Sector rotation or fundamental improvement, how did this GameFi boom come about?

Exploring the Origins of the GameFi Boom Sector Rotation or Fundamental Upgrades?

In November, the cryptocurrency market remained active. After the rise of ecosystems like Bitcoin and Solana, several “old tracks” such as meme and GameFi also started gaining attention. Some crypto communities noticed that the blockchain gaming sector seems to have entered a “news-intensive period,” with many crypto users optimistic about the prospects of blockchain-based gaming.

Cobo’s co-founder and CEO, Fish, also mentioned GameFi Summer on his social media platform on Sunday. He stated that gaming is naturally compatible with the characteristics of blockchain, making it one of the typical scenarios. In recent tweets, Fish raised questions about “GameFi Summer,” intending to explore the development prospects of blockchain gaming together with the community.

Although no one can provide an absolute correct answer in the face of the market, BlockBeats did discover that the discussion about GameFi this time is not baseless. In fact, since the beginning of this market trend, we have been able to witness the gradual launch of this sector. Based on recent news and market dynamics, BlockBeats has compiled the process of this GameFi frenzy.

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“Refining” Makes a Comeback

After StepN’s popularity fizzled out, GameFi was criticized due to token model issues and was often dubbed as “refining,” which made many communities skeptical. However, starting from September this year, high-quality GameFi projects such as Matr1x Fire and Mahjong have emerged in the market, with excellent responses from the community. The rise of GameFi has been evident since then.

September’s Matr1x Fire event. Even in the cold winter of the crypto industry, there are few teams in highly sought-after areas like ZK that can independently organize community events with such an atmosphere.

Established Blockchain Gaming Projects Make Moves

In early November, the prices of IMX and ILV, two established gaming tokens with a “big company background,” rose, once again drawing attention to the blockchain gaming sector. Immutable X, which had received Tencent’s investment, saw its native token’s price surge from $0.6 to $1.12 within a week after announcing its collaboration with Ubisoft, with a growth rate exceeding 80% in 7 days. Since then, its Total Value Locked (TVL) has been steadily increasing and has reached $214 million, with a 40.93% growth rate in 7 days.

On November 8th, Illuvium, a RPG masterpiece built on the Immutable X Layer 2 network, also announced that it will be available on the Epic Games Store on November 28th, leading to a 59% increase in token price.

Prior to this, on October 31st, P2E blockchain game Pixels announced its launch on the Ronin Network and opened Pixels Pets (NFTs with instant gaming utility) minting on the Ronin Chain. Additionally, it will introduce the PIXEL token. According to Blur data, Pixels Land NFT is currently trading at 0.88 ETH, with a weekly growth rate of over 31%.

In the announcement, Pixel stated, “The community has always been our driving force, and Ronin has more Web3 users than any other blockchain network.” BlockBeats found that many of the KOLs promoting Pixels are deep players of Axie Infinity. In addition, Ronin and Axie Infinity founder Jihoz appeared in Pixel’s NPC. Jihoz himself frequently promotes Pixels on his official account and said, “Honestly, Pixels feels like early Axie.”

According to Coingecko data, Ronin, the token of the Ethereum sidechain Ronin Network, has shown a significant increase in the past week, with a weekly growth rate of 63.3%. At the time of writing, it is priced at $0.82, with a 7-day increase of 38%. On November 16th, Jihoz stated that the number of daily active addresses for Pixels has exceeded 100,000. Although there is no specific data pointing to it, the community generally believes that this growth is due to the recent promotion of the game Pixels by Ronin.

Ronin token price and network active addresses have rapidly increased after Pixel joined the ecosystem; image source from CoinGecko

In early November, old-school gaming projects and chains collectively gained exposure, becoming the first wave of momentum in the chain gaming sector during this round of uptrend. In addition to the establishment and efforts of old-school chain gaming projects, popular games that have received significant funding in the previous cycle have also opened up to the market recently.

Big games in the chain gaming industry are landing

In mid-October, the 3A chain game token BIGTIME of BigTime was listed on OKX and saw an almost 20-fold increase in price within two days. In the overall bearish market at that time, its wealth-creating effect caused a small hot topic and new narrative, and some even shouted, “Follow BigTime into the next chain gaming bull market.”

BigTime is a PC-based multiplayer action role-playing game led by the former founder of Mana. It has recruited a development team composed of senior professionals from top game companies such as Epic Games, Blizzard, EA, and Riot. In terms of funding, BigTime has raised over $90 million through primary market financing and NFT sales.

