GameFi is one of the hottest trends to emerge from the crypto space, generating significant traction. So far, when it comes to gaming and earning money, it has been a one-way street. However, players have evolved and are demanding a more prominent role in the games they play. Today, players want to be duly compensated for the time they spend playing games online. This is where GameFi comes into the picture, giving players the financial incentive to continue playing their favorite games through its play-to-earn (P2E) model. GameFi offers players tokenized incentives while treating the player as an owner rather than the standard player as a consumer.
Thanks to its soaring popularity, GameFi has attracted gamers from all walks of life, allowing them to earn money by playing some of their favorite games. This article takes a closer look at GameFi, how it works, and some popular GameFi games.
Let’s start with the basics. What exactly is GameFi? The word “GameFi” is an amalgamation of two words, “gaming” and decentralized finance (DeFi). Often referred to as play-to-earn games, GameFi leverages blockchain technology, non-fungible tokens (NFTs), and cryptocurrencies, creating a virtual gaming environment where players can participate, play games, and earn tokens as rewards. The term first made news thanks to a tweet from Andre Cronje, often called the father of DeFi. GameFi has helped significantly lowered the entry barrier into the crypto space and revolutionized traditional gaming by giving players an opportunity to earn while playing their favorite games online.
Unlike traditional games that utilize a play-to-win system where players can purchase in-game assets, GameFi introduces the play-to-earn system, where players have a financial incentive to play and progress in their game. Players can earn in-game rewards by battling other players, completing tasks, and progressing further in the game. Players can also transfer their in-game assets outside the game and trade them on NFT marketplaces and cryptocurrency exchanges. In some cases, GameFi has allowed players to earn a full income just by playing their favorite game.
How Does GameFi Work?
Now, let’s try and understand how GameFi functions. Typically, rewards can take several forms, such as crypto assets or in-game assets, such as avatars, costumes, weapons, and virtual land. Furthermore, each GameFi project has its own in-game economy and model. All in-game assets are essentially NFTs running on the blockchain, allowing them to be easily traded on third-party NFT marketplaces. However, in some cases, the in-game assets need to be converted into an NFT before they can be traded with other players or on third-party marketplaces.
In-game assets give players a host of benefits, such as enabling them to earn even more rewards. Other games provide in-game assets for visual benefits. These include avatars and costumes that do not have any bearing on gameplay or in-game performance. Players can also increase their earning potential depending on the game they play. They can also improve their characters and create monetized structures on their land parcels that other players can pay for and utilize. Some games also allow players to generate a passive income without even playing the game. This is made possible through staking or players lending their in-game assets to other players. GameFi offers players several benefits, some of which are listed below.
- Players have complete ownership and control over their in-game assets.
- Assets or in-game items collected by players while playing a particular game cannot be destroyed, removed, or copied.
- The use of blockchain technology ensures the removal of any single point of failure. This removes any risk of players losing their assets due to in-game errors or technical issues.
The Play-To-Earn Model
The play-to-earn model sits at the heart of GameFi and is a revolutionary gaming mode, vastly different from the traditional pay-to-play model that is incorporated in most, if not all, popular games available today. The standard pay-to-play model requires gamers to invest and purchase items before they can play the game. For example, games such as Call of Duty require players to buy different licenses and subscriptions before they can play. Traditional games also do not offer players any financial incentive or rewards to play the game. At the same time, the in-game assets also remain under the control of the game creators and developers.
This starkly contrasts with play-to-earn games that give players complete control of their in-game assets and allow them to earn while playing. However, remember that each GameFi project has a different model and in-game economy, which means rewards and player experiences may differ. This is why it is crucial to understand how each game works and understand it fully before committing to a play-to-earn model-based game.
Another vital point to remember is that most play-to-earn games can be free-to-play and still generate rewards for their players. However, some GameFi projects and games require players to purchase some NFTs or other assets before they can begin playing. This is why it is important to thoroughly research each project and evaluate the pros and cons before committing to a play-to-earn game. If you are a new player, avoid games requiring a substantial amount of investment.
How Can You Get Started With GameFi?
Getting started with GameFi and play-to-earn games is relatively straightforward. All you have to do is follow the steps we have listed below.
Create Your Crypto Wallet
You will need a crypto wallet to make in-game transactions and store your NFTs. Several wallet options are available to you, and you can choose a wallet based on the blockchain on which the game is based.
Connect The Wallet
Next, you have to connect your wallet to the game. Unlike traditional games that need a username and password, blockchain games use your crypto wallet as your account. It is advisable to download wallets downloaded from the official app store, which is linked to the wallet’s official website.
Next, fund your wallet with a compatible cryptocurrency so that you can purchase any in-game items or assets required to play the game.
Once you have completed the steps listed above, you can start with GameFi.
Popular GameFi Games
There are several GameFi titles available for players to choose from. We’ve compiled a small list of some of the most popular titles in the space.
Native Token (AXS)
Axie Infinity is one of the most popular titles available in the GameFi space. It is a Pokemon-inspired game created by Sky Mavis, where players can breed, purchase, and trade digital monsters, also called Axies. To begin playing, you must purchase three Axies from the in-game marketplace. Players can then lend their Axies to other players, allowing them to earn an income without playing the game. The company reported 2.7 million daily active users at the game’s peak.
Native Token (SAND)
The Sandbox is a virtual metaverse where players can create, play, own assets, and put their virtual experiences to use. Users on the platform can create their own 3D games and experiences that they can share, sell, or rent out in exchange for tokens or other crypto assets. The Sandbox uses several different tokens to create a circular economy between the different types of users on the platform. These tokens are SAND, which is the utility token, and LAND, which is a digital piece of real estate that exists in the Sandbox metaverse. The third type of token is the ASSETS token, created by players who create user-generated content.
Native Token (DEC and SPS)
Splinterlands is a digital card game allowing players to create a collection of cards. Each card would feature different abilities and stats and can be used to battle other players. Because NFTs represent the cards, they are easily tradable on the open market. When playing the game, players battle one another in one-on-one scenarios. Each player is assigned random battle parameters and has a limited time to build their deck.
Native token (MANA)
Decentraland was created by Ariel Meilich and Esteban Ordano and is a virtual world running on the Ethereum blockchain. Players on Decentraland can purchase virtual plots of land using the platform’s native cryptocurrency, MANA. They can then sell the land they own or rent it to other players on the platform.
In Closing: The Future Of GameFi
GameFi saw a considerable boom in 2021, with expectations that it would see significant growth in 2022 as well. However, the crypto winter has seen growth slow down. As of March 2022, DappRadar listed over 1400 blockchain-based games supported on several blockchains such as Polygon, Ethereum, and BNB Chain. While initial blockchain-based games struggled to find takers, the popularity of titles such as Axie Infinity, Decentraland, and The Sandbox has seen the development of significant fan bases.
With blockchain technology continuing to evolve, GameFi has managed to gain popularity in several countries, thanks to the prospect of making money by playing their favorite games. As the popularity of blockchain games increases, we will, in all probability, see big companies continue to venture into GameFi and the metaverse.
Disclaimer: The content of this blog is strictly for information purposes only. All of the opinions expressed in this blog are not connected to CoinSmart and are not intended to provide you with investment advice. It is important that you do your personal research and/or consult an investment advisor to determine what is right for you.