The Development Stages of GameFi and Investment Layout Strategies

The current GameFi market is in a state of overheating, primarily supported by irrational funds and new users that uphold project value and token prices. Once the market adjusts, token prices and the value of in-game assets will decline, putting the overall game economy to a severe test. Users and funds are likely to shift to other sectors, and the current prosperity may face a significant correction.

As a primary market investor, it is necessary to remain calm and make sound judgments about future developments, even during the GameFi boom, in order to prepare and position for the next wave.

Three Development Stages of GameFi

Phase 1: GameFi 1.0 - Focused on making money

The primary goal at this stage is to make money; the gameplay and level of refinement are more like bonus elements that assist in the narrative of the project. A complete project that meets this stage must have the following characteristics:

• Is it possible to earn profits within a certain period of time
• Can the mechanism design allow early users to make money?
• Whether it can continuously attract new users to join and invest funds
• Is there an economic model that supports the operation of the game for at least a few months?

For first-level investors, this stage is more focused on:

1. Does the team have a long-term business mindset?
2. Is the project valuation relatively low?
3. Are you willing to invest long-term?
4. Do you have the ability to earn enough income during a bull market to sustain operations during a bear market?

High-quality projects can earn millions of dollars in the early stages through the sale of role NFTs or blind boxes. Both primary and secondary investors can also achieve good returns during the process.

At this stage, we are more focused on the project:

• Can it attract brand new users to invest incremental funds from the real world?
• Can it attract existing crypto users to transfer their funds from other projects?

For Southeast Asia GameFi projects, we pay more attention to their ground promotion capabilities and marketing resources, including guilds and KOLs. Such projects have a smaller demand for VC funding and focus more on whether they can provide suggestions for game mechanics and offer effective marketing resources.

In terms of token economics design, attention needs to be paid to:

• Can the influx of new users accumulate the value of project tokens and enhance the value of in-game assets?
• Payback Period
• Potential Causes of Mechanism Failure
• Are there any attractive additional narratives such as stunning graphics/strong investment lineup, etc. (
• Token distribution situation, will there be excessive selling pressure in the early stages?

The main risks at this stage include:

• The growth of new user numbers has slowed down.
• Design flaws in the mechanism lead to collapse
• The project party suddenly changed the mechanism
• Market pullback and so on

Even top projects find it difficult to determine the impact of a bear market on their ecosystem and economic systems. However, GameFi still has a place in the bear market, as earning money while playing games is a good way to pass the time and get something for free. GameFi projects launched during the bear market still have great potential; it's just that funding will start to shift towards iterative projects that can solve the "play-to-earn" problem.

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) Phase 2: GameFi 2.0 - Addressing the Single Game Economy Issue

This stage has higher requirements for the basic quality of games and token economics. We will pay more attention to paid game projects that can solve single in-game economic mechanisms and have social attributes.

Avoiding mechanisms where token value circulates only within a single game will be a high-quality target at this stage. The main solutions include:

1. Establish a multi-game interoperable economic ecosystem
2. Invest in GameFi incubation platforms
3. Develop high-quality games with social attributes

For high-quality games, we will pay extra attention to:

• Can I communicate and make friends with other crypto users?
• Can it reflect social status and assets, satisfying the desire to show off?
• Can it connect user identity and extend to other GameFi or DeFi applications?
• Can it extend to users' real social media?

In addition, GameFi development tools are also worth paying attention to, such as:

• Provide users with tools for data display and profit calculation.
• A platform that provides game item rental and guild lending.
• Providing DAO solution services for project parties

We expect a deeper integration of NFTs and GameFi, requiring more projects focused on financial extension scenarios.

Phase Three: Attempts at the Metaverse

This is a trial phase for humanity's move towards a virtual economic life. GameFi, as the most understandable application of the metaverse, will become an important tool for guiding traffic. Whether users can provide productivity in the virtual world to exchange for funds, consume or engage in financial activities within different but interconnected applications, and even interact with their real selves, is our ultimate imagination for the future of GameFi.

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Conclusion

Games that focus on making money are essentially a way to distribute project tokens. For most non-crypto native users, this is a more friendly and familiar way to acquire project tokens. Gamification can enhance attention and engagement with the project and even stimulate positive behaviors such as user voting.

As long as the project has token distribution and marketing needs, GameFi, which focuses on making money, is likely to continue to exist. However, whether the distributed tokens are used as short-term incentives or to encourage long-term positive behavior is a question that both the project parties and users need to consider.

We are currently at the peak of GameFi 1.0, but for investors, the most important thing is to focus on the long-term development of the ecosystem and find truly valuable innovations and teams.