To understand what will happen, first you need to immerse yourself a little in what was and what happened? Something happened that is constantly reminded and even essays are written, it always happens, but no one fully believes that it will happen to him, but it always happens and suddenly.
Join our Telegram channel and chat to keep abreast of the main crypto gaming trends.
No, it's not about the snow and the reaction of public utilities. Summer is on the nose. The best time to take a break from this seemingly endless high-speed crypto madness and engage in useful activity.
Oh great and terrible and to whom is the mother Bear Market aka Downtrend…
This is not the first and not the last downtrend in our lives. It marked the end of the second iteration or, so to speak, the era of cryptogaming 2.0. Or, at worst, the second attempt at the formation of the NFT.
Before moving on to advice, let's remember how it all began.
The birth of crypto games
Despite the fact that one of the first crypto games is considered to be a motorcycle trial simulator with cryptocurrency Motocoin, which appeared in 2014 with the Proof-of-Play consensus and in the same year of the game HunterCoin.
It is believed that the first more or less successful attempt to become an NFT using crypto games was made in 2017, when Axiom Zen and Animoca Brands hyped CryptoKitties and created Dapper Labs (Flow, NBA Top Shot). Then CryptoKitties at the moment reached 10k DAU (unique users per day) and it was the most popular dapp in crypto according to dappradar. The seals laid down the Ethereum network, and there were also rumors that Vitalik Buterin had an accident and the Ethereum rate from $400 began to tend to $80.
Another day, another blockchain use case. pic.twitter.com/OyHzdhEeGR
- vitalik.eth (@VitalikButerin) June 26, 2017
After the story with CryptoKitties, developers of all stripes began to saw their cats and pets of all stripes: hedgehogs, dogs, alpacas, cows and more. Every “ethereum killer” considered it their duty to recruit such developers to release “our response to CryptoKitties”. These were all cryptogames from the era of cryptogaming 1.0. Then they were also called collectibles. Everything revolved around breeding and collecting unique pets, and some enthusiasts even created games using these NFTs and experimented with game mechanics even then. An example of such a game: https://kotowars.com Around the same time, Axie Infinity and Blockchain Cuties appeared, the closest analogues to CK, but offering minimal gameplay.
Approximately all this lasted in the period 2017-2020. But in fact, after the start of the correction in 2018, many developments were frozen and it developed very sluggishly. there was no funding, forming a delayed hype. More than 90% turned out to be failures, and the number of users barely approached 1000 DAU for top projects. And in total there were about 10000 crypto players at that time. Over 5 years, this figure has supposedly increased by more than 100 times. In addition, all these projects suffered from one problem: NFT hyperinflation due to the then popular breeding mechanics (crossing pets in order to create offspring).
As long as the growth in the number of players was higher than inflation, NFTs grew. As soon as growth reached a plateau, prices fell. Few survived... One such project that managed to survive and become stronger is Axie Infinity and this despite the failure of the Loom Network sidechain, on which the game was first launched. Sky Mavis realized that they needed to create their own infrastructure in order to scale, and while there was a lull in the market, they sawed their sidechain and not only (they rewrote the roadmap in terms of gameplay in 2019 and received the first large investment from Animoca Brands in $1.5 million). Largely due to this and the fact that “the stars converged in the right place” they managed to succeed.
Cryptogaming 2.0 or delayed hype (2020-2022)
Outstanding Representatives:
- Various farming games at BSC;
- Alien Worlds;
- Farmers World;
- Axie Infinity, who managed to rebuild in time and create Ronin. was designed to solve many problems.
First, thanks to the spread of DeFi, game projects have been able to issue their own tokens and get solid liquidity. They made economic sense and players could earn not only on NFTs, but also on tokens with more varied gameplay, and after the hype of NFT art, they could also be financed without the help of funds, but IDO was not neglected. In addition, DeFi gave staking and farming, and this time, many developers have implemented deflationary mechanisms in the economy. Different kinds of burning tokens. But the open nature of the gaming economies still reduced the situation to the fact that the projects did not survive even six months. The challenge was still to keep user acquisition growing faster than hyperinflation.
