2023 will see the death of play-to-earn gaming


Over the past few years, play-to-earn gaming enabled by blockchain technology has grown exponentially.

In blockchain-based games, gamers can collect cryptocurrencies or nonfungible tokens (NFTs).

As a result of this new technology, players can generate income by selling NFTs or earning cryptocurrency rewards, both of which can be exchanged for fiat currency.

According to Absolute Reports, the GameFi industry is expected to grow to $2.8 billion by 2028, with a compound annual growth rate of 20.4%.

One might think that with exponential growth over recent years, the trend would continue well into 2023 and beyond. Wrong.

When the tide comes in and goes out again, a castle built on a flimsy foundation of sand can easily be washed away, as we have seen with former crypto king Sam Bankman-Fried.

GameFi developers could face big fines and jail time

Warren Buffett once said, “Only when the tide goes out do you discover who has been swimming naked.”

In 2023, we may find out who these people are. The play-to-earn gaming industry is not built on stable foundations. The foundations are fragile and flimsy, and this could spell trouble for the entire industry.

As the current GameFi market is token-centric, there are a number of issues that can arise. Before they announce that they intend to build games, project owners issue tokens that are listed on exchanges. Games are a utility of tokens they issue. Therefore tokens come first, and contents second. Because of this, blockchain games are so underrated for their design and quality.

In 2022, unique active wallets (UAWs) used decentralized applications (DApps). Source: DappRadar

In recent years, players have begun to lose interest in games themselves. It’s a strange state of affairs for a gaming industry to find itself in. More and more players are actually investors seeking returns on their investments.

It is one of the reasons why the system is not working as it should that the current structure creates the wrong kind of incentives. As one of the more well-known play-to-earn blockchain games out there, DeFi Kingdom has created perverse incentives to screw with its tokenomics relentlessly.

In general, the token market has been in a downtrend lately, while speculation trading has ceased. A lot of hype and expectation can only keep industry going for so long without anything to show for it – before people start to realize that’s not what they signed up for. Frustration follows with a quick withdrawal from the savviest participants first, gradually growing into a wave.

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There will be reassessment needed for those who had planned to secure funds by listing their tokens. As a result of insufficient funds, many projects will have to close. Even previously bullish venture capitalists (VCs) are halting new investments because the situation is deteriorating.

It appears unlikely that GameFi will survive this investment drought, but other blockchain gaming companies may.

The Ethereum-based, NFT-based fantasy football league operator Sorare is one example. Even during the darkest period, Sorare keeps on growing its users and revenue. While many of its competitors struggle, Sorare keeps on growing its users. Their daily auction volume is impressive, at around 300-400 Ether ( ETH ), and their number of users keeps growing.

In spite of the fact that it relies on blockchain, users do not perceive it as a GameFi project. They do not provide their native tokens, but their content is provided on Ethereum first, which is a good sign for the industry as a whole.

Despite GameFi’s likely death in 2023, that does not mean all is lost. Death is a necessary part of evolution. From it, new life may already be arising.

He joined Japanese conglomerate Mitsui & Co. in 2014, doing automotive finance and trading in Malaysia, Venezuela and Bolivia before founding the blockchain games developer Murasaki. Following Mitsui, he joined a second-year startup called Jiraffe as its first sales representative, then moved to STVV, a Belgian football club, as its chief operating officer and helped the club create a community token. Murasaki was founded in 2019 in the Netherlands by him.

There is no legal or investment advice contained in this article, and it is intended for general information only. In this article, the author expresses his or her own views, thoughts, and opinions, not necessarily those of Cointelegraph.

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