GameFi is the combination of two words: gaming and decentralized finance. GameFi combines blockchain technology elements such as non-fungible tokens (NFTs) and cryptocurrencies with gaming to provide economic incentives to players, therefore GameFi is also referred to as play-to-earn (P2E) gaming.
GameFi mixes blockchain technology, non-fungible tokens (NFTs), and game mechanics to create a virtual environment in which players may participate and receive tokens.
Until recently, video games were housed on centralized servers, giving developers and publishers the rights to everything within their games. This meant that players had no actual ownership or control over any of the digital items accumulated over hours or years of gameplay. These items range from weapons and costumes (also known as ‘skins’) to avatars and virtual lands, very few of which had any value outside of the game. As such, there was no real way for players to get compensated for their time spent online or share in the value of their earned in-game assets without following the route of professionalism (such as vlogging, Twitch streaming, or playing competitively in tournaments).
This is not the case with GameFi projects, however. Players of these games can obtain in-game rewards by completing tasks and progressing through various game levels. Unlike traditional in-game currencies and items, these rewards have measurable value outside of the gaming ecosystem.
Game items awarded in the form of an NFT or tokens for achievements can be traded on NFT marketplaces and crypto exchanges; hence, earning the sector the ‘play-to-earn’ moniker.
It’s important to note that ‘play-to-earn’ is the popular nomenclature, but playing in GameFi doesn’t come without risk, including potentially high initial costs that a player might lose or fail to recoup.
Play-to-earn Model (P2E):
At the core of GameFi projects, we have play-to-earn (P2E) as a revolutionary gaming mode. It’s quite different from the pay-to-play model adopted by traditional video games. Pay-to-play requires gamers to invest before they can start playing. For example, video games like Call of Duty need players to purchase licenses or recurring subscriptions.
In most cases, traditional video games won’t generate any financial returns for players, and their in-game assets are controlled and held by the gaming company. In contrast, P2E games can give players full control over their in-game assets while also offering opportunities for them to make money.
However, keep in mind that it all depends on the model and game design adopted by the GameFi projects. Blockchain technology can (and should) give players full control over their in-game assets, but that’s not always the case. Make sure you understand how the game works and who is behind the project before getting into a P2E game.
Another thing to note is that P2E games can be free-to-play and still generate financial rewards for players, but some GameFi projects require you to purchase NFTs or crypto assets before you can play. As such, it’s always important to DYOR and evaluates the risks. If a P2E game requires a big investment to start and the rewards are small, you are more likely to lose your initial investment.
One of the most popular play-to-earn games is Axie Infinity. It’s an Ethereum-based NFT game that has been growing in popularity since 2018. Gamers can use their NFT pets (Axies) to earn SLP tokens by completing daily quests and battling other players.
They can also get AXS rewards if they manage to achieve a certain PvP rank. In addition, AXS and SLP can be used to breed new Axies, which can be used in-game or traded in their official NFT marketplace.
Apart from buying and selling Axies, players can lend their Axies to other players, which allows owners to earn without playing the game. This lending model is known as scholarship. It allows scholars to use the borrowed Axies to play and earn rewards.
In other words, Axie owners can make a passive income while scholars can play the game without making any investment. The earned rewards are then split between scholars and Axies owners
Popular Play-To-Earn Games:
1. Axie Infinity:
Axie Infinity is an NFT-based online video game developed by the Vietnamese studio Sky Mavis. On it, players are able to collect, breed, raise, battle, and even trade token-based creatures, known as ‘Axies’. At its peak in November 2021, the company reportedly had 2.7 million active daily users.
Created by Ariel Meilich and Esteban Ordano, Decentraland is a virtual world that runs on Ethereum. In it, players can buy virtual plots of land as NFTs using the MANA cryptocurrency. They can then buy and sell the land they own, or rent out such assets to other players on the platform.
3. The Sandbox:
The Sandbox is a virtual metaverse where players can play, build, own assets, and put their virtual experiences to use. It provides its users with the tools to create their very own 3D games and experiences, which they can then share, rent out, or sell in exchange for tokens. The Sandbox uses several different tokens to ensure a circular economy between the four types of users on the platform: players, creators, curators, and land owners. These tokens include SAND, the utility token used throughout The Sandbox ecosystem; LAND, a digital piece of real estate in The Sandbox metaverse; and ASSETS, a token created by players who build user-generated content (UGC).
4. Game of Silks:
Silks leverage a blockchain-enabled metaverse to create a digital parallel of the real world of thoroughbred horse racing. Each digital Silks Horse NFT is a derivative of a real-world racehorse, meaning that every time the racehorse wins a race or breeds offspring in the real world, the owner of its corresponding Silks Horse will earn tokens (STT). In addition to Silks’ Horse NFTs, users of the platform can own, trade, and interact with Silks Avatars, Land, Stables, and a wide variety of other in-game NFTs. They can also earn rewards through its unique staking mechanism.
Launched on the BNB Chain and developed by Riveted Games, CryptoBlades is a P2E web-based RPG (role-playing game) that rewards players with SKILL tokens after defeating enemies and participating in raids. Players can trade their characters and weapons in an open marketplace or bet their SKILL token earnings to receive additional tokens as a reward.
Blockchain games were responsible for half of all blockchain usage in 2021. As of February 2022, the GameFi market cap has climbed to US$55.38
How To Get Started With GameFi:
1. Create A Crypto Wallet
To make in-game transactions and store the virtual currencies and NFTs collected during gameplay, you will need a crypto wallet. There are many different wallets available, like the Crypto.com DeFi Wallet, but most games demand the use of specific wallets. Be sure to visit the game’s official website to see which wallets it supports.
2. Connect The Wallet With The Game:
Unlike traditional games that require a username and password, blockchain games use your crypto wallet as your account. To avoid scams, only use wallets downloaded from official app stores that are explicitly linked to the wallet’s official website. Further, as an additional security precaution, it’s recommended that you use a different wallet for each game you play.
3. Add Funds To Your Wallet
You will need to pre-fund your crypto wallet with a compatible cryptocurrency to purchase any starter items (i.e., characters or native crypto tokens) required to play the game.
With cryptocurrencies, virtual gaming worlds are now able to create economies with their currency and marketplaces that are managed and governed by their communities. The emergence of GameFi has allowed players to generate an income while playing these blockchain play-to-earn model (P2E) games.
P2E games allow players to invest in and own in-game assets that can be traded among peers. Players also earn game tokens that can be sold on cryptocurrency exchanges. GameFi projects are deployed on a blockchain ledger and thus can be integrated with DeFi characteristics like token issuances, farming, NFTs and peer-to-peer trading, among others. A reward system and play-to-earn elements of GameFi projects are used to incentivise a loyal fanbase, returning customers and self-sustaining in-game economies