On the 11th of January, 2023, Tyler Renolds tweeted that the biggest problem with crypto games is that they emphasize too heavily on tokenomics and earning aspects over the gameplay.
Renolds believes the problem is that there is too much focus on the financial and tokenomics aspect, not the enjoyable gameplay itself.
GameFi combines gaming, DeFi, and NFTs to create a virtual gaming ecosystem characterized by a P2E gaming model that enables players to earn unique digital assets. The convergence of gaming and DeFi manifests in two ways. Decentralized games have elements of DeFi, and DeFi platforms have game-style mechanisms.
Despite investors continuing to pour billions into blockchain gaming companies in 2022, the GameFi sector lacks mass gamer adoption, and this is because there are more DeFi-integrated decentralized games than gamified DeFi platforms.
When players earn in-game tokens, they can convert them into more popular cryptos, such as Ethereum and Bitcoin, which can then be swapped for fiat currency. Though many game developers explicitly mention in their T&Cs that they prohibit real-world transactions. Yet, most are lax because they benefit from this secondary economy. The T&Cs just shield them from legal liabilities.
Critics like John Stefanidis, founder of NFT gaming platform Balthazar, told AIBC he believes the problem lies in gaming experiences that “aren’t fun.” Mark Monfort, founder of NotCentralised, a blockchain gaming consulting firm, had similar views, telling AIBC that “There needs to be a focus on making games that are actually fun to play and giving them the option to participate in an earning mechanism rather than just forcing them to do so.”
He added that blockchain “Games have been far more about value transfer and profit sharing than what games should be about, which is entertaining experiences.” creating more miners than actual gamers. Games like Axie Infinity, whose native token has delivered multi-bagger returns, do not have many daily active users, and most of its user base comes from developing countries.
Some Critics have referred to the current state of GameFi as A massive Ponzi, reiterating that the poor quality of games available in the blockchain space is the reason its expansion pales in comparison to that of the video game market as players enjoy the dopamine hit they receive when playing web2 games.
If Axie Infinity has taught us anything, earning is one thing, but it can’t be everything.