Shinnosuke Murata, founder of blockchain games developer Murasaki, says that developers are more focused on tokens than making fun games. This is why Murata hypothesizes that GameFi altcoin projects will die in 2023.
“2023 will witness the demise of GameFi altcoin projects”
GameFi, activated by Blockchain technology, has grown exponentially in a few years. Players have adopted collecting cryptocurrencies or Non Fungible Tokens (NFTs) generated in Blockchain-based games. You know GameFi altcoin projects from ApeCoin, Axie Infinity, Sandbox, Gala Games and Enjin. With the advent of this new technology, players were able to generate income by selling in-game NFTs or earning cryptocurrency rewards. In addition, it is possible to turn prestige into money for both.
Therefore, according to data from Absolute Reports, the assumption cost of the GameFi industry will reach $2.8 billion in 2028, with a compound annual growth rate of 20.4% in a one-to-one cycle. But it is quite possible to prove that such predictions are unfounded. Given the exponential growth rate in recent years, there is not necessarily any reason to believe that the trend will not continue into 2023 and beyond. Is it wrong? I think it’s wrong.
As we saw in the infamous incident of ex-crypto ruler Sam Bankman-Fried and the explosion of FTX, a castle built on a flimsy sand foundation can easily collapse when the wave comes and returns. Or, as legendary investor Warren Buffett puts it: “You only know who’s swimming naked when the waters recede.” We may be about to find out who these people are. The truth is, the play-to-earn (P2P) industry is not built on solid foundations. The foundations are fragile and unstable. Also, that means trouble in 2023. The whole structure seems to be about to collapse.
What is the cause of the collapse?
The structure of the current GameFi altcoin market is token-centric. It is possible that this will cause a number of problems. Project owners issue their tokens listed on exchanges before announcing that they will set up games. Games are a vehicle of the tokens they issue. So tokens come first and content comes later. This is why the quality and design of games in the blockchain space is so underestimated.
An environment was created where the players were not that interested in the games. This is a strange situation for a game industry. In reality, more and more players have turned into investors seeking returns. The current structure creates false incentives. It is also one of the reasons why the system is not working as it should. I argue that DeFi Kingdom, one of the better known P2P Blockchain games on the market, is relentlessly messing with tokenomics by creating perverse incentives.
“Death is a necessary part of evolution!”
So far, generally speaking, the token market is in a downtrend and the speculative trading market is dead. It is possible for an industry to survive for a certain period of time with promises, expectations and unfair exaggerations. But he can definitely do this for a while. Eventually, humans begin to realize that they are not getting what they were promised. Patience begins to wane. They become angry, frustrated, and begin to withdraw. This starts out as a trickle of the most knowledgeable players. But it is highly likely that this will turn into a flood in a short time.
Those who plan to raise funds by listing tokens will need to reconsider. Many will have to close their projects due to insufficient funds. The situation is getting so severe that even emerging crypto venture capitalists (VCs) are putting new investments on hold.
So who will survive this investment drought? GameFi altcoin projects are unlikely to do so. However, other Blockchain games have the opportunity to do this. One example is the Ethereum-powered, NFT-based fantasy football league operator Sorare becoming a Web3 unicorn. While its competitors are struggling more than once, Sorare continues to increase its users and revenue in the darkest period. Daily process volumes are around 300-400 Ether (ETH). In addition, the number of users continues to increase.
Although its backend is based on Blockchain, users do not perceive it as a GameFi altcoin project. They do not receive local tokens. But they provide their content first on Ethereum, which seems to be the way to go to the industry as a whole. So GameFi could die in 2023. But that doesn’t mean everything is lost. Death is a necessary part of evolution. From it, new life may have already begun to emerge.
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