GameFi fever and potential risks

After the success of Axie Infinity, blockchain-based game projects were continuously launched. However, users need to be wary of the risks of the new investment sector.​

GameFi is a term for games built on the Blockchain platform, NFT item trading. After the success of Axie Infinity, hundreds of GameFi projects appeared, attracting the attention of investors. However, these games are mostly in the initial form, the gameplay is monotonous, the graphics are simple. Many developers who haven’t released the game have released the accompanying digital currency.

Besides, some projects are created to follow the trend, there is no clear development roadmap. These games have a lot of potential for scams.

Explosion of GameFi projects

Making money from video games is not new. The purchases and sales of items in CS: GO, Dota2 through the Steam Market have been going on for many years.

However, on the old platform, crooks can still take advantage of security holes to cheat and appropriate in-game items of users. Blockchain technology and NFT give developers tools to increase transparency and game security.

After the success of Axie Infinity, many other blockchain-based games are continuously announced. CoinMarketCap’s NFT portfolio has the majority of tokens coming from GameFi projects. According to this list, there are currently more than 300 tokens of blockchain games listed on the cryptocurrency exchange.

Decentraland, Axie Infinity, Gala, The Sandbox, Enjin are large projects, with market capitalization exceeding 3 billion USD. Thetan Arena, a new game by the team from Vietnam, was just launched in September, but has reached a market capitalization of more than 500 million USD.

Blockchain games are currently developed across various genres such as card games, turn-based, strategy, sports, shooting. Sharing with Zing, experts all have the same opinion that current NFT games are only attractive to players in terms of making money. Compared to AAA games, the current GameFi market is “absence” of games with outstanding and unique graphics. At the same time, the basic aspects of the game such as the plot and gameplay are still quite simple.

The risks of participating in the GameFi market

When participating in a money-making game, participating investors have two main methods: buying tokens for speculation, waiting for the price to increase for profit, or playing games to receive digital money.

Dr. Ho Quoc Tuan, Senior Lecturer in Finance and Accounting at the University of Bristol (UK), said that the biggest risk is that the project development team may suddenly disappear with investors’ money. This has happened many times in the past. Even if a developer sticks with his project, high volatility of the token price, NFT assets can still cause investors to lose money.

Playing games for money requires a large amount of capital. Photo: Coinbase.​

Currently, with popular and strongly growing games, players often have to spend large amounts of money, possibly up to thousands of dollars, to buy new characters to participate. Specifically, the price to buy 3 axies to join the game Axie Infinity is about $ 1,500-2,000, and the price to buy Metamon, a character in the Radio Caca platform game, is about $ 4,000.

However, changes in the mechanism, the relationship between tokens in the game can cause the value of tokens to plummet. In the game Axie Infinity, the Smooth Love Potion (SLP) token used to pay rewards has an endless supply. Inflation caused the price of this token to drop from $0.4 in May to about $0.06 at the moment, causing a sharp drop in the income of many players from the game.

In addition, players may also run the risk of being tricked into delivering the item to a scammer’s address, or being lured into sending a certain amount of money to activate the item. Unlike the traditional game field with a management company, in NFT games it is difficult for players to get back lost items.

Some GameFi developers have also been criticized for their lack of transparency, which has angered investors. On September 16, Thetan Arena development team announced the listing on the exchange at 10pm. However, the THG token was listed 15 minutes earlier, causing investors to buy this digital currency at a high price.

Be alert when investing in GameFi

Dividing capital into multiple projects is a simple way to reduce risk. However, the current cryptocurrency market is flooded with GameFi projects, and it is difficult for investors to deposit money into all the games available on the market. Therefore, before participating, players need to learn carefully about the project, idea, team, community.

Investors need to learn carefully before participating in the GameFi market. Photo: BSC.​

Investing in cryptocurrencies or playing NFT games is a game that takes a lot of time, not easy money. When the market goes up, everyone brags about their profits, but when the market plummets, many people will return all their money to the market. Many people who just want to make quick money without spending enough time doing research will suffer.

When entering the field, players can protect themselves by distinguishing between gaming and investing.

If determined to play games, users should not spend large amounts of money, but should only balance capital, similar to other games. If identified as an investment, users need to carefully research, read and refer to documents from reputable sources, only spending the money they can lose according to the principles of venture investment. Especially not borrowing.

Those who are new to NFT gaming should look to projects that have already released games, or at least demos, to try them out firsthand. In addition, to assess the potential and risks of the project, Mr. Dinh suggested investors consider 4 factors, these are also aspects that financial institutions look for when considering pouring capital into a project. NFT game project.

The most important factor is people. The more experienced the project’s founders and consulting team are in the blockchain field and successful projects in the past, the more appreciated they are.

The second factor is security. Investors will have to consider whether there has been a problem with the past operating model, whether there is any independent appraisal company. Next, investors should learn the project’s marketing model, because the blockchain industry’s approach is quite different from traditional business.

Finally, new investors should consider the profitability factor, such as how promising the project is, how profitable previous models were.