Authored by: flowie, ChainCatcher

The long-dormant GameFi sector has recently entered a period of concentrated growth, and the crypto community has also begun to voice its expectations for GameFi Summer. In addition to the continued high hopes for GameFi to accelerate the widespread adoption of crypto, crypto users also believe that in the upcoming year of 2024, as the sector that raised the most funds in the entire Web3 primary market in the previous cycle, GameFi must deliver results to investors.

According to data provided by Immutable on the X platform, Web3 game financing accounted for 62% of the total Web3 industry financing in 2022. DappRadar data shows that in the three quarters of 2023, the blockchain gaming sector attracted investments of 739 million, 973 million, and 600 million USD, respectively. This means that even in the midst of the crypto winter, capital has not given up on heavy positioning in Web3 games, following the collapse of blockchain games in 2021.

Despite the high failure rate and even rug pulls, many crypto users have expressed skepticism about this GameFi Summer. Coingecko has compiled statistics on games in the GameFi market over the past 5 years, indicating that about 2127 web3 games have ended in failure, accounting for 75.5% of the total number of launches (2817 games). In other words, 3 out of 4 web3 games are inactive.

In addition to the extremely high failure rate and rug pulls, some crypto users have also expressed that compared to DeFi's revolutionary impact on certain aspects of traditional finance, GameFi seems to have not brought much disruption to traditional gaming. After play-to-earn, although there are many new concepts in GameFi, most of them are more hype than substance.

GameFi, or Web3 games, has always been a hot spot in the primary market. After nearly two years of silence, the recent heat is whether it is real or just a flash in the pan. How are the projects that raised large amounts of funds in the previous cycle doing now?

Why is everyone saying that GameFi Summer is here?

Since mid-October, the GameFi sector has been surging. On one hand, many new and old projects have started to take action, and token prices have risen sharply. In mid-October, the AAA blockchain game BIGTIME went online on OKX and saw a nearly 20-fold increase in token price within two days, drawing the attention of some crypto users back to GameFi.

Subsequently, some new and old blockchain game projects have also been making frequent moves. At the end of October, the RPG masterpiece Illuvium announced that it would conduct public testing in the first quarter of 2024, and then announced that it would be listed on the Epic Games Store and reached a partnership with the esports club Team Liquid, with all ecosystem revenue being 100% returned to ILV stakers. Its native token ILV rose from 49 USD to 109 USD within a month, with an increase of over 123%.

The Web3 game platform Immutable announced a partnership with the gaming giant Ubisoft. The price of the Immutable native token rose from 0.6 USD to 1.12 USD within a week, with a 7-day increase of over 80%. According to L2BEAT data, Immutable X's TVL also exceeded 200 million USD last week, with a 7-day increase of 40.71% (currently falling to 182 million USD). At the same time, the entry of traditional gaming giant Ubisoft has also increased the playability of blockchain games and brought more possibilities.

In early November, the former blockchain game king platform Gala Games announced a strategic partnership with DWF Labs to accelerate the adoption of L1. Its token Gala has risen by over 30% in the past month.

The leading P2E projects Axie and STEPN have also had many significant developments recently. The Ronin game sidechain created by Sky Mavis, the parent company of Axie Infinity, saw a large influx of new users as P2E MMO games Pixels and Zoids Wild Arena migrated to Ronin. Ronin's data shows explosive growth, with the number of active user addresses in early November increasing sixfold compared to the previous month. Axie also partnered with the Philippine ride-hailing app Grab to provide additional benefits to local users. The price of the AXS token rose by 20% within a month.

The development team of STEPN also announced the launch of its second game, Gas Hero, in November and officially started community testing on November 27. Star Atlas, a former star blockchain game on the Solana chain, combined new game modes with elements such as cryptocurrency and NFTs to bring players a completely new gaming experience. The ATLAS token saw a monthly increase of 132%.

TreasureDAO, which created the phenomenal game The Beacon at the end of last year, recently announced the development of its own game public chain plan and stated that it will use MAGIC as the gas token.

