Detailed explanation of this round of GameFi development path and future trends

As early as 2016, there was a prototype of gamefi in the crypto world; from 2019 to 2021, with the arrival of the new cycle, a new form of gamefi represented by Axie: gradually approaching modern video games, bringing the world of web2. At the same time, users can activate the ecology of the crypto world.

10,000-character long article丨Detailed explanation of this round of GameFi's development path and future trends

Author: Rachel
Original text: “Summary and Prospect of This Round of Gamefi Investment”

Around this time last year, I began to systematically look at the primary investment of gamefi in institutions. Currently, the primary and secondary markets are relatively depressed, and there is enough time to sort out and review this track and my own investment decisions. A year later, it is very interesting to answer what gamefi is and to re-examine the large and small deals that I have seen in the past. It is very interesting to re-understand the market and re-adjust the cognition. I would like to record my personal observations in this article. This article is mostly a record of my own experience rather than a formal research report. Please forgive me for the lack of argumentation. It would be an honor to be able to bring some thoughts to the readers.

1. What is Gamefi?

As early as 2016, there was a prototype of gamefi in the crypto world; from 2019 to 2021, with the arrival of the new cycle, a new form of gamefi represented by Axie: gradually approaching modern video games, bringing the world of web2. At the same time, users can activate the ecology of the crypto world.

1. From the game point of view, gamefi: the product of game+X

From the perspective of content carriers, I tend to view the evolution of the entire game as the evolution of board games, arcades, consoles, web games, end games, mobile games, and migration to new content carriers.

– 1980s-2000s: Atari, Red and White Machines (1983), Sega Saturn (1992), Nintendo, Sony and other products (after 1993), Xbox

– After 1990-2010: the era of web games with the development of PC

– 2000-present: With the improvement of computing and processing capabilities on the PC side, the rise of PC games has stably occupied part of the market until now

– After 2010-present: The penetration rate of mobile devices has increased, computing power has increased, and the mobile game market has emerged as a supplement and extension of client games.

– Around 2015 – present: VR, AR and other new carriers began to be combined with games, and VR hardware appeared a variety of affordable and easy-to-use devices (Pico V3, Oculus2, etc.); blockchain as one of the new “carriers” Start trying to run the game and explore the game form

– 2021-:game+X

At each stage of the content carrier change, there will be a process of transplanting, borrowing from the content and form of the previous generation of games, adapting to self-adaptation, and then facing a blowout innovation.

1) Porting and learning from the previous generation category: For example, early end games will still learn from the combat methods and mechanism design of console games, but in the end, with the improvement of PC performance, various types of games have exploded the market.

2) The stage of blowout innovation may produce unique types, but it is not inevitable.

3) Self-adaptation in the process of learning from the previous stage of the game: the development process of chain games can also be regarded as the reference and extension of the web2 era games in the web3 era

2. Looking at gamefi from the perspective of Crpyto: gamefi is the first application close to the real economy

In addition to infrastructure, there should also be rich ecological applications that grow from the soil of the infra. The progress of the Crypto application layer is only reflected in this cycle. Defi in 2020, NFT and Gamefi in 2021, the development of these application layers expands Crypto’s user base disk.

10,000-character long article丨Detailed explanation of this round of GameFi's development path and future trends

You can imagine the public chain as a country. This country needs to establish basic political and economic rules (consensus algorithm) before the country can start to operate. Each subject builds a business ecosystem under the basic framework: Federal Reserve – Commercial Bank – “Commercial entity” , and also need to cultivate enough population to ensure the operation of the entire economy. For public chains, the Federal Reserve (stable currency) and commercial banks (DEX/lending) are often required. After building the financial service infrastructure, a large number of big Bs and small Bs are needed to bring in more users and increase economic activity and financial revenue (public chain revenue). With the prosperity of the economy, the more complex forms, the emergence of derivatives, the need for cross-chain circulation of assets and the development of cross-chain infrastructure. Gamefi, some Defi, and NFT can basically be attributed to the category of “real economy”.

However, the construction of the “state” itself also has certain limitations, and there has always been the problem of the impossible triangle: decentralization, security and scalability can only have two of the three, and you can’t have both. When the population of the “country” is large enough and the transactions are dense enough, scalability needs to be considered more. Ethereum is making continuous efforts, but the application is developing rapidly, and 10,000 years are too long. So before the real Utopia arrives, we need some alternative solutions. That is L2 and other “new public chains”. The new public chain sacrifices some “beliefs” to meet the urgent problems that need to be solved in reality. These new public chains are supplementing Ethereum from different directions, and they urgently need to establish their own brand-new ecosystem. The rapid growth of the new public chain has also contributed to the rapid development of the application layer.

10,000-character long article丨Detailed explanation of this round of GameFi's development path and future trends

3. Gamefi from a realistic perspective: a decentralized economy with currency issuance

Commonalities between economic systems in the general world and game economic systems:

1) An enclosed space

The space defined here means that all the range that can be affected by currency flow is within this space. In reality, the human society in the world is this space. As far as online games are concerned, a server is a space.

2) is the economic system

• a. General equivalents of exchange, ie money

• b. Individuals who can carry out free trade, that is, trading individuals (individuals or groups) of players or humans

• c. There are commodities. The basic definition of commodities is that they have exchange value.

3) In line with the general law of economics, the price of commodities is determined by value, and is affected by the relationship between supply and demand, and the price fluctuates within a certain range above and below the value

Differences between the economy system in the general world and the game economy system:

Currency issuance mechanism: In reality, the government is the only issuer of currency, and the right to issue currency is the only one, which is controlled by the government, while trading entities in the economic system have no right to issue currency or intervene. In the game, monsters are the main currency issuers (of course, there are other mechanisms such as tasks, but they are excluded here), and the amount of currency issued is determined by the behavior of all players in the server, that is, by the behavior set of trade entities in the economic system. Decide.

