5 Metrics to consider before investing in a GameFi Project.
The popularity of GameFi has made the cryptocurrency’s significance to the metaverse more widely known.
GameFi industry maintains its popularity in the year 2022 with VC investors investing over $5 billion in the creation of blockchain games and other metaverse projects just in the first half of 2022 with a projected investment worth $12 billion before the year runs out according to DappRadar.
To invest successfully in a GameFi project, you need to do more than just buy the governance or utility token. It’s also not like trading, where you just buy low and sell high. Here, you are committing a significant amount of time to the process. As a result, you must be almost positive that the project will be successful. Therefore, before investing in a GameFi project, you must consider the following five metrics.
1. Tokenomics
The term “Tokenomics,” which is widely known in the GameFi industry as well as the broader blockchain space, is coined from two words “Token” and “Economics”.
GameFi tokenomics is the term used to describe the kind of economic model used in a Play-to-Earn game. With the right tokenomics, a GameFi project’s profitability will be dramatically impacted. Games with engaging gameplay and well-designed tokenomics will have a rising value. On the other hand, games that employ improper tokenomics will ultimately suffer a financial collapse.
Two different economic model types (the single-token economic model and the dual-token economic model) are used in GameFi projects.
The Single-token Economic Model utilizes a single token for all platform-related operations, such as in-game actions, project governance, and secondary economic transactions.
While the Dual-token Economic Model makes use of two tokens namely the primary token and a secondary in-game token. The primary token is the governance token, which is used for utility purposes, while the secondary token is the security token used for in-game mechanics.
2. Number of Active Game Players
A GameFi ecosystem’s smooth running depends on how many players are actively playing its game.
The number of gamers displays the degree to which gamers are interested in the gaming project. A high level of player activity on a GameFi project will raise demand for the game token and hence drive up the cost of the game token.
Even if the game project has increasingly rich content, it will be useless if it does not focus on expanding the number of active players.
3. Transaction Volume Per Capita
Transaction volume per capita is the quantity of money transmitted on average by each user. It is an essential indicator for evaluating GameFi projects since it illustrates the level of user involvement, the reliability of the service, and the effectiveness of the tokenomics scheme. As an investor, you should consider a project’s per-user transaction volume trends and pay particular attention to user data growth that is sustainable and an increase in agreed revenue for gaming-based programs.
4. Team Behind the Project
A project can be more secure and continue to develop over time with a technically strong team in the ever-evolving blockchain industry.
Teams having experience in traditional gaming are therefore something to look for. Due to prior familiarity with game operations, this guarantees a certain degree of quality.
The profitability of a project is also dependent on the long-term growth and financial support of the team.
5. Community Size
The size of a project’s community is extremely important to its development. It influences whether or not the project will be heard of.
The role of marketing in the worlds of cryptocurrencies, NFTs, and GameFi cannot be understated. Without a vibrant community, no one will be aware of what the development team has created. Information about that metaverse will spread swiftly if there is a sizable community. Increasing both its adoption and the worth of its goods as a result (NFT, token, or coin).
Additionally, a poor community indicates that the course is not good. People enjoy being a part of something significant, after all. However, thought should always be given to the stage of development.
Summary
Choosing the best GameFi project to invest in is a difficult task. Users should research the tokenomics of the GameFi project, the number of gamers who are actively playing, the team, the transaction volume, and the project community. In the blockchain space, there are no freebies, so do your research to maximize your profits.
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