The intersection of finance and Gaming in an environment powered by blockchain, smart contracts, and NFTs (non-fungible tokens) is often called GameFi. Often cited at the intersection of Decentralized Finance (DeFi) and Play-to-Ene (P2E) blockchain gaming, it creates self-service ecosystems beyond mere Gaming, shifting control from game studios to players. According to the Metaverse Awareness Survey, he said 40% of respondents are “interested in pursuing a combination of both the ‘playing’ and ‘earning’ aspects of the Metaverse.” 11% said they were more interested in making money, and 49% said they were only interested in playing.
In the blockchain and gaming industry, GameFi is a recent invention that has gained much popularity. Blockchain video games attract traditional players who are used to paying to play online games. And some of the universe’s most active sources claim it is a not-too-distant reality. Straddling the line between Gaming and decentralized banking, GameFi has attracted much interest from the cryptocurrency community. The compelling elements GameFi combines are reshaping how players and investors interact with digital experiences and online Gaming, from owning assets to making money playing their favorite games. GameFi continues to lead a series of technological advancements reshaping the gaming business so that you can learn more about GameFi.
Another interesting finding from the survey was that more than half (53%) of respondents said they would be happy to work in the virtual gaming world if they could earn digital currency. Axie Infinity is a blockchain-based online video game where you use non-fungible tokens to collect monsters (Axies) and compete against other players. Axie Infinity is for professional gamers in the Philippines and worldwide, and digital content has emerged as a significant source of income. Given the need for this skill set, creators have been known to earn substantial salaries.
Traditional gaming environments typically do not allow players to own in-game assets. But at GameFi, tokens like blockchain-based games obscure in-game resources and real-world assets. In such a game environment, the user can acquire her NFTs or crypto assets to participate and accumulate resources while playing the game, which are in-game currency or in-game assets. These can be stored in digital asset wallets or traded on the secondary market like any other digital asset.
What exactly is GameFi?
As already mentioned, Yearn Finance CEO Andre Cronje used the phrase “Game-Fi” for the first time in a 2020 tweet. It combines the words “game” and “finance.” GameFi is a platform that combines blockchain technology, non-fungible tokens (NFTs), and game mechanics to build virtual worlds that users can interact with to earn tokens. These are also called P2E or Play-to-Earn games. GameFi’s foundation is an amalgamation of blockchain technology, games, and other decentralized financial products such as algorithmic stablecoins, yield farming, non-fungible tokens (NFTs), borrowing, and lending.
According to industry veteran Tracy Spaight, GameFi is one of the fastest-growing sectors in the video game industry. With over 20 years of experience in game creation, he is currently Head of Gamification at Synesis One. Synesis One is said to be his DAO of the world’s first data yield farming. The “new kind of ownership” made possible by the industry’s structure, he argued, is what excites most about GameFi even though the sector is still relatively young.
We previously stored video games on centralized servers belonging to gaming businesses. The gaming business had the unspoken power to turn the world off whenever it wanted. Players did not own anything they collected through their characters, such as clothing, weapons, or rewards, and had no real value beyond the game. GameFi merch is not, as it is decentralized and relies on blockchain technology.
In a typical video game, purchased in-game items have no value outside the game’s settings. Players make financial investments to acquire these properties but need complete control over them. GameFi changes this mindset using blockchain technology, cryptocurrencies, and De-Fi goods. These blockchain-based games come with associated in-game currencies, markets, and token economies, which are often community-run and regulated. In this paradigm, the player, not the developer, controls in-game property, eliminating the need for any server infrastructure and the possibility of cheating or hacking.
GameFi’s idea brought a new use case for cryptocurrency to the world by creating an economic model of earning money while playing. GameFi’s appeal is mainly due to the fact that, in contrast to traditional games, the environment is not governed by a single entity. Additionally, fee-free transactions enabled by the underlying blockchain technology allow players to buy, sell and trade digital assets without paying fees. Prior to diving any further, let us take a closer look at the main parts of GameFi.
Blockchain
The underlying technology of the GameFi platform is blockchain. The Ethereum network is used to build the majority of blockchain games. Other GameFi protocols, such as Polygon, Polkadot, and Solana, are also growing in popularity due to their speed and capacity. In addition to enabling player ownership, running the game on a blockchain-distributed ledger ensures that all transactions are open, transparent, and fair.