10,000-character long article丨Detailed explanation of this round of GameFi's development path and future trends

In addition, there are three questions that need to be answered urgently, that is why gamefi is beneficial to players, why it needs to be on the chain, and why it needs to introduce tokens. This is the core of gamefi’s understanding, which will be explained one by one below.

How to understand profit sharing?

1. Provide a new cold start solution

Profit distribution encourages new users to participate in the development of game resources and accelerates the formation of different types of game players. That is, the output of game resources is driven by dividends, which further promotes the distribution of in-game resources. In traditional games, players continue to explore game content and discover in-game resources based on their interests and the fun of the game itself. However, this behavior is highly subjective and depends on the game’s mechanism design (guidance, feedback mechanism, etc.). etc.) and players’ personal preferences, so in the early start-up stage, if part of the game’s profits are given to players, so that they can get the same game resources or economic feedback while generating resources, it may be helpful for early and stable progress Cold start. Especially when traditional distribution channels are firmly held at several major entrances, it makes sense to get rid of the restrictions of publishers. But at the same time, some of the toxic users brought by this incentive method are often criticized.

2. Change the way the game is adjusted

At present, most Gamefis are based on the design of economic mechanisms and use economic interests as a means to guide players’ behavioral decisions in the middle and late stages. A condition is implied here, that is, we assume that players are rational people, and the core decision-making basis is purely based on the economic benefits in the game, and other interesting designs do not have a significant impact on decision-making. Then a series of subsequent complex problems are simplified into the adjustment problem of the economic system. As the project party, there is no need to think too much about the plot, effect presentation and other issues, and the pressure has come to the numerical planning side.

3. Game players: from simple consumption behavior to investment behavior; from passive participation in the game ecology to active participation

Why does the game need to be on the chain?

1. The game has the characteristics of being suitable for the chain

1) Games with an economic mechanism naturally have transactions, and most games have their own economic system

Gold-playing and free markets in traditional online games and client games have long existed, and mature adjustment mechanisms and design logic have been developed in both the on-site market and the off-site market. There is also a need for the circulation of props and gold coins in the game.

**2) Games in a broad sense include not only modern video games, but also games with simple mechanisms and diverse result spaces as their basic features. **The latter is the more suitable type for winding. The transparency of the mechanism, the privacy of the results, and the decentralization of the operation are realized by smart contracts; even if there are a large number of possible results, the results themselves can be concisely defined, complexly calculated, and derived in various ways. The different ways of obtaining possible results in the game, the game of obtaining successively, the design and formation of consensus, these seem to be more in line with the design logic of the concept of decentralization.

3) The multiple purposes (trading, speculation, collection) of unique assets in the game have a relatively high fit with NFT

In-game items tend to be unique, or at least we want them to be unique. At the same time, these props also have differences in rarity and function, and NFTization is a matter of course. Similarly, the project party can provide a platform for trading and leasing in the game, and players can also solve the problems of trading and leasing through other markets (such as Opensea) or peer-to-peer transactions.

4) A new UGC and DAO governance paradigm

Decentralization will bring a lot of possibilities to the governance and content production of games.Decentralized production of game content is extremely experimental. It is a commonplace to decide the direction of game content from the bottom up, but what about the shape and future evolution of the entire game? If each player has a tool (NFT/other), it can be randomly combined or calculated to obtain a new state through the combination of the results of player A and player B, and all players who are online or not online at the same time combine their own result space , and conduct them in a different order, eventually getting the state of the entire network/whole server. Regarding in-game governance issues, players can hold tokens to make voting decisions on major adjustments in the game, which has been widely used; or we think a little more complicated, the exchange of wealth between DAOs of multiple players in the same game, external decision? Combined with the acquisition mechanism of token assets in the game, a simplified but sophisticated political and economic sandbox will be obtained.

5) The flow inlet of L1 and the test field of L2

Gamefi is regarded as the most active track and so far the closest to physical applications. In 2021, Gamefi’s role in the public chain will be truly valued. For Ethereum, its TPS is not enough to meet the requirements of real-time computing in some scenarios in the game, so we can see that some decentralized public chains are sacrificed to meet the needs of different applications. At the same time, for L2, they still lack some cash cows that focus on fast delivery and high activity. Derivatives and games are the best choice. L2 and the game should be a relationship that requires each other to achieve each other. Perhaps it is related to the background of the development team. In addition to the heavy-duty games based on physical mechanisms, there are also protocols and random number games that overcome the composability of NFTs. There are innovative game categories at the crypto level.

2. Blockchain changes the relationship between the game industry chain

Thanks to the openness of the blockchain, the business model based on the virtual economy of the game will be more active and richer. Because of the data openness of blockchain projects, any individual or organization can use the data of digital assets, and can explore business models based on game digital assets, such as game equipment leasing and trading. Under the Gamefi model, these third-party organizations based on game assets have stepped out of the gray area and become important players in the virtual economy, and maintain a good relationship with the production team.

3. For game practitioners, especially Chinese game practitioners, whether it is upstream game developers, engines, or downstream gold-making studios and IP partners, Gamefi is a blue ocean market

Why does the game need to add tokens?

