Gaming as a means of entertainment is an activity that has had quite an impact on many people. But, like several elements, it has also evolved with time and seen a shift in dynamic, change, and purpose. But as much as the traditional gaming industry has witnessed a lot of successes and growth, it took a unique turn after the inception of cryptocurrency. Ever since then, we've seen a lot of exciting innovations. GameFi is one of them.
Massively taking over the traditionalist gaming scene, GameFi has been in the industry ever since the growth of Axie Infinity. So what is this new inclusion in the gaming world? And what makes it stand out? Join us as we enlighten you on the concept of GameFi and its unique features and functions. Let's go!
What Is GameFi?
The term GameFi combines two elements - (video games) gaming and decentralized finance (DeFi). It simply connotes blockchain games played by any interested person to earn money. Unlike the traditional gaming system, which is play-to-win, this form hinges on play-to-earn. Its concept stems from blockchain technology. This reality essentially clears the path for players to be the only verified owners of the game's digital elements.
The GameFi ecosystem brings a virtual gaming space to life using essential elements such as non-fungible tokens, cryptocurrencies, and blockchain technology.\
Players here can get revenue from the knowledge and other resources to participate in the game. In addition, they can also transfer their crypto assets for trading on cryptocurrency exchanges and NFT marketplaces.
How Does GameFi Work?
The functional path of GameFi is pretty straightforward. There's a rewardable system in place. It exists in several forms that range from in-game assets such as avatars, collectibles, virtual land, or even costumes to cryptocurrencies. However, as we hinted above, this system differs according to every game.
Every GameFi innovation embraces a different game economy and model. In a lot of situations, NFTs functioning on the blockchain is what represent the in-game assets. This reality means that these digital assets are suitable for trading on NFT marketplaces. However, it's also important to note that this isn't an all-inclusive concept. Other cases warrant the conversion of in-game assets into an NFT for players to trade or sell them.
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Benefits Of GameFi Projects
Many GameFi projects have great merits in their quality, structure, or theme. Here are a few popular ones:
- Play-to-earn Framework (P2E)
The pivot of GameFi games centers around play-to-earn (P2E) structures as a groundbreaking gaming mode. Traditional video games use the pay-to-play model, which requires gamers to make some form of investment before playing. The reverse is the case with P2E games. Unlike traditional video games, this P2E structure in GameFi projects possesses the ability to give players full power over their in-game tokens. It also provides them with chances to earn money.
Despite all these, you should also note that all these incentives are dependent on each GameFi project's framework and game design. For example, not all P2E games give players total control over their in-game assets. In other cases, too, some GameFi projects need you to buy crypto assets or NFTs before you can dive into that game.
GameFi innovations also embrace DeFi qualities and products such as gambling, yield farming, staking, and liquidity mining. For example, players can passively block some of their assets to make money through interests. Others can get access to exclusive items or new gaming levels.
The embrace of DeFi elements also allows crypto gaming to be better decentralized. A couple of GameFi projects have now adopted decentralized autonomous organizations (DAOs) for their decision-making process. Their community of players can now actively participate by proposing and voting for future updates. A good example is a Decentraland framework.
- Ownership Of Virtual Assets
It's no news now that blockchain technology accepts digital asset ownership; this refers to the monetization of in-game assets by players in several methods.
Like traditional games' avatars, tools, and costumes, these assets are developed as NFTs in GameFi. This process is otherwise known as NFT minting. It paves the way for players to have total control over their investments. The Sandbox and Decentraland are great examples of these NFT games.
Related: The Top 5 Most Profitable Metaverse Initiatives
What Are Some Popular GameFi Projects?
GameFi has been imprinted in the minds of so many through a couple of projects. Here are a few tasks:
This project stands as one of the leading projects on this table. An NFT-based online video game, Axie Infinity, has rapidly grown in popularity for the past four years. Released at €0.12, it costs approximately €125 today.
Players here can use their Axies for trading, collection, breeding, and winning battles. Axie owners can also earn income passively while giving other people known as scholar chances to be non-invested players. These rewards then get shared between Axies owners and scholars. Any GameFi enthusiast should study the evolution of this game.
The second on this list is Decentraland. This virtual world functions as a result of its users. Each plot of land and element in this digital earth is an NFT. Players can monetize their virtual land and develop them for other purposes. They can even go on to charge players who tour their land. They can also host content and events or even put out their land for rent. All of which can generate income for them.
Decentraland in early 2021 recorded an average of 1,500 daily active users. March saw that reach 10 000.
This game provides a platform for its users where they battle each other. Winners get rewarded with SKILL tokens after fighting their opponents. Furthermore, they can exchange their avatars or teams after this and bet their SKILL tokens.
This list won't be complete without The Sandbox. Like Decentraland, this virtual Metaverse houses players to create, own, and monetize their digital experiences. In addition, the native token of The Sandbox, SAND, can be utilized in the platform's ecosystem as the standard for all types of transactions and interactions in the game.
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What Does The Future Hold For GameFi?
It's safe to say that the future is pretty bright for GameFi. The amount of GameFi projects over the past year stands as testaments for this. In 2021, the world witnessed a rise in the number of projects and continued to boom. DappRadar has recorded more than 1,300 blockchain games as of March 2022.
Many investors and gaming enthusiasts now have their sights on GameFi due to the rising fame of the Metaverse. Multiple blockchains like Ethereum, Polygon, and Solana now house several familiar games. The success of games such as Axie Infinity and MetaSoccer further testify to this.
Final Thoughts
Traditional games sure have their way with entertainment over the past years. But the introduction of GameFi has grounded its future and helped many see where they can go with games, especially with cryptocurrency. Now, gamers are open to more wide, thrilling, and unique experiences accompanying gaming and finance.
Bitcoin had people entering the profitable parts of games. Still, blockchain technology such as smart contracts would make much more interested in what GameFi offers. Also, the booming popularity of blockchain gaming models would motivate many industries to invest in this innovation and create more in the Metaverse.
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