Due to a significant reduction in transaction costs and improved user experience, GameFi projects have witnessed a significant boost since June 2021. In addition, Cryptocurrency Exchange Huobi's research arm, Huobi Research, has discovered a surge in interest in blockchain gaming due to GameFi's initiatives. GameFi refers to applying decentralized finance (DeFi) and blockchain gaming to reward players through a play-to-earn approach.
On-chain data reveals that GameFi efforts have witnessed a sharp surge since June 2021, thanks to a significant reduction in transaction costs and enhanced user experience, according to Huobi Research.
Popular blockchain games like CryptoKitties peaked at 140,000 daily active users and 180,000 daily transactions in November 2017. Still, they lost almost 90% of their user interaction within a few months, according to the study:
"Early blockchain games suffered from defects such as singular models, simplistic entertainment and poor experiences in general."
The blockchain gaming sector has made a comeback with the integration of nonfungible tokens (NFT), DeFi, and other play-to-earn aspects. In June, the NFT-based pet game Axie Infinity surpassed Tencent's previous record of $9.72 million in a single day.
"DApp rankings show that five of the top nine apps are GameFi apps. As of early December , GameFi's weekly active users have reached 9.21 million, a record high."
Huobi Research determined that transaction costs are critical in new institutional economics based on the preceding findings. Although the gaming industry had already included play-to-earn elements, "society prefers to choose the system that has the lowest transaction costs to run."
GameFi varies from other existing gaming models in three key ways, according to the study: free trade of game components, free trading and pricing of game currencies, and protection of intellectual rights. Furthermore, GameFi developers benefit from the decreased cost of deploying private property rights via NFTs:
"This not only is a comparative advantage that traditional game developers never had but also reflects the intrinsic value of blockchain technology in the gaming industry."