Many people will always ask similar questions when they first look at gamefi. The first question to be solved is what is the essence of the token and what does the token represent. First of all, the token can be the stock of the game project, a way for investors and players to invest in the game and participate in governance; it can also be a handling fee, a general equivalent in the game. Most of the time it is both the general equivalent in the game and the stake in the game project, and the integration of the two roles is the key. “In-game economic income is ownership” is a logic that subverts traditional concepts, that is to say, diamonds in traditional games are equity that can be transferred in the second level, and are also tickets to participate in voting. What can the three roles achieve? The most important thing is that the valuation of equity in turn affects the economic behavior of players in the game. Will Perfect World’s stock price and market value affect the behavior of Magic Tower players? No. Will changes in SLP affect players’ reinvestment behavior? Will.Generally, the issuance and price of equivalents/stocks are the main tools to guide the behavior of participants/investors. Sometimes the participants in the in-game economy are not the same as the project investors, but the game participants must be project investors. Many friends are not wondering why they want to add tokens, but rather why many game projects now suddenly add a government token and a utility token.

2. Gamefi classification

1. Game CP classification

1) Game mechanics: Playability is generated by mechanics

Physics: Game mechanics can sometimes dictate in-game physics (which can be different from reality).Characters in the game are usually constantly moving, jumping up and down, or driving vehicles. In many games, the position, moving direction of objects and overlapping collisions between objects are the main computational tasks. “angry Birds”

Internal Economy: Mechanisms such as the collection, consumption, and trading of game elements constitute the game’s internal economy. The in-game economy often includes common resources such as money, energy, and ammunition, but in addition to these tangible items, abstract concepts such as health, reputation, and magic power also belong to the game economy. “Zelda”

Progressive mechanics: In many games, the level design dictates how the player can act in the game world.Traditionally, the player had to control his in-game avatar (avatar) to a designated location, where he could rescue someone or defeat the main villain in order to pass the level. These types of games have many mechanisms for closing or unlocking access to an area, and the player’s progress is controlled by these mechanisms.

Tactical Maneuver: This mechanic allows players to assign units to specific locations on the map to gain an offensive or defensive advantage. Tactical maneuvering is not only extremely important in most strategy games. It is also a key feature in some role-playing games and simulation games. StarCraft and Command & Conquer: Red Alert

Social Interaction: Today, many online games have mechanics that encourage players to exchange gifts, invite new friends to the game, or engage in other social interactions. In addition, role-playing games may have rules that specify how characters should perform, and strategy games may have rules that specify how players form and break alliances.

(Source: Game Mechanics: Advanced Game Design Techniques)

The weight of different mechanisms will profoundly affect the category selection of chain games. For example, on a decentralized server, some games that require high real-time computing are difficult to achieve the same effect as on a centralized server. Therefore, games that simulate and calculate the actual physical mechanism in real time often cannot achieve better results. Another example is the game with a large demand for real-time social interaction on the chain, which is also difficult to achieve due to the efficiency of the infrastructure at that time. Therefore, it is expected that the chain game with the economic mechanism as the core should take the lead.

However, as more and more traditional game companies enter the market, each traditional category can basically be found in gamefi. Perhaps for them, it is not a high threshold to do “chain modification”. If real-time calculation is difficult to link to the chain, they only need to NFT some props and purchase some code packages to complete smart contract development, art design, Character plots, parameter designs, etc. have been backlogged for a long time, but due to the past version number restrictions and the involution of distribution channels, these semi-finished products and even finished products have no future. So game studios scrambled to resell them or “assemble” them themselves, and achieve a “chain reform” in a few steps.These projects in the first half of 2021 can still enjoy dividends. In the second half of the year, chain games will bloom with “a hundred flowers blooming”, and the involution will intensify.

Thankfully, there are still projects committed to exploring new directions. Whether it is introducing the design of Defi into the game or doing some new exploration on the chain. So I am more inclined to use three dimensions to judge the positioning of a game. The first is the similarity with modern video games (pursuit of near-movie-level performance/sufficiently concise and abstract rules), the second is the degree of on-chain (what elements in the game are on the chain), and the third is financial attributes (whether it is a defi variant / base economy only).

2) 3D coordinate positioning classification

– Low similarity to modern video games, high degree of on-chain, high financial attributes, represented by defi kingdoms

– Low similarity to modern video games, low on-chain level, high financial attributes, gambling

– Low similarity to modern video games, high degree of on-chain, low financial attributes, random number game

– Low similarity to modern video games, low degree of on-chain, low financial attributes, very few

– High similarity with modern video games, high degree of on-chain, low financial attributes, represented by dark forest

– High similarity with modern video games, high degree of on-chain, high financial attributes, very few

– High similarity to modern video games, low on-chain level and low financial attributes, often found in chain-modified games, represented by Theta arena

– High similarity with modern video games, low on-chain level, high financial attributes, very few

3) Classification by token design type

single currency

– Features: All economic output and consumption activities in the game are linked to the same token, which is easy to control; a death spiral is prone to occur in the later stage. That is to say, it is difficult to deal with extreme market conditions, such as a large sell-off of the currency price plummeting, and the original price cannot be returned after the plummet.

– Representative game: Spaceship

– Focus: consumption mechanism design, choice of value anchoring

dual currency

– Features: Most games use the form of main currency (value currency) + auxiliary currency; generally the consumption and output of the main currency are linked to the auxiliary currency; sometimes the output of the main currency and the auxiliary currency is linked to the PVP system and the PVE system; generally In this case, the “diamond” is changed to the main currency, and the “gold” is changed to the auxiliary currency; the main currency can be applied to most of the application scenarios in the game

– Representative game: Axie and its imitations

– Focus: supply ratio of main coin and auxiliary coin; related design of consumption mode of main coin and auxiliary coin; consumption and output ratio; subsequent adjustment is related to the diversification of consumption channels

multi-currency

– Features: Commonly used in games with more resources: SLG, open world

– Representative game: farmers world; Star sharks

– Focus: The activity relationship represented by each currency, the output and consumption relationship between different tokens

2. Gamefi upstream and downstream classification

Engine: UE, Unity, Cocos, etc.

