Three key words in the first half of 2024: GameFi, BTC L2 and DePin

Source: TechFlame

In the first half of 2024, the cryptocurrency market will show a diversified development trend, among which  ; The three major sectors of Gamefi, Bitcoin Layer 2 (Layer 2) and Decentralized Physical Infrastructure (DePIN) performed particularly well. Gamefi As the most mature sector, although it is susceptible to market fluctuations, the continued prosperity of its ecosystem provides strong support for the application and implementation of cryptocurrency in daily life. Although the Bitcoin second-layer network is a rising star, its development The momentum is strong. Layer 2 solutions represented by the Lightning Network have been continuously deepened and improved, significantly improving transaction efficiency and network throughput, and effectively solving the expansion problem of the Bitcoin main network. The DePIN section shows a high degree of integration with the real world. By introducing the concept of decentralization into traditional physical infrastructure, DePIN is expected to promote the digital transformation of traditional industries and open up a new direction for the future development of decentralized technology.

1. GameFi sector

1) GameFi Market Overview

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For the past five years, GameFi has been recognized as the best place to connect Web2 users with Web3. During this period, many phenomenal products have appeared in GameFi, such as Axie Infinity, as well as AAA masterpieces created by Web3 launched by some major manufacturers, such as ILV. These projects have received huge amounts of financing. However, the reality is that in the past five years, a total of 2817 Web3 games have emerged, and the lowest failure rate has reached 45.9% (according to network data). It can be said that at the end of the bull market, most games have ceased operations or lost their activity. This shows that success in the  GameFi space is not easy and there are many challenges to overcome.       

Network Statistics

As of the first half of 2024, in terms of the number of games alone, the GameFi field has reached a peak, with a total of more than 3285 games. game. In fact, the number of online games in the first half of 2024 will even exceed the number of games in the past five years combined. Therefore, from an overall perspective, in the first half of 2024, the GameFi field is in a stage of vigorous development. The peak market capitalization reached US$41.25 billion on March 12, 2024. However, due to the impact of the overall market conditions, the market value has continued to decline and is currently US$18.69 billion (as of June 30, 2024).

Emerging trends and innovative projects in the Gamefi market

In this bull market, various It has experienced major innovations in all aspects. The original  X-to-Earn economic model has fallen into an endless spiral, and the ratio of gold mining and krypton gold cannot be balanced. Roles participating in GameFi include players, teams and project parties. If only individuals or teams engage in gold farming without the participation of krypton gold players, this is likely to cause huge selling pressure in the later stages of the project, making it difficult to continue the project, or even in a soft rug state.

Starting from 2024 , with the rise of projects such as PEPE , it can be seen that insiders are more inclined to projects based on community consensus. No longer believe in the myth of venture capital. More traffic tends to be directed to some fully-circulated projects, which are more conducive to retail investor participation. GameFi was also inspired and began to adopt the free-to-play-to-earn model. Everyone can participate for free, without additional costs or high starting equipment costs. All you need is a mobile phone to participate in the game and gain usage value by playing the game, and have the opportunity to make money. This model is more in line with the interests of most people. For example, Not in the Ton ecosystem is a popular product that adopts this model.

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Key factors to attract users

GameFi There are two key factors why GameFi can attract a large number of users to participate: playability and wealth effect. First of all, the playability of the game is an important factor in attracting users. Only interesting, challenging and easy-to-play games can retain players. Secondly, the wealth effect is the core charm of GameFi. Players can obtain real economic returns by participating in games and investing. This mechanism of wealth appreciation attracts more people to participate. The new TG track mini-game does meet the above two important conditions and has become a new trend in the development of GameFi.

2) Gamefi Data brief analysis in the first half of the year

Number of protocols and growth rate

In the first half of 2024, the number of protocols within GameFi has also increased slightly, from about 2800  The number increased to about 3200. As for the growth rate of  Dao , it is related to specific events and extreme market conditions. In most cases, it is at the middle and lower reaches, about  0.1% to 0.3% . This shows that overall, with a solid foundation in 2023, the number of protocols in the GameFi field and the growth rate of Dao are relatively stable, without significant explosive growth.

Market value and active users

According to Footprint  Data analysis shows that in the first half of 2024, GameFi's market value is consistent with the market value of Bitcoin, rising steadily. However, starting from April, the market value has declined, and the decline has been much greater than that of Bitcoin. This shows that there is a certain correlation between GameFi's market capitalization trends and Bitcoin's market capitalization, but GameFi's performance was weaker during the decline.

