Mapping the GameFi Ecosystem

FionaHe

Published in

IOSG Ventures

10 min readJan 10, 2023

Methodology

Right now, we are in a shift from infra-focus to user-focus because

Infra is maturing for building vertical applications as we saw DeFi and GameFi boom in the past;
So many developers here are building vertical DeFi/Game Fi/SocialFi…apps to acquire users who are actually a minimal base. So the future is about user acquisition and keeping the retention rate high.

Speaking of GameFi, it is a pretty large ecosystem and goes beyond games and studios. So I will map out this robust landscape from a user perspective to see the user and value flow clearly.

Zoom out, the landscape consists of 8 sectors: User-end Aggregators, Games, Multi-games Platforms / Publishers, Liquidity / Financial Tools, Blockchain Solution Providers, Game Engine, Developers / Studios, and Chains.

Specifically, based on Steam’s categorization and top mobile game genre by revenue, I summarize 5 categories and 11 subcategories to cover current crypto games.

Mapping

You can find the original mapping here.

Dive In

Chains

GameFi projects migrating or being cloned to new chains is an interesting emerging trend just as DeFi did before. Currently, BSC/ETH/Polygon/Wax are leading the GameFi landscape, over 80% on chain games are deployed on top. However, Arbitrum and zkSync are ambitious new challengers. For example, the Beacon on Arbitrum is a rogue-like action RPG that gained a lot of traction with 21k DAU since launching less than 1 month ago. Tevaera on zkSync is an arcade action game and one of the first games just launched on the mainnet.

Game Engine

Before the birth of the game engine, game developers needed to “build the wheel” over and over again. Every game requires writing code from scratch and they must manually check the game code line by line. Even worse, they cannot run and test the code at any time. But soon, they realized that many codes can be reused, as well as graphic materials, thereby optimizing the development process and saving development time. Game developers then began to integrate the code and assets needed for a game into a set of development tools. That’s how the game engine emerges.

Today, most games, no matter Web 2 or Web 3, are built on Unity and Unreal engine. Just as Unreal Engine developed by Epic Games, some Web 3 game studios such as Planetarium Labs and Lattice, are developing their own web 3 gaming engines that allow developers to code complex logic and interactive gameplay.

Blockchain Solution Providers

Once the gameplay is ready, developers or publishers need to integrate blockchain technologies into their games, including choosing chain partners, embeddable wallets, NFT minting and marketplace, compliant solutions, and SDK / API or other services built for token economies and management. This kind of demand is skyrocketing as players grow and their tastes for verticals diversify. It also includes onboarding traditional game companies. Most of the traditional game builders we have talked with do not know much about blockchain, so they suffer from blockchain integration and economic designs.

These solution providers fall into 8 subsectors based on the different services they provide for game developers or publishers:

One-stop service providers normally have a comprehensive tech stack for blockchain integration and related services for developers and publishers. For example, Forte includes almost all the features mentioned above and is ready to offload blockchain tech work from 3A game studios and help them make the transition to blockchain games.
Web 3 integrated SDK basically includes most of the Web 3 development framework and tools. They all separate a gaming kit specifically for building games on the blockchain. For example, Thirdweb provides Unity SDK, ready-to-go contracts for gaming use cases such as marketplace, NFT stake and drop, Dashboard, etc.
Studios’ SDK are services provided by game studios including Bigtime’s Open Loot, Horizon (skyweaver)’s Sequence, and others. Aiming at Web 2 developers, they utilize their own experience and traction to help the games go to market. Open Loot is providing marketplace and marketing support, payment support, integrated gameplay analytics, and much more.
System Simulation is popular in game design and specifically in Web 3 games as the economy loop is important for them. The goal is to achieve a healthy game economy by simulating, testing, and monitoring the GameFi system. Currently, 20+ Web 3 games are cooperating with Machinations that are presented on its website.
Authentication providers can onboard players with their Unity and Unreal engine SDK to accelerate blockchain adoption within mainstream audiences with reduced friction and gentler learning curves.
Data API providers build the web2 and/or web3 database that allows developers to read and write user data in real-time, including exporting the data analysis to the websites and apps, creating an in-game leaderboard, exporting wallet addresses for a whitelist, and more.
On / Off Ramps allow developers to integrate their SDK for buying and selling crypto in the game, without worrying about KYC.
Marketing / Consulting services include tokenomics design support, branding service, and more.

