DeFi Kingdoms is one of the most important DeFi and blockchain gaming titles. Although it is safe to attach the enormous growth of blockchain gaming to Ronin hero, Axie Infinity, unsung heroes like DeFi Kingdoms have been instrumental in the Play-to-Earn (P2E) revolution. 

Simply put, as a gamified DeFi project, DeFi Kingdoms has made a remarkable impact on the P2E ecosystem. However, despite its huge marketing and roadmap success, DeFi Kingdoms has fallen victim to some exploits and scandals. Are they enough to call the project a scam? Is gamified DeFi a sham? Let’s take a deeper look at the issue.

DeFi Kingdoms at Its Peak

Launched in 2021, DeFi Kingdoms is a brilliant blend of gaming and an innovative DeFi system that features a DEX (Decentralized Exchange), utility-based NFTs, and a liquidity pool. Meanwhile, its gameplay features a nostalgic fantasy world powered by immersive pixelated arts where players can farm tokens for yield rewards.

The extensive growth of DeFi Kingdoms is partly due to the impeccable timing of its team. At the time of launch, more than 1.5 million unique wallets connected to gaming dApps, signifying high gaming activity. At the end of September, the number has risen by 140%.

Even with that, DeFi Kingdoms has received a lot of traction as a successful gaming project. It began seeing a lot of market adoption and user activity within days to months of launch. By December 2021, DeFi Kingdoms boasted more than 36,000 daily users. However, the number steadied at 20,000 in 2022. Also, the game clinched 10 million in-game transactions on the DFK Chain just a few days ago.

However, a question that runs through the mind of everyone is: What makes DeFi Kingdoms unique?

DeFi Kingdoms calls itself a gaming franchise for DeFi. Therefore, unlike other regular P2E games, DeFi Kingdoms utilizes an innovative way to combine gaming with the adoption of decentralized finance. Apart from this, an essential part of its ecosystem is the attractive and easy-to-use user interface.

At its core, DeFi Kingdoms features a liquidity provider pool where players can stake their JEWEL tokens in banks or gardens. It also features NFT assets, including Heroes and Kingdoms, as a vital part of its economy. Meanwhile, some of the non-fungible assets are scheduled for release in future updates.

Furthermore, there is a decentralized exchange and a tokenized ecosystem powered by the JEWEL Token. Due to the game’s rise in popularity, the JEWEL token caught mainstream attention as one of the largest game tokens by market cap, peaking at $1.1 billion cap in January.

Unlike other normal blockchain games, DeFi Kingdoms ticks all the boxes of the dream GameFi concept. However, things started going south after a series of controversies and scandals unfolded within the ecosystem and its team.

The Exploits and Scandals

The downturn began after the discovery of an exploit where players can excessively mine locked JEWEL. Meanwhile, by creating multiple accounts and moving mined JEWELs, the exploitation led to excessive circulating JEWEL. On top of this, low user activity has caused a further downtrend since there were few new users to balance the falling economy.

Although the flaw was uncovered in January, the DFK team was reluctant to deploy a fix since it would affect existing and underlying smart contracts. Unfortunately, JEWEL token price slumped from its January $22.5 all-time high, settling at $2-$3 when the fix was finally implemented in April. Why was the fix delayed when they eventually did turn back to it? 

Barely 24 hours after fixing the excess JEWEL mining issue, another controversy arose after a Twitter user uncovered a slow rug covered by the DFK team. In the thread, a liquidity pool wallet holding 2 million JEWEL tokens was used to mine and sell several millions of JEWEL tokens.

According to the game’s documentation, the LP token cannot be sold or withdrawn. In contrast, the LP tokens were leveraged to withdraw millions of JEWEL tokens via garden rewards, thereby raising suspicions from the game’s community. Meanwhile, the DFK team completely turned a blind eye to the scam by dropping a fake wallet address to the LP tokens.

Amidst all these, JEWEL’s price continued its downtrend, losing more than 97% of its all-time high value. The token is currently trading at $0.59 with a $34 million market cap.

Despite all the controversies, the DFK community retained Frisky Fox as its community leader, signaling a huge trust in him. Afterward, the team organized a doxxing party, a move to restore confidence in its community and investors.

Is There a Way Back?

At its peak, the project is a solid blockchain game that is a top contender in the P2E ecosystem. The doxxing party shows the team’s commitment to getting back on track and building a sustainable gamified DeFi ecosystem.

Meanwhile, its Crystalvale expansion has brought exciting hype to its ecosystem. Apart from this, there are roadmap developments scheduled for release in the coming months. However, it is unclear if all these will turn things around in the long term for DeFi Kingdoms, or even for gamified DeFi. Yet, we’ve seen newer examples like DeFi Land taking over the Solana ecosystem.