– There is currently no need to develop an engine from scratch for Gamefi, or in other words, a gamefi-specific engine doesn’t make much sense.

Lightweight game development tools: mainly in the form of SDK, to provide on-chain solutions for light-weight games.

Rendering: Cloud Rendering Platform

Game application chain: Ronin, Defi kingdoms, etc.

– Mainly suitable for games with large user groups, high DAU and long life cycle

– But there are security issues of asset cross-chain and cross-chain bridge

Game Proprietary Chain: Immuatable X, WAX, Klaytn, etc.

Among them, the operation of WAX is very successful, and the current active users have always maintained a high level. Head games include Alien Worlds, R-PLANET, PROSPECTORS, Kolobok Adventures and Farmers World.

Immuatable X keeps moving, working with Starkware to try more on the base layer. But the problem is that there are still no active game projects with a large user base online.

Decentralized cloud platform:

– The core is to build nodes to use decentralized computing power to provide computing support

– Currently, the decentralized cloud platform is still in the early stage, the development cost is high, and the delay problem may not be solved

– The future will be a development direction that can be expected

Decentralized Computing: Fluence, LivePeer

To a certain extent, it solves some problems of real-time computing on the chain

Content distribution platform: Gala, Come2Us, P12

– Compared with traditional games, the operation mode of the content platform has obvious differences, mainly in the utility of the platform token and the relationship between the platform and the CP. Some platforms choose to use their own tokens as the export and entrance of CP, that is, they need to exchange the platform currency for the native token of CP before entering the game, and the withdrawal of gold also needs to be exchanged for the platform token, which is endorsed by the CP token in disguise; The exchange of CP coins is involved in the investment of CP;

– The platform token still has an independent destruction and production mechanism, which can achieve the control ability of the CP token to a certain extent.

CP: See the detailed classification above

IGO platform/content incubation platform:

– Resource driven

– Whether it will be integrated with the content distribution platform to become an oligarch connecting the upper and lower industry chains is something that needs attention in the future

Gold Guild: YGG, MC, Guildfi, etc.

– It has a very obvious regionality, does not have obvious head aggregation effect, and has low business barriers;

– Mostly distributed in countries and regions with high demographic dividends but low per capita income;

– Starting from September and October 2021, the guild’s financing will gradually increase in number;

– There are problems: the valuation logic is close to a DAO with a profit model, the “heavy assets” target is expensive at the first level, but the second level is issued in the governance token, the token value capture is weak, and the second level premium is small

Guild Service Provider:

– Access to multiple guilds to provide SaaS services: user behavior statistics, game category recommendations, guild rankings, guild asset statistical analysis, etc.;

– In the future, it may extend to DID and social fields, opening up the boundaries between socialfi and gamefi

Deposit and withdrawal: Moonpay

– Channel business with rigid demand has obvious monopoly and aggregation characteristics;

– The method of deposit and withdrawal is limited by the different policies and regulations of various countries, and the deposit and withdrawal has become a strong regional and policy-oriented track.

3. Overview of Gamefi

10,000-character long article丨Detailed explanation of this round of GameFi's development path and future trends

1、Play to earn

Let’s lengthen the time line a bit – there were some attempts in the direction of gamefi in the last cycle. The CP is mainly funded, gambling and simple online games. The infrastructure is at most at the engine level, and it does not extend from the engine to the platform level. Content applications may continue to develop on the construction of independent chains. Starting from 2021, the primary market of gamefi has been detonated by Axie; with the overall market strengthening, gamefi has also stepped out of its own Alpha.Some representative products have appeared in the first half of 2021 and have a long-lasting life cycle. Although Axie has not surpassed Axie’s reputation in the market due to issues such as token design and profit-making effects, the effect is very amazing: driving the public Chain transaction volume, for example, Splinterland has driven the overall transaction volume of the hive public chain, and has also gone through the business model of CGG in the gamefi field. More and more projects will follow suit in the future; the destruction and exchange logic of ilv tokens brings two The terrifying money-making effect of the first-level market; even some games have gradually started to have the idea of ​​ARPG, and issued concurrent coins in May and June. On the eve of the gamefi first-level track really detonated and when the gold hit has already made many players taste the sweetness, Their tokens earn a sufficient secondary premium. Since then, more and more institutions have paid attention to this track that they have never cared about before. It can be seen that the number of gamefi financing deals and the amount of financing in the second half of 2021 have increased significantly compared to the first half of the year. At the same time, countless projects have jumped out to claim that they may be the next Axie. At this time, the frenzy of the market and the decline of Axie also gave investors and project parties a more ambitious idea: the Metaverse is the best use case for gamefi, and the simple game of **dual currency is just the “residual” of the previous cycle, it is not It will be the narrative of this cycle and will not be the starting point of the next cycle. **So what is the Metaverse? How to achieve? There may be a thousand Metaverses in the eyes of a thousand people.

In addition to CP, independent game chains have been put on the agenda. IMX is the first, but there is no very strong CP to drive the growth of active users; WAX and KAI are just beginning to emerge, and more and more lightweight chain modification products appear, game With the massive growth of guilds, game guild service providers came into being. Distributed cloud computing service platforms are trying, and the “steam” competition of decentralized gamefi is fierce.

