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Since the introduction of Axie Infinity, the GameFi sphere has quickly begun to take over the traditional gaming industry. It attracts players with the possibility of making real money in video games. So what is the GameFi industry and how is it different from traditional video games?
What is GameFi
The term GameFi is derived from the combination of the words game and finance. It denotes blockchain games of the play-to-earn model that offer monetary rewards. The virtual gaming environment of the GameFi ecosystem includes cryptocurrency, non-interchangeable tokens (NFT) and blockchain technology.
Users of such games can receive in-game rewards by completing tasks, fighting other players and going through levels in the game. After that, they can sell their assets on crypto exchanges and NFT marketplaces.
In GameFi, rewards are cryptocurrency or in-game assets such as: virtual lands, avatars, weapons and suits. Each GameFi project uses its own unique model and gaming economy. In most cases, in-game assets are blockchain-based NFT that can be traded on NFT-marketplaces. However, in some cases, in order to sell or exchange in-game assets, they first need to be converted to NFT.
What is the difference between regular and GameFi games?
The thing is that the GameFi projects are based on the revolutionary play-to-earn game mode. It differs significantly from the "pay and play" model common in traditional video games - funds must be contributed to start playing them. For example, in Call of Duty, users must buy a license or pay for an Xbox Game Pass subscription.
Usually, traditional video games do not bring any benefit to players, and their gaming assets are controlled and owned by a manufacturing company. Play-to-earn games give players full control over their in-game assets, and also allow you to make money.
However, remember that it all depends on the model and game design of each specific GameFi project. Blockchain technology can (and should) give players full control over gaming assets, but that's not always the case. Carefully study the play-to-earn principles of the game before joining it.
It is worth noting that although play-to-earn games are usually free and bring financial rewards to players, some GameFi projects require the purchase of NFT or crypto assets before starting the game. I always recommend self-examining information and assessing risks. For example, if a game requires a large investment and offers a minor reward, you risk losing the initial investment.
Example of a GameFi Game
One of the most popular play-and-earn games is Axie Infinity. This is an NFT game based on Ethereum, the popularity of which has been growing actively since 2018. In it, players complete daily quests and participate in battles with other players using their NFT pets (Axie), receiving SLP tokens for victories.
For achievements of a certain level in PvP battles, players are awarded AXS tokens. Both AXS and SLP can be used to create new Axies, which are then either used in the game or sold on NFT-marketplaces.
Axie can not only sell and buy, but also lend to other users and earn income for it without even playing the game. This rental model is called a scholarship: players borrow other people's Axie to play and earn awards.
Thus, the owners of Axie receive passive income, and the fellows play without any investment. The awards received are then shared between the fellows and the owners of Axie.
Ownership of digital assets
Some popular metaverses like Decentraland and The Sandbox specialize in owning and monetizing virtual land. In The Sandbox, players can buy digital properties, develop them and earn income. For example, the site allows you to charge other players for visiting your land, earn tokens for posting content or hosting events on it, and rent it out to other players.
DeFi Applications
Some GameFi projects also offer DeFi products and features such as staking, liquidity mining, and yield farming. Typically, players can stake their game tokens and receive rewards, exclusive items, and access to game levels.
The introduction of DeFi elements makes crypto games more decentralized. Unlike traditional game studios, which update games centrally and at their own discretion, some GameFi projects allow the community to influence decisions: players propose and vote on future updates through decentralized autonomous organizations (DAO).
For example, Decentraland users can vote on in-game and organizational issues if they lock their governance tokens (MANA) in the DAO. The more tokens they block, the more weight their vote has. Thus, players can interact with developers and directly influence the development of the game.
The Future of GameFi
In 2021, the number of GameFi projects has skyrocketed and will likely continue to grow further. As of March 2022, there are over 1,400 blockchain games registered with DappRadar. Today, players can choose from a variety of popular games available on the Ethereum, BNB Smart Chain (BSC), Polygon, Harmony, Solana and many more blockchains.
As blockchain technology continues to evolve, GameFi is also expected to grow at a rapid pace. The ability to own in-game assets and make money from games makes GameFi extremely attractive, especially in developing countries.
Let's summarize
Since the early days of Bitcoin, people have been trying to succeed in simple browser games, hoping to make a profit in BTC. Although BTC-games are not losing ground, the development of Ethereum and smart contracts has changed the blockchain gaming industry - now it offers more complex and interesting opportunities.
GameFi's appeal to gamers comes from a combination of entertainment and financial incentives. Most likely, with the growing popularity of blockchain games, more and more large companies will contribute to the development of the metaverse.
Keep your awareness at check and know that Fortune, Luck and Success always favor you when you are with us!
Always your C.J.
Everything above is not financial advice, but only the subjective opinion of the author. If you doubt something, then do your own research and double-check the information yourself.
