The Development History of GameFi: From Ponzi Games to Virtual Worlds

The arrival of the Web3 era has brought new opportunities and challenges to the gaming industry. GameFi, as a combination of DeFi, NFTs, and blockchain gaming, represents the latest application of blockchain technology in the gaming sector. This article will comprehensively review the development history of GameFi and explore its future development directions.

DeFi and NFT Lay the Foundation

Since the launch of the Ethereum mainnet in 2015, the rapid development of DeFi and NFTs has provided the technological and market foundation for GameFi. The total market value of DeFi has grown from $50 million in 2015 to $100 billion in 2023, while the market value of NFTs has also risen from a few million dollars in 2018 to $8 billion in 2023. The integration of these two technologies has created the conditions for the birth of GameFi.

In 2019, MixMarvel's Chief Strategy Officer Mary Ma first proposed the concept of GameFi, which stands for "gamified finance" and "a new gamified business." She believes that future games will not only be tools for entertainment but can also become financial instruments. In September 2020, Yearn.finance founder Andre Cronje further elaborated on the vision of GameFi, believing it will be the future direction of DeFi.

GameFi Reconstructs the Gaming Ecosystem

GameFi solves the problems of asset ownership and transaction freedom in traditional games through blockchain technology. It exists in the form of NFTs for in-game items, and the game ecosystem is managed by DAO organizations, allowing players to share in the dividends of game development. This model perfectly aligns with the development process of games and is a combination of innovations in computer technology and gaming concepts.

From 2018 to 2023, the market value of GameFi increased from $200 million to $24.52 billion. Many traditional tech companies such as Facebook(Meta), Tencent, Microsoft, and others are also actively laying out their plans in the GameFi and metaverse fields.

GameFi 1.0: Ponzi Game Era

GameFi 1.0, represented by CryptoKitties, is an early exploratory stage of blockchain gaming. The games during this period were mostly simple Ponzi schemes, lacking a complete financial system and gameplay.

Launched in 2017, CryptoKitties was the first phenomenon-level blockchain game, pioneering the NFT gaming space. However, its essence remains that of a speculative game, leading to a serious economic bubble.

Pure gambling games like Fomo3D also became popular during this period. These types of games have simple mechanics and primarily attract users through high return rates, essentially functioning as Ponzi schemes.

GameFi 2.0: The Rise of Play-to-Earn Model

GameFi 2.0, represented by Axie Infinity and The Sandbox, begins to introduce a complete financial system and gameplay.

Axie Infinity was the first to combine the "Play-to-Earn" model with complex financial mechanisms, creating an attractive NFT creature world. Players can collect, breed, battle, and trade Axie creatures, earning real profits through the game. Axie Infinity achieved immense success in 2021, with monthly active users exceeding 2 million at one point.

The Sandbox inherits the UGC model of sandbox games, offering complete design tools and an economic system. Players can create, trade, and play in the virtual world. The Sandbox is favored by capital and has received large-scale financing multiple times.

GameFi 3.0: Full-chain Games and Cross-field Integration

The current GameFi market is still in the blue ocean stage, and the future development directions mainly include:

1. Fully On-Chain Games: Running all game logic, data, and assets on the blockchain to achieve complete decentralization and transparency.

2. Cross-industry integration: GameFi combines with emerging technologies such as AI and the Internet of Things to expand application scenarios.

3. IP Introduction: Bringing traditional game IP into the blockchain to enhance the game's attractiveness.

4. Enhance playability: Create large-scale games with high playability and a complete financial system, such as MOBA games.

Future successful GameFi projects need to make comprehensive efforts in areas such as IP effects, playability, and technological innovation to genuinely attract and retain players. With the improvement of blockchain infrastructure, GameFi is expected to usher in a new wave of explosion.