Written by: Luke, Mars Finance
According to Crypto Bubbles' bubble chart of crypto increases, three major tracks have emerged from the performance of the top 100 tokens by market capitalization over the past seven days:
Established Public Chains: Representative projects include XLM, ADA, DOT, etc. These once-celebrated projects have attracted market attention once again due to their stable ecological foundations and ongoing technical upgrades.
DeFi (Decentralized Finance): Protocols like DYDX and UNI performed impressively, benefiting from safe-haven demand amid regulatory uncertainty and the recovery of on-chain trading volumes.
GameFi Metaverse: Projects like SAND, MANA, AXS have rebounded strongly, becoming the biggest surprise in the market this week.
Among them, the strong rise of GameFi is particularly noteworthy. After exploding in popularity in 2021, the GameFi sector remained silent for a long time, almost forgotten during the low periods of the crypto market. The innovations in blockchain games over the past two years have leaned more towards lightweight viral propagation models, mainly relying on the combination of Telegram mini-games and meme culture, deviating significantly from traditional Web3 games. However, this rebound in GameFi seems not only to be the result of market rotation but may also herald a deeper trend shift.
Three Major Driving Forces Behind GameFi's Rise
1. The Catalytic Effect of Fund Reallocation
As the valuations of other hot sectors become saturated, the undervaluation and high elasticity of GameFi have attracted a reflow of funds.
In the past week, the overall market value of the GameFi sector has grown by over 35%, while trading volumes have surged by more than 150%. In contrast, the DeFi and established public chain sectors have already experienced multiple rounds of increases, leaving limited space for further growth. Due to the "low base" characteristic of GameFi projects, they have become ideal investment targets in the current context where funds are seeking high returns. The opportunities brought by undervaluation and high elasticity make GameFi projects highly attractive to funds.
According to the latest data from Rootdata, the amount and number of crypto market financing peaked in March 2024, with financing amount approaching $100 million and financing occurrences reaching as high as 30, reflecting the market's high attention towards the blockchain game sector. Moreover, financing amounts have continued to rise in recent weeks, particularly in October 2024, where both financing amounts and occurrences rebounded, indicating that the market's enthusiasm for the GameFi sector is gradually recovering. This also implies that GameFi, as an undervalued sector, has attracted significant reallocation of funds.
2. Gradual Perfection of the Technical Ecosystem
In 2021, GameFi projects were often criticized for being "pie-in-the-sky driven," with gameplay experiences far from traditional AAA games. However, the continuous advancement of underlying blockchain technology has made the GameFi ecosystem more mature:
The popularization of Layer 2 technology has significantly reduced on-chain transaction costs while increasing game interaction speed, optimizing players' gaming experiences.
Progress in cross-chain asset trading provides higher liquidity and security for virtual assets in blockchain games, increasing players' confidence and attachment to their assets.
Technical upgrades from project parties: For example, the Axie Infinity community initiated a proposal vote to "upgrade Axie & Land smart contracts through hard forks." This proposal addresses a frequently requested feature by Axie asset holders for a safer way to delegate Axie assets, minimizing the risks for asset owners. Similar technological upgrades have greatly improved user experience.
3. Still Imaginative Narratives
People often say that the most urgent need in the web3 industry is tangible products, not the ethereal PVP of DeFi. Vitalik has also stated that simply issuing tokens and creating exchanges signifies the industry's failure. GameFi itself is a combination of DeFi + NFT + Blockchain Game, making the originally dull DeFi lively while providing the NFT technology, which lacked application scenarios, with an opportunity to materialize. Moreover, GameFi's governance model offers a chance for implementing DAO organizations. Combined with the current concept of the metaverse, AR and VR are also expected to become part of GameFi's AAA masterpieces. Therefore, GameFi remains a narrative full of imagination within the industry.
From Phenomenon to Reflection: The Future Evolution Direction of GameFi
Despite the excitement surrounding GameFi's rebound, it does not mean that its challenges have ended. Current market focus is on the following core issues: Can GameFi shake off the label of hype and achieve long-term sustainable development centered on "game experience"?
From the current trend, the future development of GameFi may focus on the following directions:
Cross-Platform Asset Flow and a Large Financial Ecosystem: Currently, most virtual assets of GameFi projects are still limited to specific platforms, lacking cross-platform value. To address issues such as low user activity and unstable funds, future development of GameFi will focus on promoting the free flow of NFT assets across different games and platforms, and establishing a larger financial ecosystem through cross-chain bridge technology, multi-platform compatibility, and decentralized account management. This will enhance the liquidity and usability of player assets, increasing user stickiness and the overall stability of the financial ecosystem.
Immersive Gaming Experience: Diversification, AI-Driven, and AR/VR Integration: Future GameFi needs to innovate not only financially but also achieve breakthroughs in game content and experience. Generative AI can enhance the dynamics and personalization of games, combined with VR/AR technology to provide players with a more immersive and realistic gaming experience. This combination will create differentiation and uniqueness, enhancing players' sense of participation and long-term retention. (Ready Player One)-style immersion may no longer be a fantasy but gradually becoming a reality.