As for active users, the active user data of the game sector maintains a relatively healthy growth trend. In the first half of the year, the overall growth rate was relatively fast. However, affected by market fluctuations, active user data basically remained at that level after the peak at the beginning of April, without excessive growth, and even fell for a time.

Transaction volume and transfer quantity

As for Txns (Transaction volume), it is one of the important indicators of on-chain activity. Compared with the continuously increasing number of active users, the number of transfers experienced a slight peak between February and March, and then continued to decline.

This change in the number of transfers may reflect the influence of user behavior patterns and market trends in participating in GameFi. During the small peak period from February to March, it may be due to certain specific activities, the launch of new projects or the influence of market hot spots, which led to an increase in transfer activities between users. However, subsequent declines may be due to changes in market sentiment, weakness in specific projects, or adjustments in investor risk appetite in the GameFi space.

Let’s take a look at the latest daily data. The daily active users are about 2.64 million. The latest daily transfer pen The number is about 12.96 million, and the daily transaction volume is around 944 million, which shows that despite the cold market, the Gamefi market can still maintain a certain number of online users.

Finally, let us take a look at the distribution of game sectors on various chains. Since 2021, the top three chains are still Ethereum, BNB and Polychain. However, starting in 2024, game projects will gradually begin to get involved in more different chains, resulting in a continued increase in the number of games on these different chains.

This trend of multi-chain distribution may be due to the continuous development and innovation of blockchain technology and the degree of support for chain games, which has enabled more chains to have The ability to support game development and operation, different chains have different communities and ecosystems, among which the more popular public chains in 2024 may be more inclined to IMX and RONIN.

2. BTC Layer 2 

1) Bitcoin 2 Layer Market Overview

After the major breakthrough of Inscription Track Ordi last year, the Bitcoin ecosystem began to become one of the hottest areas in 2024  . Following the inscriptions, runes also appeared one after another, and each segment was highly sought after. Compared with the rising MEME trend, the second layer of Bitcoin solutions (BTC L2) focuses more on solving problems in the construction of Bitcoin ecological infrastructure.

Although Inscription has been in development for a year, network congestion problems have seriously hindered the further development of the Bitcoin ecosystem. During this critical period, whether it is Ethereum’s second-layer solution or Bitcoin’s own second-layer solution, the goal is to bring their respective ecosystems to a higher level and achieve wider application and adoption.

New progress and technological development of solutions

Bitcoin’s second-layer solution is mainly Including the following types:

• Centralized two-layer solutions: This type of solution is implemented through Bit Build a centralized exchange or payment network on top of the Bitcoin main network to transfer some transactions from the Bitcoin main network to this layer for processing, thereby reducing the burden on the main network. These transactions are completed within the second-layer network, and the final results are only submitted to the Bitcoin mainnet when necessary. Typical representatives include Lightning & RGB, which utilizes two-way payment channels and a multi-hop payment mechanism based on Hash Time Locking Contract (HTLC), taking scalability and privacy into consideration to a certain extent.

• Decentralized side chain: This type of solution is an independent blockchain built on the Bitcoin main network, introducing new Tokens and consensus mechanisms. These sidechains usually have their own node network and consensus algorithm, while interacting with the Bitcoin mainnet. For example, Stacks (formerly Blockstack) uses the Staked BTC (STX) token and the Proof of Transfer (PoX) consensus mechanism. Babylon and Interlay are also other decentralized sidechain projects. The advantage of this type of solution lies in its relatively high degree of decentralization and security, while providing more functions and scalability.

• United sidechain: This type of solution is based on cooperation and expands the functionality of Bitcoin by simplifying operations and improving efficiency. These side chains are usually managed by trusted consortia or institutions and have a certain trust relationship with the Bitcoin main network. Representative projects such as Liquid (launched by Blockstream), which provides faster transaction confirmation and higher transaction capacity for Bitcoin while increasing privacy. Rootstock and Botanix are also examples of such joint sidechain projects. But this solution may come at the expense of Bitcoin’s fundamental decentralization, as it relies on large players, triggering some centralization risks.

