GameFi Remains the Most Resilient Market in Web3
UpOnly | Research #40 — GameFi unfazed post-FTX crash
It has been a month since the FTX crash shook the crypto world to its core, sparking a ripple effect hitting every corner of the market. However, time has revealed some positive characteristics of leading secondary markets in the industry, most notably the GameFi and Metaverse markets, which have remained buoyant amidst the uncertainty.
GameFi has not only proven resistant in troubled times; there is ample reason to be optimistic about future growth. This optimism is down to the underlying value investors and developers see, consistently reflected in the multi-million dollar investment funds injected into the industry. In this edition of UpOnly | Research, we discuss the resilience of the GameFi market in the face of turmoil and highlight some optimistic trends in investment within the industry.
GameFi holds its ground
In early November, the FTX exchange platform experienced public uncertainty regarding its finances, then a run on deposits, a potential Binance takeover, and a freezing of all withdrawals from the exchange. These events were followed by suspicious outward transfers from FTX, a hack, a bankruptcy declaration, and an investigation by the SEC.
It was a turbulent week for the crypto world, with FUD spreading like a virus throughout the community. However, in GameFi, this fear appears to be misplaced when looking at the statistics. A recent Dapp Radar report tells an encouraging story of how the GameFi market has responded to the trouble.
Despite the FTX collapse, Web3 games remain the key driver of growth for the dApp industry. In October and November, gaming activity totaled nearly half of all blockchain activity across 50 of the most prominent networks, hitting 800,875 daily Unique Active Wallets (UAW) in November.
The UAW represents only a 12% decrease from October to the end of November, compared to DeFi figures which dropped over 20% in the same period. The impact of blockchain games is also visible in the NFT market, which was hit hard by the FTX crash. In-game NFTs provided a lifeline for the market, totaling $55 million in trading volume in the past two months.
Although the FTX crash hit the market hard, some silver linings surround this cloud of uncertainty. Firstly, many scams will begin to disappear as the community will likely adopt a low-tolerance attitude towards bad actors after the debacle. This will help improve trust and investment in the market.
Secondly, the crash helps distinguish investor behavior in different market segments. It highlights what we already knew — DeFi investors are much more speculative and will withdraw investments and respond quickly once unfavorable news breaks. However, what has become apparent is that blockchain gamers will stick around despite market conditions if the games are engaging and enjoyable.
Furthermore, the crash hasn’t stopped investors from going all-in on GameFi. Amidst the chaos, several large funds have emerged, demonstrating investor confidence past the twists and turns of the short-term market.
Investment remains strong
Even though the investments in blockchain-based games and Metaverse projects declined in Q4 2022, $534 million was injected into the industry in October and November. Shining examples include Horizon Blockchain Games, Bora Network, and Fenix Games, which have raised a total of $220 million between them. Fenix Games’ $150 million investment in GameFI was covered extensively in last week’s research report.
The main aim of these funds is to purchase or invest in promising GameFi projects that may be struggling due to current conditions in an attempt to build the industry. It is also worth noting that many projects are focused on building Web3 gaming infrastructure in the bear market, putting previous investments in the sector to work, and creating next-gen software that will reshape the industry.
(Source: Dapp Radar)
One of the most notable investors this year, Animoca Brands, has doubled down on its commitment to the market by announcing a massive investment fund that will likely take the industry to the next level. The company intends to distribute $2 billion to mid to late-stage startups, provided the project contains a Metaverse element.
Yat Siu, co-founder of Animoca Brands, will launch the fund, called Animoca Capital next year.
Siu said there would be no geographical limitations for those receiving the funds and the fund will aim to achieve three distinct objectives.
The first is to develop the GameFi ecosystem and create an active market instead of earning returns. Animoca Brands have invested in over 380 Web3 businesses to date. However, this fund aims to develop the market first, with profit being a secondary objective.
The second is related to digital property rights within the selected projects. “The long-term goal for us, and frankly for myself, is creating a way where we all have digital property rights,” Yat Siu said. “I’m hoping this will also drive a scenario where the digital property will be recognized like physical property in the legal system.”
Finally, the fund aims to create more opportunities for investors seeking lucrative Web3 gaming and Metaverse projects. Despite rising global interest rate hikes and turmoil in the cryptocurrency sector, Animoca Brands has attracted investments of over $450 million this year — $358 million in January and $110 million in September. Some investors who previously sought exposure to Animoca’s portfolio of GameFi companies now want more direct investment opportunities, which is what the fund aims to provide them.
Regarding recent crypto industry failures, Siu said Animoca Brands would contribute $10 million and potentially more to the Web3 Industry Recovery Initiative led by Binance to support the ecosystem. The Binance initiative is a strong display of solidarity in the crypto market. It is a promising sign to see one of GameFi’s industry leaders contribute a healthy sum to the market’s recovery.
Celebrating a bright future
The GameFi market, developers, and investors have responded well to November’s downturn. On December 15th, the industry intends to display further solidarity as the best GameFi studios celebrate the industry’s achievements at the Inaugural Gam3 Awards.
The awards will recognize the best Web3 games that 2022 had to offer, with the winners receiving a portion of the cumulative prize pool of $300,000 for their efforts. Thirty judges from the industry will determine the best games over various genres using criteria such as graphics, accessibility, replayability, and overall gaming experience.
The event is set to bring together industry leaders, promising platforms, and media outlets to reward the top game developers and content creators within the Web3 gaming ecosystem. In the face of turmoil, it is an uplifting event aimed at shining a light on how far the industry has come and the promise GameFi holds as we enter 2023.
Recent resilience in market turmoil proves that the GameFi industry is here to stay. Gamers continue to see the value in the play-to-earn model and developers are keen to continue their journey to revolutionize the industry. The resistance is a hallmark of the underlying value that GameFi has to offer and a community commitment to make it a reality.
Make data-driven investments with UpOnly
UpOnly remains committed to building a bustling GameFi and Metaverse ecosystem through numerous partnerships with promising Web3 projects. With so many emerging funds promoting the development of late-stage startups, UpOnly is anticipating an explosion of platforms to join their data directory in the coming months. New projects will join the vast selection of profitable projects on UpOnly. Investors and gamers can log on right now to see where all the Web3 traffic is heading and get the latest price action on the hottest projects in the industry.
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UpOnly is a first-of-its-kind data directory providing insightful and actionable data on the play-to-earn and Metaverse gaming fields. Our solution addresses a market left largely uncovered by other data providers. UpOnly aims to become a one-stop shop for gamers worldwide to identify the most lucrative play-to-earn games and optimize their performance within the industry. Alongside the data directory, UpOnly has launched a decentralized predictions platform that will allow anyone globally to bet on the outcome of play-to-earn and Metaverse gaming events.