Thecryptocrash has spooked many investors, butblockchainbros have high hopes for one nascent tool: GameFi.
A portmanteau of game and decentralized finance, the model offers a chance at earning cash bygaming.
Its a tempting pitch on paper.
But play-to-earn shows signs of plateauing before it enters the mainstream.
The accusation has been leveled at Axie Infinity, a Pokemon-style battle game that exploded in popularity last year.
Thousands of people have played Axie as full-time jobs with mixed results.
Play-as-you-go
Axie users typically invest hundreds of dollars for a starter pack of the NFT creatures.
The company makes money by taking a cut on every marketplace transaction.
Some users lower the entry by forming groups called guilds.
This involves owners of the NFTs lending them to players in exchange for a share of the profits.
Yet this doesnt handle the fundamental issue: new players need to replace the ones who cash out.
This wasnt a problem when Axie was adding more users each month than those it already had.
But when growth slowed and the token price slipped,player earnings dived.
The attack is the largest crypto heist to date,according toREKT Database.
Axies makerpledged to reimburseaffected users, butthe games coin valueand player numbers have continued to dip.
In May, Axies daily active usersfell below 1 millionfor the first in eight months.
The figure had peaked at over 2.7 million in November.
Fun thirst
Axies decline has reverberated across the GameFi community.
Companies in the sector are now reassessing their business models.
At a panel discussion duringthe BlockDown conferencelast week, GameFi execs centered their strategies on prioritizing pleasure over profit.
AAA games, however, have development costs that GameFi firms cant afford.
Eric McIntire, the companys CCO, hopes this shifts the user focus from play-to-earn to play-and-earn.
This could incentivize user retention but the games will need mass appeal.
I think thats probably an indicator that theyre not here for the fing game.
Game on
GameFi also needs support from regular gamers who have proven hostile to crypto projects.
Ubisofts NFT plans, for instance, sparked a furious backlash from fans.
The YouTube announcement was disliked by more than 95% of viewers.
GameFi firms aim to eventually seamlessly integrate any blockchain elements.
But Id say were probably five-to-10 years away from something like that.
In the embryonic world of GameFi, businesses are still searching for a sustainable formula.
Story byThomas Macaulay
Thomas is the managing editor of TNW.
He leads our coverage of European tech and oversees our talented team of writers.
Away from work, he e(show all)Thomas is the managing editor of TNW.
He leads our coverage of European tech and oversees our talented team of writers.
Away from work, he enjoys playing chess (badly) and the guitar (even worse).
