Today's recommendation | The next trend of the bull run? The rotation trend of GameFi Rebound in the encryption zone

Author: Luke, Mars Finance

According to the Crypto Bubbles encryption increase bubble chart, in the past 7 days, three major tracks have stood out among the top 100 Tokens in terms of Market Cap:

Old-school public chains: representative projects include XLM, ADA, DOT, etc. These former star projects have once again attracted market attention with their stable ecological foundation and continuous technological upgrades.

Decentralized Finance (Decentralization Finance): DYDX, UNI and other protocols have performed well, benefiting from the demand for hedging under regulatory uncertainty and the recovery of on-chain volume.

GameFi Metaverse: SAND, MANA, AXS and other blockchain gaming projects have rebounded strongly, becoming the biggest surprise in the market this week.

Among them, the strong rise of GameFi is particularly noteworthy. Since its explosion in 2021, the GameFi zone has been quiet for a long time, and even almost forgotten in the low tide of the crypto market. The innovation of chain games in the past two years tends to be more lightweight virus transmission models, mainly relying on the combination of Telegram mini-games and MEME culture, which is far from traditional Web3 games. However, this Rebound of GameFi seems to indicate not only the result of market rotation, but also possibly herald a profound trend change.

Three Driving Forces Behind the GameFi Pump

1. The catalytic effect of fund reallocation

As the valuations of other hot zones tend to saturate, the undervaluation and high elasticity of GameFi attract the reinflow of funds.

In the past week, the GameFi zone’s overall market capitalization has risen by over 35%, and the volume has surged by more than 150%. In comparison, Decentralized Finance and traditional public chain zones have already experienced multiple pumps, with limited room for further improvement. Due to its low base, GameFi projects have become an ideal investment target in the current environment of seeking high returns. The opportunities brought by low valuation and high elasticity make GameFi projects highly attractive to investors.

According to the latest data from Rootdata, the financing amount and quantity of the encryption market reached a peak in March 2024, with a financing amount close to 100 million US dollars and 30 financing rounds, reflecting the market’s high attention to the blockchain gaming zone. In addition, the financing amount has continued to pump in recent weeks, especially in October 2024, when the financing amount and quantity rebounded again, showing that the market’s enthusiasm for the GameFi zone is gradually recovering. This also indirectly indicates that GameFi, as an undervalued zone, has attracted a large amount of fund reallocation.

2. Gradual improvement of the technical ecosystem

In 2021, GameFi projects are often criticized for being driven by empty promises, and the gaming experience is 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 significantly dropped on-chain Transaction Cost, while improving the interaction speed of games, optimizing players’ gaming experience.

The progress of Cross-Chain Interaction in asset trading provides higher liquidity and security for virtual assets in blockchain games, increasing players’ confidence and stickiness to assets.

Technical upgrade of the project party: for example, the Axie Infinity community initiated a proposal vote to ‘Upgrade Axie & Land Smart Contract through Hard Fork.’ This proposal makes one of the frequently requested functions by Axie asset holders to delegate Axie assets in a more secure way to minimize the risk of dropping assets. Similar technical upgrades greatly improve the user experience.

3. Still full of imaginative narrative

People always say that the most urgent need of the web3 industry is a product that can be landed, not Decentralized Finance floating in the sky PVP, Vitalik also said: only launch coin and do exchange means the failure of the industry. GameFi itself is a combination of Decentralized Finance + Non-fungible Token + Blockchain Game, which not only makes the original boring Decentralized Finance vivid, but also gives the Non-fungible Token technology without application scenarios an opportunity to land, and at the same time, the governance model of GameFi also provides an opportunity for the implementation of DAO organizations. Combined with the current concept of the metaverse, AR and VR are also expected to become part of the GameFi 3A blockbuster. As a result, GameFi remains an imaginative narrative in the industry.

From Phenomenon to Reflection: The Evolution Direction of GameFi in the Future

Despite the excitement of GameFi’s Rebound, it does not mean that its challenges are over. The current focus of the market is centered around the following core questions: Can GameFi break away from the speculative label and achieve long-term sustainable development with a focus on gaming experience?

Based on the current trend, the future development of GameFi may focus on the following directions:

Cross-platform asset circulation and the large financial ecosystem: Currently, the virtual assets of most GameFi projects are still limited to specific platforms, lacking cross-platform value. To address issues such as low user activity and unstable funds, the future development of GameFi will focus on promoting the free circulation of Non-fungible Token assets among different games and platforms, and establishing a larger financial ecosystem through cross-chain bridges technology, multi-platform compatibility, and Decentralization account management. This will enhance the liquidity and utility of player assets, and strengthen user stickiness and the stability of the overall financial ecosystem.

Immersive gaming experience: Diversified, AI-driven, and integrated with AR/VR: The future of GameFi not only needs to innovate in finance, but also needs to achieve breakthroughs in game content and experience. Generative AI can enhance the dynamism 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 player engagement and long-term retention. The immersive experience of ‘Ready Player One’ may no longer be a fantasy, but gradually becoming a reality.

