Three Stages of GameFi Development: From Play-to-Earn to Metaverse

The current GameFi market is in an overheated state, primarily supported by irrational capital and new users, which sustain project value and token prices. Once the market adjusts, token prices and in-game asset values will decline, and the overall game economy will face a significant test, with users and capital likely shifting to other areas. As a primary market investor, it is essential to maintain a calm judgment about subsequent developments even amid the GameFi craze, and to prepare investment layouts for the next wave.

Three Development Stages of GameFi

Phase 1: GameFi 1.0 - Play-to-Earn

The current Play-to-Earn model mainly emphasizes "Earn", with gameplay and sophistication serving more as supplementary elements to the project's narrative. A complete project needs to meet the following conditions:

• Can earn profits within a certain period of time
• Mechanism design allows early users to make money
• Can attract new users to continuously join and invest funds
• An economic model that supports the operation of the game for at least a few months.

The investment focus at this stage is:

1. Does the team have a long-term business mindset?
2. Can the project attract new users to invest incremental funds?
3. Can it attract existing crypto users to transfer funds from other projects?
4. Is the Earn mechanism design reasonable?
5. Can the influx of new users increase the value of tokens and in-game assets?
6. Payback Period
7. Potential Causes of Mechanism Failure
8. Is there an appealing narrative ( such as stunning graphics, a strong investment lineup, etc. )
9. Is the token distribution reasonable? Will there be excessive sell pressure in the early stages?

However, games at this stage face numerous risks, such as slowing user growth, design flaws in mechanisms, sudden changes in mechanisms by project parties, and market corrections, all of which could lead to drastic price adjustments. Even Axie Infinity cannot determine the impact of the bear market on its ecosystem.

Phase 2: GameFi 2.0 - Addressing the Single Game Economic Issues

This stage has higher requirements for the basic quality of the game and the token economy. Focus areas include:

1. Establish a multi-game interoperable economic ecosystem
2. Invest in game incubation platforms to enhance interoperability between games.
3. Develop Pay to Play projects to encourage users to spend in-game.
4. Pay attention to the social attributes of games and the native characteristics of cryptocurrency.

In addition, the tools for games and guilds are also worth noting, such as Gametaverse, which provides data display for users, and Kyoko, which offers item rental.

The deep integration of NFTs and GameFi is also an important direction, such as the NFT collateral lending services provided by Drops and Vera Finance.

Connecting the data standards and physics engines of games is also an important infrastructure for the future, paving the way for the realization of a true Metaverse economic system.

Phase Three: Attempt at the Metaverse

This is a trial phase for humanity to step into the virtual economic life. Ideally, users can provide productivity in the virtual world in exchange for funds, consume or engage in financial activities across different but interconnected applications, and even interact with their real-world selves.

Conclusion

Games primarily based on Earn are essentially a method of distributing project tokens. For users who are not familiar with DeFi, this is a more user-friendly way to acquire project tokens. In the future, there may be mining services that gamify the original distribution mechanism.

As long as the project has a demand for token distribution and marketing, profit-driven GameFi may continue to exist. However, both the project team and users need to consider whether the distributed tokens are used for short-term incentives to boost the token price or to encourage long-term positive behavior.

Currently, GameFi and NFTs together play a role in attracting users from outside the circle. Although GameFi 1.0 is at its peak, for investors, the most important thing is to focus on the long-term development of the ecosystem and seek out truly valuable innovations and teams.