Encryption strategy: What aspects should be evaluated and then deployed for GameFi 2.0?

As an investor in the primary market, even when GameFi is overheating, it is still necessary to calmly judge the follow-up development, prepare for the next wave, and invest in the layout.

The current GameFi is in an overheating stage, and the entire market is supported by irrational funds and new users to support the project value and currency price. Once the market enters adjustment, the currency price and the value of in-game assets will decline, the overall in-game economy will be greatly tested, and users and funds will be transferred to other sectors with a high probability. adjust.

As an investor in the primary market, even when GameFi is overheating, it is still necessary to calmly judge the follow-up development, prepare for the next wave, and invest in the layout.

Three Stages of GameFi

Phase 1 GameFi 1.0 – Play-to-“Earn”

The current Play-to-Earn theme is Earn, and the gameplay and refinement are more like bonus points for the auxiliary project narrative (narrative).

A complete project that can meet the following conditions can be considered as a complete project in line with the current stage:

  • Can I get paid for a certain period of time?
  • Can mechanism design make money for early users?
  • Is there an incentive for new users to keep joining and investing?
  • Is there an economic model that can sustain the game for at least a few months?

Even if the picture quality of the game is not necessarily good, or the gameplay is far from the computer game, it will not affect the key narrative of GameFi at this stage.

For first-tier investors at this stage, we are more concerned about whether the team itself has a long-term mindset. No one can predict the exact appearance and trend of GameFi in the next year. This article is only based on the current market forecast. The best strategy is to find a project with a low valuation, willing to invest for a long time and able to earn enough income in a bull market, so as to ensure that the project can continue to operate in a bear market, and constantly iterate products and mechanisms, and increase the number of users who are recalled and lost in a bear market. chance.

If the mechanism design and product quality of the project are good, and the marketing ability is strong, it will attract a large number of users who come to make money in the early stage. The project can make millions of dollars in a few months by selling character NFT or blind boxes. Even if the game may not be online yet, primary and secondary investors can also make good profits in the process.

To sum up, the projects at this stage we pay more attention to:

  • Can you attract pure new users to invest incremental money from the real world?
  • Can it attract existing crypto users to transfer funds from other projects

For the first point, we pay attention to the project DNA, because we began to deploy GameFi in Southeast Asia at the beginning of this year. As far as Southeast Asia GameFi is concerned, we pay more attention to whether the project has the ability to promote and market in Southeast Asia, including guilds and KOLs.

Such projects have little demand for VC funds, and would rather give the investment quota to KOLs and communities in different regions. Whether it can provide enough suggestions for the game mechanism and give the project effective marketing resources has become the key to the fund’s participation.

The quality of GameFi projects in Southeast Asia is uneven, and there are many chain reform projects with problems in token design and allocation of private investment quotas. Such projects will be launched quickly after financing and make profits quickly. Through market value management, they can easily pull up dozens of times of currency price increases to attract secondary retail investors to invest, and they will harvest and leave the market within a month.

It is more difficult for first- and second-tier investors to find familiar investment institutions as endorsements in the cap table, because most of the investors in such projects are local VCs or communities. This is why we started in-depth cooperation with KardiaChain in Vietnam at the beginning of this year, and jointly invested in and accelerated projects such as MyDeFiPet/Thetan Arena/Mytheria/Whydah, and ensured the quality of the project and the attitude of long-term operation of the project through strong local partners.

Encryption strategy: What aspects should be evaluated and then deployed for GameFi 2.0?

Thetan Arena has more than six million users

In the second point, we focus on the mechanism design of Earn; although this is the basis for the construction of the project, most of the projects are not done well. At present, many GameFi projects are transformed from traditional game studios, and the token economy is mostly copied from the white papers of existing projects.With these issues in mind, you need to pay attention when making investment decisions:

  • Whether the inflow of new users can accumulate the value of project tokens and enhance the value of in-game assets
  • payback period
  • Potential causes of mechanism failure
  • Are there any additional attractive narratives (super beautiful graphics/strong investment lineup or ecosystem support)
  • Distribution of tokens, whether there will be excessive selling pressure in the early stage, etc.

In fact, such games often need to rely on a certain degree of early stage to attract users. If the token allocation and time design of TGE/Cliff are not good, it may lead to excessive token selling pressure and cannot attract secondary users through the currency price. look. (However, the high probability of excessively exaggerated secondary pull in a short period of time is to release a small amount of circulating tokens, use small funds to operate the pull to attract retail investors to enter, and quickly harvest).


