The Gamefi Cycle: Why All Play-To-Earn (P2E) Games Die
The gaming industry has seen a revolutionary shift with the advent of Play-To-Earn (P2E) games, also known as Gamefi (Game Finance). These blockchain-based games allow players to earn real-world value through in-game assets, fostering a new era of decentralized gaming and financial empowerment. However, despite the initial hype and success, P2E games face inherent challenges that lead to their eventual demise. In this blog, we will explore the Gamefi cycle and shed light on the reasons why P2E games often struggle to sustain their popularity.
Revenue For Defi Games Depend On Some Business Models
- Joining Community
- Membership Model
- Advertisments
- Pay To Win
But, overall as seen advertisements are the source major of revenue that has the potential to sustain any game all around the world.
Now, let’s discuss the Problems with Defi Games:
Early Enthusiasm and Adoption
The cycle begins with the initial launch of a P2E game, generating significant excitement in the gaming and cryptocurrency communities. Players are attracted by the promise of earning real money while playing a game they enjoy. As a result, the game experiences a surge in user adoption, and its native token gains considerable value.
Overinflated Expectations
The success of the early adopters encourages more players to join the game, leading to a rapidly growing player base. This surge in demand drives up the value of in-game assets and the native token, creating a speculative bubble. Players, hoping to capitalize on this trend, invest heavily, further inflating the expectations of profit.
Unsustainable Rewards and Economy
To maintain momentum and attract more players, game developers offer lucrative rewards. Initially, these rewards are sustainable due to the influx of new players and investors. However, as the player base grows, the rewards system becomes Unsustainable, leading to increased token inflation and devaluing in-game assets.
Market Saturation and Decreased Interest
As the player base expands, the competition intensifies, making it harder for new players to earn substantial rewards. This saturation leads to a decline in new user acquisition and a decrease in overall interest in the game. Players who joined the game solely for profit start losing interest as the rewards diminish.
Developer Sustainability Challenges
As the game’s economy falters, developers face challenges in maintaining the infrastructure and continuous updates. Inadequate revenue streams may force them to cut corners, leading to poor game development and loss of player trust. This negative feedback loop further accelerates the decline of the game.
The Exit of Early Investors and Whales
Early investors and whales, who have profited from the initial hype, begin to exit the game as they fear further token devaluation. Their departure causes a significant drop in the native token’s value, triggering a panic sale among other players and investors.
Now, let’s come to the Main Point that is Blockchain technology is not required for Games in reality. Games without Blockchain are also very efficient. And, now it seems it is just a marketing and hype stunt that most companies want to do to make their games popular adding this Earning mechanism from games creates some Pschology effects that in the future backfire on the companies themselves.
To Explain the Psychology effect you must listen To This Story:
Once upon a time in a small city with a small population was a small bus stop in a busy colony. As usual, every morning except Sundays, students wait at the Bus Stop for the Bus to arrive. And just Beside Bus Stop was an Old Man’s House. Where he sipped his morning Tea every morning. But, one day the students start joking about that Old Man. And the Old Man heard About it. The Old Man got angry but, did not took any action. This process kept on going on and seemed an endless process. Getting Frustrated by this the old man called the students and told them that for every joke he would reward them with a $1. The students got happy as now they were getting paid for this. And even started joking more and earning more. A few days, past the old man said this is getting expensive so, the fee per joke is reduced to 50 cents only. The students did not like it, but also they did not have any option. Similarly, after a few days the old man kept on reducing the fees and one day he said the fees would be only 1 cent. The students got angry and frustrated and told before they were getting paid about $1 now, only a cent. So, they were no more interested in joking about the old man. After that day students never joked about the Old Man as they found the reward to be so small.
Something very similar happens in Gamefi Industry.
Abandoned Game and Community Dispersal
With the plummeting token value, the game becomes unsustainable, and devalued assets and little to no profit. Developers may abandon it altogether. The once-thriving community disperses, and the game enters a state of stagnation. Players who had invested considerable time and effort into the game are left with
Conclusion
The Gamefi cycle illustrates the challenges faced by Play-To-Earn games, causing many of them to meet an unfortunate end. The initial enthusiasm, overinflated expectations, unsustainable rewards, and market saturation contribute to the downfall of these games. To create a lasting impact, developers need to address these issues by implementing balanced reward systems, ensuring a sustainable economy, and fostering genuine player engagement. The demand for integration of the Game Industry with Blockchain Technology is huge and it may be possible that in future people will find the right approach to this. But, what happening right now is that we are still learning from our mistakes.
Just one thing definite is,
We all are heading towards a better future.