Trickle Down
“Trickle Down” – a cartoon that illustrates how the play-to-earn game model has turned into a Ponzi scheme.
The GameFi market integrated blockchain applications into the gaming sector, offering game players tokens for game activity.
In 2022, Crypto.com estimated the GameFi market had a total market cap of $55.38 billion led by companies such as Axie Infinity.
However, the market was based on a fundamental misalignment, since most gamers were not really game lovers, but were just looking to sell their tokens or other digital game collectibles to other new entrants.
For example, Axie’s players needed new gamers to join because new gamers had to buy Axie characters, a non-fungible token.
When the gamer flow slowed, the token’s price collapsed, and so did a player’s earnings, and since they were only playing to make money, so did usage.
Today, Axie Infinity’s token is 95% down and daily active users dropped from 2.7 million to only 760,000.
Another example is Fancy Birds, which was based on Flappy Birds (a very successful mobile game), but now added 8,888 randomly generated NFT characters that fight through levels to earn their spot as the “fanciest bird in the nest.”
Today, Fancy Birds usage has flat-lined and never achieved Flappy Birds’ success.
One bright spot for the industry, which might point to GameFi 2.0, is the Ethereum-powered, NFT-based fantasy football league operator Sorare, which uses blockchain as a back-end to offer a better gaming experience and new product features for game lovers.
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