Southeast Asia (SEA) is experiencing a surge in a new yet unexpected sector known as GameFi, a combination of gaming and decentralised finance (DeFi) powered by blockchain technology. DeFi seeks to take power and control from financial institutions and enable the public to access financial instruments, such as loans, or to perform transactions and manage their own money in digital wallets.
GameFi takes a similar approach using the Play-to-Earn (P2E) model to enable gamers to earn cryptocurrency by performing game-related activities that generate rewards. The GameFi trends in SEA show the sector is on the rise as more people learn about P2E.
According to the DappRadar Industry Report 2021, the blockchain-based gaming, Non-fungible token (NFT), and DeFi sectors experienced positive trends that are likely to continue in 2022. The NFT space amassed $23 billion USD worth of trades, the DeFi space welcomed new companies, such as Terra, and the blockchain industry received over $27 billion USD in investment funds.
A closer look at Southeast Asia as an emerging DeFi startup hub
Venture capital (VC) firms have invested a record $4 billion USD in blockchain games in 2021. It means that the investment in the games and their underlying infrastructure is 5,000% higher than in 2020. In the first half of 2021, DeFi was responsible for up to 57% of the industry’s activity, with blockchain games and NFTs at 32%. In August, the gaming side took over, accounting for 49% of the industry’s activity.
Several blockchain gaming startups received investments from angel investors, celebrities, banks, and VC firms. Examples include Dapper Labs with $607 million USD, Forte with $930 million USD, Mythical Games with $120 million USD, Sorare with $783 million USD, and Animoca Brands with $221 million USD.
Here are some of the GameFi startups establishing themselves in Southeast Asia.
Singapore-based startup, Ethlas, describes itself as a “metaverse that rewards gamers”. It is a free-to-play game based on the P2E model. The company is backed by senior executives from companies like Grab, Coinbase, Global Blockchain Innovative Capital, and other partners, surpassing 2.5 Million gameplays ten weeks after launching.
In February, the company announced that it had secured $2.7 million USD in seed funding from its backers and other investors. The investors include Sequoia Capital India, Yield Guild Games Southeast Asia, Hustle Fund, Venturra Capital, Deus Ex DAO, Play It Forward DAO, Blockchain Space, and Genesis Fund. The company plans to help develop the GameFi ecosystem.
Yield Guild Games
Philippines-based Yield Guild Games is a P2E gaming guild that brings together gamers globally to earn money by playing NFT games, such as Axie Infinity and other blockchain-based economies. Members are part of a decentralised autonomous organisation (DAO), meaning they collectively vote on the games to play and digital assets to invest in, and they share the earned money or rewards.
Yield Guild Games raised $4.6 million USD last year from Andreessen Horowitz, bringing its total funding to $22.4 million USD. Its investors include Gabriel Leydon, Atelier Ventures, BITKRAFT Ventures, Infinity Ventures Crypto, Kingsway Capital, ParaFi Capital, SevenX Ventures, Fabric Ventures, and NON-fungible Chan.
Vietnam’s Ancient8 is a blockchain gaming guild incubated by Coin98 Labs, KYROS Ventures, 3twelve Capital, and Coin68 Media. Its goal is to establish a DAO for gamers to earn rewards in the metaverse.
In January, Ancient8 received $4 million USD in a seed round from Dragonfly Capital, Pantera Capital, and Hashed. Other investors included Mechanism Capital, Alameda Research, Jump Capital, GuildFi, Impossible Finance, and Animoca Brands. The company plans to use the money to democratise financial and social access in the metaverse.
Sky Mavis developed the blockchain-based game Axie Infinity, which has over two million daily active users. It is a digital pet universe where gamers can battle, design, and sell virtual assets in the Axie marketplace. Axie Infinity’s NFT collection is the first to reach $4 billion USD in sales in the in-house marketplace.
Axie Infinity has raised a total of $9 million USD in four funding rounds. Its investors include 500 Startups Vietnam, Collaborative Fund, Alexis Ohanian, Libertus Capital, Leon Hillmann, Mark Cuban, Animoca Brands, Hashed, and Pangea Blockchain Fund.
The GameFi trends in SEA show that major investors are getting involved, and more capital is available. Regulation is needed to protect the public, financial institutions, and the burgeoning decentralised finance sector. It will also build trust in the industry, leading to more investment.
Cybersecurity should also be addressed, with the Dapp Industry Report highlighting that over $1.9 billion USD of cryptocurrency losses occurred in 161 attacks during 2021. With many people learning about P2E and seeking to earn a living through blockchain-based games, it is vital to protect them.
GameFi startups will benefit from investments, build new games and establish innovative earning models. The surge in excitement due to developments in the blockchain industry will boost the entire GameFi ecosystem for years to come.