The existing gaming industry is being upended by Axie Infinity and similar GameFi projects, as well as play to earn games. These crypto play to earn games are essentially blockchain-based monetizations of the gaming experience. The fact that players fight for rewards rather than for victory separates them from traditional games: think Monopoly played for real money.
Unsurprisingly, the ability to pay players for their time and effort is fueling the rapid expansion of these play to earn games, often known as GameFi. Who doesn’t want to earn money while having a good time? In this essay, we’ll take a deep dive into the world of GameFi games. We’ll also go through its history, alternate monetization methods, and what to expect in the future.
What Is GameFi, Exactly?
GameFi is a mix of the keywords “game” and “finance,” and is one of the cryptoverse’s most popular buzzwords. It examines the gamification of financial systems with the goal of generating income via crypto gaming. Click here for uncommon play to earn gaming tips to know.
The distributed ledger of a blockchain underpins GameFi’s video game projects, allowing players to have verified ownership of the game’s virtual goods. Unlike traditional gaming, which pushes players to play for the purpose of winning, GameFi encourages players to play for the sake of earning.
Early Minecraft servers linked to Bitcoin; Gambit.com; online play to earn games like Bombermine; and peer-to-peer networks that let users to commercialize their online activity were all examples of the GameFi concept.
In a keynote presentation at the World Blockchain Conference in Wuzhen, China in November 2019, the founders of MixMarvel, a blockchain game startup, underlined the potential for blockchain technology to disrupt the video play to earn games industry.
In a September 2020 tweet, Yearn.finance founder Andre Cronje adopted the word “GameFi” to symbolize this new trend. Since then, the term has been used to refer to video play to earn games with decentralized financial components powered by blockchain technology. These efforts take use of the popularity of video games as a way to earn money and the unique properties of cryptocurrencies to make GameFi more appealing.
What Are the Functions of GameFi Initiatives?
Different GameFi efforts usually share a few elements. NFTs—non-fungible digital tokens that serve as evidence of ownership—represent in-game assets like as avatars, land, clothes, weapons, cash, tokens, and pets. These items are earned via game play and may be sold for profit on NFT marketplaces or exchanged for cryptocurrency, which can subsequently be turned into fiat money.
Early GameFi play to earn games were earned using the Bitcoin blockchain, however due to the high cost of transactions and sluggish performance, Ethereum, a blockchain network powered by smart contracts, was introduced.
Ethereum was and continues to be extensively utilized by crypto game creators to generate money, however it suffers from performance concerns owing to a lack of block capacity. The Ethereum network became overcrowded in late 2017 as a consequence of the viral popularity of CryptoKitties, resulting in a surge in Ethereum’s fees.
Because the Ethereum blockchain has a limited amount of block space, transactions that need faster settlement times incentivise miners to include them ahead of others using the included fee mechanism. When demand outstrips block capacity, transaction costs rise, effectively pricing certain users out.
GameFi is growing.
Naturally, a game with hefty in-game purchase costs would struggle to attract a large user base. As a result of this problem, a number of cryptocurrency game developers have moved away from Ethereum’s foundation layer in favor of faster networks. These high-capacity networks include Solana, Polkadot, Polygon, Wax, and BSC.
There are various phases to a GameFi project. Players may increase their earnings by spending time developing their characters, monetizing their land assets by developing structures that other players pay to visit, or participating in tournaments.
All information is kept on a decentralized public blockchain, which keeps track of who owns what. This means that the game’s assets belong to the players, not the designers.
Even if a server is down or the gaming company is having technical issues, you maintain ownership of any in-game item you win as a player. As a result, crypto gaming becomes a respectable source of cash for players while they are amused. Gaming is even a source of income for some players.
Additional GameFi Advantages
There are further benefits. Decentralized Money (DeFi) is a financial system that applies the blockchain’s decentralized concept to the world of money. In GameFi efforts, staking, liquidity mining, and yield farming are all gaining popularity. These are all additional ways for players to earn money in-game in a passive manner. Players may place bets on their in-game assets to earn annual interest and other rewards that can be used to unlock new levels or buy more in-game items. Gamers may receive loans by pledging their gaming assets at the same time.
Unlike traditional game development, where choices are made centrally, GameFi projects have the potential to include customers. A Decentralized Autonomous Organization (DAO) is an open-source blockchain ledger that is defined by a set of explicit rules. Certain play to earn games empower players to influence future game updates by granting stakeholder voting rights to members of the GameFi DAOAs an open-source blockchain ledger, a Decentralized Autonomous Organization (DAO) is defined by a set of explicit rules (Decentralized Autonomous Organization).
A decentralized autonomous organization (DAO) allows token holders to propose and vote on project updates, making GameFi truly participatory. Typically, these proposals have a monetary impact, such as when DAO members vote to increase the reward for doing a certain in-game action.
You must own a project’s governance token to join the GameFi DAO. Your voting power is usually proportional to the number of tokens you hold.
GameFi Games compared toTraditional Online Games
GameFi, like many other blockchain-based movements, has begun to disrupt the traditional online gaming industry. GameFi is changing online gaming as we know it by combining DeFi, NFTs, and blockchain technology.
While GameFi projects come in a variety of forms and sizes, the bulk of successful crypto and NFT play to earn games share commonalities with traditional online games.
Earn-While-You-Play (EWTP) model
GameFi’s play-to-earn strategy is revolutionary. In-app purchases, affiliate marketing, and advertising are the main sources of money for conventional online games. You spend money as a player on in-game items that help you win or give you an edge over other players. That money is, of course, delivered directly to the game operators.
Furthermore, if you’re like most gamers who grew up playing online video play to earn games like Minecraft and PlayerUnknown’s Battlegrounds, you’re accustomed to highly sought-after in-game currencies that have no value outside of the gaming environment. You gain nothing in return for your time and work invested on these online play to earn games other than entertainment.