Compared with the progress of various public chains in full swing around CP to improve the ecology, the development of L2’s game ecology seems to be slower. Nevertheless, L2 brings infinite imagination to the game. Since the STARK data structure is better supported in the re-execution environment, all states in the game can be stored, and many high-performance games are expected to be fully on-chain if the expansion is satisfied. There are also some projects under development dedicated to the composability of game NFTs.

10,000-character long article丨Detailed explanation of this round of GameFi's development path and future trends
10,000-character long article丨Detailed explanation of this round of GameFi's development path and future trends
10,000-character long article丨Detailed explanation of this round of GameFi's development path and future trends
Data source: https://www.footprint.network/@u7tkguSKt2/Gamefi-Monthly-Report-Jun-2022

The good times don’t last long. By the first quarter of 2022, there will be more and more rhetoric about empty gamefi, which is not uncommon. At the end of 2021, some games that have spent a quarter or more for a long time have seen currency prices plummet and new The situation of increase and decrease; in November 2021, the collapse of the “Four Heavenly Deaths” has dealt a heavy blow to the confidence of players: is the gamefi of the dual currency system a Pond’s with his left foot on his right? Is it a soil mine that will be dug and sold one day? The result of this collapse of belief is to completely overthrow the belief in Axie and find a new banner of Play for fun. If the profit is distributed to the players, it may be hollowed out and cause the economic system to collapse, so should we return to modern video games and use more interesting add-on values ​​to keep players in the economic system for a long time? Not for the purpose of making money, but to participate in it for the fun of the game. This brings up another question. Compared with current video games, why do you think that gamefi will definitely attract more people in terms of fun? If it’s just for fun, it seems that it can return to the arms of Steam. This question has not been answered for a long time, but entrepreneurs are still “chain reforming” a large number of low-financial and multi-category traditional CPs.

At this time, two games gave the market a new answer: wolf game and defi kingdoms. Wolf game: The fun of the game is not only the cinematic presentation and immersive experience, but also the fun of mathematical games. Defi Kingdoms: Use the game scene to undertake Defi selling pressure and lower the threshold for defi participation.

2、X to earn

By the second quarter of 2022, Play to Earn is already dead, and it will take some time for transformative innovations to emerge. X to earn has become the new darling of capital due to the emergence of STEPN.

The success of STEPN cannot be replicated, and it is also very obvious by chance. Before STEPN (Competitive product comparison table https://www.notion.so/61b11de57d314e4c9bfa1b6af4fdb09c?v=7f5a38ece4cb4cb8ba0819ad30511286) there have been various Fitfi appearances, but none of them have designed tokens in the way of games and marketed with the thinking of games operation. Some Crypto teams have tried from the direction of the game, but in the end it didn’t work well. Therefore, it is not unreasonable to say that STEPN is  the new generation of play to earn successor.

10,000-character long article丨Detailed explanation of this round of GameFi's development path and future trends

10,000-character long article丨Detailed explanation of this round of GameFi's development path and future trends

10,000-character long article丨Detailed explanation of this round of GameFi's development path and future trends

10,000-character long article丨Detailed explanation of this round of GameFi's development path and future trends

10,000-character long article丨Detailed explanation of this round of GameFi's development path and future trends

Data source: https://www.footprint.network/@u7tkguSKt2/Gamefi-Monthly-Report-Jun-2022

1) The reason for STEPN’s success

Many people say that it is a great product, even though it seems like a failure so far. I do not deny that we cannot erase the value and significance of a phenomenon-level product that was born out of nowhere. But is STEPN’s success a product that surpasses Web2? Or is it because of the money-making effect of the token?Or because of Solana? Or because of capital operation?

I think it all makes sense, but not entirely. The core is to use numerical values ​​to create the illusion of users + find a suitable backer to tell the story of the first and second level + exquisite gamification operation. The most ingenious thing is to give full play to the role of the regulator of NFT shoes. It not only plays the role of a shovel, but also acts as a market value buffer for large and small coins. The essence of the currency adjustment cycle of GST-NFT shoes-GMT should be three coins. The economic system of layer-by-layer transmission, but NFT has poor liquidity and carries complex and diverse utilities. The transmission becomes complex and NFT is the core. Due to the lag of NFT changes, the market value of GMT and GST has been buffered again; The complex design of gems, treasure chests, shoe boxes and shoe attributes hides the great changes in GST and GMT consumption and reduces users’ sensitivity to the token output ratio. Release a very small proportion of circulation, create a wealth myth in the secondary market, and the price of tokens will rise against the trend to attract players to enter the market, expand the “demographic dividend”, and maintain the operation of the economic system.

2) The future outlook of STEPN

It is very interesting to chat with a friend from a traditional VC agency about STEPN. She believes that STEPN has already surpassed Axie in terms of effect. Raise the cost of entry into the game. But this is also what I can’t understand the most, as if Web2 and Web3 have a deviation in their understanding of traffic. For the traditional Internet, when the DAU of the product is high enough, more value can be “exploited” from the user through the recommendation algorithm; but for the point-to-point decentralized network, every time the user performs on-chain transactions, interactions It is already the traffic itself, so STEPN can obtain such a large profit in the rental of NFT shoes, which itself is a kind of traffic realization.

X to earn is already a relatively mature model in web2. The basic logic is the financialization of user behavior data and the gamification of behavior goals. The scenarios include reading, fitness, short videos and other fields. In web2, there are more or less problems in the realization of these scenarios, and the best one should be the realization of short video traffic. The question of X to earn is whether the scene itself has conditions for realization, and whether the introduction of tokens can change the distribution relationship. First of all, X should have the characteristics of high frequency, low participation threshold, and easy disassembly and tracking of user behavior. At present, many X to earn projects are basically forks of STPEN, which is a helpless choice for long-tail players in web2 in the predicament. The key to this model lies in how the token economic design is combined with the user behavior path, and how can expectations be “realized” through the first-level narrative and the second-level market making. This is the vast majority of X to earn project parties and even all Gamefi projects. Things that are hard to do well.

