2021 The Explosion of GameFi Era - GMC x Ancient8

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2021 - The explosion of GameFi era

GameFi Landscape Report by GMC and Ancient8


Before the Axie Infinity boom this summer, the concept of GameFi had been around for a while but not many people were aware of it. The pandemic situation, the play-to-earn model, the migration to the Ronin sidechain have been the pieces at the right place, the right time and they all contributed to the essential first steps of the GameFi craze in 2021.


2021 marked the adoption of GameFi as many Game-oriented blockchain services were developed and introduced, creating a foundation for capital to flow in this industry. In this report, we highlight the ecosystem landscape of GameFi on different blockchains, the funding situation and the services of the year namely Launchpads and Guild models. 




Over the past year and especially in the third quarter, the GameFi industry has experienced quite a dramatic growth as Unique Active Wallets (UAW) surpassed the 1M milestone for the first time. Statistics from DappRadar show that by the beginning of Q4 2021, UAW was up by 318% since the beginning of Q3. However, the trend has begun to cool down during Q4. Although recording ATH UAW of 1.5M on Nov 30, UAW readings closed the year humbly at around 1.2M active users, down by 6% compared to the quarter’s start.


Figure 1: GameFi Daily Unique Active Wallets


Not only that, GameFi users accounted for 49% of the industry traffic according to DappRadar. Look at the UAW trailing below, traffic recorded in the GameFi category increased notably in Q2 2021 as Axie Infinity successfully migrated to Ronin and Alien Worlds trillium mining was fully enabled. This metric exceeded that of DeFi during August as many games followed the trend and ignited the GameFi explosion. 


Figure 2: UAW by Category during 2021


Regarding the GameFi trend, Axie Infinity deserves the attention as the pioneer leveraging the play-to-earn model to generate incomes for users during the May crash as well as the complicated epidemic situation. This phenomenon acts as a “butterfly effect” that activates the GameFi era to achieve these remarkable milestones and stirs up the whole cryptocurrency market once again.


Axie Infinity


Undeniably, Axie Infinity is the lighthouse of the GameFi navy through the mist of the DeFi storm and the May crash. Proven by on-chain data, the Play-to-Earn pioneer ranks third in Protocol revenue, just behind Filecoin and its predecessor L1 blockchain, Ethereum. Notably, the rise of Axie is so astonishing that it gives birth to fellow GameFi projects, creating a one-of-the-kind reality that a blockchain use case is, first-ever, able to challenge the traditional field, for real. Watch this clip here to see the change yourself.


With over 1.26B USD in protocol revenue, 98.5% of which accumulated in the past 180 days, Axie Infinity has our vote to be the 2021 winner of the “Golden Globe” for the crypto space. Such phenomenal growth outpaces some of the most popular games humans have ever played. For instance, Fortnite managed to reach its first 1M users in August 2017, 2 years after its closed Beta (Statista). Since then, the Epic Games’ cash cow has dominated the battle-royale gameplay category with 350-fold growth over the next 3 years. Meanwhile, Axie reached the first 2M milestone in just its Alpha stage. Let’s bear in mind that the Free-to-Play button has not been switched on for the Vietnam-grown studio, Sky Mavis. 


Figure 3: GameFi/Metaverse Projects Landscape


As mentioned, the Axie phenomenon has brought an inspirational story for the rest of GameFi projects to follow. Before Axie, we barely counted more than a dozen of GameFi projects, even the term “Play-to-Earn” ever being known. Today, over a thousand and still counting GameFi projects have been under development and launched on multiple blockchains such as Ethereum, BSC, Polygon, Solana, etc.


No one could deny that Axie Infinity has popularized GameFi. Let’s take a look at Google Trend analytic. Apparently, Axie Infinity was leading the global audience to GameFi since its peak in June-July. GameFi slowly caught some attention since then, before reaching its ATH in November. 


Figure 4: Google Trend - Axie Infinity & GameFi


Every growth comes with its new problem: blockchain network congestion. Witnessing Ethereum’s clog caused by Cryptokitties in 2018, the Sky Mavis team prioritized Ronin as the company’s first goal to survive with GameFi. The L2 solution not only helped Axie to dodge the ETH’s critical gas fee but even better, incubated its blooming season later on. Yet, not all GameFi projects are able to develop their own blockchain. Many choose to adopt other L2 solutions or switch to more efficient chains like Solana, Avalanche, WAX, etc. This eventually leads to significant demand for other Ethereum alternatives.


