Blockchain games continued to grab headlines while decentralized finance (Challenge) space struggled in 2022. Even the start of 2023 is the same. But the question arises: can the hype and traction continue?

Blockchain games are an innovation in the genre of video games. These differ from traditional video games by allowing players to convert points into real money.

The ecosystem also rewards players for time spent playing the game. Increasingly popular in developing countries, these games are part of larger conversations about what the metaverse is, what the market looks like of crypto and what it does for people, especially the economically vulnerable.

The blockchain business model video game spectrum indeed stands out. This is one of the reasons why he has consistently performed well over the years. Especially when talking about blockchain industry activity and the massive adoption rate of block chain game. Both can be expanded by looking at UAWs or single active wallets.

Challenge Space lost in 2022

The past year has seen many twists and turns for the cryptocurrency and blockchain industry. The collapse of established businesses valued at millions of dollars has created a ripple effect throughout the space. Despite the losses, the decentralized application space has seen some bright spots, thanks to the blockchain gaming industry.

DappRadar year-end report for 2022 paints an exciting picture.

As seen above, the decentralized financial space has been considerably impacted by the fall of institutions, like that of Terra stablecoin depeg and the FTX debacle. The drop in TVL, or total value locked, was $40 billion at the time of writing. By comparison, TVL at the start of 2022 was around $150 billion, according to data from DefiLlama.

This is evident in the graph below.

A DappRadar executive Told BeInCrypto in early 2022 that 80% of DeFi applications could disappear if the bear market continues for a year. A significant number of attendees saw the exit door.

The Rise of Blockchain Games

While this was the case for DeFi, the blockchain gaming space hasn’t veered much off course, averaging 1.15 million UAW daily.

“While [decentralized finance] and overall blockchain activity has been on the decline, Unique Active Wallets (UAW) play continues to rise, reaching nearly one million daily wallets,” said Pedro Herrera, Head of Research at DappRadar, to BeInCrypto in an email.

This is indeed the case even at the start of 2022, as GameFi rest the dominant blockchain industry niche, accounting for over 50% of activity in the space. Polygon, Harmony’s DeFi Kingdom, Axie Infinity, and Splinterlands were among the best performing protocols in the industry.

Even at the time of writing, the difference remains significant between the gaming sector and DeFi. Delphi Digital, a cryptography research company, compiled the latest statistic to highlight the above narrative.

“The game has more than twice as many active wallets as Defi,” said the executive.

Meanwhile, when it comes to top games that made it to the top blockchain games list, Splinterlands was number one, clocking in at around 300,000 in UAW over a week. Other big names from the same period were:

And UAWs connected to games surpassed those connected to DeFi in 2021, accounting for 49% of blockchain industry usage.

This unprecedented rise made headlines. But the question remains, can the hype continue in 2023?

Issues of concern

Opponents of blockchain games, mainly veterans of the traditional game industry, believe that these games can definitely damage gaming industry. While proponents of blockchain games propose that NFTs allow players to own items beyond individual games, even if games cease to exist, these assets can be moved and used in other other games.

Traditional game designers argue that while this concept sounds promising in theory, in practice it’s not a plausible use case since every game has its environment, storyline, and ecosystem. Thus making these assets of other games meaningless in foreign territories. Even if blockchain game developers could create a collaborative ecosystem, a foreign object carries the risk of bugs that could corrupt the host ecosystem.

Another area for improvement is profit accountability. Game companies create games for profit. With the movement of assets from inside games to an outside public ledger, it becomes difficult for companies to keep track of their finances.

A player can earn thousands of dollars worth of assets in Game A, move to Game B, and begin selling those assets to players in Game B, possibly at lower prices than game owners. This undermined Game B’s developers, leading to a price war the gaming industry would never accept.

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