According to the 2024 report from ChainPlay, a company specialized in the analysis and evaluation of blockchain projects, the GameFi sector is in great difficulty.
According to the findings, 93% of projects in this niche have failed, with an average drop of 95% from their all-time highs. A total of 3,200 case studies were analyzed.
Even investments in the sector have not been particularly profitable, alerting investors to its future in the GameFi landscape.
All details below.
ChainPlay studies 3,279 projects in the GameFi sector
ChainPlay, a well-known company in the world of cryptocurrencies, recently publicly launched its report about the current state of the GameFi industry in 2024.
This sector, resulting from a hybrid between the world of gaming and that of decentralized finance, seems to be going through a major crisis phase.
After leading the cryptocurrency surge during the 2022 bear market, attracting billions of dollars in investments, GameFi’s outlook now looks significantly worse.
Before delving into the nitty-gritty of the topic, we present the methodology undertaken by ChainPlay in its research work.
A total of 3,279 different blockchain game projects have been analyzedthanks also to the collaboration of the collaborating company Storible.
Information on the price of the project’s respective tokens comes from Dune Analytics, while user data is obtained from DappRadar.
A project is defined as “dead”if the price of the respective token has fallen more than 90% from its all-time high and/or has less than 100 active users per day.
The date a project’s token was created and the date it began meeting the aforementioned criteria determine its duration.
VC ROI and annual fundraising data comes from an internal database with multiple sources of information.
All data was collected in November 2024.
Difficult life for new GameFi projects: 93% fail in a short time
As mentioned in the introduction, ChainPlay’s report highlights the failed nature of most GameFi projects.
On average, 316 new projects are launched each year, but 262 of them disappear after a few months and are considered “dead”.
Although in 2022 the union of gaming with decentralized finance seems like a trend destined to grow, just 2 years later a completely different panorama emerges.
88% of the entire GameFi token industry has seen a price drop of over 90% from their respective all-time highs. This situation highlights the limited usefulness of the digital assets in question, reflecting mere speculative value linked to momentary exaggeration.
On average, the prices of these tokens have decreased by 95% from their ATH, highlighting the huge disappointment of investors who believed in this narrative.
Consider that The average duration of a GameFi project is only 4 monthssignificantly lower compared to other sectors in the cryptocurrency and blockchain world.
This incredibly short existence highlights the immense difficulties in building sustainable gaming ecosystems over time, capable of attracting traffic organically.
Also contributing to this overall failure is the rapid evolution of game logic and the ever-changing challenges of the gaming industry, which constantly vary over time.
All of these statistics paint the GameFi world as a transitory place incapable of offering long-term experiences to players and investors.
Retail and venture capital investments in this niche market: questionable performance
The grim outlook for the GameFi industry is confirmed by ChainPlay data on retail and venture capital investments, which suffer from unattractive performance.
However, while GameFi’s high failure rate is undeniable, profitability metrics reveal two different realities for retail investors and venture capitalists.
Regarding the first, the report highlights a average profit of 15% for all those small operators who have invested in decentralized initial offerings (YEAH).
We are talking about insignificant numbers that, despite the positive appreciation, must be related to the stratospheric growth of the entire crypto industry from 2022.
Furthermore, when retail investors approach GameFi token IDOs, they often have to comply with dangerous vesting restrictions, with resources locked up for several months.
Taking into account the average drop of 95% mentioned above, it is well understood that an average profit of 15% does not justify the presence of such financial limits.
For many retail investors, the aspiration of achieving financial success with GameFi has turned into a terrifying reality of illiquid assets and falling prices.
For venture capitalists (VCs), returns appear more polarizedwith one part generating profits while the other reflects significant losses.
The average profits are equal to 66%, with 42% of venture capitalists report returns between 0.05% and 1,950%, while the remaining 58% suffer losses ranging from -2.5% to -98.8%.
The main venture capital investors are Alameda Investigation with an ROI of 713.15%, Jump Capital with an ROI of 519.11% and Delphi Digital with an ROI of 490.50%.
Honorable mention also goes to Binance Labs which registers an average return of 338.52% and 3Commas with a return of 267.20%.
In contrast, the most unproductive funds were Golden Shovel Capital, which lost 97.4% on GameFi, and Infinity Capital with an ROI of 97.1%.
