Run, Pump, Earn: Which GameFi Projects to Watch in 2024

According to Messari's report, in 2023, about 3.4 billion gamers will bring the gaming industry $184 billion. The latter undergoes a paradigm shift once every 10 years, so the rise of the GameFi financial gaming sector can be compared to the spread of Free-to-Play.

Together with the developers of the post-apocalyptic game Undeads, we talk about the history of the GameFi segment, the state of the industry in 2024, and promising blockchain games.

The Past and Future of GameFi

In 2017, Dapper Labs launched the CryptoKitties game on the Ethereum blockchain. The application quickly gained popularity and, after two months, became the cause of network congestion.

Following the "cryptokitties," Decentraland, Gods Unchained, The Sandbox, Alien Worlds, the P2E game Axie Infinity, and the M2E project STEPN have emerged.

In 2020, the segment actively developed thanks to the popularization of NFT and DeFi, and in 2021 it reached its peak: GameFi tokens entered the list of leaders in terms of growth quotes. Developers started placing dapps on more efficient and cheaper blockchains Polygon and BNB Chain, as well as creating networks specifically for Web3 games.

However, by 2023, more than 75% of GameF projects have failed due to primitive gameplay and unbalanced tokenomics. According to CoinGecko, the number of active gamer addresses decreased by 58% in 2023 compared to 2021.

"Crypto winter" has contributed to a qualitative transformation of the industry: in the first quarter of 2024, the segment's capitalization exceeded $31 billion.

Surviving projects have served as a prototype for Web3 games of a new generation, characterized by a well-developed plot and exciting gameplay. The latter include Mines of Dalarnia, Pixels, Star Atlas, and Farmers World. Some projects like Undeads, Illuvium, and Shrapnel are available in early stages of testing.

Data: Epic Games.## Growth issues

In the last few years, GameFi has experienced two high-profile hacks. In March 2022, attackers stole $625 million from the Ronin sidechain involved in the Axie Infinity game. Two years later, an unknown person released and withdrew $210 million from the Gala Games platform.

The actions of scammers have led to the emergence of informal security standards for Web3 projects. Game creators have increasingly turned to services like PeckShield, Trail of Bits, and OpenZeppelin to analyze transactional interactions.

"Developers must always engage with audit firms. For example, Undeads' smart contracts are regularly audited by CertiK experts. In addition, it is important to hire cybersecurity specialists and involve white hat hackers who will monitor abnormal loads and other indicators of hacking attempts in real-time," explains Undeads Games Marketing Director Ash Hodgetts.

Hacks are not the only problem in the segment. Often, GameFi projects are unprepared for the influx of new players. For example, in 2021, Gods Unchained users were unable to receive rewards due to a loss of connection to the servers.

The answer to the scalability and sustainability questions in Web3 games has been L2 solutions. Among the first to use them were the developers of Axie Infinity, who moved from Ethereum to the sidechain Ronin.

Projects are increasingly launching dapps on cheaper and faster blockchains like WAX and Polygon. The aforementioned Illuvium uses Immutable's zkEVM, Shrapnel uses Polygon and Avalanche, Undeads uses BNB Chain, and Star Atlas uses Solana.

What to play in 2024

According to the CoinGecko report, in 2023 the highest number of active addresses were for farming/mining, card, and M2E games.

Strategies and shooters took the last places, probably because the developers of early GameFi projects didn't pay enough attention to graphics, plot, and optimization.

According to the marketing director of Undeds Games, the situation is rapidly changing:

"We are witnessing a breakthrough moment in GameFi. Studios are creating a large number of AAA games on the blockchain, developing game worlds and storylines, while investors are allocating significant resources to graphics".

However, high-quality games are not characterized by graphics alone, which is why projects like CryptoBlades and Alien Worlds are experiencing a 'cryptowinter'.

"The application must keep the user's attention with the help of game mechanics and plot. In addition, it is important to maintain a balance between the economy and gameplay so as not to distract users from entertainment," said Hodgetts.

They highlight five blockchain games with interesting gameplay.

Defi Kingdoms

Defi Kingdoms — a role-playing game set in a medieval fantasy world, with DeFi mechanics and pixel graphics.

Data: Defi Kingdoms. Users upgrade NFT characters, complete quests, and mine resources. They also earn JEWEL tokens by trading on the in-game marketplace and providing liquidity to The Gardens pools.

The application was launched in 2021 on the Harmony blockchain. Later, the developers added support for Avalanche, Klaytn, and DFK Chain. The project received funding from Delphi Digital and Andreessen Horowitz funds.

At the time of publication, the market capitalization of JEWEL is $13.2 million.

Undeads

Undeads is a post-apocalyptic PvP and PvE shooter with a focus on resource gathering. Players participate in matches, and the best performers receive rewards in in-game currency.

Data: Steam. The Undeads Games team has added the game to Steam and opened registration for beta testing.

"We have received support from Warner Brothers and ALT Animation. The feature of Undeads is the huge gaming world where the confrontation between humans and zombies takes place. The classic gameplay of the zombie apocalypse is complemented by sound design from Wabi Sabi Sound, as well as a wide selection of weapons, items, and boxes," commented Hodgetts.

The company is headed by former PayPal CEO Leo Kan. Among the team members are WhimsyGames alumni. The Undeads ecosystem also includes the racing shooter Undeads Rush and the Web3 game Viral.

At the time of publication, the market capitalization of the Undeads Games (UDS) token is $24 million.

King of Legends

King of Legends — P2E real-time strategy with elements of fantasy, reminiscent of "Heroes of Might and Magic". Users create kingdoms, accumulate resources, and battle enemies.

Data: Kings of Legends. Players receive rewards in King of Legends (KOL) and Land of Heroes (LOH) tokens, which can be staked.

The application was launched in 2022 on the BNB Chain network. In the future, the project team will migrate it to its own Kingchain blockchain platform.

At the time of publication, the market capitalization of KOL is $5.5 million.

Kompete

Kompete is a multiplayer game on the Unreal Engine 5, combining several genres, including battle royale and kart racing.

Data: Kompete. The application is available on the Epic Games Store and Google Play. The top players receive rewards that can be sold on the Bazaar marketplace for KOMPETE tokens, launched on Ethereum and Base.

At the time of writing, the market capitalization of KOMPETE is $12.1 million.

Magic Craft

Magic Craft ― a multiplayer Web3 game in the MOBA genre on the BNB Chain blockchain, released in 2021.

Data: Magic Craft.Each match lasts for five minutes: during this time, players must destroy enemies and complete missions. The winner receives the MVP title and Magic Craft tokens (MCRT). They can be used for staking, as well as purchasing characters, NFT, and tournament tickets.

At the time of writing, the market capitalization of MCRT is $5.4 million.

Conclusions

The combination of game mechanics, NFTs, and cryptocurrencies creates a unique experience at the intersection of entertainment and investment.

"GameFi originated in traditional games like CS:GO, but the economy and resale opportunities were heavily restricted by digital distribution policy. With the migration of games to the blockchain, there is a huge field for experimenting with in-game earnings and trading between users," noted CMO Undeads Games.

In their opinion, technical complexities, lack of regulatory clarity, and cryptocurrency market volatility hinder the mass adoption of Web3 games. Solving these problems is critical for the further growth and success of GameFi.