A recent report by ChainPlay indicated that 93% of GameFi projects are dead. It analyzed 3,279 projects and found their values had fallen to an average of 95% from their peaks.
The Decline of GameFi
GameFi, which refers to blockchain gaming, was at its peak in 2022 and was characterized by a lot of excitement and funding. Most of their projects couldn’t make it through. Big promotions like airdrops could not stop the decline.
There isn’t any part of the GameFi industry thriving today. Some still say that “Tap-to-Earngames” or “cloud gaming” may be the way forward. Recently, Aethir started a $100 million fund directed at cloud gaming. But even in these areas, the business cycle goes downward.
Big Investors Against Small Investors
The report indicates that the average profits earned by retail investors—common people—on GameFi projects amounted to 15%. For most, the experience was sad instead of gratifying.
Conversely, big folks like venture capital (VC) firms had strategies that cost them dearly. After making intelligent bets on project funding, they probably made average gains of about 66%. Only big VC firms were able to make millions despite the industry slump.
The report cites Alameda Research, a controversial company associated with FTX. Alameda produced astonishing returns of 713% on its GameFi investments. However, this remarkable success arose shortly before its fall into fraud and thus disqualifies it from being a model to follow.
The Money Gets Dried Up
Investments about the GameFi projects are down more than 84% in 2024 compared to their most recent peak in 2022. Still, as venture capital firms look to take on strategic bets, mainstream investors risk running too much against failure.
“For many people, the expectation of enormous rewards in GameFi has devolved into somewhat grim reality and stark disappointment,” the report said.
The flip side is: the GameFi market has become a double-edged sword for small investors. While it can generate tremendous gains, it can also lead to great losses.
