Hello my readers! Today, I will be talking about how a majority of crypto investors don't understand about GameFi and metaverse projects.
What are GameFi or metaverse projects?
For those who don't know, GameFi projects are usually play-to-earn games that allows players to earn crypto whilist playing. This process usually requires the user to own a pre-existing NFT to begin earning crypto. Usually, the crypto is a new token created by the project in question. They usually distribute their token by minting new tokens.
The two polarized views of GameFi projects
The minting of tokens, however, creates the issue of inflation and is the primary reason why GameFi projects don't last very long. Another reason is the fact that technically, play-to-earn games were paying players with investor's money. This was quite apparent when right after the last bull market, GameFi projects lost around 90 - 99% of their values. Without their main incentive of playing (Crypto), players began to move away from GameFi projects.
Me, myself, has observed two main polarized views of GameFi projects. One is extremely bearish where GameFi projects are dead and will never succeed (Even in the next bull market) and the other is overly optimistic where GameFi projects will do extremely well during the next bull market and even reclaim/surpass their ATH's (All time high's)
The reality of GameFi
The reality is that both sides are wrong. GameFi projects will not die out but will not reclaim/surpass their ATH's either. The reason being is that back in the last two bull markets, GameFi projects were overly hyped. So much so that it caused a very unnatural upside for many GameFi tokens and with the hype gone, the GameFi projects simply received a correction from their overly hyped prices.
This proves two things. One, the bearish side cannot say that GameFi is dead due to their massive drop in value. Second, the bullish side cannot say that GameFi will reclaim their ATH's because without the massive hype around it, it can never do so.
In other words, GameFi is here to stay, but it won't be as relevant as before.