Developers / Studios

They are the core team behind games. Roboto Games is developing a survival/crafting MMO aimed to bridge its 12-year Web2 game design experience and accessible Web3 in-game elements. Yeeha Games backed by Bybit has a 90+ people team and 11 games in the pipeline. Many of them are also providing blockchain solutions to other game builders.

Multi-games Platforms / Publishers

They are to-C game publishers (some of them are developers as well) providing different genre games for players. Gala, Sandbox, and TreasureDAO are leading players in this sector.

TreasureDAO is building a decentralized gaming console and publisher stack, ranking the №1 gaming and NFT ecosystem on Arbitrum with a 100K+ engaged player community. This kind of platform can establish a set of infrastructure and environment to meet the needs of independent developers, and accumulate players’ activities to form a consistent economy. It is not affected by single games’ short life cycles and therefore enhances ecosystem resilience.

Liquidity / Financial Tools

Financial tools include lending, rental, investment derivatives, guild service, marketplace, etc. Most of the services are still in the early stage as each game has its own independent financial loop and the demand is not clear. For example, a rental protocol is relatively easy to build compared to a lending protocol, while there are many projects in this subsector. However, its demand is questioned as

Big game studios are building rental systems by themselves (easy to code) while small games have a shorter life with low user base or meaningful volume to support the demand for rental;
In-game NFTs are becoming less expensive as a lot of games try to lower the threshold for mainstream users;
Most rental protocols use escrow accounts for renting NFTs and in this way, they must get approved and recognized by the games. Otherwise, the NFTs will not be admitted in the gameplay. This increases the extra difficulty for this kind of business.

reNFT is one of the first rental protocols mainly providing white-labeled rental infrastructure for guilds and games. It has a to-C interface but with meaningless rental volume: ~600 total rent transactions of NFTs that are non-GameFi related.

Games

Based on Steam’s categorization and top mobile game genre by revenue, I summarize 5 categories and 11 subcategories to cover current crypto games. Please kindly check the Terms Explanation for the definition of each genre.

RPG: MMORPG, Team Battle. For example, Bigtime is one of the first Web 3 MMORPGs where players form a party of 6 to complete missions in dungeons and earn NFTs and tokens. It has the largest Web 3 players community with over 400K members in its Discord.
Strategy: Card & Board & Autobattler, RTS & Tower Defense, Grand & 4X, DeFi & Gambling. Illuvium is a leading GameFi project aiming to release a series of interoperable games set within its universe. One of its core gameplay is an open-world RPG with auto-battler combat mechanics.
Simulation: Farming, Space & Sci-fi, Life & Hypercasual & Casino. Castaways is a fishing game where players will drift on the sea to find islands, collect resources, and fish to survive. It gained a lot of traction 2 months ago with over 70K daily active accounts.
Action: Shooter, Fighting & Other action. ev.io is a popular FPS (First-Person Shooter) game with 1.3 million visitors in April 2022 (recent quarter averaging 550K).
Sports. For example, MixMob: Racer 1 is a unique card-battle racing game, developed by seasoned gaming veterans who worked on FIFA, Halo, Battlefield, and more.

According to data.ai and SensorTower analysis, the most spending Web 2 games genre (mobile) in the last 2 years are RPG, Strategy, Action, Simulation, and Sports.

Specifically, Rise of Kingdoms was the Top 1 game by consumer spending in 2021. Its gameplay is similar to League of Kingdom, which is located in RTS subgenre of Strategy. Top 2 was Lineage M, a MMORPG game. The rest are Fate / Grand Order (Team Battle RPG, Japanese fantasy style), Slotomania (Casino, Simulation), Homescapes & Candy Crush (Match, Hypercasual), PUBG (Battle Royale Shooter, Action), Monster Strike (Team Battle RPG), Professional Baseball Spirits A (Sports), Roblox (Sandbox, Simulation).

The logic here is if the genre is not attractive for players to spend in the traditional gaming world, it’s challenging to see how it becomes really successful in a Web 3 context. One of our thesis is based on the fact that Web 3 starts to overtake the market for Web 2 games by improving experiences for players, creating an efficient secondary market for items, introducing a more attractive and healthy economic system, and allowing new content creators to join the ecosystem.

