Gaming has proved to be one of the hottest sectors and leading crypto ventures in 2021. GameFi is one of the hottest topics in the crypto industry right now. Tagged ‘cryptocurrency next big thing,’ the vast majority of global players are experimenting with the new set of income-generating opportunities and, at the same time, having fun. This is because gaming apps being developed on the decentralized frameworks offered by blockchain allow players to leverage some of the most innovative DeFi functionalities and NFT implementations, opening up a completely alternative form of financial opportunities.
What is GameFi?
The term ‘GameFi’ is a combination of two separate words game and finance. GameFi has become a bit of a buzzword, and it is a broad term. To put it simply, it refers to the financialization of gaming.
With the ERC-721 token standard development, many opportunities opened up for players and developers. The earliest form of GameFi and NFTs appeared in 2017 when the cat-themed collectibles, CryptoKitties. The famous CryptoKitties almost halted the Ethereum network due to their tremendous popularity and demand. However, the game opened the door for today’s more advanced games. They have begun to merge with the economic, artistic, and unique financial components present in non-fungible tokens (NFTS); these components enable blockchain-based games to become a true catalyst in the field.
What You Need to Play a Blockchain-Based Game
You need to do three things to play blockchain-based games. Firstly, you’ll need a crypto wallet to store your cryptos and NFTs. Then, you’ll need it to continue with your digital activities. There are various wallets, and you must check the game to see which wallets are compatible with the game.
Secondly, you must fund your wallet with the game’s ecosystem token or GameFi crypto. For example, Decentraland uses MANA, but Axie Infinity uses its native token—AXS. Lastly, you must purchase in-game items using the GameFi token to enjoy its perks. For example, to play the Axie Infinity game, you must first acquire three Axies.
These tokens mentioned can be purchased, exchanged, and stored on Guarda.
How Do GameFi Projects Work?
GameFi comes in various forms, and as a result, the processes by which players can earn yield through gameplay differ from game to game. However, there is some common ground because blockchain-based game protocols focus mainly on three primary features.
Given the DeFi-infused features—staking, yield farming, and liquidity mining—powering the majority of P2E games, it is believed that GameFi could become the next big thing in the crypto space. This is because it already allows players to stake their in-game tokens and earn interest, similar to how you normally stake BTC or stable coins in the traditional DeFi protocol.
For instance, players can earn staking rewards and interest by locking their in-game fungible tokens or NFT assets in smart contracts.
There are numerous reasons why NFTs and gaming prove to be a perfect match. For years, gamers have traded virtual assets ranging from Second Life’s real estate to World of Warcraft’s gold and Fortnite’s character skins. However, these virtual economies have operated almost exclusively within centrally controlled marketplaces that have prohibited players from exchanging their in-game assets for real-world economic value, such as fiat or cryptocurrency. NFTs allow gamers to own and control their assets with verifiable ownership, which they can monetize for different experiences.
Players can earn or trade in-game NFTs, and these in-game NFTs may represent an item, character, or collectible. Depending on the game, it might be just decorative or fulfill a specific use case and have a diversified collection of utilities.
Unlike pay-to-win (P2W) games where players need to buy a recurring subscription or subscription pack, play-to-earn has introduced a fully-fledged suite of financial utility and advanced in-game economies built on the set of both fungible and non-fungible tokens. The underlying pioneering course of each game relies on its unique value-rich microeconomic structure revolving around its platform and its fungible and non-fungible token. In addition, P2E games provide players financial incentives to continue playing and advancing to earn money.
Future of GameFi
Given the success of Axie Infinity and other games, the GameFi ecosystem has a bright future ahead of it. The value of the global gaming industry now exceeds over $200 billion. The gaming demographic has increased over 3 years; there are around 3 billion gamers in the world. GameFi embodies the most exciting ecosystem in the blockchain network. There is also an incredible potential surrounding the space, especially for those with first-mover advantage like Axie Infinity, The Sandbox, etc. It is expected that more players will turn to GameFi in the coming years, especially if they can earn income while playing.
The GameFi sector will continue to grow with innovations as more people hear about it. Big companies may also decide to join as VCs or add their elements to the space, making it grow bigger.
While some believe that blockchain-based gaming will pave the way for global acceptance of blockchain, DeFi, NFTs, as well as gaming, others think it’s something that will go away with time. However, the GameFi space has made it possible to earn rewards and enjoy a world of fun. That is why many new players are moving into the space.
Like any other crypto or blockchain-related project, always do your research before diving into any GameFi project. Though they come with their perks, they are relatively new and highly speculative.