A deep dive into what GameFi actually is
Axie Infinity and related GameFi initiatives and play-to-earn games are upending the established gaming business. These crypto play-to-earn games are basically monetizations of the gaming experience through the blockchain. What distinguishes them from conventional games is that participants compete for prizes rather than for victory: consider Monopoly played for real money.
Unsurprisingly, the potential to compensate players for their time and effort is driving the fast growth of these play-to-earn games, colloquially referred to as GameFi. Who wouldn’t want to make money while having fun? We’re going to take a deep dive into the world of GameFi games in this post. Additionally, we’ll discuss its origins, alternative monetization techniques, and what to anticipate in the future.
What Exactly Is GameFi?
GameFi, one of the cryptoverse’s trendiest buzzwords, is a combination of the terms “Game” and “Finance.” It discusses the gamification of financial systems in order to generate revenue via crypto NFT game free to play.
GameFi video game initiatives are built on the distributed ledger of a blockchain, which lets players to have verifiable ownership of the game’s virtual assets. In contrast to conventional gaming, which encourages users to play for the sake of winning, GameFi initiatives encourage users to play for the sake of earning.
The GameFi idea originally manifested itself in early Minecraft servers connected with Bitcoin; Gambit.com; online play to earn games such as Bombermine, and peer-to-peer platforms that enable players to monetize their online activities.
The creators of MixMarvel, a blockchain game company, emphasized the potential for blockchain technology to disrupt the video gaming industry in a keynote presentation at the World Blockchain Conference in Wuzhen, China in November 2019.
However, Yearn. finance creator Andre Cronje used the name “GameFi” to represent this new trend in a September 2020 tweet. Since then, the phrase has been frequently used to denote video games that include decentralized financial components driven by blockchain technology. These initiatives use the popularity of video play to earn games and the unique characteristics of cryptocurrency to create an enticing environment for GameFi.
How Do GameFi Initiatives Operate?
Typically, different GameFi initiatives have a few characteristics. In-game assets like avatars, land, outfits, weapons, currency, tokens, and pets are represented by NFTs—non-fungible digital tokens that serve as proof of ownership. Players earn these things via gameplay and may either sell them for profit on NFT markets or swap them for cryptocurrency — which can then be converted for fiat money.
The Origins of GameFi
Early GameFi plays to earn games used the Bitcoin blockchain, but the high cost of transactions and slow performance necessitated the introduction of Ethereum, a blockchain network supported by smart contracts.
Ethereum was widely used by crypto play to earn games developers and remains popular, but it suffers from performance issues as well due to limited block space. This issue was revealed in late 2017 when the viral popularity of CryptoKitties caused the Ethereum network to become overloaded, resulting in a spike in Ethereum’s fees.
Due to the Ethereum blockchain’s block space constraints, transactions needing quicker settlement times motivate miners to include them ahead of others through the included fee mechanism. When demand exceeds the available block capacity, transaction fees increase, thus pricing certain users out.
Naturally, a game that charges high fees for in-game purchases would struggle to build a sizable user base. Confronted with this issue, several cryptocurrency game creators migrated away from Ethereum’s foundation layer in favor of speedier networks. Solana, Polkadot, Polygon, Wax, and BSC are among these high-capacity networks.
GameFi projects consist of several stages. Players may enhance their revenue by investing time in character development, monetizing their land assets via the development of buildings that other players pay to visit, or competing in tournaments.
All data is maintained on a decentralized public blockchain, which maintains a record of who owns what. This implies that the assets in the game are owned by the players, not the creators.
As a player, you retain ownership of whatever in-game object you earn, even if a server is shut down or the gaming firm has technical difficulties. This turns crypto gaming into a legitimate source of revenue for participants while they are entertained. Some gamers even earn a living from gaming. Click here to read about A layman’s guide to NFT play to earn games.
Additional Benefits of GameFi
There are further advantages. DeFi Decentralized Money (DeFi) is a financial technology that brings the decentralized notion of blockchain to the world of finance. Staking, liquidity mining, and yield farming are all gaining traction in GameFi initiatives. These are all additional options for users to make passive cash in-game. Players may stake their in-game assets in order to earn yearly interest and other incentives that can be used to unlock new levels or purchase extra in-game products. Simultaneously, gamers may get loans by pledging their gaming assets.
Unlike conventional game creation, when decisions are made centrally, GameFi projects may engage consumers. 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 DAO enables token holders to propose and vote on project changes, making GameFi genuinely participative. Typically, these proposals have a financial consequence, such as when members of the DAO vote to enhance the reward for doing a certain in-game activity.
To join the GameFi DAO, you must hold a project’s governance token. In most cases, your voting power is proportionate to the number of tokens you own. Visit https://qz.com/2065446/everything-you-need-to-know-about-decentralized-finance-defi/ to read more about DeFi Decentralized Money
Traditional Online Games vs. GameFi Games
As with many other blockchain-based trends, GameFi has started to disrupt the conventional online gaming sector. By fusing features of DeFi, NFTs, and blockchain technology, GameFi is redefining online gaming as we know it.
While GameFi projects take many shapes, the majority of successful crypto and NFT play-to-earn games have characteristics that distinguish them from ordinary online games.
Model of Earn-While-You-Play
GameFi’s play-to-earn approach is groundbreaking. The revenue model for traditional online games is based on in-app purchases, affiliate marketing, and advertising. As a player, you spend money on in-game things that assist you in winning or giving you an advantage over other players. Naturally, that money is sent straight to the game operators.
Additionally, if you’re like the majority of gamers who grew up playing online video games such as Minecraft and PlayerUnknown’s Battlegrounds, you’re used to highly wanted in-game coins that have no worth outside of the gaming environment. Apart from amusement, you get nothing in exchange for the time and effort spent on these online play to earn games.