Growth (2021): Axie Infinity achieved tremendous success, attracting millions of players, reaching a daily trading volume of $1 million in August, enabling players to earn income through the "play-to-earn" model, and becoming a primary source of income for hundreds of thousands of residents in Southeast Asia during the pandemic; the same year, The Sandbox exploded in popularity, allowing users to create, own, and trade virtual assets and land, receiving immense interest from numerous venture capital firms.

· Abrupt Decline in Traffic (2022 to Present): Affected by the overall downturn in the cryptocurrency market, the popularity of GameFi has severely declined, with daily active users of Axie Infinity plummeting from 740 thousand in August 2021 to 35 thousand in August 2022; many GameFi projects also faced severe inflation issues, with the number of tokens for DeFi Kingdoms rising from 60 million at the beginning of 2022 to 100 million by mid-year.

The explosive growth of GameFi has also propelled the concept of the Metaverse, which is essentially about constructing a virtual shared space realized through AR (augmented reality) and VR (virtual reality) technologies, integrated with decentralized technologies like blockchain, encompassing not only gaming but also various aspects of everyday life.The freedom of ecological construction in GameFi has made it synonymous with the metaverse in many scenarios. Between 2021 and 2022, many traditional tech companies began to get involved in the concepts of GameFi and the metaverse.

· Facebook rebranded to Meta, reflecting its long-term vision for the Metaverse.

· Tencent established a new TiMi Studios focused on developing metaverse-related games and invested in The Sandbox and Decentraland.

· Microsoft acquired Activision Blizzard for $68.70 billion, planning to integrate traditional popular games with blockchain technology to create a new generation of GameFi.

· Goldman Sachs and SoftBank increased their investments in GameFi, supporting well-known GameFi projects such as Axie Infinity and The Sandbox.

The overall market value of GameFi has risen from $200 million in 2018 to $24.52 billion in 2023, with a staggering growth rate of 733.3% from 2020 to 2021.

Although GameFi may currently face some issues, the strong involvement of traditional tech companies and the gradual maturity of technology still present limitless possibilities for the future.

3. A Narrative that Combines the Strengths of Many

GameFi itself is a combination of DeFi, NFT, and Blockchain Game, making the previously dull DeFi lively and providing application opportunities for NFT technology that lacked use cases. Meanwhile, the governance model of GameFi also offers opportunities for the implementation of DAO organizations. Combined with the currently popular concepts of the metaverse, AR and VR are also expected to become part of major GameFi titles. Thus, GameFi is a significant application area that deeply applies blockchain technology and connects with virtual technology.

DeFi + NFT Token Economy, Building an Independent Financial Ecosystem

The financial characteristics are the biggest difference between GameFi and Blockchain Game. Blockchain Games often focus solely on using blockchain technology to enhance game transparency, fairness, and asset ownership, while GameFi emphasizes introducing a complete financial system into games, creating Blockchain Games that include financial attributes. Therefore, a Blockchain Game can be a simple blockchain application game, but GameFi must include financial functions and economic systems.

· From a technical perspective: The uniqueness and indivisibility of NFTs give each in-game item a unique value, and by limiting the issuance of NFT items, scarcity value can be created.

· From a rights perspective: In GameFi, the project party appears only as game developers, bug fixers, and proposal initiators. At the beginning of the game, they sell Tokens and NFT items to players while delegating most of the power to ordinary players. The game's updates, development, and profit distribution are decided by a DAO organization composed of players and the project party.

· From a mechanism perspective: The "play-to-earn" model in GameFi allows players to earn NFT items or tokens in the game through time investment and initial financial input, which can be exchanged with fiat currency, generating economic benefits.

Introducing a financial system into games is not unique to GameFi; some traditional games have long had complex financial systems, proving that this initiative is feasible. MMORPG (Massively Multiplayer Online Role-Playing Game) "EVE Online" is known for its complex financial system, simulating real-world markets within the game, including production, trade, and resource management, with over 40,000 items. Players can mine, manufacture goods, establish companies and alliances, and even engage in market manipulation. The developer CCP Games employs economist Eyjólfur Guðmundsson to study the economic operating mechanisms within the game and timely adjusts the large market to prevent collapse.

Currently, the complexity of GameFi's financial system is far from that of older games like "EVE Online," "World of Warcraft," and "Second Life," but its decentralized characteristics ensure GameFi players have ownership of their assets without bearing the risks of trusting game developers.

