In recent months, there has been a notable drop in cryptocurrency-based games in the GameFi marketplace category, which combines game theory and blockchain technology within the decentralized financial ecosystem.
A recent analysis by cryptocurrency price tracker Coingecko found that a hefty 75% of GameFi companies have failed. This drop highlights the difficulties encountered by initiatives trying to combine these cutting-edge ideas with games and decentralized money. It also demonstrates the difficulties that exist at this confluence.
Cryptocurrency-Based Game Survival Metrics
According to the analysis, only 690 of the 2,817 games released between 2018 and 2023 still have a reasonably active user base. CoinGecko considers a Web3 game “failed” if its 14-day moving average of active users drops 99% or more from its peak.
According to CoinGecko, since game finance, or GameFi, emerged five years ago, three out of four Web3 games have become inoperable. It’s only been a few months since a different study revealed that 95% of NFTs are now essentially worthless.
Due to the bull market, 2021 had a lower failure rate of over 46%. But the number of failed Web3 games rose to 339, surpassing 2018’s numbers.
The market continued to decline in 2022, a year in which the number of failed games more than doubled to a record 742, raising the failure rate to an all-time high of 107.1%.
Of the games released this year, 509 (or 71%) have not been successful as of 2023. There may be a chance that the Web3 games market may stabilize given this decline in failure rates.
As of today, the market cap of cryptocurrencies stood at $1.386 trillion. Chart: TradingView.com
Will extinction come to Web3 games?
In late 2017, Canadian studio Dapper Labs created the blockchain game CryptoKitties. The popularity of the game brought GameFi to light in 2018. Play-to-earn (P2E) games gained popularity at that point in the cryptocurrency narrative, leading to the release of 422 Web3 games in 2018 alone.
One of the first Web3 games to gain popularity in late 2017 was CryptoKitties, although its acceptance has declined since then. Other popular cryptocurrency-based games from before that are still in use today include Axie Infinity, The Sandbox, and Decentraland.
A business strategy for video games called Play-to-Earn (P2E) offers players fair compensation for their time and work. In-game cryptocurrencies and non-fungible tokens that can be sold, traded, or used as collateral in other financial applications are popular incentives.
From January 1, 2023 to April 22, 2023, the three most popular Alien Worlds, Planet IX, and Splinterlands, according to current data, the average unique active wallets was the highest.
Furthermore, the data reveals that the number of dying Web3 and crypto games rose to a record 742 last year. Additionally, it had the highest failure rate ever (107.1%) while the number of new Web3 games continued to increase.
The downtrend was once again attributed to the start of the cryptocurrency market downturn in mid-June 2022.
The coming months will likely be pivotal in determining which projects can withstand the challenges and ensure their survival amidst this dynamic and competitive landscape, avoiding the imminent threat of extinction looming over these cryptocurrency-based games.
Featured image from Freepik
