Huobi Research, the research arm of the Crypto Exchange, has identified the growing interest in blockchain games as a direct influence on GameFi initiatives. GameFi refers to the use of decentralized finance (DeFi) and blockchain games that motivate users based on a “game for profit” model.
According to Huobi surveys, online data shows that GameFi initiatives have increased since June 2021, driven by significant reductions in transaction costs and improved user experience.
How GameFi lowers transaction fees. Source: Huobi study.
Research shows that popular blockchain games like CryptoKitties had a maximum of 140,000 active users per day and 180,000 transactions per day in November 2017, but over 90% of user interaction was lost within a few months:
“Early blockchain games had flaws such as separate models, simplified entertainment and a poor overall experience.”
Changes in CryptoKitties daily active users and trading volume. Source: DappRadar, Huobi research.
However, the blockchain gaming industry has made a comeback with the incorporation of non-fungible tokens (NFT), DeFi and other serving gaming elements. NFT-based pet Axie Infinity earned $ 9.72 million in a single day in June, breaking Tencent’s record at the time.
The DApp ranking shows that five of the nine best apps are GameFi apps. As of the beginning of December , GameFi’s weekly active users reached a record 9.21 million. ”
Based on the findings above, Huobi Research concluded that transaction costs are important for the new business economy. Although the gaming industry has already implemented “games to earn” features, “society tends to choose the system with the lowest transaction costs to work with”.
The study also highlights three key aspects of how GameFi differs from other modern game models: free trade in game content, free trade and pricing of game currency, and copyright protection. In addition, GameFi developers have the benefit of publishing NFT ownership at a lower cost:
“This is not only a comparative advantage that traditional game developers have never had, but also a reflection of the inherent value of blockchain technology in the gaming industry.”