Cross-Chain Asset Interoperability + Multi-Platform Operation, Creating a Large Financial Ecosystem

Single GameFi projects may face problems such as low user numbers, low activity, and unstable funding. Cross-chain asset interoperability and multi-platform operations may help improve these issues. Each GameFi is an economy, and when GameFis are interconnected, it can form a large economic market, which requires the comprehensive application of technologies such as cross-chain, cross-platform compatibility, data synchronization and consistency, and decentralized account management.

· Cross-chain technology: By using cross-chain bridge technology or interoperability protocols, users are allowed to trade and communicate directly across different blockchains.

· Cross-platform compatibility: At the beginning of GameFi development, it is essential to ensure that it can run in different hardware and software environments. Using high-compatibility game engines like Unity and Unreal Engine and standardized APIs is crucial for achieving cross-platform compatibility.

· Data synchronization and consistency: Through State Channels technology, users can complete transactions off-chain and only submit the final state to the blockchain for information synchronization, relieving data transmission pressure.

· Decentralized account management: When supporting cross-chain and multi-platform operations for GameFi, DID (Decentralized Identity), SSO (Single Sign-On), and distributed account storage become very important. These technologies can alleviate the burden of managing accounts for users and enhance security.

A unified and effective financial loop can not only enhance the liquidity of funds within the loop but, as Andre Cronje hopes, it may also become the future direction of DeFi development. In addition, the GameFi financial loop will simulate financial behaviors between various countries and regions in the real world, providing examples for further research in economics.

Integrating AR and VR technologies, "Ready Player One" is no longer a fantasy.

Benefiting from the explosive growth of GameFi in 2021, the concept of the metaverse once dominated the A-share and US stock markets. During this period, fraudulent incidents claiming to be related to the metaverse emerged frequently. Against this backdrop, GameFi has gradually been entrusted with the hope of carrying the metaverse concept forward.

At the same time, AR and VR technologies associated with the metaverse have begun to flourish. By 2023, the global AR and VR market size has exceeded 70 billion, and it is expected to surpass 400 billion by 2030.

Estimated AR and VR market size

Many projects are beginning to focus on the underlying implementation of blockchain and AR/VR technology integration, making it possible for future GameFi to combine AR and VR technologies, bringing "Ready Player One" into reality.

· Render Network: Provides distributed GPU rendering services, supporting high-quality 3D rendering for AR and VR. Many applications, including Apple Vision Pro, have offered this service.

· Ozone: Offers multi-chain and cross-chain 3D applications and cloud computing services.

· IOTX: Provides a secure, privacy-protecting, and scalable blockchain platform to connect and manage IoT devices.

Facing such future demands in the virtual market, the consensus is gradually forming that GameFi, combined with AR and VR technologies, will create a new generation of AAA titles.

4. GameFi 1.0 Era: Fast-Paced Ponzi Games

CryptoKitties, the Crazy Cat, Initiates the GameFi 1.0 Era

On November 28, 2017, CryptoKitties (also known as Crypto Cats or Mystery Cats) logged onto the Ethereum blockchain, becoming the first phenomenal DApp. Its emergence proved to users that Ethereum is not just about token issuance; it also offers simple and engaging NFT games. CryptoKitties presented a series of innovative gameplay.

· Users can use $ETH to buy a cat NFT that belongs to them in the CryptoKitties market.

· Each cat has a unique genetic code, allowing users to look up each cat's parents, siblings, and past activities on the market.

· Two cats can breed to produce a new generation of kittens. After breeding, cats enter a cooldown period, which lengthens with the number of breedings, and the new generation of kittens will incorporate the cooldown time.

· Players can rent their cats to breed with others' cats, gift cats to others, or auction them in the market.

CryptoKitties' groundbreaking gameplay and high profit expectations quickly attracted the attention of speculators, with one cat named "Dragon" selling for 600 $ETH (approximately 170 thousand USD), setting a historic record. The CryptoKitties project also separated from its original company Axiom Zen and secured a 12 million USD investment from top venture capital firms a16z and USV.

By 2024, the CryptoKitties project has conducted over 700 thousand transactions, with a total transaction volume of 67,818 $ETH, equivalent to approximately 115.00 million USD. However, since mid-2018, the transaction volume of the CryptoKitties project has seen a dramatic decline, and it has completely fallen out of market focus.

Although the original intention of the CryptoKitties project was not to be a Ponzi scheme but to explore more channels for Ethereum's future development through NFT games, it also led to a very serious economic bubble.