Future development

Due to the price of Bitcoin itself It is relatively high and has scarcity, making it difficult for the general public to participate easily. Existing Bitcoin investments are mainly concentrated in some countries, institutions or wealthy groups. If more people are to truly participate in the Bitcoin ecosystem, Bitcoin's second-layer solution may be more attractive. However, the existing second-layer solutions still have some problems, such as high transaction fees (gas fees) and network congestion, which to a certain extent limit the development of the second-layer ecology.

If these problems can be effectively solved, Bitcoin's second-layer solution should have broader development prospects in the future. For example, through further optimization and innovation, transaction fees can be reduced, network congestion can be alleviated, and the general public can easily participate. In this way, the accessibility and attractiveness of the second-layer network will be greatly improved, laying the foundation for the further expansion and development of the Bitcoin ecosystem.

Data analysis

Defillama Bitcoin second-layer  ;TVL Data

In contrast, there are relatively few data analyzes and reports on the Bitcoin second-layer network. According to data from Defillama, the current total locked value (TVL) of Bitcoin’s Layer 2 network is approximately US$1,063.04 million. Among them, Arbitrum, Bitlayer and Rootstock account for the largest proportions, accounting for 28.28%, 25.68% and 14.52% respectively.

It is worth noting that starting from April, the market shares of traditional large-scale pledge projects Rootstock and Merlin have declined significantly. In contrast, emerging projects Bitlayer and BounceBit have gained more market share and successfully cannibalized the market of some original projects.

3. Depin Plate

Depin Track Overview

Depin (full name Decentralized Physical Infrastructure Networks) is an emerging infrastructure construction and management model. It refers to building and maintaining infrastructure in a decentralized manner in the physical world. This "infrastructure" can be WiFi hotspots in wireless networks, or household solar cells in energy networks. This innovative approach is revolutionizing the way traditional centralized infrastructure and hardware networks are created and managed.

This decentralized infrastructure construction model has the potential to add US$10 trillion to global GDP in the next ten years, and is expected to reach US$100 trillion in ten years.

At present, the main subdivisions of the DePIN industry include cloud storage, computing power and wireless sensor networks. These fields are based on decentralized underlying architecture, using distributed hardware resources to provide more flexible, scalable and efficient infrastructure services.

In addition to GameFi and RWA (Real World Assets), DePIN can be considered a third The track closest to Web2 users. This field is expected to develop the economic cycle model to the extreme.

The reason for this is that the DePIN field can conduct comparative analysis directly from actual data and traditional industries to find greater advantages. For example, DePIN's decentralized storage solution is approximately 70%-80% cheaper than traditional cloud storage.

These obvious advantages make DePIN an important connection point between Web2 and Web3. No other field can better utilize distributed hardware network resources and expand them to compete with technology giants like DePIN. The investment of investment institutions in the field of DePIN is gradually realizing the connection between the cryptocurrency world and traditional industries. This track is expected to play an important role in the future and promote the transformation of traditional industries towards decentralization.

Depin Overview of sector ecology

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According to statistics from CoinGecko , the decentralized physical infrastructure network (DePIN) sector currently ranks 29th  position, the total market value remains at around US$20.14 billion. Overall, the market value of the DePIN sector has shown a steady increase.

In terms of the number of users of DePIN, it is positively correlated with the total number of devices. According to the latest data, the total equipment increase of DePIN in the past seven days has reached 1.7 million units, with the main increase coming from key application projects such as WIFI Map.

From a geographical distribution point of view, DePIN devices are mostly concentrated in Europe, North America, Southeast Asia and other regions. This reflects that these regions with developed economies and mature technology applications are widely adopting DePIN solutions.

It is worth noting that in the domestic market, due to the impact of policy supervision and other factors, the growth rate of the deployment and application of distributed resource equipment has slowed down significantly. This shows that differences in geopolitical and regulatory environments are becoming one of the important factors limiting the development of DePIN in certain regions.

Despite this, DePIN still shows a good growth trend.

Depin Income status of the head of the agreement

According to  According to industry data provided by Artemis, in the past year, the top three DePIN protocols (Helium, Geodnet and Akash Network) generated a total of US$3.5 million in fee income. This highlights the strong position and good business model of the leading project in the DePIN field.

It is worth noting that the profitability of the DePIN protocol also shows a certain degree of volatility. Data shows that the profit level in the first quarter of 2024 is about 30% higher than that in the second quarter. This change may be related to the impact of fluctuations in the cryptocurrency market, but overall, it shows the market’s broad recognition of DePIN technology and application scenarios.