Counting the GameFi track: Will GameFi break out again in the future?
Original title: "GameFi Track Analysis (1)"
I. Introduction
I. Introduction
In the past two years, the hottest and most out-of-the-box topic in the cryptocurrency circle is innovation in the application layer:
DeFi Summer 2020 NFT Summer 2021 (currently ongoing...) and its spin-off NFTFi GameFi 2021
DeFi has gradually become the core value capture method of the current blockchain application layer, and even the slogan "everything can be DeFi" appeared. The reason is: DeFi, as a financial tool, can greatly leverage the liquidity of market funds, promote a substantial increase in the amount of interactions on the chain, and further promote the growth of market value. While this also brings risk, leverage, and a degree of false exuberance to the market, such a tool is necessary in the early stages of the development of the cryptosphere.
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2. GameFi, short-lived?
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AXS Market Cap Trend Chart
But after the short-lived prosperity, apart from GameFi in the form of funds, not many successful GameFi projects have been heard. Up until now, Axie felt a bit anticlimactic to me and didn't really see his potential. This rapid decline has changed many people's views on GameFi: GameFi seems to be just a flash in the pan.
However, we think that there are too many other factors mixed in which make GameFi fail to continue to be out of the circle in the season when it should continue to explode. The main reasons are:
- The impact of the general environment of the currency circle: since Bitcoin hit 60,000+ for the second time, the market has entered a bear market cycle. In the bear market, although there will be local hot spots, the pessimistic situation makes it difficult for the track to stabilize fomo ;
- Impact of the external environment: the dynamics of the world's geopolitical situation, the Fed's interest rate hike, the superimposed impact of the epidemic, and the overall economic downturn in the world, it is difficult for the currency circle to be immune to it;
- The quality of GameFi projects in that period was uneven, and it was far from the quality and playability of WEB2 games. In addition, the development cycle of GameFi projects was longer (the development time and cost of high-quality GameFi projects were compared with those of DeFi or NFT), causing everyone's recognition of GameFi to quickly diminish as the first wave of novelty and money-making effects decline.
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3.1 DAPP data situation
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Classification of the top 10,000 projects on DappRadar
Here, we exclude the HIGH-RISK project, and we can get the proportion of GAMES as shown below:
can be seen:
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3.2 Financing data
We counted the financing situation from January 2021 to April 2022 (data source):
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3.3 Hot spots
In the current market situation, incremental funds are insufficient, and in most cases, stock funds are playing games, so it is difficult to have large-scale hot spots or increases.
However, the market is not a stagnant pool. Participants (market makers of exchanges, hot money, large investors, etc.) will also find or create local hot spots to make the market look active.
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3.4 Upcoming projects
We have observed that most of the 3A games with resources have not yet been launched. Among them, investment institutions and production teams are very strong, and they also have in-depth cooperation with traditional WEB2 game manufacturers, such asIlluvium, these 3A masterpieces are worth looking forward to.
therefore:
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4. Characteristics of high-quality GAMEfi projects
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Out-of-the-box ability (playstyle, game quality, celebrity support)
GameFi projects need to have a more innovative way of playing, so as to quickly attract users (for example, when "eat chicken" first came out, it was very novel to most gamers);
The game quality of the GameFi project should gradually move closer to WEB2, at least in concept, so as to improve the quality and experience of the game to meet the needs of users;
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Resources (owners, cooperative project parties)
For most projects, if you can get the help and support of high-quality capital, the success rate will increase a lot, and GameFi is no exception. Because the employer is the endorsement and appearance of the project credit, and more importantly - the employer may bring more resources to the project;
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Good, long-term economic model
In the Crypto circle, if a good project does not have a good economic model, it is easy to fail. For GameFi, the economic model occupies a more important position. It needs to be in <long-term maintenance> andFind the right balance in <Short-Term Incentives>.
Overall, you can refer to the requirements in the figure below:
You can refer to this article about [Links to Articles on Economic Modelingsecondary title
The degree of support and usage of the public chain
The public chain that carries the game is also a very important aspect. Because the game is a highly interactive project, the public chain supporting the game needs to meet the two core points of [high speed] and [low fee]. Although the current approach is to chain up the part involving digital assets, its level of interaction still exceeds that of other types of projects.
