Blockchain-based gaming, which has always been seen as a leader in the crypto industry, experienced a severe decline in the first two quarters of 2022. In a new weekly report from Arcane Research, the number of active users in the top Ethereum-based blockchain games, which includes games like Axie Infinity, The Sandbox, Decentraland, etc., have declined by roughly 96% from November 2021 peaks.
Arcane Research gave two reasons for this collapse. The first is that a slower momentum in the metaverse and NFTs has caused the number of users participating in GameFi to decrease. The second is because the reduction of financial rewards has made the community feel discouraged and see this as no longer a potential investment opportunity.
Also, Arcane Research suggests that while Web3 games hold great promise, the way they work is questionable. By comparison, it took developers years to build an ecosystem of traditional games like Fortnite and World of Warcraft. Meanwhile, blockchain games launch too quickly, usually taking only a few months. Many blockchain games were rushed out without deep content and clear vision. Many GameFi projects rely heavily on external investments to keep growing, which is not ideal for sustainable development.
For a blockchain game ecosystem to grow in the long term, three main pillars need to pay attention including cost of entry, token inflation, and incentives. Of course, it is hard to get the balance.
In essence, blockchain game players are primarily crypto enthusiasts, not real gamers. If you want to participate in GameFi, users have to buy NFT, even with a high cost to access and that’s why gamers don’t seem to be interested in NFT.
Other concerns such as Rug pull, FOMO, and other scams barriers that make many players worry about the risks of blockchain games. While not every “abc-to-earn” model will survive, certainly in the short term there are plenty of reasons to continue to be optimistic about blockchain games. GameFi needs to find more avenues of sustainability, and good products entering the market should help fuel that.
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