With the concentrated rise of blockchain game tokens in the past week, the total market value of blockchain games has increased by over 10%, reaching a current total market value of nearly 1.5 billion USD. From the perspective of primary market investment and financing, according to RootData, the investment in the GameFi sector has also rebounded in October this year, with financing amounting to over 100 million USD, a 61% increase from the 67 million USD in September, and the financing amounts in July and August this year were both less than 15 million USD. In addition to Animoca Brands receiving a 50 million USD investment from NEOM, a fund led by the Saudi Crown Prince, the CS equivalent of blockchain games, Shrapnel, secured a 20 million USD Series A financing. In November, the metaverse game MATR1X received a 10 million USD Series A2 financing, with participation from Folius Ventures, SevenX Ventures, and ABCDE Capital.

In addition to some actual actions in the blockchain game sector, the high expectations of crypto users for this wave of GameFi Summer are also based on a basic logic. In the previous cycle, too much money was poured into the GameFi primary market, with many projects raising tens of millions of USD, but there was almost no substantial impact. As the crypto market gradually transitions from bear to bull, with a large number of game public tests in Q1 and Q2 of 2024, the secondary market of GameFi is bound to perform better, providing some explanation to investors.

After "P2E," blockchain games are divided into Web2.5 games and full blockchain games

After the "collapse" of GameFi at the end of 2021, the crypto market gradually entered a deep bear market, and GameFi also fell silent. There were almost no paradigm innovations like play-to-earn from projects like Axie and Stepn, but there were also some small ripples, such as the emergence of the Free to Own model based on NFTs, emphasizing more playability in 3A RPG games, and the introduction of Bet to Earn/Skill to Earn with a certain degree of gambling and competitive nature.

For example, in August last year, the blockchain game Limit Break announced the completion of a 200 million USD financing led by Paradigm and proposed a new "Free to Own" model. Although this model was highly questioned, Zhao Changpeng, CEO of Binance, even tweeted sarcastically: "Venture capital firms (VCs) have just created a new term: Free-to-own. If everything in the world is going to be free, why do we work so hard… It won't be free forever. Work hard!" However, the NFT series DigiDaigaku released by Limit Break at that time ranked first in trading volume on OpenSea within 24 hours, and the floor price peaked at around 18 ETH.

After the short-lived popularity of Limit Break and DigiDaigaku, the game The Beacon, incubated by TreasureDAO, also experienced a surge in popularity at the end of last year, making it one of the hottest blockchain games in the bear market. Within a week, over 10,000 players entered The Beacon, and over 17,000 units of the "founder game character," priced at $40, were sold. Many YouTubers even live-streamed gameplay introductions. The Beacon's popularity was largely due to its demo adding a lot of playability, with its "dungeon" challenge offering new content every day, allowing users to enjoy playing blockchain games for the fun of the game itself, in addition to receiving airdrops.

In October of this year, the AAA blockchain game BigTime gained popularity due to the astonishing rise in the game token BIGTIME, with even preseason invitation codes appearing on the second-hand e-commerce platform Xianyu.

In summary, after the "collapse" of blockchain games at the end of 2021, blockchain games have been trying to break free from the simple "Play to earn" label and transition to a "Play and earn" mode by increasing playability, in order to cultivate a group of genuine game players. In 2022, there were the emergence of 3A-level blockchain game narratives, with many projects claiming to be 3A-level blockchain games such as Bigtime, Delysium, and Abyss World. In 2023, the narrative shifted towards full blockchain games, with projects such as Dark Forest, Loot, and Arena of Faith dedicated to becoming full blockchain games. Many crypto VCs, including Paradigm, have expressed optimism about the development of full blockchain games.

EMC_Labs researcher @0xNing0x mentioned in a summary of the fundamentals of Web3 games this year that the industry has gradually divided Web3 games into Web2.5 games and full blockchain games. ABCDE Capital also divided current Web3 games into Web2.5 games and full blockchain games in an article titled "Why Should We Invest in Matr1x?"