Fomo3D - A Pure Gambling Game

The popularity of CryptoKitties sparked the early explosion of Blockchain; however, most of these Blockchains lacked any innovative points, with Fomo3D being the most well-known project. Fomo3D is a simple, luck-based game primarily consisting of four types of gameplay. The core mechanism is a treasure hunt, combined with a team dividend mechanism, a referral reward mechanism, and a lucky candy mechanism to increase profitability.

The treasure hunt mechanism targets gamblers. In Fomo3D, each game consists of a 24-hour countdown. During this countdown, players spend Ethereum to purchase tokens in the game called "Key". Every time a player buys a "Key", the countdown is extended by 90 seconds (it will no longer increase after 24 hours). Ultimately, the last player to purchase one or more "Keys" before the countdown ends will be able to take 48% of the prize pool. To ensure that the game can conclude, Fomo3D continuously adjusts the price of the "Key" dynamically; after each purchase, subsequent buyers need to pay a higher price. Over time, as the cost of participating for players increases, there will be scenarios where the countdown speed exceeds the 90-second increase, ultimately ending the game.

It is evident that Fomo3D is a typical Ponzi scheme game, where everyone hopes to be the final winner, but most will end up losing everything.

Games like Fomo3D that operate as Ponzi schemes were the norm during the GameFi 1.0 era, almost all of them were schemes that shifted funds from one user to another, sucking blood from new users to distribute rewards to old users. The fragile balance under high returns is very susceptible to factors such as native token sell-offs, waning interest, and a decrease in new users, leading to collapse.And in terms of fun, these Blockchain Games are completely incomparable to traditional games. Therefore, essentially, the Blockchain Games of this period do not have a complete financial system and cannot be called GameFi.

5. The Era of GameFi 2.0, Inspired by "play-to-earn"

The era of GameFi 2.0 is a stage of flourishing development for the GameFi concept, expanding the financial system of Blockchain step by step from "play-to-earn" to "x-to-earn," gradually introducing financial elements such as community, trading, battles, and markets into GameFi.

Axie Infinity Ignites the "play-to-earn" Model Craze

Unlike all previous Blockchain Games, Axie Infinity was the first to combine the concept of "play-to-earn" with complex financial mechanisms, creating an appealing NFT creature world where players can collect, breed, battle, and trade creatures called Axies within the game.

· Early Stage (2018): Axie Infinity was launched by the Vietnamese startup team Sky Mavis, inspired by Pokémon and CryptoKitties, with the aim of creating a player-governed creature world.

· Initial Development Stage (2019 - 2020): Axie Infinity officially launched on the Ethereum blockchain, allowing players to purchase Axies for breeding and sell them in the market. Subsequently, Axie Infinity introduced PVP mode and adventure systems, further increasing the playability of the game.

· Explosive Growth Phase (2021): Due to the "play-to-earn" model within the game, Axie Infinity attracted a large number of players, and a documentary titled "Play to Earn: NFT Games in the Philippines" brought more attention to this promising game.

· Expansion Stage (2022 to Present): Axie Infinity has been developing stealthily, currently comprising six segments: Axie Infinity Origins, Axie Infinity: Homeland, Axie Classic, Axie Infinity: Raylights, Defenders of Lunacian, and Project T prototype.

In the Axie Classic version, users need to purchase 3 Axies to start battles or breeding; each Axie is unique and entirely belongs to the player's personal property. Axies are assigned randomly distributed attributes at birth, including health points, skills, speed, and morale, and Axies have different racial traits that can provide certain counter-relationships in battles. There are many details in the specific game rules of Axie, which will not be elaborated here.

The Axie Infinity token governance model employs a dual-token governance system, with $AXS as the governance token and SLP as the game token.

Functions of AXS:

· $AXS holders have voting rights for the governance of the Axie Infinity ecosystem, including the future development direction of the game and major decisions.
· Players can stake $AXS tokens to earn rewards.
· A portion of $AXS is required as a breeding fee when breeding Axies.
· $AXS is also used as a reward token for in-game events.

Functions of SLP:

· SLP is primarily used for breeding Axies, with each breeding requiring a certain amount of SLP; the more breeding instances, the more SLP is needed.
· Players can earn substantial SLP rewards by completing daily tasks and participating in PVE (adventure mode) and PVP (arena mode).

Unique Scholarship Mechanism:

Axie Infinity has a unique scholarship mechanism, where Axie holders can lend their Axies to apprentices, who can earn SLP by battling with the Axies, while the holders can collect profit shares. Under this mechanism, diligent players who are familiar with the game rules can enter the game with zero barriers, continuously earning $AXS and SLP and expanding their Axie teams. During the pandemic, many Filipinos maintained their basic livelihoods through Axie games, marking one of the few blockchain projects that have genuinely improved the lives of the people so far.

