93% of GameFi Projects Have Failed, Claims ChainPlay Analysis

According to a new report from ChainPlay, 93% of Web3 GameFi projects are dead. The firm analyzed 3,279 projects and determined that the average application’s value is down 95% from its all-time high.

None of the various subdivisions of the industry have meaningfully broken with this overwhelming downward pressure, but some VC firms have managed to make profitable investments.

GameFi in Freefall

ChainPlay released this grim analysis of the GameFi industry on its blog this week. Essentially, the peak of GameFi funding and enthusiasm was in 2022, but most businesses proved completely unsustainable. Even well-publicized airdrops this year have not arrested this stark decline.

These statistics are so damning that the report doesn’t claim any area shows healthier returns.

For example, some industry commentators have proposed that Tap-to-Earn games are the future of GameFi investment. Cloud gaming is also growing, and Aethir recently created a $100 million fund for its development. Neither of these, however, buck the downward trend.

Nonetheless, ChainPlay was very clear that profitable returns do exist. Retail investors saw an average profit of 15%, and the report stated that “the aspiration of achieving financial success with GameFi has transformed into a terrifying reality” for these small-time users. Institutional investors, however, saw much higher returns.

“For venture capitalists (VCs), the returns are much more polarized. Average VC profits are at 66%, suggesting that strategic bets can pay off despite broader market difficulties. The top performers are also top-tier backers of the crypto market. This suggests that careful VC investments can still yield profits,” ChainPlay claimed.

The highest-performing VC firm, however, was the controversial FTX spinoff Alameda Research, which saw a 713.15% ROI on its investments. Considering the massive fraud that Alameda was involved in, its GameFi strategies are hardly a replicable model.

All told, GameFi investments in 2024 have decreased by over 84% from their peak in 2022. VC firms are still placing strategic bets on certain projects, and these can generate useful returns. For the individual user, however, “the volatility that once promised immense upside potential has now proven to be a double-edged sword,” and profit outcomes are grim.