@0xNing0x explained that Web2.5 games refer to "traditional" blockchain games that put game assets on the chain, place the core game logic off-chain, and lack a game community governance mechanism. ABCDE believes that Web2.5 games emphasize Play & Earn, weaken the Earn component, and increase the proportion of Play. Full blockchain games, as @0xNing0x stated, refer to new types of blockchain games that put game assets and core game logic entirely on the chain and have a DAO governance mechanism. ABCDE stated that the narrative of this track is more grand and more blockchain-native, but it is still in the very early stages, similar to DeFi in 2018, and still requires several years for iteration and development.

However, despite the emergence of new narratives and projects with wealth effects in the blockchain game sector, and the recent frequent actions of blockchain game projects and decent token price increases, there are still doubts about whether blockchain games will perform well in the next bull market. dForce founder @mindaoyang mentioned, "Full blockchain games or AW, apart from changing the wording, still haven't given people the kind of transparent feeling of 'wow' like DeFi's Uniswap." Blockchain games still face three contradictions: the conflict between playability and financial attributes, the conflict between developer coinage rights and decentralized token models, and the unequal status of players and developers, with many players and few good developers.

Looking at the current blockchain game projects, there is indeed not much paradigm innovation in gameplay and economic models, and it is still difficult to break free from the pattern of skyrocketing and plummeting death spirals.

How are the Web3 games that raised a lot of money progressing?

Although Web3 games have been relatively quiet in this bear market, the sector has always held an important position in Web3 industry investment and financing. ChainCatcher has compiled representative projects that have received significant financing (over $10 million) from January 2022 to the present and their recent developments.

Animoca Brands

The main project that has received over a billion dollars in financing is Animoca Brands, which has raised nearly $600 million in financing from 2022 to the present. Recently, Animoca Brands has entered into a strategic partnership with TON, strategically investing in the TON ecosystem and becoming the largest validator of the TON blockchain. The TON Play project, based on TON, provides the infrastructure and solutions needed to launch new game projects on TON and enables the smooth porting of Animoca Brands' portfolio of over 400 Web3 projects to Telegram.

Proof of Play

Proof of Play is a Web3 game studio. In September of this year, it completed a $33 million financing round led by Greenoaks Capital and a16z Crypto. Proof of Play has currently launched its first game, "Pirate Nation." In "Pirate Nation," players can collect and dispatch pirates for adventures, collect crafting materials, treasures, and pirate gold, and pirates can gain experience and level up through multiple adventures.

Mythical Games

Mythical Games is a game technology studio aimed at creating world-class products and driving consumer adoption of distributed ledger technology through games. In June of this year, it received a $37 million Series C1 financing round led by Scytale Ventures, with participation from Animoca Brands, PROOF, MoonPay, and a16z Crypto. Recently, Mythical Games launched the blockchain-based video game NFL Rivals on Apple and Android devices and released another mobile game called "Nitro Nation World Tour."

CCP Games

In March of this year, CCP Games received a $40 million financing round led by a16z Crypto. CCP Games is an Icelandic game development company founded in 1997, known for its modern sci-fi space MMO game "EVE Online." After this financing, CCP Games plans to create a new 3A blockchain game set in the Eve Online universe.

Gunzilla Games

Gunzilla Games is a game developer currently working on "Off The Grid," a cyberpunk battle royale 2.0 game. In June of last year, Gunzilla Games completed a $46 million financing round, with lead investment from Republic Capital and participation from Griffin Gaming Partners, Animoca Brands, Jump Crypto, and others.

Wildcard

Wildcard is a Web3-based electronic game for game players, fans, and collectors. In June of last year, Wildcard completed a $46 million financing round led by Paradigm. In April of this year, Wildcard released 4,444 Wildpass tokens on Magic Eden's Launchpad, the first digital asset released by Wildcard, which will provide unique access to the Wildcard Universe.

Irreverent Labs

Last May, Irreverent Labs received a $40 million Series A financing round with participation from a16z Crypto, Solana Ventures, Infinity Ventures Crypto, and others. Led by Rahul Sood, a veteran in esports and founder of the gaming platform Unikrn, Irreverent Labs is launching its first play-to-earn NFT cockfighting game, "MechaFightClub."

