Gaming Defrosting The Crypto Winter

In the icy grip of the prolonged crypto winter, token prices have tumbled massively, generating significant FUD within the industry. Liquidity has flown out of the markets, projects crumbled, and pessimism held the fort.

Amidst the frosty spell, a new hero emerges in the form of crypto gaming. According to on-chain metrics, crypto gaming is quietly thawing the crypto winter chill. Crypto gaming has been on the uptrend in 2023, and projections indicate that the momentum is set to continue into the incoming bull market.

This edition will explore the crypto gaming landscape in detail.

TL;DR

• Crypto gaming is one of the verticals responsible for generating huge user activity within blockchain ecosystems.

• Ecosystems hosting gaming projects have sustained user demand during the bear market.

• Several gaming projects have attracted huge investments, indicating growing interest among institutional players.

• Crypto gaming can potentially onboard millions of users into web3, as the gaming industry already boasts hundreds of millions of users.

Overview Of The Gaming Landscape

The gaming landscape is currently booming. The GameFi market cap has reached an outstanding $13 billion valuation as of writing. On-chain analysis reveals that volumes and numbers of unique active wallets have remained high for the better part of the year.

As indicated by wallet counts, gaming dapps continue to show strong dominance over other verticals. Blockchains that support many gaming projects have benefited from this growth.

Investments flowing into gaming projects have also increased. In 2023, gaming investments peaked at approximately $2.3 billion, with $1.5 billion coming in within the year's first half alone. With all the current media attention on GameFi’s massive potential, many retail and institutional investors are considering including GameFi projects in their portfolios.

Multiple leading projects have achieved double-digit gains within the past several weeks on a project-by-project basis. Most of the top ten GameFi projects have surged more than 10% in the past week. GameFi infrastructure providers like ImmutableX, Illuvium, and Sandbox have registered significant gains within this period.

Despite this growth, most gaming projects are still trading at more than a 90% discount from their previous ATH. This is likely to change, moving into the bull market.

While the number of on-chain games is rising, only about 5% are fully hosted on-chain. Instead, game developers have opted to have only in-game assets like NFTs hosted on-chain while the rest of the game runs on legacy gaming technology. This trend is expected to shift as on-chain gaming infrastructure develops.

GameFi’s relevance and potential within the industry can’t be underestimated.

How Has The Crypto Gaming Landscape Changed?

The gaming landscape is evolving at a rapid pace. Gaming developers have shifted from Ethereum to more scalable chains like Solana, Polygon, Arbitrum, and Immutable. This is fueled by the need for superior technical capabilities.

The GameFi trend is also shifting towards casual games. Casual games continue to attract both users and investments. This is due to their appeal to the huge base of non-sophisticated gamers worldwide.

Casual games like Vulcan Runner and Rollercoin have amassed huge communities. Experts predict that casual games will become the next trend within the industry.

The dominance of well-established gaming projects like Axie Infinity and Alien Worlds is growing rapidly. Alien Worlds is currently leading with more than 200k daily unique wallet addresses. Newer entrants like TreasureDAO are also gaining momentum.

What Are The Challenges Facing Crypto Gaming?

Blockchain gaming has provided new opportunities to gaming developers and communities worldwide. But despite its massive potential, it faces several deep-rooted challenges that may stall its growth.

If history is anything to go by, gaming tokens have suffered from poor tokenomics. Token designs like Axie Infinity dramatically dropped token prices as the hype died. Gaming developers struggle with non-inflationary token designs as these limit their incentivization capacity.

Crypto gaming also glares at a myriad of security risks associated with blockchain. Axie Infinity’s hack for more than $600 million still lingers in the minds of many. Storing in-game assets on-chain exposes them to many security risks, and developers are left at the mercy of existing security standards, which always fail in the face of new hacking tactics.

Another challenge facing crypto gaming is poor UX. Even experienced games still need help with navigating blockchain technology. This complicates user experience and slows down new user onboarding. Blockchain still suffers from a UX problem, which trickles down to crypto games.

Besides UX and tokenomics, navigating the regulatory landscape also presents some challenges. Since GameFi enables new economic models, aligning them to fit within the existing regulatory framework is a huge challenge, considering the laws aren’t mature enough to accommodate the dynamic world of blockchain.

Which Are The Top Gaming Projects?

The industry is booming with many unique projects, from infrastructure to highly enjoyable crypto games.

Axie Infinity still leads the pack as one of the most promising crypto games with a thriving community. The following chart shows the top GameFi projects ranked by ROI.

However, there’s increasing competition from the likes of Battle Infinity, Tamadoge, and Alien Worlds. Casual games like Vulcan Runner, Benji Bananas, and Shatterpoint have also built strong user bases.

Sandbox, Illuvium, ImmutableX, and Enjin continue to attract gaming developers. This comes at a time when traditional infrastructure blockchains like Solana and Avalanche are incentivizing and rapidly growing their gaming ecosystems.

Newer gaming platforms like Nakamoto Games have outperformed in the bear market, providing the much-needed attention boost the industry needs.

Final Take

Crypto gaming is one of the essential verticals that will sustain user demand across blockchain ecosystems. Gaming’s potential to attract millions of new users into web3 can’t be underestimated, and the growing user count in blockchains with developed gaming ecosystems signifies this.

The future of crypto games remains bright. As more and more businesses explore the new economic models enabled by blockchain, we expect more games to be built on the blockchain. Gamers will also opt for the tokenized gaming environments provided by GameFi projects.

Based on the metrics, economic models, and customer base of crypto games, all pointers indicate a positive growth trajectory. For this reason, gaming tokens will likely be one of the biggest winners in the coming bull market.