GameFi enters a cooling period, what is the next main theme?

1. Market Overview

1.1 The trading volume has significantly decreased, while active users have fluctuated upwards.

Looking back at 2021, the peak trading volume of GameFi was concentrated in early August and early November, both reaching around $220 million, with over 90% coming from Axie Infinity. Other games with high trading volumes include Alien Worlds, Sorare, Aurory, Gods Unchained, and Crypto Kitties.

The trading volume of these games continued to decline after November, dropping to around $44 million in the first week of 2022, more than an 80% decrease from the peak. Axie Infinity's trading volume fell to $35 million, only 16% of its peak.

Despite a significant drop in trading volume, the number of active users in blockchain games has been fluctuating upwards, increasing from 470,000 at the end of July last year to 1.53 million at the beginning of January this year, more than tripling in six months. This indicates that although the market calm has led to a decline in trading volume, new users continue to participate in GameFi.

1.2 Multiple ecosystems flourish comprehensively

Due to the high requirements of GameFi on network performance, lower transaction fees and faster transaction speeds are needed. Ethereum sidechains, Layer 2, and other Layer 1 public chains can all serve as infrastructure for blockchain games. According to the data of the top 100 GameFi Dapps by trading volume in the past 30 days, 57 are deployed on BSC, 11 on Polygon, 10 on Wax, 7 on Ethereum, 4 on Immutable X, and 3 on Harmony.

In terms of quantity, the GameFi ecosystem on BSC is quite large. BSC was very keen on games in the second half of last year, with a series of P2E games represented by Crypto Blades in the middle of the year and Crypto Mines in November. Low transaction fees and support from the Binance ecosystem make BSC one of the most suitable public chains for developing GameFi.

In addition, there has been a phenomenon where a single GameFi project drives the development of the entire public chain ecosystem. For example, Splinterlands has promoted the development of Hive, accounting for over 90% of the total usage of the Hive network. WAX, on the other hand, relies on Alien Worlds to drive its gaming ecosystem, accounting for half of WAX's activity. The largest contribution to GameFi transaction volume on Harmony comes from DeFi Kingdoms, with a transaction volume of $1.76 billion within 30 days, making Harmony the public chain with the largest GameFi Dapp transaction volume.

1.3 Investment and financing activities are active

The development of the GameFi sector in 2021 attracted a lot of venture capital. In 2020, the investment amount in blockchain games was about 88.8 million USD, and in 2021 it reached 4 billion USD, an increase of about 43 times. Currently, the total investment amount in blockchain games is approximately 5.4 billion, with traditional investments accounting for 85% and blockchain investments accounting for 15%.

2. Layout Direction

Through the analysis of the current market, we believe that the following four areas are the key layout directions that GameFi needs to focus on in the future:

2.1 More engaging GameFi

Currently, GameFi, which is primarily based on play-to-earn, has some gaming attributes compared to traditional games, but the gameplay is not strong enough. Whether in terms of narrative or graphics, these games generally place more emphasis on "earn", while "play" is of secondary importance.

Many of the chain games seen on the market have this characteristic, where most of the participating users are cryptocurrency players, and the quality of the games varies. After Axie Infinity, the November GameFi wave represented by Crypto Mines, Wolf Game, BNX, etc. further shows that game items are mostly obtained through opening blind boxes, and there are very few fighting and competitive scenes in the games.

More emphasis on strategy and gaming, the economic model maintains a shorter duration, and some outside players even view this type of blockchain game as "online gambling". During this stage, many high-risk speculators in GameFi have also emerged.

We believe that the GameFi sector is one of the most effective means of attracting non-crypto users into the crypto field. The development of GameFi cannot rely entirely on crypto native players; attracting traditional gamers is crucial. High-quality blockchain games with stronger gameplay and playability will become the main direction of the GameFi sector in the future.

However, for investors, although large-scale AAA blockchain games that require significant funding and take years to launch are guaranteed in quality, and the chances of them running away or not delivering are low, there are still certain risks involved. This is because the GameFi industry is very fast-changing, and the economic mechanisms and gameplay designs can undergo significant changes within a few months.

We believe the following three blockchain games have strong gameplay:

2.1.1 Thetan Arena

Thetan Arena is a MOBA game known by many players as the "on-chain League of Legends," developed by the well-known Vietnamese traditional game company Wolffun. Wolffun was established in 2014 and has created popular games such as Heroes Strike(. Thetan Arena is like the on-chain version of Heroes Strike. The game has the following modes:

• Battle Royale ) Single/Double: Become the last survivor among 12 players, all players have the same mission, which is to attack supply crates and eliminate other enemies.
• Tower Defense: 4v4 team, destroying the opponent's tower is considered victory
• Deathmatch: 4v4 team, players need to eliminate as many others as possible.
• Super Star: 4v4 team, players need to win by accumulating points.

There are two types of tokens in the game: one is the governance token THG, and the other is the in-game token THC. THG can be used to purchase mystery boxes and upgrade heroes, and users can earn it through PVE, PVP battles, and tournaments; THC can be obtained by completing tasks and improving rankings.

This game has the following advantages:

1. Diverse gameplay, strong playability, similar to League of Legends and Brawl Stars, players can enjoy the fun while earning rewards.
2. Can be operated on mobile devices, supporting users to play games on PC, Android, and iOS.
3. The game duration is relatively short, about 3-5 minutes per round, allowing players to utilize fragmented time to play the game.
4. You can play for free and earn rewards, users can experience the game and receive rewards without investing any funds.
5. The team has a rich background in traditional game development and has developed several high-quality games.
6. There are many heavyweight partners and investors such as Animoca Brands, Mask, etc.
7. High popularity: The current number of players has exceeded 18 million, with nearly 360,000 Twitter followers and 320,000 Discord community members.

