Run, grind, earn: GameFi projects to watch in 2024

According to a Messari report, in 2023 roughly 3.4 billion gamers generated $184 billion for the industry. Gaming undergoes a paradigm shift about once a decade, so the rise of GameFi can be likened to the spread of Free-to-Play.

Together with the developers of the post-apocalyptic game Undeads, we outline the history of GameFi, the state of the industry in 2024 and a handful of promising blockchain games.

The past and future of GameFi

In 2017 Dapper Labs launched CryptoKitties on the Ethereum blockchain. The application quickly gained traction and, two months later, clogged the network.

After the “crypto kitties” came Decentraland, Gods Unchained, The Sandbox, Alien Worlds, the P2E game Axie Infinity and the M2E project STEPN.

In 2020 the segment grew rapidly on the back of NFTs and DeFi, peaking in 2021 as GameFi tokens ranked among the top performers. Developers began deploying dapps on faster, cheaper blockchains such as Polygon and BNB Chain, and building networks specifically for Web3 games.

By 2023, however, more than 75% of GameFi projects had failed, undermined by rudimentary gameplay and unbalanced tokenomics. According to CoinGecko, the number of active gamer addresses in 2023 fell by 58% compared with 2021.

“Crypto winter” catalysed a qualitative transformation: in the first quarter of 2024 the segment’s capitalisation exceeded $31 billion.

The survivors served as prototypes for a new generation of Web3 games with developed storylines and engaging gameplay. These include Mines of Dalarnia, Pixels, Star Atlas and Farmers World. Some projects such as Undeads, Illuvium and Shrapnel are available in early testing.

Growing pains

GameFi has suffered two headline hacks in recent years. In March 2022 attackers stole $625 million from the Ronin sidechain used by Axie Infinity. Two years later an unknown actor minted and drained $210 million from the Gala Games platform.

The exploits helped usher in de facto security standards for Web3 projects. Game studios increasingly turn to firms such as PeckShield, Trail of Bits and OpenZeppelin to analyse transactional interactions.

“Developers must work with audit firms. For example, Undeads’ smart contracts are regularly reviewed by CertiK. It is also important to hire cybersecurity specialists and engage white-hat hackers who can monitor abnormal loads and other indicators of attempted breaches in real time,” says Undeads Games marketing director Ash Hodgets.

Hacks are not the only headache. GameFi projects are often unprepared for surges in new users. In 2021, for instance, Gods Unchained players could not claim rewards due to server disconnects.

Layer-2 solutions have emerged as the answer to scaling and network resilience in Web3 games. Among the first movers were the developers of Axie Infinity, who migrated from Ethereum to the Ronin sidechain.

Projects increasingly launch dapps on cheaper, faster chains such as WAX and Polygon. Illuvium uses Immutable’s zkEVM, Shrapnel runs on Polygon and Avalanche, Undeads on BNB Chain, and Star Atlas on Solana.

What to play in 2024

According to a CoinGecko report, in 2023 the largest share of active addresses went to farming/mining, card and M2E titles.

Strategy games and shooters ranked last—likely because early GameFi projects skimped on graphics, story and optimisation.

According to Undeads Games’ marketing director, the picture is changing fast:

“We are witnessing a turning point in GameFi. Studios are building a large number of blockchain AAA games, fleshing out game worlds and storylines, and investors are allocating significant budgets to graphics.”

But quality games are about more than graphics alone—hence why projects like CryptoBlades and Alien Worlds have weathered the crypto winter.

“An application must hold users’ attention with its mechanics and narrative. It is also vital to balance the economy and gameplay so that users are not distracted from the fun,” notes Hodgets.

Here are five blockchain games with engaging gameplay.

Defi Kingdoms

Defi Kingdoms is an RPG set in a medieval fantasy world, with DeFi mechanics and pixel art.

Players level up NFT characters, complete quests and gather resources. They can also earn JEWEL tokens by trading on the in-game marketplace and providing liquidity to The Gardens pools.

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

At the time of publication, JEWEL’s market capitalisation stands at $13.2 million.

Undeads

Undeads is a post-apocalyptic PvP and PvE shooter focused on resource gathering. Players compete in matches, with top performers earning rewards in the in-game currency.

The Undeads Games team has listed the game on Steam and opened registration for beta testing.

“We have received support from Warner Brothers and ALT Animation. The distinguishing feature of Undeads is a vast game world where humans and zombies face off. The classic zombie-apocalypse gameplay is complemented by audio from Wabi Sabi Sound, as well as a large selection of weapons, items and boxes,” comments Hodgets.

The company is led by former PayPal executive Leo Kan. Team members include alumni of WhimsyGames. The Undeads ecosystem also features the racing shooter Undeads Rush and the Web3 game Viral.

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

King of Legends

King of Legends is a real-time P2E strategy with fantasy elements, reminiscent of Heroes of Might and Magic. Users build kingdoms, amass resources and battle opponents.

Players are rewarded in King of Legends (KOL) and Land of Heroes (LOH) tokens, which can be staked.

The app launched in 2022 on BNB Chain. The team plans to migrate it to a proprietary blockchain platform, Kingchain.

At the time of publication, KOL’s capitalisation stands at $5.5 million.

Kompete

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

The application is available on the Epic Games Store and Google Play. Top players earn rewards that can be sold on the Bazaar marketplace for KOMPETE tokens, issued on Ethereum and Base.

At the time of writing, KOMPETE’s market capitalisation is $12.1 million.

Magic Craft

Magic Craft is a multiplayer Web3 MOBA on BNB Chain, released in 2021.

Each match lasts five minutes, during which players must eliminate opponents and complete objectives. The winner earns the MVP title and Magic Craft (MCRT) tokens. These can be staked and used to buy characters, NFTs and tournament tickets.

At the time of writing, MCRT’s market capitalisation is $5.4 million.

Conclusions

The blend of game mechanics, NFTs and cryptocurrencies offers a distinctive experience at the intersection of entertainment and investment.

“GameFi originated in traditional games like CS:GO, but the economy and resale opportunities were heavily constrained by digital distribution policies. By moving games to the blockchain, there is vast room to experiment with in-game earnings and peer-to-peer trading,” notes the CMO of Undeads Games.

He believes mass adoption of Web3 games is hampered by technical complexity, a lack of regulatory clarity and the volatility of the crypto market. Solving these issues is critical to GameFi’s continued growth and success.