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5. How to invest
This part is the key point we want to emphasize in this article. When it is clear that the future of this track is very promising, how should we invest.
As I pointed out in my last tweet:
Investment research = investment + research, research is the premise and basis of investment, investment is the practice and verification of research
If we want to find projects with a high probability of success among many projects, in addition to in-depth analysis of projects from the perspective of fundamentals, we also need to continuously track project data.
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5.1 Find
The search is to find the high-quality ones in the project? At what point in time might the value of the project be discovered? What data can reflect these situations?
For GameFi, we give two data dimensions: <Activity><hotness>
5.1.1 Activity Index
According to the data of DappRadar, the indicators reflecting the activity of the game mainly include: the number of users, the transaction volume, and the number of transactions.
First of all, we conducted research on the changes in the number of users of several games that have already been launched and rank high in market value: Axie, Stepn, Splinterlands, Alien Worlds, and Crabada, and the diagrams are as follows:
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Axie
Crabada
Splinterlands
Alien worlds
can be seen:
1) The number of Crabada users shows a steady growth trend;
2) The number of users of Axie, Alien worlds, Splinterlands) showed a steady growth trend at the beginning, and the number of users became exponential after accumulating for a period of time.
The commonality is: before the game breaks out, there will be a stage of steady user growth
So a possible solution is:
1) Use the number of users in the past period of time, such as N days, to do linear fitting to get a straight line, and then observe the slope of the line. If the slope is positive, it proves that the overall user growth trend is in the statistical period. If it is not positive, it proves that the number of users is not no growth;
2) In order to make the monitoring results more stable, three time scales, long, medium, and short, can be selected to monitor the slope of the line fitted by the number of users (because from the principle of linear fitting, if the number of users fluctuates greatly, as long as the overall upward The fitting result of the slope will also be positive, and large user fluctuations cannot be considered as steady user growth, so this situation needs to be filtered out).
3) In order to filter out a large number of dying projects or projects that are growing steadily but with a small growth rate, we can make a basic limit on the number of users and the slope of the project.
In view of the above analysis, we selected three different time scales to fit the number of users, and selected 1315 games from Dappradar for backtesting, and counted the games that triggered the rules and the corresponding time points as shown in the following table:
From the statistical results: 34 matching games were screened out, accounting for about 2.5% of the total. It is worth mentioning that almost all games with high market value can be monitored some time before the outbreak.
5.1.2 Heat Index
The indicators of response popularity mainly include: Google search popularity, Twitter popularity, website visits, and mobile App downloads.
For search popularity, we can extract data through such a website:
The traffic of the website can be counted by similarweb.
The figure below is the weekly website visits of stepn according to similarweb (member version):
It can be seen that the trend is consistent with the trend of the number of users analyzed above. The number of website visits first increases steadily and accumulates for a period of time, and then shows an exponential growth trend. This can be monitored by the above monitoring method and early warning.
App downloads and user daily activity data can be obtained through the appfigures website.
If more detailed research is required: Twitter’s social popularity data or discord’s interaction data can be introduced, which requires specialized custom analysis tools.
5.1.3 Data sources
To summarize, the relevant data sources are as follows:
5.1.4 The whole set of monitoring ideas
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ViewDAO overall monitoring system logic diagram
The main logic from left to right is: to screen a large number of game projects in the market layer by layer through the funnel, and finally filter out the projects that can be invested. The discovery dimension of the project is two ways of automatic data monitoring and active input. For automatic data monitoring, models/rules can be obtained by analyzing past successful projects, and trigger rules can be manually researched. For active investment projects, it can be obtained from active industry research, hackson, whale, smart money and high-quality communities.
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5.2 Find
In fact, there is another way of thinking: if you can’t choose the best from so many GameFi projects, then you can look for the carrier of the game-the public chain instead of looking for it.
Here is an idea for your reference. The selection considerations of the public chain can include:
- undervalued
- The GameFi ecosystem on the public chain has not yet exploded
- High-quality GameFi on the public chain is growing steadily
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