I still hope that there will be more “web2.5” projects, but not necessarily the project side of Web2.5 to do this. It is not so much a desire to bring new users to the world of crypto, but rather a desire to allow tokens to change relationships in the world more broadly.

Fourth, the regional evolution of Gamefi

The regional evolution of Gamefi is related to many factors, and it is still divided into two perspectives: game and crypto.

The user volume and penetration rate of Crypto are related to the population structure, economic structure, sovereign currency, domestic inflation level, laws and regulations of the country and region. For Southeast Asia, Latin America and Africa, these regions have a higher proportion of young and middle-aged populations, relatively unbalanced economic structures, weak sovereign currencies, high inflation, and large foreign exchange fluctuations, making it easier to accept digital currencies. Just imagine a young Thai man who is facing a macroeconomic recession and has no way to make a living, holding a national currency that is increasingly like a piece of waste paper in his hand. Perhaps BTC is as attractive as gold/dollar at this time.For Europe and the US, crypto developers and investors mostly gather here. For ordinary people in Europe and the United States, primary investment and development are not what they need to care about. Defi and token secondary trading are more attractive investment methods besides stocks. For some people, the purpose of registering a wallet and interacting on the chain is to preserve value and make a living, and for others, it is to obtain a higher return on investment. Those younger, less educated people in less developed regions, perhaps without a PC but with a mobile phone, are more likely to be involved in gamefi earlier.

From the perspective of games, the main developers of games are mainly distributed in Europe and the United States, and the main consumption areas of games are the Asia-Pacific region. The Asia-Pacific region has the largest number of players in the world, accounting for 55% of the total number of players worldwide.Not surprisingly, the region has a roughly equal share of the global internet population (54%). Asia Pacific’s high player share is largely due to China’s huge population base, but the region also includes emerging regions such as India and Southeast Asia. At the same time, the proportion of revenue from different regions is another picture. Players from the European and North American markets account for a very high proportion of consumption, accounting for more than 40% of the game market revenue. It is also worth noting that in 2021, players in these two markets will account for less than a quarter of the total number of global players (14% in Europe and 7% in North America).

10,000-character long article丨Detailed explanation of this round of GameFi's development path and future trends

10,000-character long article丨Detailed explanation of this round of GameFi's development path and future trends

In addition, more than 90% of the world’s gamers in 2021 will be mobile players. Due to the demand and fondness for mobile games in the Asia Pacific market, as well as the accessibility and ubiquity of this segment in various regions of the world. This year, 2.8 billion of the world’s 3 billion gamers will play games on mobile devices. This compares to 1.4 billion and 900 million gamers on PC and consoles, respectively.

Here is a rough classification:

– Countries with high crypto penetration rate + high game consumption + low game development – Gamefi early participants, but difficult to maintain for a long time. Typical representatives Southeast Asia, Latin America, Africa

– Countries with high crypto penetration rate + high game consumption + high game development – able to keenly capture Gamefi’s upgrade needs and have sufficient development capabilities to meet the needs, may be the leader in Gamefi’s investment and development. Europe, America, South Korea

1. Rising in Southeast Asia, but the core will not be in Southeast Asia

As mentioned above, Southeast Asia is a major consumer market in the early stage, and its overall development capability and stage of development still lag behind other regions.

2. Korean market: success is also Xiao He, failure is also Xiao He

The Korean people’s participation in crypto is extremely high, and the policy is relatively relaxed. The local game industry chain is mature, there have been popular products CP, and there are also the world’s top e-sports events. In general, it can be said that the proportion of gamers and the proportion of crypto participants are high. Success is also Xiao He, everything started because of the enthusiasm of crypto and game genes; failure is Xiao He, the Korean crypto market and even the entire crypto market came to an end quickly due to excessive fanaticism. Terra has a huge impact on retail investors, VCs, ecological projects, and developers. , and even South Korea’s economy and society have a certain impact. The 2021 “Raging Bull Market (Tail)” coincides with the presidential election in South Korea. Yin Xiyue tried his best to win over the middle class of young men, and finally won the election. Who would have thought that the black swan of DK caught everyone off guard, and how to deal with DK, whether to restrict crypto, and how to restrict crypto became his difficult problem.

3. Japanese market: conservative and cautious

In East Asia, a region with strong game culture and not weak game development, China and South Korea are scrambling to devote themselves to gamefi to find opportunities. In comparison, Japan seems a little out of place. Most traditional game developers seem to be trying, but have been slow to move. Some local first-tier investors are also working hard to participate, but in the end, there is not much success due to the time point of entry, decision-making, volume and other reasons. Lack of innovation, difficult U-turn, and long decision-making cycle are the footnotes of conservative words.

4. African and South American markets

There is currently a lack of first-hand information on the African and South American markets. According to the current news, the governments of Africa and South America are relatively open to crypto; the communication infrastructure is more complete than we thought, and the number of independent wallets is high, which may be a potential market.

5. European and American markets: investment and innovation centers

Needless to say, Europe and the United States have firmly grasped the direction of mainstream game development in the past. The development of modern video games has also entered some bottlenecks. Due to the maturity of Western markets, it is extremely challenging for publishers to achieve revenue growth in these regions. The saturation of game revenue in Europe and the United States has led many old European and North American game companies to pay more and more attention to the Middle East and Africa and Latin American markets.

