96% Decline In Ethereum’s GameFi Activity: A Minor Blip or Gameover?

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Over the past one year, the crypto landscape has been particularly interesting — moreso for GameFi. While the crypto markets continue to middle in a hard-biting bear market, several other subsets of the markets have taken hits. NFT floor prices have plunged, the crypto markets are wreaking havoc on many DeFi protocols, and GameFi has taken a beating too, with GameFi activity decreased by over 96% on Ethereum. This decline in GameFi activity creates a backdrop for this article to discuss the ever-raging question among critics and believers alike: is the decline in GameFi activity a minor blip in what is a long ride? Or does the 96% drop in DeFi activity carry longevity concerns for the industry? 

Establishing The Facts 

According to a weekly report published by Arcane Research last week, Q1 and Q2 of 2022 have served as a reality check, after what was a very prosperous last quarter for GameFi last year. Data from the report showed that active players of the most played Ethereum-based games on platforms such as Decentraland, The Sandbox, Axie Infinity, and many more, have declined by 96% from the peaks achieved in November 2021.  

The current situation of GameFi is perfectly accentuated by looking at where a pioneer GameFi project, Axie Infinity, is at today. The project pioneered the Play to Earn model in GameFi, leading to a sub-sector wide boom in blockchain gaming. Users were enthusiastic about playing to have fun, to win, and — most importantly — to earn. Axie Infinity is by no means a failure, but its in-game token, Smooth Love Potion, trades at $0.0039 per token according to CoinMarketCap, from an all-time high of $0.346 — an over 98.87% drop. 

Smooth Love Potion’s value declined massively over the past few months. (Credit: SLP/USD, TradingView)

Important Takeaways…

The research published by Arcane came to a number of important conclusions. First, the slow momentum in NFTs and web3 has contributed to this decline in numbers. However, a key factor in the decline has also been the drastic reduction in rewards for players. This raises a point on the sustainability of GameFi project: do the numbers go when the money goes? Thus far, the answer is looking positive for the long-term survival of GameFi. 

Another conclusion from the Arcane study is that there are three pillars that the market needs to pay attention to. They are: incentives, token inflation, and barrier (or cost) of entry. For GameFi, increased adoption would mean that projects have to address the issues that have come up thus far.  

Arcane’s findings presented. (Credit: Bitcoinist.com)

Away From Ethereum’s GameFi Activity

Zooming out of Ethereum, there is enough evidence across GameFi to suggest that the outlook remains positive. According to a report by Footprint Analytics, a data analytics platform and De Game, a web3 game platform, there are three key points that show that GameFi is only experiencing a blip in fortune within a wider market crash. Let’s take a look at them. 

#1. GameFi Token Liquidity Remains High 

According to the report, in Q1 2022, between 20 and 30% of tokens listed on CEXs were GameFi tokens. The report also showed that the trading volume on these tokens were extremely high. In fact, trading on GameFi tokens occupied a major part of the total market share. 

Within these numbers, STEPN was the project that saw the highest daily trading volume. The report, captured in the image above, shows that its governance token, GMT, posted an average trading volume of over $110 million per day. Games from Decentraland, The Sandbox, and Gala Games closely followed.

It is important to note that although the market conditions in Q1 2022 have worsened considerably in Q2, these numbers suggest that the future for GameFi is bright. 

#2. GameFi Users Across Board Stay Playing 

Although the activity on Ethereum has declined significantly, the number of users, according to the report, remained stabled from Q4 2021 at around 1.2 million users. This could be a telling sign that Ethereum dominance may be coming to an end. What it also does tell us for certain is that the gamers are going nowhere. The market capitalization of GameFi tokens decreased by 15% from Q4 2021, but this could be as a result of the harsh market conditions. By the end of Q2, this decline is expected to be more significant, but the number of gamers still around is a good omen. 

Funding Trends in GameFi (Credit: DeGame & Footprint Analytics)

#3. There Is Room Across Board For More Projects 

With the exception of Binance Smart Chain and Ethereum, both of which saw fairly even distribution of projects, most blockchains continue to be dominated by single successful projects. On WAX, 100% of users play Alien Worlds; for Ronin, the story is similar with Axie. On Hive, Spinterlands take up 99.9% of users while Upland accounted for 94.1% of the gamers on EOS. 

Without doubt, the GameFi market is far from saturated, and if builders can build projects that offer real utility, there is room for many more projects to thrive. 

What We Can See From This Market And Audience 

There are limitless opportunities in the gaming industry for projects to optimize at scale. However, negative behaviors such as shilling and rugpulls are turning gamers away from NFTs. Amidst the harsh market conditions, research by NRG eSports shows that a lot of gamers believe in play to earn and the potential it poses to take gaming to the next level. 

Regardless of how gaming developers may feel about Play to Earn, it is evident that the market is ever-present. If there is a market demand, there will be enough developers to supply Play to Earn games. However, with the markets experiencing a meltdown, there is very little appetite across board for gaming as gamers and builders alike are sheltering against crypto winter. 


There is every reason to believe that some “to-earn” models will not survive — especially in the short term. However, there are several indicators that suggest that GameFi and play to earn is just getting started. Today, the in-game rewards offered by many games has fueled participation across the board. Usage has been linked to the (extent of) financial rewards that are possible and, as we have seen, harsh market conditions are bound to affect individual and market-wide appetites towards blockchain-based gaming. In the future, however, much of what we will see with GameFi and play to earn remains undiscovered today. We will likely find more use cases, real utility, and GameFi will be ready to launch a new world of possibilities. 


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  1. Great article. I enjoyed reading and I hope that we can eliminate Ethereum’s dominance (not a fan of high gas fees!)

  2. Fantastic article! I like the research-based analysis and presentation of ideas. Hopefully we see more from GameFi beyond “earning” as the most important USP.

  3. Great article, Chidera. I also am a champion of uniformity (not an Ethereum supremacist!). I think the money has vanished so have the players. Something founders must fix!

  4. Fantastic article! I like the research-based analysis and presentation of ideas. Hopefully, we see more from GameFi beyond “earning” as a major USP.

  5. I do not believe that GameFi is going anywhere as long as the crypto and DeFi industries remain. I do believe, however, that GameFi founders must fine tune their value propositions to survive harsh market conditions and periods where users cannot really earn.


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Chidera Anushiem
Chidera Anushiem
Chidera is an experienced crypto writer who believes in the power of the blockchain to revolutionize our world. Reach him at [email protected]