GameFi on Top Ecosystems


Despite the success narrative of Axie Infinity on Ethereum, the difficulties generated from low transaction finality, high gas fee and lack of scalability are the primary obstacles preventing blockchain games to expand on this network. As a result, the community has witnessed an impressive surge in the number of games built on the other high-performance networks across the blockchain space during the second half of 2021. 


The expansion of GameFi on various blockchain platforms has bolstered the robustness of blockchains themselves. The current on-chain data indicate an upsurge of over 482% in the number of users per week on top blockchains for GameFi compared to the first week of 2021. According to DappRadar, GameFi accounts for an average of 40% in total users on every blockchain during the second half of 2021 compared to other categories of DeFi, Exchanges, Gambling, etc. Among these blockchains, BSC and WAX account for the spotlight, growing from 2.69M and 2.58M weekly users in June 2021 to the ATH of 8.97M and 3.4M respectively, within the second half of 2021. Ronin Network, the Ethereum-linked sidechain solution for Sky Mavis blockchain games (currently Axie Infinity) is concrete evidence of GameFi explosion with an increase from approximately 300 users in January to nearly 740,000 users per week in December (according to the data provided by DappRadar).


Figure 5: Total Active Users per week by Blockchains in 2021


Undoubtedly, GameFi occupies an average of 77% of all of the transactions executed on every network, totally outperforming DeFi (according to the data provided by Dapp Radar). The data also shows an identical increase in the total number of transactions executed on these blockchains compared to the pre-GameFi scenario. Distinctly, this figure rocketed 98%, reaching the average of 135.8M weekly within the second half of the year compared to the average of 68.5M transactions per week in the pre-GameFi scenario. This data once again demonstrates the tremendous impact of GameFi on the robustness of these blockchain ecosystems.


Figure 6: Total Transaction per week by Blockchains in 2021


Empowered by the superior features integrating additional improvements in tokenomics and gameplay models, these gaming projects did capture most of the attention in 2021 and are expected to emerge significantly in 2022. Regarding GameFi on ecosystems, BSC has outperformed Ethereum to become the most preferred blockchain for GameFi projects and infrastructure to build on with a record of a total of 315 games on this network on Dec 2021.


Figure 7: Total number of games by Blockchains

BNB Chain

Figure 8: Top gaming projects on Binance Smart Chain


Binance Smart Chain completed the prosperous year of 2021 with plenty of milestones accounted mainly by GameFi projects, rather than DeFi fundamentals as initially intended. According to Token Terminal, the total revenue generated on Binance Smart Chain surpassed the record of over $600M compared to $2.2M in June 2021.


This network is well-known as the homeland of many GameFi projects setting a big blast in the play-to-earn community including CryptoZoon, CryptoBlades, and Mobox with remarkable records in both user base and trading volume. However, there exist a considerable number of projects that induced negative price movements, affecting the perception of investors towards the quality of GameFi projects on this network


Figure 9: Top gaming projects on Polygon


Offering advanced user experience with higher throughput and scalability for Ethereum network, Polygon network acquired themselves with a diversified ecosystem of GameFi projects contributing to the growth in total revenue from $11K to over $8.9M during the second half of 2021 (according to the data provided by Token Terminal).


Figure 10: Top gaming projects on Solana


Q3 2021 marked a prospective advent of the Solana ecosystem penetrating the blockchain space in both DeFi and GameFi segments. In contrast to BSC, Solana acquires its reputation as the homeland of high-profile GameFi projects backed by big names in the industry consisting of FTX, Solana Ventures, Alameda Research, etc.


Figure 11: Top gaming projects on Avalanche


Besides, it is worth noting that Avalanche deserves the attention to be the next game-changer in the GameFi landscape. With EVM compatibility, instant finality, and user capital efficiency, Avalanche successfully captivates a solid number of GameFi projects bolstering the diversity of its ecosystem.

NFT/Gaming exclusive blockchains

Several blockchains/solutions have been developed exclusively for NFT/Gaming to capture the ever-growing demand while ensuring a reinforced infrastructure for this segment.


Figure 12: Prominent GameFi/NFT Dedicated Blockchains


Hive, WAX, and Enjin stand out as the leaders in this segment offering solutions and infrastructure for a considerable number of well-known blockchain games such as Splinterlands, AlienWorlds, Farmers World, Lost Relics, etc. As a typical example, Splinterlands, an NFT cards game on Hive and WAX, is one of the most popular blockchain games with a record of nearly 750K active users along with a volume of $2.5M within the last 30-day period (according to the data provided by DappRadar).