User-end Aggregators

In terms of users, except spectators, there are 3 main types of GameFi users ranking from financially driven to fun driven:

Web 3 users (Crypto native users)
Web 3 players (Crypto native gamers)
Web 2 users (Traditional gamers)

Currently, active unique addresses in Web 3 gaming are ~400K, still tiny compared to ~3 billion users in traditional gaming. To onboard traditional gamers, user-end aggregators are essential to provide a seamless experience. Here are 8 types of them:

P2E guilds / Scholarship. Led by YGG and its subDAOs, they gained a lot of traction because of Axie Infinity’s rise.
Esports / Tournaments. Some guilds find the scholarship model may not be profitable in the future and turn to building esports and tournaments for games. It’s still early in Web 3 while mature and common in the traditional gaming world.
Incubators. For example, Everyrealm incubates and develops businesses that are related to gaming, including The Row, Fantasy Islands, Narcos: Metaverse, and Hometopia. It also operates Bedlam, an esports guild and tournament platform, and manages an investment portfolio that includes holdings in 30+ platforms and more than 4,000 in-game assets.
Launchpad is the destination for players or investors to find and participate in games’ IGOs and INOs. It acts as an all-in-one discovery hub for games and metaverses. Usually, players need to buy NFTs to get access to the gameplay.
Gamer Credential. A unified identity for the Web 3 gamers to maintain their reputations across different games and experiences, driving intense cross-game interactions and a high retention rate of true players.
Content / Community. They group up gamers and provide services for them, such as content distributors, streaming services, KOLs or communities, education, and more.

Special thanks to TJ Kawamura (Co-founder at Everyrealm), Alex Qin (Founder at Ubiloan), Alex Liu (Game Studio Advisor), and Yele Bademosi (Founder at Metaverse Magna) for providing valuable feedback and support!

Terms Explanation

RPG: A role-playing game (RPG) is a game in which each participant assumes the role of a character, generally in a fantasy or science fiction setting, that can interact within the game’s imaginary world.

MMORPG: Massively Multiplayer Online Role-Playing Games, are role-playing games that can be played online by a large number of players simultaneously.
Team Battle: In this type of game, players act in multiple roles or are the commander of a team.

Strategy: A strategy game is a game in which the players’ uncoerced, and often autonomous, decision-making skills have a high significance in determining the outcome.

Card & Board & Autobattler:

A card game is any game using playing cards as the primary device with which the game is played, be they traditional or game-specific.
A board game (such as checkers, chess, or backgammon) is played by placing or moving pieces on a board
An autobattler game typically features chess-like elements where players place characters on a grid-shaped battlefield during a preparation phase, who then fight the opposing team’s characters without any further direct input from the player.

RTS & Tower Defense

A Real Time Strategy game allows all players to play simultaneously, in “real-time”, where the participants engage in competitive economics, managing limited resources to expand multiple game elements in order to gain an advantage
Tower Defense is a type of game where players use strategy to build towers to help defeat an enemy.

Grand & 4X

A Grand game is the highest level of strategy, taking into account Politics, Economics, Warfare, Diplomacy, etc.
A 4X game (abbreviation of Explore, Expand, Exploit, Exterminate) is where the player has extensive control over their empire: War, research, agriculture, government, etc.

DeFi & Gambling: It is a type I created especially for crypto games which at its core is a gambling strategy with simple gameplay.

Simulation: Simulation games are a genre of games that are designed to mimic activities you’d see in the real world.

Farming: a farming simulation game where a player enjoys the growth and experiences gained in the process of farming.
Space & Sci-fi: A game takes self-invention, imagination, and narrative to the extreme. Science fiction takes our current reality and thrusts it into the great beyond, to explore the logical ends of the human endeavor.
Life & Hypercasual & Casino:

A Life (Lifestyle) game is any game that takes on a form as the hobby itself and delves into mastering it.
A Hypercasual game is a lightweight, instantly playable game that players revisit often because of its short session length and fun.
A Casino game is where the players gamble cash or casino chips on various possible random outcomes or combinations of outcomes.

Action: It is defined by fast-paced gameplay with a focus on, usually, movement, combat, hand-eye coordination, and reaction time.

Shooter: Its focus is almost entirely on the defeat of the character’s enemies using the weapons given to the player.
Fighting & Other action: the player controls an on-screen character and engages in close combat with an opponent.