GameFi sector down, but not out

While the Web3 GameFi sector continued to bleed users in June and see funding rounds slashed, several popular games have kept their token prices and user numbers relatively stable. Additionally, game platform BinaryX reversed its downward trend, creating a rare bear market breakout, while game developer Playful Studios raised a record amount for its battle game Wildcard. 

Despite how things look from the token price charts of former leaders like DeFi Kingdoms and Axie Infinity, these developments show that even though there is a lot of pain for devs and investors in GameFi, the industry is far from collapsed. 

The overall market continues to be very negative. Footprint Analytics data indicates that, last month: 

• GameFi marketplace volume declined 30.3% MoM, with a $166 million decrease in transaction volume.
• GameFi had 1.46 million total users, a 26.9% MoM decline. The number of new users also gradually decreased by 34.1%.
• VC investment in the GameFi sector was down 57.7% MoM.

On the other hand, aside from the gloom, so-called “risky” investments like metaverse land and NFTs have performed relatively well compared to “safe” assets like BTC and ETH. We explored this topic via three hypothetical BTC/ETH, NFT, and metaverse land portfolios and found that the BTC/ETH (by some calculations) dropped harder from ATH than top NFT and metaverse projects. For the latter two “riskier” assets, returns are also significantly higher in a bull market.

Here’s what happened in GameFi in June. 

GameFi Market Overall Quotes

GameFi Project Count up 2.9% MoM, Funding Down 57.7% MoM

The number of GameFi games stood at 1,557, up 2.9% MoM. Newly released GameFi projects include MIND Games, Fishing Lands and Fantom Survivor. They currently have very few transactions and users.

Although the market is in extreme fear, it has not stopped new projects from emerging.

Financing was down by $239 million, or 57.7%, from May. In terms of the number of financing rounds, there were more seed rounds than any other type.

Capital mainly flowed to the Web3 and NFTs categories. One Web3 project, Wildcard, received $46 million, making it one of the few dark horses in the bear market. Cryptoys, a digital, collectible NFT toy project, closed a $23 million round led by a16z.

GameFi Total Users Down 26.9% MoM, Volume Drops from $547M to $382M

Despite more innovative games and projects beginning to emerge, the macroeconomic environment and volatility of the crypto market pushed the number of active users down from a peak of 3.58 million in January to 1.46 million by the end of June. The number of new users also gradually decreased to 500,000. Compared with May, the number of active users decreased by 26.9%, and the number of new users decreased by 16.1%.

In addition, the overall transaction volume decreased in June compared to May, with a 30.3% decrease from the previous month.

WAX has the most GameFi transactions out of all chains at 87% of the total. This is due to its top 2 game projects, Farmers World and Alien Worlds. Both have maintained a stable number of transactions and users during the bear market.

GameFi Project Analysis in a Bear Market

BinaryX Quietly Revived After Entering the Death Phase

With the bear market in full swing, formerly lucrative projects like Bomb Crypto, DeFi Kingdoms and StepN have seen their NFTs and tokens devalued to a fraction of their ATHs. BinaryX, originally a trading protocol that transitioned to GameFi and launched a successful title called CyberDragon, looked to be one such project among many.   

BinaryX issued its governance token, BNX, at $20.62 in September. In November, Binance announced that BNX was on the Innovation Board and could be deposited on the platform as a demand money currency, which means that the currency has no pledge period, and holders can directly purchase for any number of days to obtain income, with an APR of 15%. This led BNX to hit an all-time high of $200.71 on November 15, an increase of 873%.

But the good times didn’t last long. The developers of BNX CyberDragon modified the character upgrade function several times to earn more money in-game—upgrades require spending Gold. 

As a result, most players sold their game assets and left the market, resulting in a rapid decline in revenue and difficulty attracting new users. This caused BNX to drop from its ATH of  $200.71 on Nov. 15 to an ATL of $17.71.

To save the project, BinaryX released CyberDragon V2 in March, which added new gameplay and modes. It also included a new minting and upgrading mechanism for heroes, which they hope will add stability to the price. 

Emerging GameFi Projects to Watch

On June 14, The Wildcard Alliance, a gaming ecosystem from Playful Studios, announced the closing of a $46 million Series A round.

The funding was for Wildcard, a hybrid multiplayer online battle game. Besides pitting their NFTs against one another, participants can interact and trade directly with in-game fans and holders.

In the current market environment of massive devaluation of virtual assets, Wildcard was still able to get huge financing to support the development of its project.

Summary

While the overall market continued to slide with the crypto market in June, individual developments in the GameFi sector have shown that it might be more resilient than many believe. 

June Events Review

NFT & GameFi

• Stepn Returns to Crypto Market Top with 75% Price Spike in Last 7 Days
• Yuga Labs breaks silence, X2Y2 outpaces OpenSea
• NBA Top Shot leads with a 901.95% spike in sales volume
• Paris Saint-Germain and Jay Chou launch an exclusive series of 10,000 “Tiger Champs” NFTS
• Phantom and Magic Eden Partner to Deliver Integrated User Experience for Solana NFT Collectors

Metaverse & Web3

• Metaverse Land Prices Boom By 879% Since 2019
• Bertelsmann raises $500 mn for India, eyes early-stage investments in Web3
• Layer Three Ventures Announces $30M Web3 Crypto Fund and Accelerator
• A “very ambitious” $100M Metaverse R&D hub is being built in Melbourne
• Facebook Pay rebrands to Meta Pay as Zuckerberg details plans to create a digital wallet for the metaverse

DeFi & Tokens

• Lido to Move to a Two-Phase Voting Governance Model with a Conventional Voting Phase and an Objection Phase
• Following BTC’s Price Drop, Bitcoin Miners Benefit From a 2.35% Difficulty Reduction
• Addresses starting with 0x40 paid about 13.4 million stablecoins to repay debts on Aave
• TVL on Layer 2 fell to $3.78 billion, down 20.77% in 7 days
• The largest BTC whale bought 927 BTC this month

Network & Infrastructure

• Arbitrum Pauses Odyssey as Layer 2 Fees Surpass Ethereum Mainnet Fees
• Axie Infinity Restarts Ronin Bridge Months After $625M Exploit
• Ethereum Energy Consumption Sees Sharp Decline As Mining Profitability Drops
• Cross-chain bridge Horizon attackers transferred 6012 ETH to Tornado Cash in batches
• Tether to undertake full audit by top 12 firm for transparency over USDT reserves

Institutions

• Genesis Faces ‘Hundreds of Millions’ in Losses as 3AC Exposure Swamps Crypto Lenders
• Global Alliance of Tech Founders Entrepreneur First Raises $158 Million in Series C Funding
• Crypto Exchange Unizen Receives $200M “Capital Commitment” From Investment Group GEM
• Crypto.com App Now Accepting Apple Pay
• Coinbase Adds Support for On-Chain Polygon and Solana Transactions

Worldwide

• Taiwan central bank governor considers interest-free CBDC design to prevent fiat deposit flight
• North Korea Retains Lead In Crypto Crimes, Over $1.5B Stolen
• Russian parliament approves tax break for issuers of digital assets
• Central African Republic president launches crypto initiative following Bitcoin adoption
• New York Crypto Moratorium Comes to a Standstill

This piece is contributed by Footprint Analytics community by Vincy.

Data Source: Footprint Analytics – June 2022 GameFi Report

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