2022 GameFi Industry Report

Source: CoinMarketCap × Footprint Analytics

This article is officially authorized by CoinMarketCap × Footprint Analytics for Cointelegraph Chinese

Introduction

The encryption world has experienced ups and downs in the past ten years, and GameFi, as a new segment, only began to enter people's field of vision at the end of 2020. Therefore, the first half of 2022 is the first bear market cycle experienced by the GameFi industry.

Supported by data, this report analyzes the performance of various projects in the GameFi industry in terms of user behavior, on-chain transactions, financing, and currency price fluctuations. In addition, this report also explores some of the challenges faced by the industry.

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A series of events in the GameFi space in 2022 highlighted the fundamental contradiction between the two verticals of gaming and finance. Specifically: people play games to have fun, and participate in financial activities to make money. The data shows that GameFi projects based on hype profits and the unsustainable Play to Earn economic model have a more serious recession in the bear market.

This report delves into the gaming ecosystem in each chain. We also took a closer look at the top GameFi tokens and their market performance in the bear market cycle in the first half of 2022, and found that most projects saw a sharp decline in currency price and user numbers.

Big issues still remain: how to make people play and earn in the game instead of working hard and getting rewarded in the project? How should developers design projects? How is the GameFi project sustainable?

Compared with other tracks, GameFi and Metaverse have attracted a large number of investment institutions. From the data point of view, investors are very optimistic about the GameFi track, but so far, there is no one that is completely built for GameFi and becomes the first choice for GameFi project developers.

At the end of the report, we propose the GameFi public chains that are most likely to succeed, and list some games worthy of attention in the second half of 2022.

Table of contents

• Overall performance of the GameFi market
• Analysis of each chain of GameFi
• Head GameFi Project Token Observation
• Analysis of GameFi's financing situation
• GameFi projects to watch in the second half of 2022
• GameFi public chains worthy of attention in the second half of 2022

CoinMarketCap Research is the new research division of CoinMarketCap. CoinMarketCap Research is dedicated to using data analytics to bring unique market insights to the crypto world. We are willing to work with industry-leading partners to create a platform for people to learn and share, and to express their passion and love for the encrypted world with everyone.

Footprint Analytics is a tool for discovering and visualizing blockchain data, covering relevant data in fields such as NFT and GameFi. So far, Footprint has collected, analyzed and cleaned up the data of 17 public chains, and built a no-code drag-and-drop dashboard for users. At the same time, Footprint also supports the use of SQL and Python for data analysis.

Overall performance of the GameFi market

Abstract: Since the beginning of 2022, the macro conditions have been severe, global inflation is high, and the overall market is trending downward. The stock market also fell throughout the year. The representative index of US stocks, the S&P 500 Index, is not optimistic. Bitcoin is also affected by it, and its price continues to fall, absorbing a large amount of institutional funds. Likewise, the altcoin market also collectively fell in response.

Figure 1: Correlation Analysis of Bitcoin Price and S&P 500 Index

The market's Fear & Greed Index (Fear & Greed Index) has also reached the level of extreme fear, and the number of active users of the GameFi project (the number of unique addresses that interact with the project contract within a certain period of time) has gradually declined. Although the index has recovered from 10 (extreme fear) at the end of June to 42 (fear) now. However, so far, the price of cryptocurrencies has not recovered significantly.

Figure 2: Comparison of Bitcoin price and Fear and Greed Index

Figure 3: Comparison of GameFi's total market capitalization and Bitcoin market capitalization

From the perspective of transaction volume, the performance of Ronin chain , BNB chain (formerly BSC chain) and Harmony chain is far ahead. The BNB chain has low transaction costs and low development difficulty, which has attracted many projects to build on its chain. The Ronin and Harmony chains are completely dependent on the top projects in their ecosystems to support them - the two projects Axie Infinity and DeFi Kingdoms have significantly increased the overall transaction volume of the two chains.

