• GameFi has been hit hard by the bear market, and players often see it as another “cash grab” opportunity
• This narrative has to change, and the way it starts is by setting the proper narrative from the get-go
• Not every game needs to be a blockchain game. Developers need to be discerning in what aspects of the game is integrated on-chain

Poor tokenomics, lacklustre gameplay, and a community that is for the most part, only in it for the money. These are the criticisms that have plagued blockchain games over the past few years. Where some may have initially viewed them as a reliable source of additional income, others swore by them and pivoted their career aspirations towards climbing the leader boards of these games to rake in profit.

Blockchain games and GameFi tout ideals of ownership, where gamers are able to truly own their in-game assets instead of merely renting them out from a centralised authority (game developers). Indeed, the ability to own in-game assets such as items and avatars may be attractive to many.

The relentless and unforgiving bear market, coupled with numerous exploits, hacks and “slash-and-burn" tactics by gaming guilds have however unfortunately devastated a good portion of the blockchain gaming industry. Yet as we passed through the doors of the Asia Blockchain Gaming Summit 2022 in September, we were met with energetic attendees and boisterous booths. Confidence and bravado rang poignantly throughout the speeches of the speakers on stage, while flashy monitors showcasing the latest blockchain game projects drew the attention of curious onlookers.

To find out more about the future of blockchain gaming, Coinlive spoke with the Executive President of Asia Blockchain Gaming Alliance (ABGA), Kevin Shao.

“Unfortunately for many, blockchain gaming has been pigeon-holed as mere play-to-earn platforms where they [players and developers] just want to earn as much money as possible,” Kevin tells us. “But we at ABGA see things differently. We believe that blockchain gaming can also be for fun, especially with more TripleA games coming in.”

Just as Kevin says, there exists a sizeable portion of the community who see blockchain gaming as just another way to earn a quick buck. Yet this is simply unsustainable. As investor and CEO at Kreation Ventures Kelly Choo tells us, “Many of these blockchain games were not designed to serve as a game. They [developers] have focused too much on tokenomics, and as such the GameFi market has been flooded with low quality games.”

Indeed, a sustainable GameFi project has to be one that is able to strike a balance between token inflation and deflation. If a game’s token price rises too high, bubbles may be created that may break the economy at some point if token holders suddenly opt to cash out. Yet if deflation occurs too rapidly and suddenly, there would undoubtedly be an outflow of players from the game simply because the token value has simply become too low. Even then, tokenomics is but one slice of the entire GameFi pie, as Kevin tells us.

“For most projects, tokenomics is their main priority. But fixing up your tokenomics in such a difficult market now may be insufficient,” he advises.

“Innovation and the rethinking of business strategies is needed. In the bear market, it’s not easy to survive even if your tokenomics is fixed.”

Kevin cites the example of Axie Infinity for instance, a game that had once dominated the blockchain gaming industry that saw upwards of 2.7 million daily active users (DAU) at its peak. The game now sees less than 739,000 DAU. Yet the game has remained determined even at this stage. Axie has begun to turn its focus away from merely releasing patch notes to fix its tokenomics, as Kevin says. Instead, it has started to allow for new players to own free NFTs so that they may play the game at minimal cost. Previously, Axie Infinity required all new players to own 3 paid NFTs, that could cost over USD$100 in total at minimum.

“Axie is a top project in the GameFi industry, and if they have decided to change their business models and mindsets now, I think this should also be the case for smaller projects as well,” Kevin opines.

However, it isn’t just founders who need to rethink their strategy in order for blockchain gaming to have a turnaround. Gaming guilds form a large portion of the playerbase for many of these games. Gaming guilds in the realm of GameFi serve to facilitate the expansion of the market by lowering the barriers of entry for new players, while also educating non-crypto users about cryptocurrency. For many of these players, gaming guilds were their first step not only into the game, but also into the crypto space as a whole.

Coinlive's interview with Kevin Shao, Executive President of ABGA

ABGA, which has more than 80 partners in the alliance including prominent developers in the space such as Klaytn, Polygon, YGG, and even financial partners like Kucoin and Huobi, is one of the fastest growing collective of gaming guilds in the industry, having been only established in November last year. For a large number of players, ABGA was their stepping stone into the crypto world. Yet the narrative of gaming guilds has to change, as Kevin argues.

“Play-to-earn models may have worked in the bull market, but that’s not the only way for blockchain games to survive,” he notes. “The game still ultimately needs to be fun, so that the community can collectivise into guilds. If the game is not fun or playable to begin with, then the type of guilds in these games that will emerge will just be in it for the money – and that’s not sustainable.”

Indeed, slash-and-burn tactics have been employed by a good number of gaming guilds, wherein players belonging to these guilds would collectively farm and drain a project of its tokens, before immediately cashing them out so that the game’s token deflates suddenly and drops to zero, destroying the economy of the game.

Investment manager at Hashkey Capital, Junbo Yang, shares a similar sentiment.

“The focus has to be shifted towards the form of the game and its core gameplay,” he says in agreement. “We as investors are now learning to be more discerning, and are looking at the game itself, such as the storyline, and what excites players.”

It is undeniable then, that players serve as the heart of every game since time immemorial. Setting the tone of the project is incredibly important, as it dictates the narrative of the gaming guilds within the game, as well as how they operate. If a GameFi project focuses its attention solely on tokenomics and earning money, then that would precisely be the same narrative that guilds in the game are likely to adopt as well – which of course trickles down to its members, hence leading to scenarios of “slash-and-burn". Having a fun and playable game ensures that the guilds that eventually do emerge are ones that are in it for more sustainable reasons, such as the community, gameplay, and storyline.

Kevin also believes that not all games need to be on the chain. He argues that the term “blockchain gaming” should not be touted as merely a marketing tool, and that developers ought to be more discerning in the way this technology is integrated into their projects.

“Different games have different needs, and developers need to think carefully about whether or not this technology will actually be of use to the core gameplay,” he says. “Maybe in PvP (player vs player), where fairness and transparency are needed. But the whole game does not need to be on chain.”

Just as Kevin says, while blockchain technology promises aspects of fairness, transparency, and security, developers need to carefully create their project to ensure that this technology is integrated in the right way.

“The gameplay does not necessarily need to be on chain unless you need to track the player’s use actions,” Lawrence Lin, the head of blockchain at Razer says in agreement. “The aspects of the game that involves sharing with other players can be on chain, but the rest don’t have to be.”

Kevin cites the example of traditional web2 games to underscore his point on this. Popular MMORPG titles such as Diablo and Maplestory have withstood the test of time and have long maintained a strong followerbase even till today, and yet do not utilise blockchain technology.

The truth is, blockchain technology is simply not the key to making a good game. It definitely has its use cases in games by introducing fairness and transparency, however the technology and tokenomics cannot be the lynchpin upon which the project rests upon.

Just as Kevin says, it is imperative now, more than ever, for developers to rethink and re-strategise the formula to making a good game that can last through the harshest of winters.

This is an Op-ed article. The opinions expressed in this article are the author’s own. Readers should take the utmost precaution before making decisions in the crypto market. Coinlive is not responsible or liable for any content, accuracy or quality within the article or for any damage or loss to be caused by and in connection to it.