The figure of $542 million invested into US-based DeFi platforms in 2020 pales in comparison with the $2.9 billion in games, NFT, and virtual world blockchain projects that were funded in 2021. The appetite for crypto and blockchain adoption that VCs have, combined with a growing sense of FOMO, could be driving this massive adoption wave.
The summer of DeFi was indeed glorious. We celebrated as an industry that had faced so much negative press finally came to the fore, making headlines in the national press and even getting established financiers like Raoul Pal to switch sides. DeFi got the dapp adoption ball rolling, setting the stage for the current batch of records.
“DeFi dapps like PancakeSwap attracted millions of dollars and users into DeFi dapps. Compound changed things entirely with its COMP governance token. But that was more than twelve months ago. This year, NFTs gave the Ethereum blockchain the energy boost it needed to reach a new ATH. They also brought on some healthy competition. NFTs — and with them, games and virtual worlds — made everything more tangible and accessible. No longer are we in the abstract and financial jargon-ridden world of trading. The dapp space is evolving into a complete ecosystem that anyone can now enter, †says CEO of DappRadar, Skirmantas Januskas.Â
DeFi dapps appeared to be lacking that killer-something to spark an all-encompassing revolution. Gamification of those same finance mechanics, however, has changed the game. It even has politicians in Vietnam using Axie Infinity to sway voters. The play-to-earn movement has captured the imagination. Games and virtual world experiences, mixed with internal token economics, give players a chance to earn and even make a living.
For example, $2.89 billion worth of AXS — or around 30% of the AXS total circulating supply — is staked into the Axie Infinity AXS staking contract, which rewards every single one of those stakers with more AXS. “We spent years trying to pull people into blockchain dapps, and it was games and NFTs that did it, and they did it in only a few months. Investors old and — more importantly — new are now buying land, art, avatars, wearables, things with utility and a passive income possibility, rather than buying into ICOs or tokens backing projects they don’t necessarily fully understand,†Skirmantas concludes.
VCs lured by blockchain games invested at least $127 million in October, while Epic Games have reportedly thrown over $1 billion at the blockchain games market. With the floor market cap for virtual worlds also hitting that $1 billion psychological barrier, and virtual world NFTs capturing 8% of the total estimated NFT market cap (that’s 166% up since September, by the way), the dominance of this recently emerging category is growing by the day. As the biggest names in the space, including Mythical Games, Cometh, and Illuvium, to name a few, are poised to release their current developments, while others like Axie Infinity are yet to integrate virtual worlds into their game mechanics, it appears that the gaming-led bull run is only just getting started.
