The rise of blockchain-powered games has been a defining moment for the Web3 industry, with play-to-earn gaming (P2E) taking centre stage. However, the gaming revolution has reached a turning point, signalling the end of the GameFi era.

Leading experts from Polemos, a blockchain gaming resource, observe a significant shift towards sustainable gaming models that prioritize rewarding players in frictionless ways. Instead of solely focusing on earning regular income streams from gameplay, studios are now emphasizing competitive tournaments with prize pools to keep players engaged. This new approach allows players to still earn small incomes without risking a game economy collapse, a concern faced by games like Axie Infinity and StepN.

Axie Infinity’s utility token, AXS, has fallen over 95% since its all-time high

Currently, the blockchain gaming movement aims to expand its player base of approximately 1 million users to unprecedented levels. Game developers are now prioritizing the implementation of sustainable and enjoyable mechanics to keep players hooked and ensure the continued growth of the industry. Polemos believes that maintaining a low barrier to entry across games is crucial for achieving widespread adoption and highlights two projects leading the way in this regard.

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One such project aims to gently introduce Web3 gaming to a broader audience, dispelling the misconception that anyone can easily earn a living solely by participating in game economies. While early participants may benefit from the appreciation of in-game cryptocurrencies, this approach creates a high barrier to entry that stifles game growth. Restricted player base growth limits revenue generation, making the game economy reliant on unsustainable inflationary token distribution. Eventually, when liquidity dries up among the capped player base, the collapse of the game economy becomes inevitable.

The reality is that, much like in Web2 gaming, earning a comfortable living will be reserved for top players and content creators. Only cryptocurrencies powering the most profitable games and exclusive gaming assets with significant value, such as the Counter-Strike skins bundle sold for $500,000, have the potential to bestow wealth upon holders. However, this situation also presents an opportunity for low barriers to entry.

The excessive financialization of game assets is not the solution to onboard new users to blockchain gaming. While improving game quality remains a priority, Richard McLaren, Co-CEO of Polemos, emphasizes the need to address the steep learning curve associated with cryptocurrencies and streamline the onboarding process. The ultimate victory, according to McLaren, will be achieved when gamers can seamlessly enjoy blockchain-integrated games without even realizing it.

Polemos has identified two promising projects that break down barriers and foster growth in the blockchain gaming space — Immutable which in collaboration with Magic has launched Immutable Passport — a non-custodial wallet and authentication platform that simplifies onboarding through passwordless sign-on and automated wallet creation and METALCORE, a territorial warfare game which plans to enter the popular Epic Games Store as a fully free-to-play title, offering a chance to showcase blockchain-powered gaming features to its vast user base of 31.3 million daily active players.

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The demise of GameFi is an essential step in the evolution of blockchain gaming. The terms themselves imply an unsustainable focus on extracting value from a game’s ecosystem rather than contributing to it. To build exceptional games that advance the Web3 gaming industry, developers must resonate with an audience willing to invest in games purely for entertainment.

While promising advancements are already underway to accelerate the growth of blockchain gaming, there is still significant work ahead to bring the industry on par with global gaming standards. The death of GameFi will enable Web3 game developers to shift their focus towards what truly matters—creating exceptional games. With smoother onboarding processes and improved game quality, the future of the gaming revolution has never looked brighter.

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Written by Agbo Obinnaya.

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