The Development History of GameFi: From Ponzi Scheme to New Paradigm of Virtual Economy

DeFi and NFT Lay the Foundation for GameFi

After the launch of the Ethereum mainnet, the DeFi and NFT markets have flourished, providing a fertile ground for GameFi to develop. The total market value of DeFi grew from $50 million in 2015 to $100 billion in 2023, while the market value of NFTs surged from a few million dollars in 2018 to $8 billion in 2023.

In 2019, Mary Ma, the Chief Strategy Officer of MixMarvel, first proposed the concept of GameFi, aiming to introduce new business models and economic systems to the gaming industry through blockchain technology. In September 2020, Andre Cronje, the founder of Yearn.finance, further elaborated on the idea of GameFi, believing that GameFi will become the future development direction of DeFi.

GameFi Reshaping the Gaming Industry

GameFi solves the problems of limited item transactions and monopolies by game companies in traditional games through blockchain technology. At the same time, GameFi adopts DAO governance, allowing players to share decision-making power and economic benefits in game development.

The development of GameFi aligns with the evolution of the gaming industry, representing innovations in computer technology and gaming concepts. Between 2020 and 2021, the GameFi market experienced explosive growth, with its total market value soaring from $200 million to $24.52 billion. Many traditional tech giants have also started to invest in the GameFi and metaverse sectors.

GameFi 1.0: Ponzi Scheme Era

Early GameFi projects like CryptoKitties and Fomo3D lack a complete financial system and true gameplay, and are essentially Ponzi Schemes. These projects attract new users with high returns, ultimately unable to escape the fate of collapse.

GameFi 2.0: The Rise of "Play-to-Earn" Model

Axie Infinity has innovatively combined the "play-to-earn" concept with complex financial mechanisms, becoming a landmark project of the GameFi 2.0 era. The Sandbox, on the other hand, provides a model for the integration of traditional IP and blockchain technology through its UGC model and a well-developed token economic system.

GameFi 3.0: Full Chain Games and Cross-Border Integration

The current GameFi market is still in the blue ocean stage, and the future development directions include:

1. On-chain games: All game logic, data, and assets run entirely on the blockchain.
2. Cross-industry integration: combining with emerging technologies such as AI and the Internet of Things.
3. IP Empowerment: Introduce traditional game IPs to enhance playability.
4. Improve the financial system: Create high-quality games that include a complete financial ecosystem.

GameFi is expected to become a new paradigm of the virtual economy in the future, but when investing, it is still necessary to pay attention to the project's IP effect, playability, and technological strength. Only GameFi projects that truly attract players have long-term development potential.