Key takeaways
- GameFi merges online gaming with decentralized finance. It aims to establish an in-game economy and enhance convenience. It introduces the play-to-earn (P2E) model, wherein players earn digital assets, rare items, and other rewards through in-game activities.
What is GameFi?
GameFi is a fusion of Gaming and Finance. It is a novel concept amalgamating gaming with decentralized finance. This innovative approach signifies a fresh category of decentralized applications (dApps) striving to integrate the gaming and blockchain realms.
GameFi achieves this integration by constructing a gaming ecosystem. It leverages blockchain technology, digital assets, and decentralized finance. Thereby enriching player experiences and providing new avenues for monetization.
How Does GameFi Work?
In GameFi, rewards are offered in various forms. This includes cryptocurrencies or in-game assets like virtual land, avatars, weapons, and costumes. Each GameFi project adopts its own model and game economy. Typically, in-game assets are represented as NFTs running on the blockchain, enabling trading on NFT marketplaces. However, in some instances, assets must be converted into NFTs before players can trade or sell them.
These in-game assets often offer benefits to players, enhancing their ability to earn rewards. Some games also offer purely visual avatars and cosmetics that do not affect gameplay or earnings.
Players can earn rewards by completing tasks. Depending on the game, They can earn by engaging in battles or constructing and monetizing structures on their land parcels. Some games even allow players to generate passive income without actively playing. This is done either through staking or by loaning their gaming assets to others.
Let’s explore some common features of GameFi.
Popular GameFi Activities
Several engaging Play-to-Earn (P2E) gaming activities are prevalent both online and within metaverse applications:
1. Crafting and vending virtual goods: Players have the opportunity to craft and mint unique in-game assets, such as digital companions or virtual properties. These items can be traded with other players in return for digital currencies. This aspect of gaming can be highly profitable for developers with the expertise to design sought-after in-game merchandise.
2. Trading: In-game virtual assets can be exchanged among players through trading platforms. This aspect of gaming appeals to individuals keen on amassing rare or distinctive virtual possessions.
3. Staking: Certain GameFi platforms permit players to stake their digital holdings. This allows players to partake in a game’s governance or specific in-game events, earn passive income, and actively contribute to the game’s evolution and expansion.
Why is GameFi becoming so big?
Play-to-earn (P2E) represents a shift from conventional pay-to-play models, which are prevalent in traditional video games. It introduces numerous earning opportunities through participation in blockchain games, thus fostering increased industry engagement and wider adoption.
Non-fungible tokens (NFTs) advocate for virtual asset ownership. They are independent of centralized authorities. NFTs offer a pathway to maximizing earnings for individuals previously unaware of the benefits associated with in-game items. Plus, it can be done while acquiring valuable, rare collectibles.
Certain traditional games restrict access to enthusiasts based on geographic location. On the other hand, GameFi transcends borders, enabling users worldwide to participate in the continually evolving gaming industry. Such opportunities promote financial inclusivity. Additionally, they enhance awareness of the technology sector among diverse global populations.
GameFi Example
In the world of GameFi, various items, creatures, cards, and currencies are tokenized. Thus facilitating trading on marketplaces. Some notable examples include:
- Axie Infinity: Axie Infinity is a strategic gaming platform. It is centered around distinctive, axolotl-inspired digital creatures known as Axies. Players acquire Axies from fellow participants in open markets. They construct teams comprising three Axies and engage in battles across different game modes. Victories and completion of missions yield rewards in the form of the game’s native currency, SLP. SLP possesses multiple in-game utilities, including the creation of runes and charms, along with the breeding of new Axies.