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Wednesday, June 5, 2024
HomeCryptoWhat prompted $1 billion in investment capital to flow into blockchain gaming?

What prompted $1 billion in investment capital to flow into blockchain gaming?

The first quarter of 2024 has energized investor sentiment in the cryptocurrency market. Following the conclusion of a landmark lawsuit against the United States Securities and Exchange Commission (SEC), US investors are finally receiving access to spot Bitcoin ETFs. This opened the doors of Web3 to large institutional investors: weekly net inflows into US-based ETFs have repeatedly outperformed initial forecasts, triggering bull runs taking Bitcoin to an all-time high.

Despite the broader market’s upbeat sentiment, investments in Web3 gaming remained cautious, with $288 million injected in the first quarter. However, April brought the industry a windfall, attracting a staggering $988 million – the highest monthly investment since January 2021.

Gia increased investment

The root causes of this year’s investment spike appear to be similar to those in early 2021. More than three years ago, the GameFi industry predicted explosive growth, thanks to the emergence of emerging technologies new like NFTs. From 2020 to 2021, the total market capitalization of NFTs skyrocketed 29 times, while the total value locked in protocols DeFi reached the highest level in history.

Likewise, committed investment increased sharply in April 2024 as Ethereum recently implemented its new technology of Account Abstraction and increased layer 3 blockchain solutions in general. Companies are also making unusual moves: a16z is raising a $600 million game fund, Bitcraft Ventures is pursuing a third $275 million GameFi fund, and Ubisoft Studios is increasingly interested in partnerships, partnerships, and collaborations. blockchain business. With all these signs, Web3 gaming is preparing for a strong start.

Unusually strong underlying user engagement metrics underpin this. The average number of unique active wallets for gaming dApps almost reached 3 million per day – a record-setting number. According to DappRadar data, every third person who logged into a dApp in April did so primarily for gaming purposes, showing strong interest in fair, play-to-play gaming business models. earn and play-to-airdrop. Meanwhile, the number of active blockchain players increases by 83% by 2024, reaching 90.3 million users.

Explain about causes growth: Account abstraction and layer 3

Why do market participants and venture capitalists equate the importance of Account Abstraction and layer 3 with the disruptive impact of NFTs and DeFi? In 2021, blockchain gaming has tried to find a unique way to differentiate itself from its predecessors in Web2. Finding this value proposition embodied in NFTs provides users with true data sovereignty and ownership claims over digital assets as well as DeFi to monetize a multitude of GameFi tokens origin.

In 2024, it is not the novelty of technology or the lack of sustainable monetary rewards that hinders the future development of Web3 games. Users are familiar with GameFi play-to-earn and the Web3 world. Ironically, the taste for new technology becomes contradictory – uncomfortable because of its recognizability. It’s not the technology or economic layer in the application that VCs are betting on. Instead, they see Account Abstraction and layer 3 solutions as the technology catalyst for superior GameFi UX.

In theory, Account Abstraction replaces non-custodial wallets with programmable smart contracts. In practice, this gives dApp developers an unprecedented level of flexibility. For example, by removing the dependency on seed phrases and applying arbitrary verification, AA allows players to create trusted decentralized accounts using familiar options like email or Google accounts .

Second, Account Abstraction maintains the integrity of the in-game experience without compromising security, eliminating the need to approve every in-game purchase individually and from external wallets. Finally, Account Abstraction introduces sponsored transactions, removing the most notorious barrier in the dApp user experience, gas fees.

Even when network activity is low and gas fees are negligible, the cognitive bias of unpredictable and unexpected additional costs will discourage users from engaging with the dApp more. Linking fiat cards to pay gas fees seamlessly or even using developer funds to directly pay related commissions is an important step towards user experience and retention better users.

Similarly, Ethereum’s vertical scaling in layer 3 solutions (also known as application-specific blockchains) allows for reduced transaction execution times and radically reduced gas fees to achieve functionality. Doesn’t consume gas. Combined with Account Abstraction, layer 3 solutions open the door to completely novel experiences in GameFi— truly free-to-play, seamless, and indistinguishable from the gameplay flow Web2 games specialize in UX.

The future of GameFi

With new technologies available and significant financial backing breathing new life into the field, it’s only a matter of time before fundamentals become the next big wave of GameFi products .

Blockchain games will become the leading trend in a new development model that puts user experience first if this becomes true. Technical advancements such as layer 3 solutions and Account Abstraction are making their way into the initial technology stack for most GameFi products, and Web3 is moving towards a new phase of widespread adoption. The Blockchain of the future will present itself as an alternative to Web2 and a much better option.

Minh Anh

According to Cryptoslate

Mark Tyson
Mark Tyson
Freelance News Writer. Always interested in the way in which technology can change people's lives, and that is why I also advise individuals and companies when it comes to adopting all the advances in Apple devices and services.
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