Judging from the two indicators of transaction volume and average number of users in the first half of 2022, the WAX chain and Hive chain, which focus on GameFi, take the top two positions among the public chains.

Figure 4: The distribution of the transaction volume of GameFi projects in each chain

Figure 5: Distribution of GameFi users on each chain

Three revelations from the market in the first half of 2022

The sustainability of the project cannot be judged hastily, and the enthusiasm under the bull market may not represent the long-term success of the project.

At present, whether it is the first well-known cryptocurrency game Axie Infinity or the first Move to Earn project STEPN , the number of active users this year has fallen out of the top three, which shows that the industry is changing rapidly.

Figure 6: Average daily active users for each game

Alien Worlds and Splinterlands , on the other hand, dominated the scene, and these two games are not well-known in the GameFi space. They have retained users despite falling coin prices and low return on investment (ROI). While Splinterlands leads AlienWorlds with almost twice as many active users in the first half of 2022, its active user numbers have dropped off sharply after June. Possible reasons include the end of the current season on June 1, changes to the ranking reward system, downward pressure on the crypto market, or a combination of all factors. Alien Worlds and Splinterlands aren't the only interesting games on the market, but they avoid the hyperinflation of assets during the ups and downs of the market.

Figure 7: Active User Trends (Alien Worlds and Splinterlands)

In the GameFi public chain world, there has not been a dominant chain in the market that has become the first choice of project parties. It's too early to predict GameFi's industry leaders at this stage.

WAX and Hive are the top two GameFi public chains in terms of transaction volume, and they are largely dependent on the success of Alien Worlds and Splinterlands. The number of users of these two games accounted for 54.55% and 99.85% of the total number of game players on their chains respectively. It is worth mentioning that neither of these two public chains is specially set up for a single game (Ronin is a public chain specially created for Axie Infinity).

Figure 8: Market share of WAX Chain game users

Figure 9: Market share of HIVE chain game users

Calculated by game transaction volume and number of users, the BNB chain is the third largest chain in the GameFi field, and no single project currently dominates its ecosystem. Once a leading project emerges, the BNB chain will have unlimited potential.

Figure 10: The market share of each game user on the BNB chain

There is also a high-profile GameFi project Illuvium that will launch on Ethereum, and another upcoming game on Ethereum, Big Time, has also received a large amount of financing. In addition, STEPN has also been extended to the Ethereum chain.

More and more developers aim to create a multi-chain ecosystem.

The top games DeFi Kingdoms and STEPN both deployed the second chain in March 2022 with the intention of gaining more users and diversifying risks, but at the same time encountered problems related to the token economy. SETPN is initially launched on the Solana chain. When it was extended to the BNB chain, the price of GST (utility token) on the BNB chain grew to 9 times that of GST on Solana, mainly due to the lack of cross-chain bridges and demand skewed heavily in favor of the BNB chain. Although the price gap of GST on these two chains has decreased sharply after the shrinking of the market value of cryptocurrencies, after the latest deployment of STEPN on Ethereum, the price gap of GST on each chain has shown again, which is also one of the challenges of creating a multi-chain ecosystem. one.

Figure 11: Number of GameFi projects deployed across chains

Animoca Brands stated that their upcoming AAA game Phantom Galaxies will be a multi-chain deployment project.

Avalanche aims to make it easier for games to be built on multiple chains through the Avalanche subnet (that is, to build their own network on the AVAX infrastructure). Currently, Avalanche has attracted projects such as Defi Kingdoms and Crabada to join the subnet.

Analysis of each chain of GameFi

Abstract: The growth of the number of projects on the chain has slowed down significantly since May, with only 47 new projects launched in May. This indicator improved slightly in June, with 63 new projects. However, there is still a big gap compared with the number of projects launched in the first quarter. In July, 38 new projects were launched on the market, a slight decrease in the number.

The BNB chain and Ethereum remain the chains with the richest gaming ecosystems, with over 582 and 538 projects respectively.

