Axie continues to break through imagination, and NFT games will become the next industry narrative after DeFi

This article is a reader submission, authored by Michael Gao, co-founder of Metablock Ventures.

After the DeFi explosion at the beginning of the year, due to the limitations of Ethereum's performance, the anticipated DeFi innovations did not arrive. Market attention shifted to various sidechains and pseudo layer 2 solutions vying for Ethereum's overflow funds and traffic. However, layer 2 has been slow to materialize, and the expected DeFi innovations have not come. Instead, what we witnessed was a carnival in the zoo followed by a subsequent crash…

In the aftermath of the significant drop on May 19, amidst a market characterized by continuous decline and indistinguishable bull and bear trends, some people were searching for solutions in vain, while others could not bear to cut losses and exit. Yet, the game Axie Infinity surprised many users who had previously never heard of it, had heard of it but never played, or had played but not held onto it. The token AXS astonishingly carved out its own bull market in such a climate, and its generated revenue recently topped the on-chain income rankings.

So, is the soaring Axie merely a fleeting phenomenon or a discovery of a new narrative?

To understand this question, one must first grasp a principle: for this industry to gain lasting vitality, it must attract external traffic and funds by creating value through innovation to enlarge the pie. The industry's ability to emerge from the despair of the last bear market and provide hope for continued involvement is not only due to Bitcoin gaining greater recognition from traditional institutions and companies in the context of global monetary easing but also primarily stems from the transformation of the DeFi narrative within the blockchain industry itself.

Looking back, why did trading mining only become a temporary hotspot during the bubble-clearing process at the end of the 2018 bull market? Why did small altcoins and IEOs struggle to survive amidst the fluctuations and panic of the 2019 bear market? Why did the DeFi Summer of 2020 not dissipate like previous annual hotspots but instead see innovations like DEX, lending, and derivatives begin to reshape the industry landscape and profoundly change user interaction habits? This is because DeFi has pointed the way forward, enlarging the industry's pie, instilling confidence in those within the circle, encouraging finance-savvy outsiders to dare to participate, and finally finding real use cases for blockchain beyond digital gold.

Therefore, regardless of whether the market turns bullish or bearish, there will always be hotspots in this increasingly mature market. So what will the next hotspot be? Will it be the return of DeFi kings or the resurgence of the zoo? Let's analyze:

The zoo has indeed attracted FOMO users from outside the circle, but essentially, the zoo's cooperative model and memes only hold short-term consensus value and struggle to gain long-term innovative value. The few remaining animal tokens will ultimately have to follow the path of DeFi.

While DeFi is on the verge of Layer 2 catalytic innovation, the basic tracks are already well-established. The subsequent launch of Layer 2 should be a long-term process that highlights value creation. Of course, there will be innovative projects that emerge from quantitative changes leading to qualitative changes, but if limited to DeFi, it may be challenging to see various eye-catching innovations and excitement in the short term.

The zoo struggles to take on significant responsibilities, and DeFi cannot stand alone. Can the current NFT games represented by Axie bear this heavy burden?

Games have evolved alongside our generation of users in the circle, and they naturally align with the culture of crypto. Excellent games from the PC era, such as "Journey to the West" and "World of Warcraft," have high playability and robust economic systems, and they are still operational today. Later, games like "League of Legends" and battle royale games ignited the competitive online gaming scene. In the mobile internet era, "Honor of Kings" and battle royale mobile games became almost ubiquitous. Now, as blockchain infrastructure gradually improves and the concept of WEB 3.0 becomes ingrained, NFT games represented by Axie are beginning to emerge, aiming to reshape the value flow between producers and consumers in the gaming industry through blockchain, NFTs, and DeFi, thereby attracting more external users into the crypto world.

Therefore, I believe that NFT games should be the next hotspot comparable to DeFi, potentially even rising to the level of industry narrative.

As mentioned above, whether they are native blockchain games or well-known games entering the crypto world, they will ultimately bring together countless consumers who grind games, producers who play to earn, creators of NFT game content, and developers. They will socialize, produce, and consume within games, then combine with DeFi and DAOs, earning governance tokens through gameplay, making decisions for games via DAOs, and ultimately forming a game ecological community based on blockchain technology, which will lay the groundwork for the Metaverse.

At that time, Sushiswap's farm could be a simple farming mini-game, aliens in Cryptopunk could be precious game items, and rare Axies that are bred could be used for collateral lending. Owning a BAYC could grant access to a unique game dungeon or participation in an exclusive virtual party. Of course, whoever can become the social platform and game UGC platform connecting everyone will ultimately become the Metaverse, akin to the Oasis in "Ready Player One." However, the politically correct Oasis will likely belong to all governance token holders rather than just those who collect three NFT keys.

As for now, Axie is primarily combining playability with NFTs, leveraging sidechains to reduce transaction friction and achieve explosive growth. It has yet to fully develop GameFi or UGC, let alone social features, and is still far from being a comprehensive platform. Yet, even under such fundamentals, Axie has hundreds of thousands of players, and its game revenue surpasses that of DeFi giants, showcasing outstanding performance even in the traditional gaming industry. Thus, the potential for NFT games, GameFi, and the Metaverse in the future is evident.

Currently, the concept of native blockchain games is already being hyped, and eager players are ready to jump in. Axie has mentioned plans to explore the UGC field, and Pancake is also exchanging pleasantries with Axie on Twitter. Some small game developers are rushing to combine NFTs in their games with DeFi mining to create GameFi. I believe that as sidechains, Layer 2, and other infrastructure continue to improve, the Roblox of blockchain will eventually emerge amidst the gaming craze.

Regardless of what the future holds, the current Axie feels reminiscent of Chainlink in 2020, illuminating the gloomy market with its counter-trend performance and bringing a spotlight to a track for people to analyze and speculate. Regardless of people's attitudes, this field, like DeFi, can no longer be easily ignored.