The Development Paths of GameFi (2)

Development of GameFi to this day, we are pleased to see more and more top-level game developers, and senior-level game developers have begun to pay close attention to and study the industry’s dynamics, technologies and products. I believe that GameFi will also quickly enter a new stage of growth. As a long-term practitioner of the game industry and an observer of the Crypto industry, there are some prejudgments on the trend of GameFi that I hope to share with you:

Trend #1: P2E will always exist as a strong vitality model, will still be one of the important forms of GameFi, and will still dominate in terms of quantity. (Gamified packaging of financial products, currently represented by the card game RPG type)

I think P2E games will be there for a long time and won’t be completely replaced by other modes. To use an inappropriate analogy, just like stocks and futures in the capital market, the emergence of futures does not replace stocks, the two have similarities, but the essence is two types of products that exist independently.

Such products are essentially not game products in our traditional sense, but the gamification performance of DeFi products, which is a gamification packaging of financial products, for example, Axie Infinity shows the successful use case of NFT combining with DeFi To introduce the idea of DeFi in token design, from profitable NFTs to governance tokens, essentially to gamify financials, through games to present the value of decentralized finance and non-homogeneous digital assets. Representatives of such products are naturally Axe Infinity and StepN, among others.

It is worth mentioning that since the vast majority of participants are involved in the game with a speculative mentality (i.e. P2E), the ultimate goal is to leave the market for profit rather than entertainment, they attach great importance to the yield and return cycle, so when the system does not have enough real income to fill their revenue gap, the entire system will inevitably move towards the situation that generating returns for earlier investors with money taken from later investors, and the Ponzi structure has thus become a natural part of the P2E product.

Ponzi structure ≠ Ponzi scheme. Ponzi, essentially a financial architecture, is a common occurrence in the financial industry, transferring the value provided by later participants to earlier participants. Whether it is a scam or not actually depends on the design philosophy and system details. If we only talk about the Ponzi structure, then there is a relatively extreme point on the market, the concept of social security pension is the world’s largest Ponzi structure, young people pay for the elderly, young people will have new young people pay for it when they get old, but it has become an indispensable part of social security. Therefore, through the P2E Ponzi structure, guide, motivate users and increase revenue, develop the game ecology, and eventually form a positive capital cycle, technically is possible while in reality is extremely difficult due to limited newcomers. Especially if some teams fill their pockets at the expense of the long-term benefits of the entire market, then we have to admit that scams happen again.

Why will such products exist for a long time?

1. For investors in the era of digital encryption, they are eager to find a newer and higher income investment method, P2E as the core business model in GameFi, will inevitably be sought after and participated by users and funds;
2. The traditional digital transaction of financial products is transformed into a visual digital asset transaction, the picture is direct and the gameplay is simple and easier for investors to understand and accept, and the user’s participation threshold is low. (Filipino players without any financial knowledge background can earn for gold in Axie, but they are unlikely to gallop in the capital markets);
3. Combining concepts such as currency, consensus mechanism, and economic model, product projects are easier to carry out financial packaging publicity;
4. GameFi’s various gameplay, such as battles, collections, dungeons, and social networking, make it entertaining and interactive, and users will find it more interesting than ordinary financial products.

Based on the above understanding, the development and competitive trend of P2E products may show the following phenomena:

1. Product investment and standards will become higher and higher to attract more investors to enter the market.

• Enhance the packaging and marketing programs of financial products, expand IP visibility, use celebrity effects and investment institution endorsements, etc., to build sufficient trust with target users to convince and accept products by target audiences;
• High-quality team with professional background (such as gaming, finance, law, etc.);
• The competition between products and products will become more and more fierce, the siphonage effect is obvious, and different projects will compete for limited resources, such as public chain support, user traffic redirection, etc.

2. Pay attention to external value injection and achieve value filling.

• Create additional values aside from the game ecology for the product, for instance, connecting the virtual online space and the offline physical space, strengthening the social features and benefits of the product, and building community value and emotional resonance. StepN, for example, provides users with a sense of mental satisfaction that can not only make money but also exercise by marketing a healthy attitude to life;
• Project teams can also explore different ways to inject external resources or external values into the product, such as getting advertisers to reward the community, generating value through IP development like movies, literature, and merchandise products, etc. Again StepN, whose cooperation with sports brands such as Nike brings external value to the originally closed ecology;

• The project owner continues to use its own funds for repurchase.

3. Maintain a simple barrier to entry while increasing the complexity of the subsequent content of the product, and delay or hedge the negative impact of the Ponzi structure.

• Learn from Defi’s model to create a stake scenario and slow down the circulation of tokens and NFT transactions;
• Increase the depth of game products, design rich game content, and create multiple reservoirs or pools for tokens and NFTs. For example, in blockchain game illuvium, after you buy a land NFT, you can play games and produce Fuel on it, and then develop an open world scene that consumes Fuel, and then design an arena to team up the pets caught in the open world to get token rewards.

Part 3: The Development Paths of GameFi (3) | by Jeromeoh.eth | Sep, 2022 | Medium