However, during the actual operation of the game, there will be lag, and there are many restrictions on withdrawals. Both THC and THG tokens require players to create an account for at least 12 days, and can be claimed once every 48 hours. A handling fee is required when collecting, with minimum and maximum withdrawal limits that are related to account reputation. Reputation is linked to battles, rankings, and purchasing volume in the mall, so this game is more suitable for players who want to play games rather than gold farming players.

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(# 2.1.2 Sidus Heroes

Sidus Heroes is a sci-fi themed MMORPG built on Ethereum, ), which is currently in the early stages of development. The official website only provides a demo version, and the Market Place and other features on the website are still under construction.

The game is set with 12 races, each with different skills, and these 12 races are all related to blockchain, such as Polygopus, Solantrum, Bitcoione, Polkacyon, etc. There are four gameplay modules in the game:

1. PVP Arena: Players can adjust their strategies, combine different skills and weapons, and engage in battles with other players.
2. Planet Exploration: Players can purchase spaceships to explore in space and can occupy other planets through combat.
3. Land Management: Players obtain resources by purchasing assets or occupying planets, managing and building their own land, similar to RPG mode games.
4. Politics: Includes parliamentary and party elections, concerning the future direction of the entire interstellar space.

Players need to hold an NFT to enter the game, currently the floor price for avatars on Opensea is 0.7 ETH, which is much lower compared to Star Atlas. The economic model adopts a dual-token system, with the in-game token being Sidus and the governance token being Senate.

The main highlights of the game include:

1. Well-crafted, high resolution, with exquisite image quality and strong artistic value in the avatar.
2. The game content is rich, and the storyline is complete and detailed.
3. The roadmap is compact in duration, plans are relatively long-term and very detailed, and a demo is provided, while most AAA games on the market only offer a few images and promotional videos. This is the only game that allows for gameplay experience.
4. The team's token lock-up lasts for four years, giving investors the impression that they are seriously developing this game.
5. Social Media Activity: Twitter followers have exceeded 330,000, and Discord members are around 210,000.

However, the game also carries certain risks, such as the investment team's lineup not being strong enough for a AAA title, team members lacking experience in large-scale game production, and the development time being relatively short.

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[image]# 2.1.3 Illuvium

The story background of Illuvium is about a spaceship discovering a mysterious planet in space that is sending out a distress signal. After an accidental crash, people attempt to explore this planet and conquer the divine beasts known as illuvials. They can capture illuvials to include them in their own camp, and capturing these divine beasts requires crystal balls. Players need to mine resources from the planet to synthesize crystal balls.

The game features both PVP and PVE modes, with illuvials having different rarities and five attributes: water, fire, earth, nature, and air. The professions are also different, and players need to use their strategies to adjust the positioning of the divine beasts. This is somewhat similar to the thinking in chess games, but the battle scenes are also crafted very well. Additionally, players can fuse different divine beasts to create even more powerful ones.

According to official sources, there are still some undeveloped plots in the game, which may be used for the development of other games in the future, or may be provided for players to create games independently, thus forming a rich game ecosystem. Illuvium is expected to enter public beta in Q1 of this year, and currently only the staking of the ILV token and the sale of NFTs are open, with divine beasts, weapons, armor, skins, and more being NFTs in the game. The game also employs a dual-token mechanism, with ILV used for governance and sILV serving as in-game assets.

Several highlights of Illuvium are:

1. The artist's graphics and design are excellent, with high picture quality and fine detail, and strong gameplay. ( This is also the game's biggest highlight. )
2. Built on ImmutableX, which is specifically designed for NFTs on Ethereum Layer 2, players do not have to pay high fees.
3. Introduce DeFi Staking mechanism before the game's launch to reduce selling pressure, strengthen investor confidence, and stabilize the coin price to a certain extent. The longer the staking period, the greater the APY coefficient. ### Provides higher rewards for players who want to invest in the project for a long time. (
4. The team includes experienced game developers, with co-founders Kieran Warwick and Aaron Warwick being brothers, along with Kain, the founder of Synthetix.
5. The investor lineup is quite strong, including YGG.
6. Strong social media operations, with nearly 250,000 followers on Twitter and around 250,000 members on Discord.

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[image] 2.2 "Chain Game Steam"

The mechanisms and gameplay design of blockchain games change rapidly. A single game and a single economic system may lead to slow user growth, as lack of novelty in gameplay and mechanisms or declining earnings can result in user loss. On the contrary, we should pay more attention to the "Steam" of the blockchain gaming field, which is an ecosystem composed of multiple blockchain games. A multi-game ecosystem can bring more narratives (, such as the Metaverse ), and token economics can also be applied across multiple games to form a cycle, with stronger interoperability among different games. Currently, notable projects in the multi-game ecosystem include Gala and Mobox.

2.2.1 Gala Games

Gala Games is both a game developer and a game aggregation platform. In addition to developing games themselves, the team also allows other developers to create games through voting, attracting other game studios to integrate. The NFT item assets and Gala tokens of Gala Games are all based on Ethereum, while internal game transactions rely on their own network maintenance. This approach ensures asset security and maintains game smoothness.

There are already over 26,000 nodes in the Gala ecosystem, Founder’s Day.