2.3 Current issues in GameFi industry

Even though GameFi has great market potential, one might lose its life savings when investing recklessly. There remain some obstacles in current GameFi industry that are not only involved in technical

2.3.1 Technical level

Many gaming companies aimed to develop their own games so they entered GameFi world, or traditional gaming companies sought to make a breakthrough so they did so. In general, they all encountered technical issues regarding novel technology such as blockchain, smart contract, token ecology, operation models and so forth. These new fields which they are not familiar with could take them ages, loads of money and labors to get to know more and hence many game companies are still holding a much conservative attitude before having to invest that much.

2.3.2 Business model

Paying early gamers with the money earned from later gamers purchasing NFT will eventually build up a Ponzi scheme.

P2E is a good method to attract users but when you’re actually engaged, you’ll realize that many gamers pay great amount on NFTs to enter the game, those games with a value of “Play to earn” have eventually turned into “Pay to earn.” Some projects even have poorly designed games that the players can’t even play after spending a lot on NFTs.

Many players joined P2E games just for making money, however, current average lifespan of a GameFi is merely two weeks, for the later plays, they are actually paying a high price just for a picture.

2.3.3 Token Ecology

Many development teams add mining into their games; players could earn more tokens through mining in the game. Project teams allow players to exchange token for money through token buyback programs.

As mentioned in paragraph 2.3.2, project owners attract more players to join their so-called rapid and profitable projects, however, they also realize that they will need to pay more to the players under that business model, so many GameFi project owners have no other choice but to make the game more difficult and reduce rewards to extend the lifespan of their games, this approach will result in currency depreciation.

This phenomenon drives users away and hence project owners will need to make some adjustments to reduce loss. It ends up in a vicious circle, the tokens depreciate rapidly and couldn’t bring revenue to later players.