Overview of the Development History and Future Prospects of GameFi

DeFi and NFT Lay the Foundation for GameFi Development

Since the launch of the Ethereum mainnet in 2015, the DeFi and NFT markets have experienced explosive growth. The total market capitalization of DeFi has increased from $50 million in 2015 to $100 billion in 2023, while the total market capitalization of the NFT market has risen from several million dollars in 2018 to $8 billion in 2023. The vigorous development of DeFi and NFTs has provided fertile ground for GameFi.

In 2019, Mary Ma, the Chief Strategy Officer of MixMarvel, first proposed the concept of GameFi, which means "gamified finance" and "new gamified business". In September 2020, Andre Cronje, the founder of Yearn.finance, further elaborated on the GameFi concept, believing that GameFi would become the future development direction of DeFi.

GameFi Reshaping the Gaming Track

GameFi combines DeFi, NFT, and blockchain gaming technologies, running game assets and some logic on the blockchain, managed by a DAO organization that oversees the gaming ecosystem. GameFi builds a complete financial system, supporting activities such as item trading using game native tokens, allowing users to earn token profits through gameplay.

GameFi can completely solve the problems of monopoly in item trading and rampant black markets in traditional games. Through DAO governance, GameFi also allows players to share decision-making power in game development.

GameFi follows the development process of games and aligns with three major elements: the enhancement of computer technology, hardware upgrades, and innovation in game concepts. The market value of GameFi has risen from 200 million USD in 2018 to 24.52 billion USD in 2023, with a staggering growth rate of 733.3% from 2020 to 2021.

GameFi 1.0 Era: The Prevalence of Ponzi Games

In 2017, CryptoKitties sparked the first wave of blockchain gaming craze. However, most early projects like Fomo3D were typical Ponzi scheme games, lacking a complete financial system and gameplay.

GameFi 2.0 Era: The Rise of Play-to-Earn Model

Axie Infinity innovatively combines the "play-to-earn" model with complex financial mechanisms, attracting real gaming enthusiasts through PVE and PVP modes. In August 2021, Axie Infinity's total transaction volume exceeded $2 billion, with monthly revenue reaching $364 million, surpassing Honor of Kings for the first time.

The Sandbox inherits the UGC model of sandbox games and provides users with a comprehensive design experience through three major functions: VoxEdit, MakeTPlace, and Game Maker. The market value of The Sandbox reached a high of 6.8 billion USD, providing a model for the integration of traditional IP and blockchain technology.

GameFi 3.0 Era: Full-Chain Games and Cross-Industry Integration

On-chain games will become the future development direction of GameFi, achieving complete decentralization of game logic, data, and assets. The integration of GameFi with emerging technologies such as AI and the Internet of Things has also attracted significant attention from capital.

The introduction of traditional game IPs into blockchain technology has become a new trend. Gaming giants such as Atari, Square Enix, and Capcom have announced that they will bring classic IPs to blockchain platforms.

The breakthrough path for GameFi in the future lies in creating a game ecosystem with high playability and a complete financial system. Projects that are the first to bring quality IP to the blockchain are expected to gain a first-mover advantage.