Five, gamefi existing problems

1. Development

– Overall, the team’s CP research and development capabilities have improved, and the proportion of self-research has increased, but there are fewer innovative designs for game mechanics

– R&D at the decentralized infrastructure level is still in its infancy, and can wait and see and follow up

2. Design and operation

– Traditional teams lack bottom-up community mobilization capabilities: the use of social media accounts such as Discord/Twitter, the image of the founding team and community exposure, whether the game mechanism design can meet the needs of crypto users and take into account their usage habits;

– The crypto native team lacks experience in game numerical design and game economic model adjustment, and is not proficient in various means to maintain the stability of the game economic system

3. Issuance

It is still impossible to completely get rid of traditional distribution and promotion channels, such as Google Store, Facebook, YouTube, etc. Most of the games with a form close to modern video games, low barriers to entry, and weak financial attributes rely on this channel to achieve the purpose of breaking the circle. Such as STEPN, THG and so on. Judging from the results, compared to products of the same type but relying on crypto media and KOLs, the cost of publicity may be lower.

4. Policy and Regulation

– License: Due to various restrictions in mainland China, game companies involved in token issuance need to register overseas entities to operate overseas.

– Deposits and withdrawals: In some areas, the use of in-game virtual currency to exchange stablecoins and US dollars requires the company to hold a payment license. Almost all games involve the deposit and withdrawal process of USD-stablecoin-in-game token-stablecoin/USD, and cooperation with local payment companies, banks, deposit and withdrawal service providers becomes very important

– Taxation: Currently, the United States, Europe, Southeast Asia and South Korea are considering taxing virtual currencies, especially some application-layer products with high transaction frequency and high income. At present, the policy requirements of most countries are not clear or the management is too extensive: it is still difficult for regulators to confirm the subject of taxation, track the circulation of tokens, confirm the right of profits and tax proportion.

6. The future evolution of Gamefi

1、CP:

1) Pay attention to the progress of Defi direction

Introduce more defi designs to refine the design of the in-game economic model. At the same time pay attention to the innovative projects of defi.

– Utilize business fee income as staking rewards

– Use some governance tokens as staking rewards

– Application of Ve model in game economic model

2) Pay attention to the extension of X to earn

In the future, there will be more and more second- and third-tier web2 teams and even head teams who can quickly learn token design and make more explorations in scene development and token design numerical design.

3) Pay attention to more empowerment of NFT

The value of in-game NFT is still in the role of “shovel”, and NFT can endow social attributes and display functions.

– Connect with other social platforms to show the achievement system;

– NFT, as a certificate of participation of CP, obtains more rights and value on the content platform;

– NFT PASS card: the entry threshold for the community

– Rewards for random exploration or completion of game content: Easter eggs are rewarded as NFTs and displayed

Additionally, NFTs themselves are programmable, composable, and playable. NFT holders can not enter the game. NFT itself is a small game. Through the interaction and voting between NFT holders, it affects the direction of the entire project.

2. Middleware and services

1) Middleware: Game player behavior tracking and classification service

At present, most of the dashboards analyze the players or guilds from the data level of the project chain. But few similar projects address the problem of player behavior data. For example, which types of games do users prefer, what is the overall decision-making process in these games, the upgrade and consumption habits of game items, etc., and even data can be accumulated to provide behavioral guidance for guilds: for example, how to make decisions more efficiently.

It can be combined with DID and tagged through user behavior to realize social functions inside and outside the game.

2) Opportunities for Chinese games to go overseas

Due to the limited distribution of domestic version numbers, a large number of domestic game CPs are to be converted.

3) On-chain operators

Off-chain operation services have developed very maturely, and there are still few intermediary service providers on the chain.

3. Infrastructure

1) Cloud Gaming

– Since the ARPU of Chain Games is much higher than that of traditional games, the revenue of cloud game CP may cover the cost.

– Cloud games will subvert gamefi’s revenue charging logic, and may change from free-to-play or buying NFT shovels as a threshold to shovel + point card payment.

2) VR/AR

Many Metaverse projects claiming to be developing VR/AR versions in the future have not made any progress.

3) AI generates game content

Content source: https://github.com/ls361664056/GameAI-paper-list

PCG (Procedural content generation), which uses AI methods to assist in the design of game systems, requires good data (including data quality, data representation, and data quantity) and representative evaluation methods (including aesthetics, playability, novelty).

(1) Application-oriented

a. (Auxiliary) Generate in-game content (affecting rules): levels, maps, items, weapons, tasks, characters, rules, etc.

b. (Auxiliary) Generate the appearance in the game (does not affect the rules): character appearance, expression, weapon appearance, sound effects, etc.

c. Assisted Design

d. Fix map bugs: detect and replace unreachable dead spots, etc.

e. Data Compression: Compress game data to a smaller size.

(2) method-oriented

a. Cellular automata

Use domain rules to generate a large number of irregular graphics based on random initial states, which can be used for environmental system modeling such as heat, rain, liquid flow, pressure explosion, etc., and can also generate small maps such as caves, but controllability cannot be guaranteed.

b. Grammar-based methods

Define a series of grammar rules to generate content.

c. Based on the search method (usually Evolutionary Algorithms, EA):

Compared with the machine learning method, the search method can greatly reduce the amount of data required. The key issues are, for example, the need to determine a better content representation and a better evaluation method. There are the following categories:

EA algorithms: genetic algorithms, evolutionary strategies, evolutionary programming

EA like algorithm: particle swarm optimization, differential evolution algorithm

assessment method

Direct evaluation is to constrain the generated content through a certain function, including Theory-driven and Data-driven, the difference is whether the evaluation function is based on a theoretical or empirical model.