Again, when the number of users reached a plateau, the price fell. And this time, not only NFTs, but also tokens. In some projects, NFT supply was made limited in an attempt to maintain the value of NFT, but it was transferred to tokens, and tokens are associated with NFT income and ultimately the value of NFT. Kind of like a death spiral. It's like a hot potato, but it's still an economy, only inefficient and unbalanced.
GameFi problems today
This era gave us a slightly more advanced gameplay (if you can call it that), a lot of DeFi mechanics, because of which the industry began to be called GameFi and highlighted the main problems. They were not only in tokenomics:
- Lack of professional staff from classic game development. Especially the State Duma and producers. Because of what the gameplay is lame, the balance and the interest in games is falling, despite the stimulation by rewards. If the situation with 2D artists is still all right, then with 3D artists everything is very sad even for top projects.
- The infrastructure is still lame. At some point, projects scale so strongly that the user experience is so lame that even rewards do not save. Today the bar is 1 million DAU. At its peak, Axie Infinity, according to some reports, reached 2.2 million DAU. But it was almost impossible to play. There were daily technical problems during this period.
- Overemphasis on marketing over product. Injecting advertising budgets is too short-lived when fundamental problems with net capital outflows are at the root of the problem.
- Excessive stimulus with inflationary tokens.
- Excessive emphasis on EARNINGS, moreover, in USD and the promise of profit, when in fact we are talking about REWARD in TOKENS. When receiving game tokens, the player himself decides at what point to sell them and, in fact, earnings also depend on trading skills, and not just on the economy. This tool is designed to enhance emotions when playing, and not be the main motive for entering the project. Projects themselves attract moneymakers, not players, and complain that they are being flipped.
- Weak implementation of ideas aimed at motivating players to create value.
This concludes the excursion into the history of cryptogames. Let's try to think about how to solve the existing problems.
What can Cryptogaming 3.0 look like and what should be considered when creating a gaming economy
Important: Hypotheses are described below. This should not be treated as a proven business model.
Obviously, if the idea of the game is the possibility of earning money, and many people understand earnings after conversion to fiat as earnings, then it is important to overcome the problem of the outflow of net capital from the economy. To do this, you can attract external investment from brands from WEB2 through the creation of elements of consumption and production (some of which Decentraland and The Sandbox are trying to do).
The gaming platform attracts a user base, this user base becomes interesting for brands and they buy land with project tokens or otherwise make a contribution that supports the economy. Thus, the outflow of capital is compensated. Players receive income from brands through the gaming platform by paying with their attention. However, this happens in a different form, and not just advertising. It can be a product placement that will be succinctly integrated into the game without harming the style. If your concept does not allow you to attract brands, then instead of them you can try various collaborations, because one of the ideas of NFT is to bring asset interoperability through the creation of cross-playing NFTs. So that the same asset can be used in different applications / games. An excellent growth point for cross-marketing activities. From this place, the potential of NFT is revealed.
- What is the difference between an economy and a financial pyramid?
In the financial pyramid, the main element is distribution under the guise of fake activities. There are four such elements in the economy: distribution, exchange, production and consumption. Particular attention should be paid to consumption.
It is important that all these four elements are present and balanced. Brands can sell their NFTs, their products, energy drinks, clothes, events, whatever, paying for the rent of the gaming platform and a share of the proceeds can be distributed at the discretion of the DAO as prize money for tournaments or something else. Similar to taxes.
- Focus not only on encouraging Fungible tokens, but also on POAP or collection tokens, accompanying this with storytelling so that the value of the project does not go into the glass.
- Since the developers give ownership of the assets and allow their players to earn, why not create conditions for the players under which they create value for the project. So that the players would not only pay a fee for NFT at the start, then take out tokens and, in the end, the NFT itself until the source of wealth dries up, but also add something to the project throughout the entire cycle and not necessarily by paying a fee. The future of the gaming industry may lie not only in the field of the right to own items, but also much wider, for example, the right to own the game itself through governess and grants.