Non-Fungible Token (NFT)
NFTs represent assets in P2E games and are used to facilitate market trading. NFTs can be exchanged for other NFTs, cryptocurrencies, or fiat currencies in-game. P2E NFTs, in contrast to traditional online games, ensure that all assets in the game are distinguishable and cannot be copied or counterfeited in any way. Many P2E games aim to motivate players to complete levels while earning virtual currency and developing a virtual personality (or avatar).
Play-to-earn model
GameFi pays for simply playing, as opposed to play-to-win games, where users have to pay to participate and advance gameplay. As you progress, you collect digital valuables: money and NFTs. Players typically have to complete daily objectives such as completing their missions or winning battles. These resources have value and can be bought, sold, and traded.
De-Fi components
A Decentralized Finance (De-Fi) component has been incorporated into several GameFi initiatives. Some of his best GameFi games allow users to earn passive income by staking tokens, while in-game incentives via yield farming that lock assets with in-game currency and smart contracts.
How does GameFi work?
GameFi primarily refers to blockchain-based games that offer financial incentives to players and is distinguished by its “play to earn” business model. Players earn money as they play these games and pass new levels. NFTs, in-game tokens, and Bitcoin make up the majority of rewards. Once players earn in-game tokens, they can be exchanged for more popular cryptocurrencies such as Bitcoin and Ethereum and then converted to fiat currency. It is noteworthy to remember that the idea of “playing to earn” is not entirely new. There is still a lot of hype about them, with cutting-edge technology underpinning GameFi applications with a play-to-earn business model.
From blockchain technology and smart contracts to in-game tokens, these games have several aspects that distinguish them from other games and make them a better choice. Most Game-Fi projects offer their NFTs in the form of land, clothing, gear, and skins. These NFTs can be bought and sold outside the game and used as collateral and yield farming on De-Fi platforms. The Game-Fi area has a variety of games, each with its mechanics and specs. One such requirement is that users have a crypto wallet to store in-game currency. However, for the wallet to work, it must be preloaded with Bitcoin. To start some games, you need to get a starter character.
What are GameFi tokens utilized for?
In the gaming world, GameFi sells hard-to-find in-game assets like in-game weapons and props for real money or exchanges them with other players with evidence of legitimacy and ownership. These weapons can be rented to other participants for a fee, permitting objects earned in one game to be incorporated into different games. In the real world, GameFi NFTs can be used to guarantee his DeFi lending protocol and for staking, liquidity mining, and yield farming.
A growing number of NFT games are establishing an on-chain metaverse by selling virtual land as NFTs, which are well integrated with cryptocurrencies, providing real-world value for time spent in-game. Worldwide interoperability is provided. Depending on its trajectory, GameFi tokens could be used for ownership and speculative trading, paving the way for a more decentralized metaverse that may not be owned by one big company.
How will the GameFi initiative be funded?
GameFi has been successful in expanding its team and attracting game development users. Additionally, similar to Initial Coin Offerings (ICOs) and Initial Public Offerings (IPOs), the GameFi Initiative will raise funds through an IDO, or Initial Decentralized Exchange Offering, funded by venture capitalists. Much of this comprises diverse token allocation rounds of public and private funds with sufficient reserves for marketing, gaming incentives, and ecosystem development. Another mechanism for funding blockchain games is the Initial Game Offering (IGO).
GameFi Tokennomics
Once the game is functioning, the GameFi project creates its tokens and game rules through utility or governance tokens necessary to create GameFi’s revenue model. GameFi can be based on one token, and we can use the same token to purchase game avatars through utility functions and distribute rewards to players through governance functions. This gives token holders the right to propose and vote on future improvements and game policies. Etc.
Most of these games run on his Ethereum blockchain, so gamers must put in Ether or convert fiat to crypto to participate in the games. Ethereum’s scalability limitations lead many GameFi initiatives to create their separate sidechains. Additionally, the fees collected on these games can go into the treasury of Decentralized Autonomous Organizations (DAOs) and be sent to DeFi strategies.
How to get started with GameFi?
Create a cryptocurrency wallet.
To enter the GameFi universe, you need an ETH wallet, such as Trust Wallet or MetaMask, that supports GameFi. Depending on your game, you are required to utilize various wallets or connect to different blockchain networks. For example, to play blockchain games on the BNB Smart chain (formerly Binance Smart chain), we must first connect MetaMask to its BSC network. Also, use Trust Wallet or any other compatible cryptocurrency wallet, and to see who the game supports, visit the game’s official website.