Furthermore, the innovative achievements of Axie Infinity are reflected in the project's MAU (Monthly Active Users), trading volume, and revenue. In August 2021, Axie Infinity's total trading volume exceeded $2 billion, with monthly revenue reaching $364 million, surpassing Honor of Kings for the first time; by the end of that year, the number of monthly active users exceeded 2 million.

Although Axie Infinity made groundbreaking breakthroughs in the development of GameFi, it has still been affected by economic bubbles and the overall market downturn. Its active user count dropped from a peak of 2.70 million in 2021 to 400 thousand in 2023, with the current monthly user count around 100 thousand, and its trading volume has fallen from $4 billion in 2021 to $200 million in 2023.

Despite experiencing significant economic bubbles, Axie Infinity has withstood the turbulence and still maintains its leading position in GameFi. In the past 30 days, Axie's trading volume reached 387,232 trades, with sales totaling 1083.3 $ETH, approximately $4 million, which is quite impressive data for a game that has been around for six years.

Axie Infinity was the first to implement the concept and model of GameFi through the "play-to-earn" model, successfully attracting genuine fans of the game through its PEP and PVP modes, making it a successful example in GameFi.

The Sandbox Shapes the Virtual World

If Axie Infinity is the casual game in GameFi, then The Sandbox is undoubtedly a monumental work among them. The Sandbox originated from two popular sandbox games, "Sandbox" and "Sandbox Evolution," which together have exceeded 40 million downloads on iOS and Android. In 2018, the publisher Pixowl decided to bring this successful user-generated content game IP and large creator community from mobile devices into the blockchain ecosystem, providing real intellectual property rights to creators through NFTs and rewarding their contributions to the community in the form of tokens. Thus, the great work, The Sandbox, was born.

· From a technical perspective: The Sandbox inherits the past sandbox game UGC (user-generated content ecosystem) model and provides three integrated functions, VoxEdit, MakeTPlace, and Game Maker, offering users a comprehensive design experience while supporting copyright protection for successful designs through blockchain and smart contracts.

· From a token model perspective: The Sandbox offers three types of tokens to ensure the economic circulation within the game: $SAND, LAND, and ASSETS (material assets).

a. $SAND follows the ERC-20 standard and is the token required for players to acquire material assets, purchase land, and publish content in The Sandbox game. $SAND also has ecological governance functions and allows staking to earn $SAND rewards.

b. LAND follows the ERC-721 standard and represents land assets within the game, with each LAND sized at 96*96. After purchasing LAND, players can add games and material assets within the LAND and establish their own game rules. Multiple LANDs can form a larger ESTATE, suitable for creating larger and more content-rich sandbox games.

c. ASSETS follow the ERC-1155 standard and are tokens generated by creators to prove ownership, which can be sold on The Sandbox's front-end webpage.

With its strong IP effect, innovative gaming concept, and open financial system, The Sandbox has garnered significant interest from investors. In 2018, Animoca Brands acquired Pixowl and provided long-term support for The Sandbox's development; in 2019, The Sandbox raised $2.5 million in seed funding led by Hashed; in 2020, it secured $3 million in Series A funding from institutions such as True Global Ventures and Square Enix; and in 2021, The Sandbox's robust ecosystem was recognized by SoftBank, which led a $93 million Series B funding round.

Since the sale of LAND began, The Sandbox has not disappointed investors, with average prices continually rising; currently, the floor price on the NFT exchange OpenSea remains as high as 0.12 ETH.

Moreover, many core LAND positions have been sold for exorbitant prices. In November 2021, the virtual real estate investment company Republic Realm purchased a virtual land parcel in The Sandbox for $4.3 million, and the following month, a nearby LAND belonging to Snoop Dogg was sold for approximately $450,000.

Since its ICO, The Sandbox's market value has fluctuated significantly, reaching a peak of $6.8 billion, and currently remains at $700 million, making the profits for venture capital firms investing in The Sandbox immeasurable.

Overall, the emergence of The Sandbox provides an example of the combination of traditional IP and blockchain technology, showcasing the powerful wealth accumulation effect of high-quality GameFi.