The expansion of these infrastructure solutions for NFT Gaming is a positive signal for the sustainable future of GameFi. To capture this potential, an impressive amount of capital has been invested into this segment from the big names of both the blockchain-native entities and traditional gaming companies in 2021, especially during the last quarter of this year.


GameFi Funding Landscape


GameFi is perceived to acquire many differences compared to the previous upcycle of DeFi. In particular, fundamental aspects of DEX, Lending/Borrowing, Derivatives, and Synthetic Assets remain the primary sources of capital attraction in DeFi, however, lack noticeable developments. Meanwhile, GameFi institutional investments target at broadening the boundaries of GameFi by constantly growing user base, scaling solutions, in-game assets ownership, storage infrastructure, and community services. According to Footprint Network, GameFi is positioned as the leader attracting investments that accounted for nearly 16% of the total number of investments made in the blockchain space in 2021.


Figure 13: Top GameFi/Metaverse Active VCs


Capturing the potential of GameFi/Metaverse, there exists committed VCs who stay active incubating and investing in this emerging segment including the pioneers of Kyros Ventures, Animoca Brands, Coin98 and Kyber Ventures to name a few. Undoubtedly, the list of GameFi/Metaverse active VCs is continuously fulfilled by big names in the industry with the participation of  DeFinance Capital, Pantera, Binance Labs, A16Z and Huobi Ventures. To demonstrate its commitment to GameFi, Binance organized the MVB III targeting directly to GameFi projects, in which the winners will be granted $10K along with a complete security audit from Certik and various incubation programs. 


Figure 14: Binance Smart Chain MVB III Gaming Participants


Besides the incubation of the active VCs, 2021 marked an important milestone of the GameFi/Metaverse funding in particular and blockchain funding in general. Up-to-date, the total funding raised/distributed to GameFi/Metaverse projects and its underlying infrastructure in 2021 surpassed the height of over $4B (according to the data provided by Blockchain Gamer).  


It is fair to state that GameFi is positioned as the transitional gateway embracing not only blockchain-based VCs but also traditional VCs and Gaming Studios to gradually flow capital to the blockchain space. Softbank, Atomico, and Bessemer are paving the way with their major investments into the project of Sorare, closing the successful year of 2021 with nearly $738M raised in this project only (according to the data provided by Blockchain Gamer). During the end of October, Meta (previously Facebook) induced a stir in the community with its long-term vision to the metaverse and released the fund of $50M to aid with this effort. This signal is marked as the cornerstone of the GameFi/Metaverse funding status, directing to an impressive declaration of various significant funding during the last quarter of 2021 with major investments in Forte, Game7, Mythical Games, etc. as per the below statistic.


Figure 15: GameFi & Metaverse Investment Landscape

Besides these impressive amounts of capital raised from institutional entities, retail investors also play an important role in the success of these GameFi projects. So as to grasp the GameFi investment demand from retail investors, launchpad platforms have developed innovative services to connect retail investors and projects. This phenomenon, therefore, positioned the launchpad as one of the most practical investment strategies for retail investors to invest in GameFi projects.



Over time, as more and more GameFi projects are built and capital starts to flow in this space, not only from venture capital but also retail investors. This phenomenon paves the way for launchpad platforms to become the bridge between projects and retail investors, who want to seek new opportunities in the GameFi segment.


The dominance of the GameFi segment has been shown clearly on launchpad platforms. According to data from CryptoRank, in 2021, there are nearly 800 token sales from all launchpad platforms and a quarter of them are from GameFi projects. Q4 is a prominent period for GameFi, there were 325 token sales in total from all launchpads and the GameFi segment accounted for 153. Regarding all GameFi token sales in 2021, Q4 accounts for nearly 75%.


Figure 16: Launchpad statistics in Q4/2021


The GameFi segment not only accounts for a larger number but the return on investment (ROI) is very high. The average ROI of the GameFi segment in Q4/2021 is approximately 1100%. 


Almost all token sales were executed on decentralized platforms, usually called IDO, instead of centralized exchanges. Because of the high ROI, many investors want to maximize their profit by buying GameFi tokens through public sales. With the mechanic of participating by holding a token, many IDO platforms have seen big growth in their own tokens. 