Simulation-based is to use bot AI to play the game to evaluate the content of the game. Includes static evaluation and dynamic evaluation, the difference is whether the evaluation function changes over time.

Interactive evaluations are real-time evaluations that are evaluated through the experience of human players.Includes Implicit Evaluation – data generated by players playing the game to analyze whether the content is good or bad, and Explicit Evaluation – direct player ratings

d. Machine learning methods

A new direction of PCG research is to train generators on existing content to be able to produce more content of the same type and style. This is inspired by the results of recent deep neural network research, where network architectures such as generative adversarial networks and mutated autoencoders have achieved good results in learning to generate images such as bedrooms, cats, or human faces, while also being influenced by early Inspired by research results, where simpler learning mechanisms such as Markov chains and more complex architectures such as recurrent neural networks learn to generate text and music after training on some corpus.

Neural networks, including GAN, AutoEncoder, and NeuroEvolution to name a few.

Probabilistic models, including decision trees, etc.

e. Combining game-generated content with player experience (EDPCG, Experience-driven PCG), which includes three core aspects: emotion stimulation, emotion detection, and emotion expression.

– Emotional stimulation: Games provide excellent background building blocks for stimulating emotions, as stimuli are varied and come from different sources such as images, sounds, stories, and more.

– Emotion detection: Game users (players) are generally more willing to provide more input of a multimodal nature (via sensors) as long as this will lead to an enhanced experience. In a sense, players are the best users for affective computing and multimodal interaction research.

– Emotional expression: The user voluntarily experiences a range of experiences in the game: these experiences range from very positive to very negative. At the same time, the emotional experience in the game is influenced by the player! Therefore, players are accustomed to and largely open to emotion-based expressions!

4)NFT

– NFTfi: NFT lending and NFT combination will have great development in the game track; NFT lending platforms may not have a separate giant, and most of them will extend from guild service providers or the in-game NFT rental market.

ERC4907: It provides technical support for “native leasing” on the chain and realizes the separation of NFT ownership and use rights

ERC1155 and EIP5006: The capital turnover rate of heavy assets in the GameFi ecosystem will be greatly improved.

– NFT utility development: Explore the various functions of NFT itself, such as in-game asset lease contracts, as the carrier of the Metaverse itself, etc.

7. How to judge gamefi CP and how to do gamefi well

1. Public chain + capital

The public chain and the game achieve each other, and the public chain with rich ecology, high performance and capital support can bring a relatively high Beta to the game CP itself: mainly reflected in the fast transaction speed, low latency, large user base of the public chain wallet entrance, public chain wallets. Chain token value stability, DEX transaction convenience, etc.; games are also the starting point for active application diversion to the public chain.

2. Token design and subsequent adjustments

– Whether the design of the number of tokens conforms to the economic depth of the CP itself;

– Token destruction and output rhythm and quantity ratio;

– There are enough diverse and continuous scenes for reasonable in-game asset consumption;

– Whether the team has the ability to make emergency adjustments according to the actual extreme situation

3. Category selection

– Heavy-duty games: The category development cycle and life cycle are relatively long, but it is not necessarily a high-risk and high-reward category. At present, there are still not many successful cases of large-scale games.

– Leisure category: At present, the simulation business category and social category are mainly used, and the entry threshold is low, but the economic depth of the simulated business category is high, the token complexity is high, and the upper limit still exists.

– Partial defi category: sufficient data analysis and Defi product understanding capabilities are required. And it can fully combine the pledge of defi with lending and game scenarios to realize the “substantiation of defi products”.

4. Delivery method

8. Future Outlook

1. What is the game

From my first contact with gamefi to now, I have been thinking about this problem repeatedly. What should the game be? It is tic-tac-toe in the 1950s, a simple video game operated with a cumbersome game console in the 1970s, the playful Blue Moon that “cut me if you are a brother”, the Witcher 3 that occupied the steam bestseller list all the year round, and the “simulation”. “Realistic” Half-Life Alyx is the original god of fire… I have no intention of arguing about the definition of a game, such as whether it is fun enough, enough to have a movie-level picture performance, and enough to have a sense of substitution to be “fundamentalism” game. But I think that in the next ten or twenty years, or even a longer future, there will be subversive changes in the connotation and extension of the game. Don’t use the posterior so-called “definition” to frame your imagination in advance.

2. What is gamefi in the future?

It is foreseeable that gamefi is the closest application in the crypto world to an “entity”. Judging from the proportion of gamefi’s market value to the overall market value, its market value still has room for growth. At the same time, the application layer is still in its early exploratory stages, but has seen amazing development in just a few years. Of course, while firmly believing that the future is bright, we must also be aware of the current difficulties and the complexity of the process: gamefi still has many pain points that have not been resolved, and these problems cannot be resolved in the short term. Personally, I think that in the future gamefi may have games that belong to the game, and the development of crypto to the polarized development of crypto, that is, the gamefi that is close to modern video games will be more “light chain reform”, gradually reducing its own ponzi characteristics and increasing players’ consumption. Behavior; CP with a more crypto-native form will be composed of a core team with a background in mathematics and cryptography, and will never return on the “interesting” road that geeks and financial players will find.

Finally: I really like the movie “Ready Player One”, especially Halliday’s “Thank you for playing my game”. I hope that after the chicken feathers in one place, there are still pure Hallidays who build new oasis.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/detailed-explanation-of-this-round-of-gamefi-development-path-and-future-trends/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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