Figure 12: Number of GameFi projects on each chain

The BNB chain was originally the public chain with the most new projects every month. Since the bear market came in May, the number of new games has decreased significantly. The number of new projects on other chains is relatively stable, with the Polygon chain having the largest relative increase, followed by the WAX chain. Although there are many public chains on the market, it can still be seen that developers still choose the Polygon chain, WAX chain and BNB chain more, because they are more friendly to developers because of their low fees.

Figure 13: The number of new GameFi projects on each chain

The figure below shows the number of active users of the ecosystems on the five top public chains. The number of WAX users expanded to 370,000 at the end of July, but the number of Hive users experienced a sharp decline in early June, from 360,000 to 140,000. The reason It was Splinterlands, the dominant gaming project on the Hive chain, that saw a sharp drop in active users.

Figure 14: The number of users of the five leading public chains

According to the market value of each project on the public chain, it can be seen that the ecosystem of the BNB chain is relatively sound and diverse—the transaction volume of the top games on the BNB chain does not exceed 25% of the total transaction volume. Compared to Ronin or Harmony, the projects in the BNB chain ecosystem are more balanced. In Ronin or Harmony, the top projects accounted for 100% and 99.8% of the total transaction volume. Due to the high volatility of GameFi projects, even the top games can fall into a death spiral, so a diverse ecosystem can make the public chain more resilient in the market downturn.

Figure 15: Market share of projects on each chain

Figure 16: Game transaction volume on each chain

Figure 17: Transaction volume of each project on the BNB chain

Figure 18: Transaction volume of each project on the Ronin chain

Figure 19: Transaction volume of each project on the Harmony chain

Footprint Analytics defines active projects as having at least 100 active users in the last 5 days. According to this definition, active projects on all chains are gradually decreasing. Although the number of active projects on the BNB chain remains at the top, it has seen a bigger drop compared to Polygon.

Figure 20: Number of active projects on each chain

Head GameFi Project Token Observation

Abstract: While the crypto bear market arrived in May, sentiment in the GameFi market has been up and down since December 2021. The market has understood the principle of GameFi's death spiral. Whether it is a decline in token prices or a decline in the number of users, it will trigger a downward trend in games. As it stands, "Play to Earn" only works if there's a steady stream of new players coming in. The market is skeptical about the future of many GameFi projects, prompting more users to accelerate the minting and selling of assets.

Figure 21: Top 10 GameFi token market capitalization trends (ranked by market capitalization)

Overall, the price and market value of tokens have dropped sharply, but there are still some projects showing a growth trend. For example, BinaryX’s token price increased 8x from its nadir to $147 on June 14th, and this upward trend started after the game underwent an upgrade in March, which included gameplay upgrades and the minting of new NFTs and upgrade mechanism.

Figure 22: Top 10 GameFi token trends by currency price (ranked by currency price, based on 100%)

STEPN was once a famous project in the bear market. In the bear market, various indicators of STEPN, including the number of GMT token addresses, new users and deposits, all dropped sharply. Currently, GMT still ranks first in trading volume at $1.1 billion.

Figure 23: Ranking of top game tokens by average daily trading volume

Green Satoshi Token ( GST ) — the utility token of the STEPN ecosystem — also experienced an explosive increase in trading volume to $14 million amid price crashes, illustrating the project’s inability to control the token sell-off pressure despite its constant efforts.

Compared with the bull market in 2021, most projects have lost their liquidity.

Figure 24: Average Daily Trading Volume of Top Tokens

Analysis of GameFi's financing situation

Abstract: As can be seen from the figure below, in 2022, venture capital firms will begin to pay more attention to the Web3 field, especially the GameFi and Metaverse tracks. In other words, the GameFi and Metaverse tracks accounted for more investment shares, and there are also categories such as tools, transactions, and lending in this investment field classification. Funding in these two categories has increased from $874 million in 2021 to $2.4 billion in 2022.

