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In recent months, the cryptocurrency world has been abuzz with anticipation for the impending Bitcoin halving event. We are witnessing the most dramatic halving price increase ever recorded, with Bitcoin hitting all-time highs well ahead of schedule according to the four-year cycle theory.
This surge has had a noticeable impact on the altcoin market, especially the web3 gaming sector. Memecoin and AI projects have dominated the altcoin narrative, but now capital is turning to the GameFi project. Popular blockchain gaming projects such as Gala Games, Pixels, and Floki have all recorded gains of more than 50% in the past week, according to data from CoinMarketCap.
gamer’s dream
Gaming has experienced exponential growth over the past few decades, transitioning from a simple form of entertainment to one of the most profitable industries in the world. But playing video games for a living has only been a dream of successful streamers and professional gamers. Thanks to the growing web3 gaming sector, that dream is now accessible to more people.
That same dream is fueling GameFi, turning it into one of the defining trends of the current bull market narrative. As with previous cycles, retail investors are likely to flock to web3 gaming projects in hopes of turning their hobby into a profitable venture.
Web3 games are back
According to Footprint Analytics, web3 gaming adoption will increase 54.67% above average in 2023, and this trend is expected to accelerate. These changes represent a tremendous opportunity for smaller studios to innovate and compete, potentially leading to a new era of compelling and financially rewarding games.
Sky Mavis, the studio behind Axie Infinity, secured a $3 billion valuation at the end of 2021. What’s stopping new blockchain game studios from achieving the same goals as established companies like Konami and CD Project Red?
It’s different this time
One of the most heavily criticized aspects of blockchain-based games is their lack of engaging gameplay. That said, most of the titles feel like a chore to play, and seriously lack the fun factor that’s present in traditional games.
Nonetheless, as the GameFi project improves, these complaints are becoming less and less common. While the overall gaming community remains skeptical about cryptocurrencies, the benefits of owning in-game assets through NFTs and leveraging DAOs to participate in the development of games and in-game economies will be difficult to ignore in the future.
Big players are stepping up.
Traditional gaming powerhouses like Ubisoft, Square Enix, and Sony are slowly stepping into the web3 gaming industry. Titles like Ubisoft’s ‘Champion Tactics’ and Square Enix’s ‘Symbiesis’ may seem simple and experimental in nature, but they represent the first wave of blockchain-based games conceived by traditional game studios.
Together with Sony’s recent patent for a ‘super fungible token’, these ventures highlight a shift from a purely entertainment-focused model to one that encompasses economic value, player ownership, and community-driven development. The pioneering steps taken by Ubisoft, Square Enix, and Sony could serve as a blueprint for other studios considering entering the web3 gaming sector. Observing the successes and challenges of these giants is invaluable to smaller studios and indie developers.
The present and future of the gaming economy
Blockchain technology was not initially developed with gaming in mind, but it is a great fit for the gaming world. Games traditionally build their own worlds, complete with their own currency, based on in-game inflation as perceived by the player. These worlds often feature market and production mechanisms that mirror real life, supported by player-versus-player (hunters) and grinding (gathering) mechanisms.
In this context, games with their own economies don’t just operate in isolation. This provides the perfect environment for both defi and GameFi elements to thrive. This synergy between blockchain technology and games opens up new possibilities for game developers to create worlds with self-sustaining economies where currencies have real value both inside and outside the game world.
The GameFi sector is still struggling with several challenges, including scalability issues, poor user experience, and regulatory hurdles. The web3 gaming experience should be smoother, with encryption integration happening in the background so less tech-savvy players don’t feel overwhelmed.
Nonetheless, blockchain technology has tremendous potential to transform the gaming industry, leading to new game mechanics, revenue models, and player incentives. We hope to phase out predatory monetization models to move toward a fair gaming economy where value is created and shared between players, developers, and content creators across multiple platforms.
What to expect in the coming months
As Bitcoin continues its upward trend, the GameFi project is expected to continue growing as well. However, certain indicators, such as risk indicators, suggest that the market is overheating and a correction will be needed in the short to medium term.
Although nothing is certain, the web3 gaming industry is expected to record the most significant growth since the halving. When Bitcoin starts to move sideways and lose its dominance, altcoin season begins.
Macroeconomic factors will come into play, but as long as the global economy remains stable, altcoin season will begin in the coming months. Although it’s difficult to pinpoint an exact date, the Altcoin Season Index can help you navigate the market and figure out when retail investors will start shopping for gaming coins.