Integrate the game into your wallet.
In order to access most games on the Ethereum network, you need to link your ETH wallet to the Ethereum blockchain. Certain games like Axie Infinity and Gods Unchained generate wallets to save money and improve performance. The Ronin network was created as a sidechain, while Axie Infinity is based on Ethereum. As such, one must use their official Ronin wallet in order to correspond to the Axie Infinity ecosystem. Axie’s breeding and trading costs are significantly reduced by his Ronin network as a sidechain, reducing the overall cost of play.
Check the game prerequisites.
Most GameFi initiatives require you to acquire in-game NFTs or cryptocurrency tokens. Every game has requirements, but you should always weigh potential rewards against overall risk. Then identify how long it will take to get a return on your initial investment. To play Axie Infinity, you need 3 of these in your game wallet, which is available on the Axie Marketplace. Ax purchases can only be made using wrapped ETH stored in the Ronin Wallet. Using the Ronin Bridge, you can buy ETH on cryptocurrency exchanges like Binance and transfer it to the Ronin wallet.
Metaverse and GameFi 2.0
The idea of GameFi is still very young, but the play-to-earn movement ushers in the “GameFi 2.0” era. Video games are a form of entertainment, so making money should be something other than your primary goal. Sadly, this paradigm has been distorted by the ability to play and earn, leading to the development of many precarious gaming economies. Axie Infinity can still change course because he has demonstrated strategy viability from two fronts in the brand-new Origin mode. A feature of Origin is that there is no initial cost. To start a duel in Axie Infinity, you must own 3 NFTs. They demand hundreds of dollars from users before starting a game they may not like.
Origin’s free Beginning Pack lowers the barrier to entry and makes his GameFi 2.0 more accessible for players. More importantly, it emphasizes the value of thinking game first rather than creating a game economy and designing game components. The development of GameFi 2.0 could determine the success of Web3 games and, thus, the appeal of the Metaverse. To highlight the importance of this paradigm shift, the play-to-earn football game MonkeyLeague team is holding a GameFi 2.0 roundtable. There will be a lot of consultation about the current state of Web3 games and initiatives to promote the broader use of blockchain games and cryptocurrencies.
GameFi what lies in the future of the Metaverse
For a Metaverse Project to be successful, it must be of value to users. Incentive programs, user agencies, and controls make this possible. GameFi contributes to the future decentralization of the Metaverse. GameFi can help increase user engagement with the Metaverse, allowing users to influence change. The Metaverse will attract more investment and developer support as more individuals join it and take advantage of its benefits. GameFi’s involvement also powers the Metaverse’s digital economy. The Metaverse thrives when there are more options for consuming digital assets.
With an estimated 3.24 billion players worldwide, the GameFi industry has enormous growth potential. Given the popularity of Axie Infinity and his other GameFi platforms that use other blockchain protocols, it is clear that GameFi is on the verge of a successful future. However, due to the continuous development of blockchain technology, it is difficult to predict new features and technologies that will define future GameFi platforms. Investors say it has invested more than US$3.6 billion in cryptocurrency gaming companies in 2021 alone, making it an important year for the developing sector.
As of February 11, 2022, the GameFi market capitalization for the four years from January 1, 2018, to January 1, 2022, is estimated at $55.38 billion, with a compound annual growth rate (CAGR) of 180 for GameFi market capitalization, according to a report from Crypto.com. Naavik and BITKRAFT Ventures forecast the blockchain games market to grow at a CAGR of 100% from $1.5 billion in 2021 to $50 billion in 2025. Overall, there are certain drawbacks of traditional games that blockchain technology has entirely resolved. However, it is worth noting how regulation around cryptocurrencies has evolved and how regulators have decided to design regulation around virtual digital assets.
In conclusion, GameFi’s innovative integration of blockchain technology is set to revolutionize the gaming industry. With its unique approach, GameFi aims to provide gamers with a platform where they can earn rewards and incentives in the form of cryptocurrencies. This not only creates a sense of community, but it also offers a new and exciting way for gamers to engage and interact with one another. GameFi has the potential to bridge the gap between gaming and cryptocurrency, offering players a new level of financial freedom and control. The future of gaming is here, and GameFi is leading the charge in the ever-evolving world of blockchain technology.