The game at this stage is very likely to cause a drastic price adjustment to the current apparent premium when the number of new users is slow, the mechanism design has loopholes and crashes, the project party suddenly changes the mechanism, or the market pulls back. . Not to mention that most games only have a very small market circulation for market value management, which can easily lead to huge changes in the currency price in a short period of time, or even zero overnight. Even Axie Infinity cannot determine the impact of the bear market on its existing ecological and economic system.

When a game started by a bull market encounters a decline in the currency price, the economic system and key coefficients may fail in the short term, the user return cycle will increase, and the asset value will decline rapidly, which will have a huge impact on the credibility of the project, and the game users will lose a lot. Difficult to recall. This is also why many games want users to continuously accumulate assets in the project, increasing the user’s departure cost.

The good news is that GameFi still has a place in a bear market. After all, the bear market has limited funds and the market is not good. Playing games to make money is one of the best ways to pass the time and prostitution. The GameFi project launched in the bear market still has huge potential, but the first and second level funds will begin to transfer to iterative projects and narratives that can solve the Play-to-Earn problem, and the industry as a whole will move forward to the next theme.

Phase Two GameFi 2.0 – Solving the Single Game Economy

At this stage, there are higher requirements for the basic quality of the game and the token economy. The low-quality Play-to-earn GameFi will become a short-term speculation tool for a small number of high-risk enthusiasts, just like Tugou Mine. We will pay more attention to ways to solve a single in-game economic mechanism, and Pay to Play projects with social attributes.

Even Axie Infinity will experience slowing new user entry, excess NFT assets, and declining revenue for everyone. What Axie does well is that its various values ​​are well designed, and at the same time, the economic activity link and the reward cycle are long, and each user needs a certain amount of investment and time to gain long-term benefits. But no matter how long the link economy system is, if it only circulates in a single game, factors inside or outside the game may affect the success or failure of the project.

Mechanisms that prevent token value from circulating only within a single game will be a high-quality target at this stage, with better narratives.

The first idea to solve the problem is to establish an economic ecology of multi-game interoperability. For example, Mobox quickly publishes multiple games on its own platform through a strong development team, and attracts developers to use platform tools to develop through traffic and platform funds. The economic system runs through every game on the platform and is not limited to a single game. Sandbox purchases land and provides development tools for users, expecting users’ UGC content to continuously generate valuable content and applications for SandBox to support the currency price.

The other is to invest in game incubation platforms. One of the potential narratives in the next stage is game interoperability. In addition to ensuring quality and mechanics, the same incubator can have lower cooperation friction costs in the future. For example, Whydah, which we invested in, is seven game incubation platforms incubated by Kardia Chain, as well as a number of games to be launched by Hotwire Studios. This kind of thinking can slow down the failure of the economic system, and trade time for space.

Encryption strategy: What aspects should be evaluated and then deployed for GameFi 2.0?

Nitro League’s first game for Hotwire Studio

The reason why there is a single game economy problem is that most GameFi relies on consuming the funds that new users continue to bring into the game ecosystem to provide income for everyone. The game itself is only a packaging and a medium rather than a real purpose, and does not provide real play value.

Therefore, another idea is to let users feel that the game is the purpose and are willing to Pay to Play. In addition to the funds brought by new users, the “consumption” of existing users in the game can also solve the current game economic dilemma. This kind of game also has the value of turning to Dao, otherwise Dao is still a short-term means to attract users to stake platform tokens to solve the selling pressure.

If it can attract users who are willing to spend in the game, large capital investment in the production of high-quality games will also be a way. However, there are already many top 3A games available on various platforms outside of crypto, and users do not need to spend time to understand the mechanism of crypto. So whether the game has social attributes and whether Crypto Native will be our additional focus.

Is it possible to communicate and make friends with other crypto users on it?

Can it reflect social status and assets, satisfy show-off psychology, and connect NFT assets?

Can linking to user identities extend to other GameFi or DeFi applications?

Can it be extended to the user’s real social media?

Games that can reflect this value are extremely valuable investment targets.