Jadu

Jadu is a Web3 augmented reality platform that is creating a world-class AR game where players will use jetpacks and hoverboards to traverse real-world locations, searching for rare in-game NFTs. In April of last year, Jadu completed a $36 million Series A financing round led by Bain Capital Crypto. In February of this year, Jadu announced that users can register for use, and according to its official website, Jadu is available for download on the App Store and Google Play.

Matr1x

Matr1x is a metaverse brand that plans to build the Matr1x brand through self-developed high-quality games or collaborations with third parties, game IP development partnerships, and global esports events. Matr1x will interpret its game trilogy (Cyber Earth—Mars Immigration—Interstellar Exploration) through three large games with a unified worldview: Matr1x FIRE (first-person shooter game), Matr1x WAR (shooter + MMORPG), and Matr1x EVOLUTION (SOC). Matr1x recently announced a $10 million financing round with participation from Folius Ventures, SevenX, ABCDE, and others. In August of this year, Matr1x FIRE launched its Alpha test and airdropped tens of millions of FIRE tokens to test users.

After the financing announcement, the NFT series MATR1X 2061 floor price briefly rose to 2.65 ETH. MATR1X is also launching another platform-level NFT, MATR1X KUKU, which enjoys creator economic benefits and advanced rights on the MATR1X platform.

SHRAPNEL (SHRAP)

SHRAPNEL is a competitive multiplayer FPS game created by a team of top AAA game and blockchain project experts. Last year, it completed a $7 million financing round through token sales, with participation from Dragonfly and Three Arrows Capital, among others. Recently, the game development studio Neon Machine behind SHRAPNEL also received a $20 million financing. "Shrapnel" is scheduled to be released to paying users in December and will be fully released as a free game in 2024.

On November 8, the game was also listed on Bitget, with an initial price of $0.03, which briefly soared to $0.19, an increase of over 533%. However, with the larger financing amount, internal issues have arisen at Shrapnel, with Neon Machine mentioning lawsuits to multiple investors, claiming an attempt to seize control and the company's treasury.

Pahdo Labs

Pahdo Labs is developing Halcyon Zero, an isometric action role-playing game set in a ethereal world with an anime-style background. Pahdo Labs' mission is to cultivate a player-built virtual world. The upcoming game will allow players to create their own anime-style world using AI or program-generated enhanced tools, bringing creativity and social features to the forefront of anime role-playing games. In September of this year, Pahdo Labs completed a $15 million Series A financing round led by a16z Crypto.

Mahjong Meta

Mahjong Meta is a Web3 mahjong competitive community created by former Tencent and NetEase employees. In August of this year, Mahjong Meta completed a $12 million financing round led by Dragonfly and Folius Ventures. Users can currently log in to the official website to play games and participate in mahjong master tournaments.

Illuvium (ILV)

Illuvium is an open-world RPG adventure game based on the Ethereum blockchain, allowing players to collect, trade, and battle NFT assets. In May of this year, Illuvium announced a $10 million financing from Framework Ventures.

Recently, Illuvium announced that it will conduct public testing in the first quarter of 2024, and subsequently announced its listing on the Epic Games Store and a partnership with the esports club Team Liquid, with all ecosystem revenue being 100% returned to ILV stakers.

Azra Games

Azra Games is a blockchain game company aiming to create mainstream collectible combat RPGs. In February of this year, Azra Games completed a $10 million seed round, with a16z leading the investment and participation from NFX, Coinbase Ventures, Play Ventures, and Franklin Templeton. Azra plans to release the first installment of the game Legions & Legends later this year.

Angelic / Metaverse Game Studios

Metaverse Game Studios is a blockchain game development studio, and its game Angelic is a narrative strategy role-playing game with a dark sci-fi theme. In March of last year, Angelic / Metaverse Game Studios completed a $10 million financing round with joint leadership from Animoca Brands and Solana Ventures, among others.

In addition to the Web3 game projects that have received large financing in the past year or two, the previously mentioned Star Atlas, Ronin Network, Treasure DAO, and the new game Gas Hero developed by the STEPN team are also worth paying attention to.

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