DeFi, GameFi, SocialFi: Pillars of Web3 and more
“Perfectly balanced, as all things should be.”
The conceptualization of GameFi started in 2017, and it gets popularized by Axie Infinity in late 2020. If we are to say, GameFi was born at the right time when the entire world was on lockdown, and people had nowhere to go, so the new evolution of gaming was introduced to the world.
The initial narrative of GameFi was that for the first time, you get to earn money and even make a living while you do what you love: play games. While this narrative has nothing wrong as the open distributed ledger technology of blockchain promises a better distribution of wealth with a transparent and immutable financial system. It has attracted people mostly looking for “financial incentives” rather than those looking for real “fun” playing the game.
Today, GameFi is not fully evolved yet. Most of the games are not “enjoyable” like those of the previous web2 games, and they also suffer greatly from an unsustainable game economy. We have yet to see any right “winner” in the ecosystem, and many gamers remain “skeptical.”
Yet, this is the first “bear market” for GameFi, and while the ecosystem impairs greatly with the rest of the market, it remains to standby.
Kuzote Lohe
Researching on Web3, GameFi & Blockchain
In this week's newsletter, let’s give a thought to some of the best ideas and concepts coming out around Web3.
“Perfectly balanced, as all things should be.”
When Satoshi Nakamoto created Bitcoin fourteen years ago, it opened a whole new industry of finance power by open ledger bookkeeping. Today, this simple yet powerful technology has emerged and given rise to other industries as well.
The most notable one is the evolution of the web. With blockchain technology, we are experiencing a new phase of Internet web technology, web3. Today, multiple sectors or verticals are incepting in the web world of web3. Innovators, builders, and industry leaders often consider these sectors and verticals separate standalone. For instance, the DeFi innovators look at the space purely with financial perspectives in mind, while the GameFi builders look more into the experimental elements of gaming.
As the web3 world begins conceptualizing Metaverse, a literal meaning for meta=beyond, verse=universe, we need to see all the sectors horizontally rather than vertically. We need DeFi to manage and take care of financial elements, GameFi for the community to have experiential elements, and SocialFi or DeSo- Decentralized Social Media to give ecosystem credibility and social recognition. By combining the sectors of web3, DeFi would offer better tools for finance; GameFi gives ownership of digital assets into the hand of players and creators, while SocialFi gives transparent social recognitions with no algorithm to deter users.
Read more: Why DeFi, GameFi, and SocialFi are horizontals in the Metaverse
How online communities are revolutionising human coordination
In one of our earlier newsletters, Gaming Guilds- The new way to communicate in gaming, we talk about how Gaming guilds are driving the force of GameFi. In the world of Web3, the community is the center of everything. We saw successful startups in the space being community-oriented rather than product-oriented. In the earlier evolution of the web, companies focus on the minimum viable product, but today Web3 founders and investors are looking for a minimum viable community.
The Web3 DAOs are the most exciting development that put the community ahead of everything else. DAOs allow organizations and future companies to have a more vibrant talent pool cutting across cultures and borders, get community feedback to design better products and services, and collaborate with open interdisciplinary information flow to the ecosystem to solve real-world problems.
Read more: How online communities are revolutionising human coordination
‘All that glitters is not gold.’
Levan Kvirkvelia, co-founder of Jigger: modern anti-bot protection, says after analysis of more than 60 games and services, there are over 200,000 bots and on average web3 games have 40% bots.
This comes as not a surprising one. Up until recently, most Web3 games focus more on the “financial incentives” rather than the “fun” part of the game. Players will create multiple accounts with different wallets to get the rewards. Thus games have more value extraction players and fewer value creation players. This creates an imbalanced ecosystem for sustainable games.
As per the analysis, a game like Karmaverse Zombie Serum has over 96% bots, while Gods Unchained has just 1% bots. You can see the complete analysis here.
Read more: Every web3 game has 40% bots.
“First focus on creating really engaging + fun game mechanics and then build tokenomics around them.”
@j0eferrara, Founder of Cornell Blockchain, wrote an interesting Twitter thread and presented the principles that Web3 game developers should heavily consider.
When founders start any Web3 projects, designing perfect tokenomics usually comes first to most of them. But in the case of GameFi projects, that is not the right way to start quickly. Blockchain enables Web3 open doors for better financial incentivization, ownership of digital content, and composability across applications and games. To build successful web3 games, one non-negotiable element is creating a fun and engaging game. In our previous newsletters, we shared 5 elements to consider before building web3 games.
What are people talking about?
Where is the money?
Saga Raises $6.5 Million Seed Round to Build the Next 1000 Chains in the Multiverse.
Saga is a protocol for automated deployment of application-specific blockchains in gaming, entertainment, and DeFi.
Blockchain Gaming Platform Xterio Raises $40M Led by Partner FunPlus.
Xterio is a free-to-play-and-earn game developer and publisher founded by game industry veterans.
Previous issues
Building on-chain fully is hard; what about web2.5?
Gaming Guilds- The new way to communicate in gaming.
5 elements to consider before building web3 games.
Do Sports games in Web3 have a product-market-fit?
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I will write to you again next week; until then, happy building, gaming, and investing.
Kuzote Lohe
Researching on Web3, Blockchain at Librty