Figure 25: Market share of various types of investment in 2021

Figure 26: Market share of various types of investment in 2022

Figure 27: Investment amount in 2022 compared to the same period in 2021

From the perspective of financing amount, Epic Games won the US$2 billion investment from Sony Group and KIRKBI in April 2022, occupying the first place in the market. In terms of the number of projects, Animoca Brands leads with 52 projects invested in a year, covering GameFi, Metaverse, guilds and other fields.

Figure 28: Ranking of Top Projects Obtained Funding

Figure 29: Ranking of investors by number of investment projects

Investment rounds in GameFi and Metaverse are still mostly seed rounds (48% of total deals), which shows that the markets in these two areas are still in the early stages of development.

Figure 30: GameFi track investment round distribution

Figure 31: Mateverse track investment round distribution

GameFi Funding Projects to Watch in 2022

Spotlight: GameFi projects to watch in the second half of 2022

Unreleased AAA masterpiece

One thing to watch in the future of the GameFi space is whether a couple of high-profile, big-budget titles turn out to be the hits people were hoping for.

Most of the current projects in the GameFi space are low quality and unsustainable. However, once AAA games come out, GameFi will enter the public eye and solve most of the current problems.

Many AAA titles will be released in 2022 and 2023.

A few notable games are:

• Illuvium

• Phantom Galaxies

• big time

Illuvium isn't out yet, but it's already gaining traction. It promises to be the first mainstream AAA game backed by a blockchain and star developer team.

Figure 32: Analysis of Google's key search terms - interest in Illuvium, GameFi and Blockchain Games

Phantom Galaxies is a project launched by Animoca Brands and its subsidiary Blowfish Studios. This game provides the possibility for the future development of blockchain games - the cooperation between mature game studios in the traditional field and the blockchain field, such Cooperation enables the project to have a strong variety of backup resources.

Big Time is developed by the Big Time studio founded by Decentraland co-founder Ari Meilich. Big Time promises to give players a true AAA-level RPG gaming experience, and they provide users with escrow wallets to make the game easier to pick up.

The teams behind these projects have a glorious history in the blockchain and game fields, such a strong background and resources are likely to create top AAA game masterpieces.

Will they win the hearts of traditional gaming users? If they do, will the blockchain be able to handle the influx of users? Those who are all about Web3 and blockchain gaming should wait and see with bated breath, expecting AAA games to surprise people.

GameFi public chains worthy of attention in the second half of 2022

ethereum chain

The future does not always belong to the latecomers. While excellent new chains are popping up on the market frequently, Ethereum still has the most attention and the largest developer community by far.

Combined with the progress Ethereum has made in terms of efficiency and scalability, it could easily capture a sizeable share of the GameFi market. This is because the current influx of GameFi users into other public chains is mainly due to the low transaction speed and high Gas Fee of Ethereum.

Both Illuvium and Big Time will be deployed on Ethereum, and STEPN has also expanded to Ethereum. Depending on Ethereum's scaling options and its ability to handle congestion, it may become the chain of choice for GameFi projects in the future. The development of the GameFi project on Ethereum will be one of the stress tests for the Ethereum upgrade.

Figure 33: Number of active users of various projects on Ethereum on July 31

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CoinMarketCap Research:

CoinMarketCap Research is the new research division of CoinMarketCap. CoinMarketCap Research is dedicated to using data analytics to bring unique market insights to the crypto world. We are willing to work with industry-leading partners to create a platform for people to learn and share, and to express their passion and love for the encrypted world with everyone.

Footprint Analytics:

Footprint Analytics is a tool for discovering and visualizing blockchain data, covering relevant data in fields such as NFT and GameFi. So far, Footprint has collected, analyzed and cleaned up the data of 17 public chains, and built a no-code drag-and-drop dashboard for users. At the same time, Footprint also supports the use of SQL and Python for data analysis.