GameFi Demonstrates Resilience During Market Downturn

The crypto market has been very turbulent and asset prices have plummeted as well as investor confidence has been shaken throughout the market. Nevertheless, there is one industry that has managed to retain its power and remain appealing to investment in spite of these adverse circumstances: GameFi.

Large venture capital funds are still putting money into the space, such as a $600 million fund raised by A16z and the $500 million project by Immutable to fund game developers.

The GameFi industry is a combination of both games and finance, bringing together cryptocurrency, non-fungible tokens, and blockchain technology to produce immersive virtual gaming worlds with a market capitalization currently estimated to be around $9.2 billion and is projected to reach a growth of $74.2 billion by 2031.

Players are engaged with such ecosystems by completing missions, fighting other players, and advancing through different levels of the game to receive rewards in a variety of forms, such as cryptocurrency tokens and in-game tokens like virtual land, avatars, weapons, and cosmetic items.

All GameFi projects have unique economic systems and mechanics, though the majority of them have a set of similar features:

• •The play-to-earn system allows players to own and control their digital assets and earn money
• •DAO ownership enables players to own avatars, pets, properties, weapons, and tools that may be minted in the blockchain as NFTs allowing verification and authentic ownership

The current market downturn can be defined as a prolonged downturn in the value of cryptocurrencies. According to industry observers, this bearish period started earlier than the pronounced crash of TerraUSD and Luna in May that had a domino effect on the cryptocurrency ecosystem.

This is a massive downturn that has adversely affected a lot of cryptocurrency and blockchain projects.

Prior to the Market Downturn

GameFi had made $2.32 billion in the third quarter of 2021. Axie Infinity was the first game to reach a billion dollars in NFTs sales.

GameFi Performance in Market Challenges

In early June, floor-priced Axie NFTs were exchanging at $5, in contrast to almost $200 of equivalent assets in 2021. Decentraland has had a similar route, whereby its MANA token rose up to around $1.63 and then declined to about $0.78 by the end of August 2022.

Splinterlands, Illuvium, Galaverse, and STEPN are examples of projects that have managed to find a new audience, financial support, and grow their work in the second quarter of 2022.

Although Bitcoin is down in early June, the blockchain game Illuvium sold 20,000 parcels of land in 4,018 Ether, which is worth $72 million at sale.

GameFi and metaverse technologies: A16z and Dapper Labs have a long-term history of venture capital investment of $1.3 billion. Dapper Labs also invested in the decentralized blockchain Flow to fund metaverse projects such as NBA Top Shots to an extent of being more cautious about their strategies.

• •Play-to-earn games have been able to use existing assets to earn profit and although asset values have fallen, their usefulness to the environment still persists even in difficult market environments
• •Developers are recommended to stop the model of Proof of Work which uses energy-consuming mining to switch to Proof of Stake

Less Resource-Intensive

The latter will be more environmentally friendly, and may also restore trust among participants in the market, as current play-to-earn games do not have enough entertainment value.

The rise and adoption of Web3 technologies, however, can alter the situation. Developers are striving to provide more interactive games that have interesting plots and attract gamers not just by the quality of the gameplay but also by the earning prospects.

Although the period of the market downturn cannot be predicted, the advancements observed in the GameFi market in recent times make it clear that it has a potential to be a valuable long-term investment.

Such factors as the ability to survive in difficult circumstances, the desire of investors to invest in this sector, and further development of technologies create a bright future of gaming finance platforms. The sector is in a good position to cash in on the recovery of the market in the future as the technology gets more mature and the gaming experiences are getting better and the sector continues to grow through the rollercoaster times.