6. In the era of GameFi 3.0, how to explore the future GameFi market

Mini Games Are Not GameFi

Recently, Telegram mini-games like Not and Hamster have become extremely popular, requiring only a simple tap on the screen to earn tokens. Such simple operations have led to viral community growth, achieving participation from tens of millions of users in a short time. Since its launch in January 2024, the Not game has attracted over 30 million participants, with daily active users reaching as high as 5 million. Subsequently, Notcoin also successfully launched its ICO on several exchanges, including Binance, with a growth rate exceeding 400% within 7 days.

However, these games are built on Telegram and can only be classified as Mini Games; they lack a complete financial system and are deficient in IP effects and playability. One could say their popularity is almost entirely supported by the concept of "fair launch." Unlike similar mini-games on WeChat, Telegram's Mini Games are not restricted by platform limitations, and the benefits they generate can be viewed as an extension of Web2 into Web3.

Revisiting GameFi

The variety of gaming forms exists, but the market remains a blue ocean

The years 2023 to 2024 are expected to be two rapid years of development for GameFi in terms of gaming forms, currently covering types such as Farming/Mining Games, Card Games, Move-to-Earn Games, MMORPGs, Metaverse Games, and Auto Battles.

On DAppRadar, the GameFi game Matr1x, which ranks first in UAW (Active Users), is an MMORPG type game. Over the past 30 days, the number of active users reached as high as 1.92 million, but its circulating market cap is only 49 million USD. Currently, market hotspots are mainly focused on foundational aspects like Layer 1 and Layer 2 development, while GameFi leans towards technical integrated applications. As breakthroughs occur in foundational areas, there remains an opportunity for a second explosion in this sector.

Fully On-chain Games

Fully on-chain games operate and store all game logic, data, and assets on the blockchain. During the transition from GameFi 1.0 to GameFi 2.0, most games had only assets or partial logic on-chain, while fully on-chain games emphasize complete decentralization and transparency, perfectly avoiding issues like game cheating. The concept of Autonomous World can be seen as a significant expression of fully on-chain games, building a virtual world based on blockchain technology, making the rules and operations of the entire world auditable. The future development goal of GameFi is undoubtedly fully on-chain games.

GameFi+?

In the current market, a standalone GameFi is hard to gain market favor, while combining with AI, IoT, and other technologies may be the way to break through. A series of GameFi + AI projects such as Colony, Nimnetwork, Futureverse, Palio, and Ultiverse have emerged to break the deadlock. Among them, Palio secured a 15 million USD investment from Binance Labs to develop and integrate AI technology, showcasing the recognition and pursuit of GameFi + AI projects by major VCs. In addition, the combination of GameFi with IoT, cloud computing, and other hotspots is also a significant development avenue.

From the Perspectives of Technology, IP Effects, and Playability

Axie Infinity draws inspiration from the game "Pokémon" to develop a pet battle game on the blockchain, while The Sandbox represents the blockchain migration of "$Sand" and "$Sand Evolution," demonstrating the unlimited development potential of traditional IP in the blockchain space. Although Axie Infinity and The Sandbox have both experienced serious economic bubbles, their current market caps still stand at 800 million and 700 million USD, respectively, proving their ability to attract real users.
Moreover, many game companies plan to introduce blockchain technology into classic games.

· Atari collaborates with The Sandbox to bring its classic games "Centipede" and "Pong" to the metaverse platform. Players can use $SAND tokens in The Sandbox to participate in and create experiences based on these classic games.

· Square Enix has announced plans to bring its well-known game IPs, "Final Fantasy" and "Dragon Quest," to the blockchain platform.

· Capcom has announced that it will explore ways to bring its famous games, such as "Street Fighter" and "Resident Evil," into the blockchain gaming realm.

In the traditional gaming sector, the emergence of MOBA games like League of Legends and Honor of Kings often indicates that game development has reached its peak stage. In the GameFi space, the current breakthrough method is to create a game with high playability and a complete financial system. Whoever can first introduce excellent game IP will have the opportunity to gain a first-mover advantage.

Conclusion

· GameFi is essentially a combination of DeFi + NFT + Blockchain Game, representing a unified application of blockchain technology and a new stage in the evolution of game development.

· GameFi has transitioned through the 1.0 and 2.0 eras, gradually transforming from past Ponzi schemes into a game ecosystem that attracts real users.

· Currently, blockchain industry hotspots are concentrated on foundational ecological constructions like Layer 1 and Layer 2, while GameFi is still building momentum.

· "Fully On-chain Games" and "GameFi+?" are the development trends for GameFi 3.0.

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

Disclaimer: The data in this article is derived from annual reports and other research reports from various platforms, and the reference standards may vary.