93% of GameFi projects fail as valuations drop 95%

A recent ChainPlay report has revealed that 93% of Web3 GameFi projects have failed, with average valuations dropping by 95% from their all-time highs since 2022.

The study analysed 3,279 GameFi projects, and the results show a grim picture for the industry.

Despite the initial boom in GameFi funding and excitement in 2022, many projects have proven unsustainable.

Even high-profile airdrops in 2024 have not been able to reverse the downward trend in the market.

While most sectors within GameFi have experienced significant losses, some venture capital (VC) firms have managed to generate profits.

According to the report, retail investors have averaged a modest 15% profit, but the overall market conditions have led to “a terrifying reality” for small-time users.

Institutional investors, particularly VC firms, have seen more polarised results, with an average profit of 66%.

ChainPlay noted that strategic investments can still yield profitable returns, especially when firms back projects with solid foundations.

However, the highest-performing VC firm, Alameda Research, saw a remarkable 713.15% return on investment, though its past involvement in a major fraud scandal raises questions about the sustainability of such strategies.

The GameFi sector's decline has been marked by an 84% drop in investment since 2022.

While VC firms continue to place strategic bets, they are seeing returns that do not reflect the broader market trends.

For individual users, the once-promising volatility has become a double-edged sword, with profit outcomes now looking grim.