- The sale of items not only affecting the gameplay and earnings, but also the sale of skins that do not affect the benefits. Cosmetics. If the project is an MMO, then let the players spend on self-expression. Not all players need to earn. Provide opportunities for players to socialize and share profits with others through gameplay.
- Some new game projects have realized that a new category of players has appeared - Moneymakers aka Turners. and propose to reconsider the interaction of three parties in the economy:
1. Developers can sell materials, blueprints to moneymakers and they can spend time creating items. For example, a blacksmith.
2. Moneymakers can sell finished products to players who don't want to waste time. (those items that affect the gameplay, costs, armor, weapons).
3. Developers can sell items that do not affect the gameplay to players. (cosmetics), so as not to turn into pay-to-win.
- Another problem is the price of entry into the game. So far, guilds are trying to solve this problem in an attempt to democratize gaming, but so far it is not working out very well. Perhaps the solution may be in the plane of game design and the regulation of the economy by the developer or the split of players for those who entered the project for free and by purchasing NFT.
- And the problem with an overabundance of game assets can be solved by analogy with the leveling of game mechanics, which allows you to expand the gameplay and remove routine mechanics, introduce “item durability” or “shelf life” so that items are not eternal. In addition, it would be possible to create opportunities for recycling, so that an item can be disassembled and reassembled into another one that is needed in a new game cycle. This will allow you to create always new and necessary items and stimulate trade by effectively using the secondary market.
- In addition, it is not always necessary to focus on
Of course, this is not a panacea, but some of the listed mechanisms can allow your economy to be more sustainable, but new challenges will certainly appear for building a digital economy. We are still at the experimental stage and mass implementation is just ahead.
Do you know what else?
Still, Sale Otherside (Yuga Labs x Improbable x Animoca Brands) turned out to be as iconic as many expected. Still would have burned so many ethers ... We can say that he put an end to the 2nd iteration of the formation of NFT, cryptogaming and the Metaverse market. The money has been collected, now you can cut food. A record number of projects for a record amount raised funding over the past year and created a buzz, thanks to which many new people came. Some of them will be shaved, some will remain. And so step by step, cycle by cycle, the audience will grow.
The next cycle is likely to attract even more people and set new records, but no one knows for sure when this will happen. Usually during the development phase, the markets adjust because there is nothing more to show. Marketing mission accomplished. Now the task is to live up to the expectations and slogans and attract a new user base when we are presented with the first real achievements and probably large companies and brands that are trying to integrate crypto and test hypotheses about business models are capable of this.
Cryptogaming 2.0 will be replaced by projects from the era of Cryptogaming 3.0, in which this time the focus will not be on token liquidity and DeFi mechanics, but on the visual part, gameplay, economic stability and ease of entry, but there will definitely be other problems. The bar for such a killer app is 10 million - 20 million. DAU.
A small list of not the most famous, but interesting and new projects in development, which can be called next-gen crypto games focused on gameplay, graphics, innovations in the economy and UX, and thanks to this, attracted funds from tier-1 funds. Non financial advice:
- metalcore;
- World Eternal Online;
- shrapnel;
- Sipher;
- Blast Royale;
- Civitas.
PS This is not the whole list of interesting projects and Star Atlas or Illuvium are deliberately not mentioned in it. You have probably already heard about them.
Bear market: what to do now?
I hope you used the advice that it would be time to go into stablecoins. At least 30%, but better not less than 50%+. If yes, then rejoice. If not, then think about how to get stables at a favorable rate. In general, as practice shows, it is not enough just to have some kind of stable. You will have to diversify your portfolio into several stables. There are no safe harbors. Even gold is not rising. Everything under the gun. I don't want to vang, but it looks like we are probably only halfway down the road, and NOBODY can predict with guaranteed accuracy how it will actually be. But why are we still somewhere in the middle?
