GameFi Financing Continues Unabated Amid Downturn
VYSYN Weekly Release #102: Game tokens outperform crypto market as engagement soars
The past few weeks have been nothing short of eventful for the digital asset industry, with several coins falling off the edge. While the market is still recovering, one sector of the industry has outperformed in these turbulent times. The blockchain gaming or GameFi space is witnessing massive cash injections and an influx of users.
This week's VYSYN Release will analyze the performance of the top GameFi platforms amid the market downturn. We will also examine how the space continues to thrive despite challenges.
Metaverse tokens rise as GameFi users grow
Despite the recent downturn in global financial markets, the play-to-earn sector of the digital asset industry continues to impress. While several popular crypto assets lost a chunk of their value over the past few weeks, top gaming tokens outperformed the market by nearly 400% year-on-year (YoY). According to the Kraken Intelligence and CoinGecko report dubbed Hold Steady: May 2022 Market Recap & Outlook, Metaverse tokens fared better than other crypto categories, rising by 395%.
(Source: Kraken Intelligence)
Blockchain gaming has remained popular despite slumping prices across the market. Data from decentralized application tracker, DappRadar, revealed that over the past month, the number of active users on the top 10 gaming platforms grew by more than 3 million. User counts in these games have also remained consistent, with approximately 1 million users daily.
This growth is not limited only to popular blockchain gaming platforms. A recent report by blockchain-based gaming analytics platform UpOnly noted that fast-rising blockchain games like Nakamoto Games are also witnessing impressive growth. The gaming platform recently crossed the 100,000 registered user milestone.
The platform's play-to-earn (P2E) gaming ecosystem hosts several gaming experiences for gamers and game developers. It is gaining traction among gamers as it provides a wide range of games to choose from.
Leading the gains was the token for the move-to-earn project STEPN (GMT), which saw a 746% increase since last year. The governance token for Axie Infinity (AXS) followed with a 511% increase.
They were closely followed by the Sandbox's native token SAND, which saw a 470% increase. Decentraland (MANA) rose by 41% YoY.
Investment in blockchain tilts towards GameFi
According to data from Footprint Analytics, there are currently 1,534 GameFi projects, up 99% annually. Developers are leveraging increased user interest to create more blockchain gaming projects. Simultaneously, investments into these projects also saw a major spike, with the amount of investments in the first half of 2022 exceeding the total for 2021.
(Source: Footprint Analytics — Funding Monthly Investment Trend)
Out of the $22.5 billion invested in the blockchain sector in the first half of 2022, the GameFi sector accounted for 16.4% of that number. With a total investment of $3.7 billion, higher than the $780 million in 2021, the sector is gradually increasing its proportion of the blockchain investment space.
(Source: Footprint Analytics — Gaming Financing Distribution)
Earlier this month, Binance Labs, the venture capital arm of the leading crypto exchange Binance, raised $500 million from several top VCs. The fundraising was targeted toward accelerating the development and adoption of Web3 and blockchain-based projects, including gaming. The firm's executive director of investments, Ken Li noted that the funds will be invested in projects across three stages of pre-seed or incubation, early-stage venture, and late-stage growth.
Recently, blockchain gaming firm Immutable launched a $500 million fund to boost Web3 gaming adoption. The fund will support projects building Web3 games on the firm's Ethereum-based layer-2 platform, ImmutableX. Regarding the growth of the GameFi sector, Immutable's president and co-founder Robbie Ferguson said, " We see gaming being one of the biggest opportunities in Web3 to have ever existed. The total addressable market is going to be enormous and much bigger than what gaming is today — a $100 billion industry for in-game items alone.”
Blockchain gaming boom continues amid challenges
Despite a marketwide downturn, the blockchain gaming industry is recording stellar performance, breaching new frontiers, and attracting more users and investors. The blockchain gaming sector has grown from zero market value to a billion-dollar industry.
However, a few challenges are restricting this sector of the digital asset industry from attaining mainstream adoption. For one thing, a lack of awareness about blockchain technology and NFTs is slowing the pace of adoption. Despite the popularity of these two concepts, many mainstream users still regard them as buzzwords and give little attention to blockchain-based games.
Another issue is the complexity involved in interacting with these games. The processes involved in signing up and connecting wallets to these games are too complicated. The risk of losing money from a mistake further increases users' skepticism about playing these games.
One of the biggest issues the GameFi industry has is that projects often launch regardless of the games' development stage. Scammers leverage the massive popularity that blockchain games have attained within the past few years to defraud unsuspecting users. A good example of this issue is the Squid Game project, which made away with over $3 million worth of investors' funds.
Nevertheless, despite these challenges, the GameFi industry is setting new frontiers with its unique features. It has allowed gamers from all experience levels to participate, boosting the growth of the gaming economy. For instance, the open-world MMORPG game on Nakamoto Games, Outlanders, is rapidly gaining acceptance among gamers. The gameplay allows both expert and beginner gamers to benefit from its lucrative earning opportunities, irrespective of their blockchain experience.
While the space is sometimes clouded with confusion and uncertainties, it is imperative to remember that GameFi is still a new concept. There is enough room for growth and with the recent increase in VC funding, the blockchain gaming industry can overcome these challenges and drive development and adoption.
About VYSYN Ventures
VYSYN Ventures is a longstanding venture capital company that specializes in funding and supporting disruptive startups in the blockchain and cryptocurrency industry. We have provided early-stage support to several projects that have grown USD market capitalizations of hundreds of millions and even billions. Our incubation program focuses on providing capital allocation, versatile marketing support, and tech assistance.