Do you recall the once famous Daniele Sesta and his Wonderland Money? It was the largest fork of Olympus DAO that amassed a whopping USD 1.8B in Total Value Locked (TVL) and had an astounding 80,000% APY!

From its peak price of USD 10k per token, the price of Wonderland’s native token $TIME has declined to just under USD 20.

As for this once popular Play-to-Earn (P2E) game Axie Infinity that boasted more than 2.3M daily active players, there are currently only 255k daily players!

Wonder why? In this article, we will uncover the top 3 crypto trends that faded away, why they lost steam and examine if they are likely to make a comeback.

Top 3 Crypto Trends That Faded Away

  1. Yield Farming with high and unsustainable APYs

Yield farms, once touted as the rocket fuel of DeFi, have fallen out of favour with crypto investors as the yields offered have dramatically fallen.

In early 2020, Compound Protocol first began issuing its native $COMP tokens to reward early users of the platform. 

Since then, it sparked off hundreds of yield farms randomly named after food and animals on many L1 blockchains that offered insanely high APYs for staking Liquidity Provider (LP) tokens and the projects’ own reward tokens.

The main problem lies in the lack of utility for the reward tokens, this led to excess supply of tokens which ultimately led to the collapse in prices of these rewards tokens. 

Worth the risk now?

  1. Traditional Profile Picture (PFP) NFTs

CryptoPunks, Bored Ape Yacht Club, Azuki, Doodles and Moonbirds are arguably some of the top PFP NFT projects around. 

It takes at least a decade to build a recognizable brand and global community. These projects do have a real shot at proving their staying power and popularity over the longer term. 

Beyond airdrops, they are focused on executing and delivering exclusive experiences for their respective communities based on a solid roadmap.

However, many of the PFP NFT collections that followed are mere derivatives of these projects that lack any form of utility. 

The floor prices for many of such projects are unlikely to recover and we will probably not hear of them in time to come. 

  1. P2E Games with declining number of users 

The number of unique active gaming wallets provides great insight to the state of the blockchain gaming industry. 

Since 2022, the number of wallets that interacted with blockchain games have declined significantly from its peak of more than 1.2M wallets to around 200k wallets. This represents a 83% decrease in unique active gaming wallets! 

So what went wrong? In order to examine why most P2E games faded and died off, it is crucial to first understand how and where the money or tokens earned by players is derived.

Resembling that of a ponzi scheme, money is pumped into the ecosystem by new players. For example, in the case of Axie Infinity, players must first pay to buy an Axie, a character used in the game. The money invested by new players is used to fund existing players when they cash out. Many other games such as Aavegotchi, STEPN and Sweatcoin adopt such a model.

They need to consider introducing and diversifying revenue streams such as having advertisements that raise monthly revenue and channel these funds to rewarding skilled players. 

What do traditional games such as World of Warcraft, Call of Duty and League of Legends have in common? These games are actually fun to play! This is in stark contrast to games such as CryptoKitties, Splinterlands and DeFi Kingdoms that lack functionality and a captivating gaming experience.  

Can These Crypto Fads Make A Comeback?

The popularity of these 3 crypto trends were purely driven by hype, founders of many of these projects capitalized on the bull run to attract many users but failed to provide any unique value proposition.

While yield farming with high APYs is likely to resurface in some shape or form in the next bull run due to human greed, there is no doubt that pure PFP NFT projects that rode on the NFT hype in the last 2 years or so will fade into irrelevance.

Only those PFP NFT projects that seek to create a global brand that offer real world utility and experiences are the ones that are likely to make a strong comeback and prove their staying power.

As for blockchain gaming, the key to creating sustainable Web 3 games very much depends on how far these games succeed in creating a compelling storyline, improving the game design and quality of graphics to attract more Web 2 gamers.   

Also Read: Fueling the Future: Scaling Innovation at The Sandbox’s Singapore Lion City Partner Day

[Editor’s Note: This article does not represent financial advice. Please do your research before investing.]

Featured Image Credit: ChainDebrief 

Author: Clarence Lee