Web3 Gaming is transforming the blockchain space. The GameFi industry has progressively expanded its dominance, attracting over $22.5 billion in total investments. This era began in late-2020 when Andre Cronje, the founder of Yearn.Finance, introduced the notion of GameFi. His tweet about gamification in a decentralized setting took crypto Twitter by storm.
A slew of innovations drove the industry forward steadily since then. NFTs have propelled GameFi to a new level, merging entertainment and financial incentives. Moreover, the metaverse has introduced an additional utility and value layer in this domain. It offers an immersive experience, among other things, to the participants of virtual worlds.
Overall, there’s been an intense craze. So much so that several new projects emerge daily. For example, there were 1400+ GameFi projects in May 2022, representing a 99% yearly increase. This is primarily because investors have dedicated billions of dollars to this domain—$2.5 billion in Q1 2022, whereas the total investment last year was $4 billion.
Institutions Enter Blockchain Gaming
Recently, venture capital funds have gone big on blockchain gaming. Leading investors are doing everything in their capacity to capitalize on GameFi’s immense potential. For example, Andreessen Horowitz (A16Z) launched the Games Fund One, investing $600 billion in blockchain gaming.
Similarly, Framework Ventures, a crypto-focused venture capital firm, raised $400 million for Web3 gaming and DeFi. Moreover, a recent report by Drake Star Partners stated that one-third of all game startup funding in Q1 2022 went to blockchain gaming firms. Over a hundred companies, including Animoca Brands and Shima Capital, raised over $1.2 billion.
GameFi’s popularity among institutional investors highlights its influence on the broader blockchain industry. It also emerges as a gateway to widespread Web3 adoption.
Blockchain Gaming’s New Paradigm
Web3 is still in its early stages. Although several blockchain games are in the market today, receiving attractive investments, they haven’t successfully boosted Web3’s mass adoption. The reasons for this are clear, though, and concern the core of blockchain gaming.
Existing in-game economies are usually unsustainable. Most P2E games have poor tokenomics and incentive structures. They also have inflationary reward systems, including a limitless supply of crypto and NFTs.
Moreover, P2E remains a closed market for traditional gamers. As a…
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