However, at this stage, whether it is to develop a mechanism innovation platform like Mobox or a high-quality game with social elements, a single development team may lack sufficient resources. We expect that medium and large developers with resources will start to make efforts at this stage. However, we are currently more cautious about ultra-high-value games that take years to develop and launch.

The reason is that the development iteration of GameFi is not clear enough, and there may be huge changes in gameplay/mechanism/token model/expansion every six months, and a single economic system game that will be launched after a few years is more risky. In addition, most projects have been overdrawn at the moment of their launch. Therefore, it is not too late to invest in similar projects when the logic is clearer. After all, it is impossible for only one 3A GameFi masterpiece to be successful in the market forever.

The advantage of this type of project is that there will be a lineup of the most well-known investors in the industry, the speed of perception of market changes will be faster, the game can be launched at the most suitable time and the economic model can be adjusted to meet the trend of the market at that time. At the same time, the project basically guarantees that the delivery will not run away. Generally, the worst will choose a soft run (the price of the currency falls, and it will be handed over to the foundation).

Other concerns

Tools for games and unions

The development of GameFi takes time to iterate. If you look at more GameFi users and funds, it is safer to invest in games and guild tools. It can be split to focus on solving the problems of the current parties involved, including players, guilds and project parties. For example, GaMetaverse, which provides users with data display and income measurement tools for game assets in wallets, Kyoko, which provides game props rental and Guild to Guild lending, and Dao solutions such as Dora Factory or Ink Finance for project parties.

We expect that NFT and game finance will have a deeper integration, and more scenarios that focus on financial extension are needed to make the currently fragmented game assets and funds have stronger liquidity. Such as NFT mortgage lending provided by Drops and Vera Finance, NFT cross-chain solutions provided by XY Finance, etc.

Get through the game’s data standard/physics engine

Although Pay-to-Earn and multi-game platforms can alleviate the economic dilemma of a single game, the best solution is to treat each game as only one link in a super-large economic system, the so-called Metaverse economic system.

For example, users may be in the A game Create-to-Earn, Design-to-Earn or Write-to-Eran, by contributing productivity, provide value to obtain funds, and then go to high-quality, high gameplay B game consumption. Just like in the real world, if assets and values ​​can be circulated between games at this time, the problem that the existing Play-to-Earn economic link is too short and single can be solved.

Therefore, NFT and game data standards, as well as the corresponding physics engine, allow the games used to have the same physical response. It will be the underlying project that can undertake all GameFi values ​​in the next stage. After the construction of this type of infrastructure is completed, the Metaverse of the third stage Only possible.

Attempts at the third stage of the Metaverse

This stage began as an attempt by humans to live in a virtual economy, and GameFi, as the best-understood Metaverse application, will serve as a tool for its diversion. Whether users can provide productivity in the virtual world in exchange for funds, consume or perform financial behaviors in different but interoperable applications, or even interact with themselves in reality is our current ultimate imagination of GameFi.

Of course, the Metaverse has already had too many renderings and fantasies, and at this moment no one can be sure what form it will take in the end and how long it will take to build it. There is still a long way to go in the construction of Metaverse infrastructure, so the investment thinking at this stage will not be carried out here, and will be described in another article.

in conclusion

In summary, Earn-based games are a way to distribute project tokens. For people who don’t want to spend too much time delving into DeFi or for most non-crypto native people, it is a friendlier and more familiar way to get project tokens. Whether it is DeFi or other tracks, gamification can increase attention and participation in projects, and even stimulate positive behaviors such as user voting. In the future, there may even be mining services that gamify the original distribution mechanism.

As long as the project has the need to distribute and market tokens, GameFi, which mainly makes money, may continue to exist. However, whether the distributed tokens are used as short-term incentives, a means to increase the currency price or to encourage long-term positive behaviors will be things that project parties and users need to think about before participating.

The current GameFi and NFT share the role of attracting users outside the currency circle to join. We are now at the climax of GameFi 1.0, but for investors, the most important thing is to focus on the long-term development of the ecosystem and find truly valuable innovations and teams.

risk warning

Axia8 Ventures holds positions in most of the above projects. The content of the article does not constitute investment advice, and readers should make their own judgments.

Special thanks to Wayne Lin and Rui for their suggestions and assistance in this article, and I will write an article to analyze the current projects and subsequent layout planning of the Metaverse.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/encryption-strategy-what-aspects-should-be-evaluated-and-then-deployed-for-gamefi-2-0/
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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