The GameFi sector has achieved unprecedented levels of growth during the past few years, notably thanks to the advent of blockchain gaming. GameFi, which is a portmanteau of ‘gaming’ and ‘finance’, was once a relatively niche sector, with genuine play-to-earn opportunities being few and far between.
However, the arrival of NFTs and the ability to not just generate cryptocurrencies by playing games but to sell and trade them has seen the industry’s popularity skyrocket.
According to analysts at Business Research Insights, the total GameFi market was valued at $9 billion in 2021 and looks set to be on track to generate revenues of $38 billion in 2028. Blockchain and decentralised currencies have had an impact on other gaming segments — most notably in the iGaming sector, where gamers can play crypto pokies at an online casino in Australia or deposit Bitcoin on European digital platforms.
Yet, the success of GameFi has been staggering. Having survived two “crypto winters”, the sector continues to attract significant investment and is now established as a major player in long-term crypto success.
The Surging Popularity of GameFi
Blockchain gaming refers to the application o distributed ledger technologies in the video gaming industry. In the context of gaming, DLTs can be used to create unique, one-of-a-kind digital assets that players can buy, sell and trade on crypto marketplaces. Additionally, blockchain tech is being used to create decentralized gaming platforms, which can provide a more fair and transparent gaming experience and open-source game development environments.
In becoming the core of the GameFi sector, DLTs and their associated cryptocurrencies are radically reshaping the game economy, creating a new type of gaming experience that genuinely rewards players for their time. There are numerous benefits to crypto and blockchain gaming, with players being able to truly own their in-game items and NFTs high on the list. Little wonder, then, that so far, GameFi has attracted over 800,000 daily players.
According to a 2022 report published by CoinMarketCap, 75% of gamers actively seek to trade their in-game assets for financial currency, whether in the form of cryptocurrencies or by converting their assets into fiat currencies. Enterprising gamers have even found a market for renting out their assets, such as virtual land or holdings in a specific title. Furthermore, there are opportunities for gamers to stake their assets and get involved in the process of liquidity mining.
GameFi is also supporting and encouraging gamers to engage with their own creativity in the form of platforms that support user-generated content. User-generated content ensures that gamers of all demographics are catered to. According to the 2021 BGA survey, almost half of all participants cited creativity and gameplay as their top two reasons for engaging with games in the sector.
How is GameFi Boosting Crypto Growth?
One of the biggest ways in which GameFi is helping to boost the growth of the cryptocurrency industry is by helping to democratize decentralized currencies and blockchain tech.
With a global audience of over 3 billion people, the gaming industry has a far greater reach than the crypto industry – more people enjoy playing games than they do invest in or even following the crypto market. By giving gamers the opportunity to directly earn crypto (or convert their digital assets), the industry becomes more accessible and demystified.
ChainPlay’s 2022 State of Gaming report confirmed the potential impact of GameFi on mainstream crypto adoption. 75% of participants who invested in crypto projects did so because GameFi was their entry point. Furthermore, 68% of investors joined the market less than a year before.
During the third quarter of 2021, at the height of games like Axie Infinity’s popularity, the number of unique active crypto wallet registrations shot up to 1.54 million per day — 49% of which were linked to blockchain games.
An Attractive Investment
The rising popularity of GameFi among global consumers is one thing, but how is the sector shaping up in terms of corporate investment and blockchain market expansion? The signs so far indicate that the sector has a strong potential for disruption. More than $13 billion in investment has been realised to date by new blockchain gaming companies, $3.5 billion of which was raised during the first six months of 2022 alone.
Meanwhile, GameFi has made significant contributions to the ongoing advancement of the NFT market. Unsurprisingly, the 2021 rise of the sector correlated strongly with the NFT boom. Gaming-related NFT sales rose from $82 million in 2020 to $5.17 billion in 2021, which has helped to solidify the ongoing growth of the NFT market.
The GameFi segment is rapidly evolving. By representing the blockchain ecosystem’s versatility, it generates genuine interest that will undoubtedly help the crypto and blockchain industry gain credence towards mainstream adoption. A number of high-profile gaming organisations, for instance, have announced moves towards expansion into GameFi. Ubisoft, Zynga and even Tencent have either unveiled or are in the process of developing blockchain-based P2E games.
