GameFi is a DeFi sector where users play blockchain games that reward players with economic incentives. Most games incorporate NFTs that give access to the game along with a native token that is paid out to users for participation. These are known as play-to-earn (P2E) games and they became extremely popular after the meteoric rise of Axie Infinity. After the hype cycle died down and the bear market began, most of these games suffered massive drawdowns in their user base and token price (AXS currently down 90% from ATH). Despite this, many people, including us, still believe in the future of GameFi and blockchain gaming. In the past few years, investments in the sector have skyrocketed, and traditional gaming companies and developers are starting to look for ways to integrate this new technology.
Investments in Blockchain Gaming
According to the investment firm, Drake Star Partners, $3.6 billion was raised by blockchain gaming companies in 2021 with $1.8 billion coming from Q4 alone. In the first half of 2022, this number reached $2.2 billion. Comparing this to the $780 million total raised in 2020 shows just how fast this sector is growing. Coatue, Softbank, a16z, and Animoca Brands were among the largest investors, revealing that the interest extends to traditional VCs. In fact, many gaming-focused VCs have stated that the majority of their inbound pitches are blockchain related.
Blockchain Gaming Funds
This massive growth has led to the creation of multiple blockchain gaming-focused funds. Below is a list of some of the largest and most notable ones:
- Immutable launched a $500 million developer and venture fund.
- Konvoy Ventures launched a $150 million early-stage venture fund.
- Old Fashion Research, which is led by a group of former Binance executives, launched a $100 million fund focused on the metaverse.
- a16z launched a $4.5 billion blockchain fund and a $600 million gaming fund.
- Framework Ventures launched a $400 million crypto fund, stating that roughly half would be dedicated to blockchain gaming.
- Gala Games partnered with C2 Ventures to launch a $100 million blockchain gaming fund.
- Solana Ventures launched a $100 million DeFi and GameFi fund.
Traditional Gaming Companies
Traditional gaming companies are divided on the prospect of incorporating blockchain technology into their platforms and games. Some companies, such as Steam and Mojang (the company behind Minecraft), have completely banned NFTs from their platforms. However, many others are embracing the technology, including Steam’s biggest competitor, the Epic Game Store. Major studios such as EA and Zynga have publicly expressed their interest, and Ubisoft even released a collection of NFTs for their Ghost Recon Breakpoint game.
GameFi’s growth has forced traditional gaming companies and venture funds to start thinking about how they can get involved. Top executives and developers are starting to migrate to GameFi projects, which should further legitimize the space. So far, only a few projects have built significant user bases, and the gameplay aspect of these projects does not stand up to traditional games. However, with further development, funding, and the influx of top talent, this sector should continue its path of growth.
What is GameFi?
GameFi is a DeFi sector where users play blockchain games that rewards them with economic incentives
What do I need to participate in GameFi?
You need a crypto wallet and usually a NFT for access.
What does P2E mean?
P2E stands for “play-to-earn”, which is a type of blockchain game that rewards gameplay with economic incentives.