Compared to previous corrections in the crypto market, the macroeconomic situation was not as alarming as it is now, and this is also superimposed by the increasing correlation of the stock market with crypto, and the fund is now doing poorly and it has not even begun to be rescued. Obviously, the data on inflation of 8.3%, while the expected 8.1%, indicate that the rate will not only grow, but there is a possibility of even greater tightening. Crypto corrections, like growth, are often higher than expected and deeper. ~80% BTC and ~90-99% alt.
What could be the scenarios?
No one wants to give a nightmare, given that no one knows to what level prices will fall. Who knows… Maybe we will see Ethereum at $500-$600 and Bitcoin at $8500-$9000, or $1100-$1400 and $18000-$20000. Or maybe we have already corrected and there is only growth ahead?
This is just another reminder of risk management. Make sure that in the event of a critical situation, this will not have a catastrophic effect on your financial situation, your family or company, because the fall to the above values may not be instantaneous, in addition, no one knows how long the accumulation phase will last before the next growth. Hold the rise, not the fall.
What should the players do?
• First: Don't try to catch falling knives! If you have a good reaction, you do not plan to sleep, you have a huge supply of doshiraks and energy drinks, then try it. But keep in mind that you should still have at least 30%, and preferably 50% in stables before making purchases. The situation looks like that there is a feeling that it is too early to buy long-term. Don't be tempted.
• Most sales now are RECT with home delivery or semi-rect stories. Again, only if you have an inhuman reaction and you are ready to be content not with x2, but simply with 20% -50%.
• Invest in yourself. Learn to research projects more deeply, study the industry for how everything works, how funds and developers work and how they think. It is important to be able to distinguish what the fund invests in in this project: In technology (it happens that a game is just a demonstration of technology and the game is not planned to be developed); to the team; Or indeed in the project itself. Or perhaps the timing is just right or the portfolio does not have the required category of projects and do not blindly follow the announcements of the funds.
• Don't capitulate! Get invaluable experience of survival in extreme conditions. If you go through all the stages of rise and fall, then you will have something to share with others. Try to stay in this area and the crypt will thank you.
• If you would like to work full time here, consider the common vacancies in cryptocurrencies.
• BUT here briefly wrote where to start in order to find a full-time job from scratch.
What should developers do?
• If you're running a startup, focus your efforts on retaining talent and consider whether to pause scaling;
• If you have recently received funding, then review PnL, the roadmap. Perhaps it is worth increasing the timing of the stages, reducing costs in order to wait out the crypto winter;
• Concentrate on community building, feedback gathering and work that does not require large financial costs;
• Analyze other people's mistakes and develop effective approaches that exclude the repetition of negative experience;
• Polish presentations, pitch decks, analyze your tokenomics and game balance, follow emerging trends as on hype they can shoot.
How to understand when you can uncover the stash?
• Perhaps for some this is a situation where you stop following the market every day. There will be long breaks.
• When they stop saying that the bubble has burst.
• Volatility will decrease to the minimum values. There will be literally nothing to do in the market even for traders.
• The wave of regulation will end and the negative news will no longer affect the course, but for now it looks like it is only spinning.
• In chats that previously had hundreds of messages in a day, there will probably be a couple of messages.
• Market participants will not be depressed. Rather, the depression will already pass.
• Also, one of the signals will be a breakout of the accumulation range with record volumes.
What to look for
What assets and projects, in addition to those listed above, can be looked at when it is clear that it is time to buy? Not financial advice.
- Star Atlas;
- otherside;
- decentraland;
- The Sandbox;
- Don't discount Axie Infinity;
- Illuvium;
- Phantom Galaxies;
- RTFKT.
- I apologize in advance that I may not have indicated your favorite project or which you consider top. This list is far from complete, but can be a good reference for finding gems. You can write your top projects in the comments.
Thank you for reading to the end. Take care of yourself, your loved ones and your deposits. May the profit be with you!
Subscribe to our telegram channel and go to our main chat to discuss the latest news.