Figure 17: ATH ROI of Launchpad token in Q4/2021


Along with token sales at the moment, GameFi projects have started to sell their in-game items by non-fungible token (NFT) for funding. Binance is the one name for this model - initial game offering (IGO) in November.


On one hand, NFT sales will bring funding for game developers. On the other hand, the surge in demand for NFT items is increased as the game becomes popular. As a result, it generates an entry barrier for the pure gamers who would like to play and earn but are not able to afford the initial cost of buying NFT. For that reason, the concept of gaming guilds was born to solve this problem and open a wide door of opportunities for gamers.


Blockchain Gaming Guild

How it started


In the summer of 2021, Axie Infinity, the leading unicorn of the GameFi space, has had some of the most important updates such as the completion of the Ronin sidechain, making the game more accessible to the community and the completion of the play-to-earn model attracting thousands of players to join the game. The pandemic situation in Asian countries at the time has also been an utmost important factor contributing to the success of Axie Infinity as many people were desperate to make a living for themselves. 


According to statistics from BitPinas, during the early months when Axie Infinity became a phenomenon, the average amount of SLP a player can earn was about 3 times the average income of workers in some regions of the Philippines.

At the same time, the NFT Gaming craze has pushed up demand for Axie ownership and skyrocketed Axie’s floor price to $495.5 per Axie, up by 76% in 2 weeks (data from CryptoSlam as of July 16, 2021)


The high demand for play-to-earn has resulted in the entry price of Axie becoming too high. Capturing this moment, organizations with financial resources have stood up and introduced the Axie Scholarship model. The leading pioneers of this model at the time were Guilds like Yield Guild Games or hedge funds like Blackpool Academy. 


A new business model

The emergence and development of the gaming guild model have created a structural change in the way the public perceives the blockchain space and the gaming industry. This unique business model generates a revenue stream coming from managing Scholars across different divisions, and also from investments in crypto assets from games or even other guilds.



At the end of Q4 2021, Axie Infinity still remains the most popular game among all guild portfolios simply because its protocol revenue remains stable, 2nd after Ethereum itself (Token Terminal). Another reason is that Axie was the first game that helped ignite the GameFi and scholarship craze.


However, dependence on external factors such as market conditions or the number of scholars and SLP oversupply has made a return from SLP proven unstable.  



Figure 18: Net SLP Change vs SLP Price Q4 2021

Investment Philosophy

With the GameFi craze in the past year, tokens of GameFi projects have experienced an extremely high ROI. Early GameFi investment strategy is working well for Gaming Guilds, highlighted by YGG's ATH ROI of more than 44,000% from a 20,000 USD investment in Illuvium (figure 19).


Figure 19: YGG Q3 Treasury Report Breakdown


We project that the NFT investment trend is the next big guild movement and it has been gradually formed for a while now. Since top-tier games like Sipher have spent nearly half a year for community building and product preparation, and moreover, these games also receive support from top-tier investors which have been known for several top-notch investments. When these games launch, the demand for NFT will skyrocket and Guilds will be the entities that benefit the most from this as they have been quietly accumulating NFT from top-tier games.


Player Distribution & Localization


The success of large Guilds contributed to this operating model gradually becoming more popular and paved the way for the emergence of small and medium-sized Guilds across regions.


Figure 20: Guild Distribution by Regions


According to Blockchain Space, as of December 29, there were more than 4000 guilds around the world and about 60% of these are in Asia. The high demand for gaming in Asia is also understandable when Asian countries have low income per capita and in addition, the traditional game market in Asia in recent years has also been somewhat bustling as many Asian gaming giants like Tencent or Konami are gradually asserting their market share.


A key selling point of the Guild and Scholarship model is localization and community orientation. The culture of collectivism and community-driven patriotism in Asia countries have been the two utmost essential factors contributing to the success of Guilds in this particular region, especially in South East Asia.


YGG first started in the Philippines, hence the enormously high player base in the Philippines. Since then this model has proven to be efficient as Ancient8 successfully conquered the Vietnamese market blockchain gaming player base and the same applies for GuildFi with Thailand’s. Localization and cultural similarities are the bonding agents that every Guild would need to capture their potential market share of the player base.  

Figure 21: SEA Gaming Guild Landscape


Projection for 2022


Guild Infrastructure


GameFi has qualified to assert its important position in the blockchain space. Therefore, a spike in player numbers when AAA games released next year is a reasonable prediction. With a large number of players, player management tools and the ecosystem of these tools are indispensable. The next Guild to hit the finish line on this service at scale will have the upper hand in 2022.