The entire on-chain game and autonomous world: The entire on-chain game will put all game logic, data, and assets on the chain, emphasizing Decentralization and transparency. The Autonomous World will become an important form of on-chain games, providing a completely transparent gaming environment and effectively solving the problem of plug-ins.

Introduction of traditional game IPs: The extension of traditional game IPs on the blockchain is another major trend in GameFi. For example, Axie Infinity draws inspiration from the gameplay of Pokémon, while The Sandbox ports classic games to the on-chain blockchain. These successful cases demonstrate the potential of strong IPs, and in the future, more classic games may realize value expansion through the blockchain, becoming an important competitive advantage in the future of GameFi.

Non-fungible Token vs MEME, a battle of wits, will they thrive separately or achieve common prosperity

In the previous bull run, GameFi was closely associated with Non-fungible Tokens (NFTs), forming a strong connection. However, as the industry has evolved over the past three years, this association 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, and their former social attributes seem to have become an awkward constraint. It is worth mentioning that during the explosive period of the BTC ecosystem, BTC NFTs also had a brief moment of popularity, but it was ultimately just a fleeting moment in the NFT space.

Meanwhile, memecoin is also rising, attracting a lot of market attention. Many Non-fungible Token Holders even believe that ‘memecoin has stolen the life of Non-fungible Token’.

There are many similarities between Non-fungible Tokens and memecoins, which have rapidly accumulated large user bases in the market. Firstly, both have a low entry barrier and relatively simple understanding cost. Non-fungible Tokens can be simply regarded as ‘small pictures’, while memecoins are usually associated with internet meme culture, being simple, easy to understand, and easy to spread. The purchase threshold is also low, and Non-fungible Tokens can sometimes be minted for free, only requiring payment of gas fees; while memecoins often have prices with decimal places in the tenths, making it easy for even small-scale investors to participate.

MEME is more like the Non-fungible Token Pro max version, with higher Liquidity, a more fear of missing out atmosphere, and a more meme-worthy community culture.

CoinGecko’s research data in August this year showed that about 54% of the participants believe that Non-fungible Tokens cannot recover in this cycle, with 29.5% of the participants firmly believing that Non-fungible Tokens cannot recover in this cycle, and 24.7% still bearish on the Non-fungible Token market.

Mechanism Capital partner Andrew Kang has said that if the market pumps significantly in the future and comes with overheating, the NFT market may make a comeback as a way for people to show off their identities. Although the rise of memecoins has indeed absorbed some of the speculative heat of the NFT market, those who currently hold NFTs are not eager to sell, and the market supply is scarce. Just a small wave of enthusiasm could drive the entire momentum. Azuki is about to launch AnimeCoin, and other top projects may follow suit, all of which could become catalysts for the NFT market to warm up.

According to Cryptoslam data, the top Non-fungible Token volume and number of traders have both experienced a significant Rebound in the past 30 days, which may be a signal that the recovery of Non-fungible Tokens is quietly happening.

Non-fungible Tokens and memecoins each satisfy different types of needs in the market: Non-fungible Tokens represent symbols of 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 large influx of funds with their easy-to-understand, low-threshold, and high Liquidity characteristics, becoming a hot focus. However, as speculative fervor gradually fades and investors begin to re-follow long-term holding value, Non-fungible Tokens, with their artistry, scarcity, and community Consensus, re-enter the market’s vision and become the object 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, allowing the Non-fungible Token market to take advantage of this gap period to re-accumulate user interest through innovative projects or the introduction of new features. Therefore, Non-fungible Tokens and memecoins do not completely cancel each other out, but attract market attention alternately, meeting the needs of investors in different cycles, and achieving alternating brilliance. Understanding this logic can help investors adjust their strategies better in market fluctuations and seize the opportunities brought by each rotation.

Ending: New Opportunities in Rotation

From the strong rebound of GameFi to the potential recovery of Non-fungible Tokens, we can see the characteristics of the crypto market are continuously reshaping: funds, hotspots, and narrative logic. All these elements are constantly flowing and changing, forming the cyclical rise and fall of different zones. After experiencing undervaluation and silence, GameFi once again becomes the market focus with the gradual improvement of its technical ecosystem and unique narrative. Non-fungible Tokens and memecoins also find their market opportunities in rotation, meeting the needs of different investors for short-term speculation and long-term collection.

The encryption market is not a single path of growth, but a multidimensional rotation game, where each zone may become the next hotspot in a specific market cycle. Future investors should learn to find patterns from these changes, timely discover new opportunities in each rotating node, and capture the dividends of rise in the midst of change. In the evolving fields of GameFi, Non-fungible Tokens, and memecoins, those who understand the logic behind the rotation have the opportunity to lead the next market explosion.