The Evolution of GameFi: Exploring the Next Hit Game

GameFi, as the concentrated application of blockchain technology in the gaming field, has undergone an evolution from simple Ponzi schemes to the construction of a complete financial ecosystem. This article will review the development history of GameFi and analyze its future prospects.

DeFi and NFT Lay the Foundation for GameFi

Since the launch of the Ethereum mainnet in 2015, DeFi and NFTs have thrived, providing the technical and market foundation for GameFi. The total market value of DeFi has grown from $50 million in 2015 to $100 billion in 2023, while the market value of NFTs has risen from a few million dollars in 2018 to $8 billion in 2023.

In 2019, Mary Ma, the Chief Strategy Officer of MixMarvel, first proposed the concept of "GameFi", combining gaming and finance. In September 2020, Andre Cronje, the founder of Yearn.finance, further elaborated on the vision of GameFi, believing it would become the future direction of DeFi's development.

GameFi Reshaping the Gaming Industry

GameFi addresses the pain points of item trading in traditional games through blockchain technology, allowing players to truly own game assets. At the same time, GameFi introduces DAO governance, enabling players to participate in decision-making within the game ecosystem.

From a technical perspective, GameFi is a combination of DeFi, NFT, and blockchain gaming, representing the comprehensive application of blockchain technology. It aligns with the technological innovation rules of game development and is expected to become a new direction for the gaming industry.

GameFi 1.0: Simple Ponzi Game

Launched in 2017, CryptoKitties marked the beginning of the GameFi 1.0 era. Players could buy, breed, and trade unique crypto cat NFTs, sparking a craze. However, CryptoKitties and most of the early GameFi projects that followed were essentially Ponzi schemes, lacking real gameplay.

GameFi 2.0: Building a Complete Financial Ecosystem

Axie Infinity pioneered the "play-to-earn" model.

Launched in 2018, Axie Infinity is a representative work of GameFi 2.0. Players can collect, breed, battle, and trade Axie creatures, earning tokens through gameplay. Axie Infinity has built a complete gaming economic system, including:

• Dual Token Model: AXS( governance token ) and SLP( game token )
• Scholarship Mechanism: Allowing new players to enter the game with zero barriers.
• PVE and PVP gameplay: enhance game playability

Axie Infinity saw explosive growth in 2021, with monthly active users exceeding 2 million at one point, and annual trading volume reaching $4 billion. Although the popularity has declined in the later period, it still maintains about 100,000 active users per month.

The Sandbox creates a virtual world

The Sandbox is based on a popular mobile game IP, reconstructing the UGC( user-generated content) ecosystem through blockchain. It offers three types of tokens:

• SAND: Ecological governance and trading token
• LAND: Virtual Land NFT
• ASSETS: User-created material assets

The Sandbox has received investments from well-known institutions such as SoftBank, and its virtual land LAND has previously been sold at a sky-high price. Its market value still reaches 700 million USD, showcasing the value of high-quality GameFi projects.

GameFi 3.0: Exploring Future Directions

The current GameFi market is relatively sluggish, but it still has growth potential. Future GameFi projects can break through in the following directions:

1. Fully On-chain Games: Putting all game logic and data on-chain to achieve complete decentralization.

2. Cross-border integration: combining with emerging technologies such as AI and the Internet of Things

3. IP Empowerment: Introduce well-known game IPs to enhance user attraction.

4. Enhance playability: Create high-quality competitive games similar to MOBA.

Overall, only GameFi projects that can truly attract players and build a complete economic system are likely to become the next blockbuster games.