By the end of 2021, we have seen the emergence of scholar management platforms and gaming tools such as Ancient8 scholar management toolset, Blockchain Space's Axie Academy Bot, PathDAO's scholar management tool or EzHub, and GuildFi's web-based gaming ecosystem. 


DAO vs subDAO


The concept of DAO has been around for a long time, but 2021 is the year when the decentralization of blockchain projects is discussed a lot and DAO models are gradually making new strides. Application of DAO model in Gaming Guild operates quite effectively where the community is key. 


In addition, the fact that small and medium-sized guilds are constantly sprouting up and investing, merging with large guilds also facilitates the DAO and subDAO models to maximize their potential. The operating model of YGG and subDAOs like YGG Sea is an indisputable example.


Recap and Predict


Blockchain gaming isn’t a new concept but it has gotten attention recently because of the rise of Axie Infinity and the Play-to-earn model. 


A considerable number of GameFi projects have been developed along with an impressive amount of capital invested into this potential segment from both venture capital and retail investors. Big players in the traditional market start to consider putting the money to experiment. 


There is much work going on in the gaming sector to provide scaling solutions that will result in the expansion of the gaming space. As a result, many GameFi projects are being developed on other blockchains such as Avalanche, Solana, WAX, Efinity, FLOW or ImmutableX. New concepts, ideas have been introduced such as IGO, gaming guild to bring GameFi to the mass type of players.

Opportunities and threats


GameFi is not a temporary trend, but rather a use case of blockchain technology. Thanks to this technology, the in-game assets are truly owned by gamers forming a brand new model of the digital economy.


The market of global gaming is very huge. According to Newzoo, the gaming industry is valued at 180 billion USD. Blockchain games have opportunities to become a big part of this market when creating a new way to play games: earning when having fun. Besides, with the open mind of crypto ventures capital, it isn’t hard for game developers to raise funds to actualize their ideas.


On the other hand, the blockchain game industry is currently in its infancy. In other words, earning remains the most vital factor motivating users to spend time playing blockchain games rather than the gameplay itself. Games where earning is at the core will meet a sustainability problem. If new players can’t gain profit, the game will experience a downturn. Therefore, for sustainable growth, gameplay should be the core. 



In the short term, earn-first crypto games will still be dominant in the blockchain gaming space. This financial incentive model is a magnet to attract more players to explore the incorporation of blockchain technology in the gaming space. This is the essential transition to convert game and player to the whole new space, GameMarketCap name this term is the financialization of game. Because of financial incentive, gaming guilds and the related can be the segment that will see strong growth in 2022. 

In the medium term, we will witness the explosion of GameFi in both aspects of quantity and quality when the extensive amount of capital raised will begin to take effect.


In terms of quantity, the number of GameFi projects on ecosystems, especially high-performance and GameFi/NFT dedicated blockchains, will expand immensely. As a result, there will be better tools and development kits stimulating producers to develop blockchain games effectively and concentrate on maturing new gameplay ideas without having to spend time constructing the underlying infrastructure layer. With high processing speed and low transaction costs, there will be more blockchain games with diverse gameplay inspired by traditional games, typically MOBA games, drawing more traditional gamers to enter the blockchain space.


In terms of quality, reputational GameFi projects in the blockchain gaming space such as Axie Infinity, The SandBox, Radio Caca have equipped themselves with upgrades in gameplay and are ready to launch in the near future. Specifically, Axie Infinity will launch a virtual land system called Lunacia, promising to stir up the GameFi market once again with its expansions in gameplay and the Dapp ecosystem.


Importantly, AAA games remain the core activator for the actual explosion of blockchain games to outperform the traditional gaming market. If blockchain games are currently attracting users mainly based on the “earn” factor, AAA games will act as the transition to bring blockchain games towards the “play” factor. The most significant obstacle that prevents blockchain games from outperforming traditional games at the current stage. This segment, therefore, will be a new battleground for both developers, VCs and even blockchains. With a massive amount of capital raised in 2021 to invest in both the infrastructure for AAA games and the games themselves, the blockchain gaming space has enough evidence to expect an actual explosion powered by AAA games in the future.


We’re not sure about how this industry will look like in the long term but there will surely be new creative models beyond P2E mechanics applied in blockchain gaming. Let’s wait.


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