Dacheng, the Chinese representative of BigTime, stated in an AMA titled “Exploration of Cooperation Between Web3 Games and KOLs: How Ordinary People Can Benefit from Web3 Games” that “We are looking for small and medium-sized game streamers and inviting them to be test officials to play the early version of the game and provide suggestions. Many people in this model don’t take money at all and play for us for free, then they invite their fans to play together. We will gradually move towards Web 2 and may also be listed on Steam and Apple Game. We will also engage in traditional user acquisition and advertising. If the game is of high quality, there is no distinction between Web3 and Web2.”

Although the game has caused some controversy in the community after its launch, with some claiming that the project has changed teams for marketing purposes and others claiming that market makers are controlling the BIGTIME token through KYC, there are also concerns about the frequent appearance of bugs in the game, calling it “BugTime.” However, it cannot be denied that the market has not discussed a GameFi game like this for a long time.

Douyu platform anchors use BigTime for game live streaming, the extent of the project’s popularity can be seen; Image source from the internet

In addition, another major AAA work is also gaining momentum in November. On November 1st, Gas Hero, a large multiplayer online (MMO) game developed by STEPN developer Find Satoshi Lab, announced that it will conduct community testing from November 24th to December 8th, and open testing qualifications to 3000 users. On November 27th, Gas Hero officially launched community testing.

Gas Hero is STEPN team’s second official game project that they personally participated in. With its unique and efficient community operation, combined with KOL cooperation mode, and a highly strategic gameplay involving power, influence, and wealth, it has become the most anticipated game project in this bearish cryptocurrency market.

STEPN token GMT has risen from a low point of $0.17 at the beginning of the month to a peak of $0.36, an increase of over 110%. After the launch of the test version of Gas Hero yesterday, there was temporary network congestion and failure to receive verification codes. The official response indicated that it was due to the large volume of traffic in the short term, which shows how popular Gas Hero is.

Yesterday, Sky Strife, an instant full-chain strategy game developed by Lattice, also began testing. Season 0 of Sky Strife will last from November 27th to December 15th, making it the longest game test on Redstone so far.

Although Sky Strife has had multiple trial plays in the past, this test is the first one deployed on the newly released Redstone testnet. The performance of Redstone and its ability to handle a large number of users simultaneously is also a focal point of this test.

According to community feedback, the test token for Sky Strife costs only 0.3 RMB, but now a LianGuaiss card costs nearly 3000 RMB, users commented, “I haven’t seen anything like this on the bullish testnet,” and there are also many people in the community buying ETH from holesky off the market to play the game.

Another recently highly popular blockchain game is a Diablo-style APRG game called Seraph, developed by South Korean listed game company Actoz Soft. On November 19th, Seraph released 3,000 game equipment boxes at a price of 0.06 ETH, and after selling out, the floor price once exceeded 0.4 ETH, achieving a more than 6x increase. Seraph started a new round of testing last week, and many players who wanted to experience the game quickly even purchased test activation codes off the market.

Base Chain’s GameFi Carnival

Social and gaming are not separated, and this has been well proven in the Web2 world. Friend.Tech, as a booming project in the social track, needs no introduction here, and its based Base Chain, since its launch in August 2023, has become a place for dApps with broad prospects.

Having raised $50 million in financing, with a valuation reaching as high as $500 million, LianGuairallel has put its NFT cards on the Base chain for Minting, accompanied by a series of marketing activities on Base, intending to take advantage of the trend. It was also from that time on that a number of popular projects started appearing on the Base chain, causing a market frenzy.

On November 17th, a pet-raising blockchain game called “Fren Pet” received official promotion from Coinbase and Base’s official accounts. Subsequently, Fren Pet gained high attention from the overseas community, with many players looking for invitation codes on Twitter and rushing into Fren Pet. The team even stated that the game once experienced API overload issues.

On November 18th, there were changes in the total value locked (TVL) of projects on the Base chain, and FrenPet is firmly in the lead; image source from CoinGecko

As a pet-raising game based on the Base chain, players can purchase Fren Pet tokens to buy items, earn points by feeding their pets and battling other players’ pets. The higher the points, the higher the ranking on the leaderboard and the ETH rewards received. Some players are trading pets from the Fren Pet game on OpenSea, with a floor price of 0.01 ETH for a pet, which is much higher than the cost of minting pets in the game (almost zero). The total trading volume of Fren Pet pets on OpenSea has exceeded 18 ETH.

Although the gameplay of Fren Pet is simple, it is attracting new players and continuous investment from existing players through reward mechanisms. For example, Fren Pet generates social diffusion through its invitation system, with referrers receiving 10% of all FP spent by the invitees within the app. This achieves new user acquisition and activation at zero cost, making the game also known as the “FT version of blockchain games”.

