How did the FTX collapse impact the Web3 gaming industry?

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The FTX col­lapse impact­ed the whole cryp­to ecosys­tem, but this might have been deeply felt in Web3 gam­ing because of the ties between Solana and FTX.

Some believe the col­lapse will bring more atten­tion to decen­tral­ized projects, while oth­ers think Game­Fi relies on cen­tral­iza­tion to attract Web2 gamers.

On Nov. 24, Tegro Earn host­ed a Twit­ter Space fea­tur­ing Foot­print Ana­lyt­ics, Tegro Earn, KCC Games Guild, and Earn Alliance to talk about the impact of the FTX col­lapse on Web3 Gaming.

Here are the key takeaways.

What does this mean for the big picture?

  • More investors and mar­ket par­tic­i­pants are los­ing trust in cen­tral­ized enti­ties with­in cryp­to. The fall of a seem­ing­ly sta­ble and pro­lif­ic exchange, with strong ties to the Game­Fi ecosys­tem and key blockchains and mar­ket­places, had made peo­ple rethink how they store and stake their tokens.
  • In the com­ing months, Web3 projects will lose fund­ing oppor­tu­ni­ties, but this will change even­tu­al­ly because there are still fund­ing hous­es with cap­i­tal avail­able to be deployed.

Sid­dharth Menon, the founder of Tegro, said:

“There’s a set­back; there’s an entire trust issue. It comes back to why in the first place, Bit­coin was born. We don’t trust cen­tral­ized enti­ties. It’s not like peo­ple have lost faith in cryp­to in general.”

Earn Alliance noted:

“A lot of projects will lose the chance of fund­ing, espe­cial­ly small games that got the fund­ing through Web3. On one side, we’re going to see a lot of scams dis­ap­pear­ing, but we’re los­ing a lot of great potential.”

Will this cause a rise in decentralized projects?

  • Bit­coin, and the cryp­to indus­try in gen­er­al, began as a way to decen­tral­ize the finan­cial sys­tem and lat­er extend­ed to gam­ing and oth­er indus­tries. How­ev­er, many cen­tral­ized com­pa­nies thrive in the ecosys­tem for the ease of use they provide.
  • While cen­tral­ized enti­ties are bet­ter at attract­ing and main­tain­ing main­stream users to cryp­to, they are inher­ent­ly riski­er than decen­tral­ized options.

Alex Coop­er, Com­mu­ni­ty Man­ag­er at Foot­print Ana­lyt­ics, noted:

“Since every­body is tak­ing their mon­ey off of cen­tral­ized exchanges and now cen­tral­ized exchanges can’t be trust­ed, are peo­ple going to start stor­ing and stak­ing their tokens on DeFi projects? Are we going to see anoth­er wave of DeFi pro­to­cols, espe­cial­ly for gaming?”

Juan Jose Mar­tinez, Com­mu­ni­ty Man­ag­er at Earn Alliance, said:

“Most games are try­ing to get play­ers from Web2, and the eas­i­est way to do that is just giv­ing them easy access, and the way to do that is cen­tral­iz­ing. In one side, games will become cen­tral­ized, and on anoth­er we’re going to see a rise of decen­tral­ized games, but for peo­ple who are already in the ecosystem.”

How did this affect the existing GameFi protocols?

  • Despite the bear mar­ket, Game­Fi pro­to­cols have been rel­a­tive­ly sta­ble for the last few months. How­ev­er, the col­lapse of FTX and its effect on Solana and the wider cryp­to mar­ket will most like­ly cause a down­siz­ing of play­ers and investors.
  • The price of NFTs and tokens also dropped, reduc­ing the expect­ed income for players.

Alex Coop­er of Foot­print Ana­lyt­ics noted:

“Based on our Octo­ber Game­Fi report, not much changed since Sep­tem­ber going to Octo­ber. The amount of fund­ing is about the same, and the num­ber of dai­ly users are the same. But I think the FTX issue is going to dras­ti­cal­ly change our stats for the Novem­ber report, espe­cial­ly for funding.”

Kyle from KCC Games Guild said:

“There are 20 to 25 projects that actu­al­ly got fund­ed either by Alame­da Research or by FTX Ven­tures. With this kind of back­up, you real­ly have the chance to get list­ed on FTX. With the col­lapse of FTX they lose this advan­tage as well, so they have to seek fund­ing from elsewhere.”

This piece is con­tributed by Foot­print Ana­lyt­ics com­mu­ni­ty in Nov. 2022 by [email pro­tect­ed]

Foot­print Ana­lyt­ics is build­ing blockchain’s most com­pre­hen­sive data analy­sis infra­struc­ture with tools to help devel­op­ers, ana­lysts, and investors get unri­valed Game­Fi, DeFi, and NFT insights.

The engine index­es, cleans and abstracts data from 20+ chains and counting—letting users build charts and dash­boards with­out code using a drag-and-drop inter­face as well as with SQL or Python.

Foot­print Ana­lyt­ics also pro­vides a uni­fied data API for NFTs, Game­Fi, and DeFi across all major chain ecosystems.

Post­ed In: FTX, DeFi, Gam­ing, Web3

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