Shinnosuke Murata, founder of blockchain games developer Murasaki, says developers are more focused on tokens than making fun games. This is why Murata predicts that GameFi altcoin projects will die in 2023.
“2023 will witness the death of GameFi altcoin projects”
As you follow on Kriptokoin.com, Blockchain technology-enabled GameFi has grown exponentially in a few years. Players have embraced collecting cryptocurrencies or Non Fungible Tokens (NFTs) generated in Blockchain-based games. You know GameFi altcoin projects from ApeCoin, Axie Infinity, Sandbox, Gala Games and Enjin. With the advent of this new technology, gamers earned income by selling in-game NFTs or earning cryptocurrency rewards. Also, it is possible to convert both into fiat money.
Therefore, according to data from Absolute Reports, the estimated value of the GameFi industry will reach $2.8 billion in 2028, with a compound annual growth rate of 20.4% over the same period. However, it is quite possible to prove that such predictions are unfounded. Given the exponential growth rate in recent years, there is absolutely no reason to believe that the trend will not continue into 2023 and beyond. Is it correct? I think it’s wrong.
As we saw in the infamous case of former crypto king Sam Bankman-Fried and the explosion of FTX, a castle built on a flimsy sand foundation can easily collapse when the wave comes and returns. Or as legendary investor Warren Buffett put it: “You’ll only know who’s swimming naked when the tide is low.” We may be about to find out who these people are. The truth is, the play-to-earn (P2P) industry is not built on solid foundations. The foundations are fragile and unstable. It also means trouble in 2023. The whole build seems to collapse.
What is the cause of the collapse?
The structure of the current GameFi altcoin market is token-centric. This is likely to cause a number of problems. Project owners issue their tokens listed on exchanges before announcing that they will launch the game. Games are a vehicle of the tokens they issue. So tokens come first and content comes later. This is why the quality and design of games in the blockchain space is so underestimated.
An environment was created where the players were not that interested in the games. This is a strange situation for a gaming industry. In reality, more and more players have turned into investors seeking returns. The current structure creates false incentives. It’s also one of the reasons why the system isn’t working as it should. I would argue that DeFi Kingdom, one of the better known P2P Blockchain games in the market, is relentlessly dealing with tokenomics by creating perverse incentives.
“Death is a necessary part of evolution!”
So far, generally speaking, the token market is in a downtrend and the speculative trading market is dead. It is possible for an industry to survive for a period of time on promises, expectations and unfair exaggerations. But it can do this for a certain period of time. Eventually, people begin to realize that they are not getting what they were promised. Patience begins to wane. They become angry, frustrated, and begin to withdraw. This starts out as a trickle of the most knowledgeable players. However, it is very likely that this will turn into a flood in a short time.
Those planning to raise funds by listing tokens will need to reconsider. Many will have to close their projects due to insufficient funds. The situation is getting so severe that even emerging crypto venture capitalists (VCs) are putting new investments on hold.
So who will survive this investment drought? GameFi altcoin projects are unlikely to do. However, other Blockchain games have the possibility to do this. One example is that Ethereum-backed, NFT-based fantasy football league operator Sorare has become a Web3 unicorn. While most of its competitors are struggling, Sorare continues to increase its users and revenue during its darkest period. Daily trading volumes are around 300-400 Ether (ETH). In addition, the number of users continues to increase.
Although its backend is based on Blockchain, users do not perceive it as a GameFi altcoin project. They do not receive their native tokens. But they provide their content first on Ethereum, which seems to be the way to go across the industry. So GameFi could die in 2023. But that doesn’t mean all is lost. Death is a necessary part of evolution. From it, new life may have already begun to emerge.