Fully On-Chain Games and Autonomous Worlds: Fully on-chain games put all game logic, data, and assets on-chain, emphasizing decentralization and transparency. Autonomous Worlds will become an important form of fully on-chain games, providing a completely transparent gaming environment and effectively addressing cheating issues.
Introduction of Traditional Game IPs: The blockchain extension of traditional game IPs is another major trend in GameFi. For example, Axie Infinity draws on the gameplay of (Pokémon), while The Sandbox ports classic games to the blockchain. These successful cases demonstrate the potential of strong IPs, and more classic games may achieve value expansion through blockchain in the future, becoming important competitive advantages for GameFi.
NFTs and MEMEs in Competition: Diminishing Returns or Joint Prosperity?
In the last bull market, GameFi and NFTs were closely linked, almost forming a binding relationship. However, with three years of industry development and refinement, this connection has gradually weakened. The pricing of NFTs in GameFi now relies more on project popularity and economic models, while blue-chip NFTs like Punk and BAYC have fallen into a slump, as their former social attributes now seem to have become an awkward burden. It is worth mentioning that during the explosive period of Bitcoin's ecosystem, Bitcoin NFTs also briefly thrived, but ultimately only represented a fleeting moment in the NFT track.
At the same time, memecoins are also on the rise, attracting a lot of market attention. Many NFT holders even feel that "memecoins have stolen the limelight from NFTs."
There are many similarities between NFTs and memecoins, which have allowed both to rapidly accumulate large user bases in the market. Firstly, both have a low barrier to entry and are relatively easy to understand. NFTs can simply be seen as "small images," while memecoins are often associated with internet meme culture, being simple, easy to understand, and easy to spread. The purchase barrier is also low; NFTs can sometimes be minted for free (free mint), only requiring gas fees; meanwhile, memecoins often have prices with just a few decimal places, making it easy for small investors to participate.
MEME resembles the Pro Max version of NFTs, with higher liquidity, a more FOMO atmosphere, and a more meme-rich community culture.
A survey by CoinGecko in August this year showed that about 54% of respondents believe NFTs cannot recover in this cycle, with 29.5% firmly believing NFTs cannot recover, and 24.7% still bearish on the NFT market.
Andrew Kang, a partner at Mechanism Capital, has stated that if the market rises sharply in the future and overheats, the NFT market might make a comeback as a way for people to flaunt their identities. Although the rise of memecoins has indeed siphoned off some speculative enthusiasm from the NFT market, those still holding NFTs are not in a hurry to sell, leading to a scarcity of market supply, where just a small wave of enthusiasm can drive the entire momentum. Azuki is about to launch AnimeCoin, and other top projects may follow suit, which could serve as catalysts for the NFT market's recovery.
According to Cryptoslam data, the top NFT trading volumes and number of traders have seen a significant rebound over the past 30 days, which may signal that the revival of NFTs is quietly occurring.
NFTs and memecoins each meet different types of market demands: NFTs symbolize identity, collection, and long-term value, while memecoins represent short-term high returns and the release of collective emotions. Whenever market sentiment is high and speculative demand surges, memecoins attract a significant influx of funds due to their ease of understanding, low barriers to entry, and high liquidity, becoming a hot focus. However, as speculative enthusiasm gradually wanes and investors begin to refocus on long-term holding value, NFTs, with their artistry, scarcity, and community consensus, come back into the market's visibility and become objects of pursuit for investors.
This cyclical alternation also benefits from the rotation of funds and attention between different asset types. When the memecoin craze reaches its peak, liquidity and attention gradually flow out, while the NFT market can take advantage of this gap to regain user interest through innovative projects or the introduction of new features. Therefore, NFTs and memecoins do not completely negate each other, but rather attract market attention through alternation, satisfying investors' needs in different cycles and achieving alternating brilliance. Understanding this logic can help investors better adjust their strategies amid market fluctuations and seize every opportunity brought by each rotation.
Conclusion: New Opportunities in Rotation
From GameFi's strong rebound to the potential recovery of NFTs, we can see that the characteristics of the crypto market are constantly being reshaped: funds, hot topics, narrative logic—all these elements are continuously flowing and changing, forming the cyclical rise and fall of different sectors. After experiencing undervaluation and silence, GameFi has once again become the market focus due to the gradual improvement of its technical ecosystem and its unique narrative. Meanwhile, NFTs and memecoins are also finding their market opportunities in rotation, meeting different investors' needs for short-term speculation and long-term collection.
The crypto market is not a single path to growth, but a multidimensional rotation game, where each sector may become the next breakout point in specific market cycles. Future investors should learn to find patterns from these changes, discovering new opportunities at each rotation node, thus capturing growth dividends amid changes. In the evolving tracks of GameFi, NFTs, and memecoins, those who understand the logic behind the rotations have the chance to lead the next market explosion.