The projects on the Base network, such as Friend.Tech, Base Name Service, Fren Pet, and Base Swap, provide users with social networks, seamless transitions, pet games, DEX services, and Aerodrome Finance as an AMM, offering options for users to participate in manual or automated concentrated liquidity strategies. It can be said that the prosperity of the Base chain ecosystem and its social and gaming aspects are closely related, which is also the core reason why many crypto users continue to be optimistic about the blockchain gaming sector.

Sector rotation or fundamental improvement?

In the previous bull market, the basic logic behind the speculation of blockchain games was the Play-to-Earn mechanism, as playing games could make money. Blockchain games attracted a large number of people, and token prices soared. If the GameFi craze in 2021 was the result of sufficient market funds plus speculation, then now token prices have returned to their value after the bubble burst and have already entered a stable bottom phase.

On May 25th, Sandeep Nailwal, co-founder of Polygon, stated, “Web3 games are one of the biggest driving forces for the widespread adoption of cryptocurrencies. In the next 6-18 months, there will be some top-tier games released in Web3. Just last year, the funding for Web3 games exceeded $2 billion.”

Looking at funding, money is still flowing into the blockchain gaming sector. According to DappRadar data, the blockchain gaming industry attracted $739 million in investments in Q1 2023, while Q2 and Q3 attracted $973 million and $600 million respectively. Although Q4 data is still uncertain, there are some glimpses through several financings in November.

On November 8th, 1kx led a $3.3 million seed round for GameFi platform Citadel. On November 15th, a16z CSS23 accelerator program participated in the $1.6 million pre-seed round for blockchain gaming project EthXY. On November 17th, game studio Bazooka Tango successfully raised $5 million in funding, and on November 20th, developer protocol Saga announced a $5 million seed round led by venture capital firm Placeholder. On November 27th, UAE-based blockchain gaming project Farcana announced a strategic investment from Animoca Brands.

On November 23rd, Web3 digital entertainment platform MATR1X announced a successful $10 million fundraising in its Series A-2 round, bringing its total funding to $20 million. Its first game, MATR1X FIRE, became the first shooting mobile game in the metaverse and has attracted over 200,000 gamers. In addition, Matr1x’s PFP series Matr1x 2061 has nearly tripled in value in the past 30 days, and the release of Matr1x KUKU is currently underway, becoming a hot topic in the platform-level NFT space.

Besides the continuous influx of funds, the playability of blockchain games has been a frequent topic of discussion, and keeping up with infrastructure is crucial for playability.

On November 9th, DWF Labs announced a strategic partnership with Gala Games, an Ethereum-based blockchain gaming platform, to accelerate the adoption of GalaChain, their L1 blockchain.

On November 15th, the team behind the full-chain open-source engine MUD announced the launch of L2 Redstone, a self-made world for blockchain games. The Redstone Holesky testnet is already live. Redstone is an Alt-DA chain inspired by Plasma and built on the OP Stack.

Currently, the Lattice team is developing MUD V2, which will provide greater flexibility for developers in reading and writing to the blockchain. Projects supported by MUD include the full-chain city-building game Primodium and the blockchain-based word game Word3.

On November 25th, an encrypted KOL revealed that the TreasureDAO team is developing their own blockchain to create a dedicated gaming ecosystem platform. This blockchain could be based on Arbitrum or COSMOS, and this information was confirmed by TreasureDAO co-founder Karel Vuong.

Whether it’s specific projects or community discussions, this wave of growth in the blockchain gaming sector is highly concentrated. In the past, due to inconsistent game quality, lack of player demand, and shortcomings in the economic model design, GameFi left a deep “doge” and “Ponzi” impression on most Web3 practitioners. However, nowadays, it’s difficult to associate AAA blockchain games with “doge” impressions. With funding in place and marketing following closely, high-quality productions not only showcase team strength and willingness to deliver, but also pave the way for the development from playable to enjoyable experiences.

But as independent researcher Jason Chen said, “Unfortunately, we have not yet seen any paradigm innovations like CryptoKitties, Axie, and StepN.” And crypto analyst @thecryptoskanda does not believe that the fundamentals of blockchain gaming have improved. He believes that the top-ranked blockchain games today are still the successful projects from two years ago or even a year ago. “GameFi hype” seems to be a necessary part of every crypto market cycle.

From established blockchain gaming projects to the new forces in the industry, from funding narratives to infrastructure alignment, the recent changes in the GameFi sector are indeed noteworthy. However, on the other hand, the lingering question about the token economic model continues to be unresolved. What exactly is making GameFi regain its vitality? The answers from the community still need time and market validation. But at least for now, the next “Axie moment” that people have been waiting for has not yet arrived.

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