GameFi: An Inside Look and Market Overview
The term “GameFi” (“game” and “finance”) is used to describe the financialization of games. GameFi can be seen as the next step in the evolution of gaming, where players are not only competing for prizes and recognition but also for real-world money.
GameFi is an all-encompassing term. Various GameFi models have unique financial implications. For example, several blockchain videogames reward players for completing in-game objectives. Others, on the other hand, allow gamers to profit from buying and selling assets in the game.
It’s also vital to remember that GameFi isn’t a gamble. Participants in the booming videogames industry must employ a mix of talent and a variety of strategies in order to supplement their income. To play these games, players must have a certain level of ability. However, while good fortune plays a part in these games, it isn’t the most important factor in determining who wins or receives cash rewards.
Now, GameFi is currently one of the trendiest topics in the modern digital world, especially among young crypto enthusiasts. What’s more, the traditional global video game market seems to be on the verge of being challenged by constantly evolving blockchain gaming, giving the space for the GameFi industry to expand worldwide.
The possibilities regarding GameFi are indeed thrilling. Therefore, it is a good idea to learn a little about its history, and it will be helpful to realize why they matter.
GameFi is a term that was popularized by software developer A. Cronje in 2020. It refers to games that incorporate financial components supported by blockchain technology. Since Cronje’s initial tweet, the term has become more widely used to describe this type of game.
Given that the terminology has only lately gained recognition, GameFi has a background that dates back almost as long as the existence of cryptocurrencies. Several initial attempts in the industry that we now refer to as GameFi include earlier Minecraft servers with Bitcoin implementations and peer-to-peer systems letting gamers utilize superior products using Bitcoin. Subsequently, several ventures extended the use of blockchain beyond payments, allowing users to earn money by mining cryptocurrencies.
Due to the general complexity of its scripting language, Ethereum’s debut in 2015 provided new possibilities for video game designers. For the very first time, the software could be encoded and performed on-chain, facilitating the creation of modern apps. Take CryptoKitties, for instance. It is a blockchain game that uses the freshly formed ERC-721 standards to define in-game items in the form of NFT, which is another product of a modern digitized ecosystem, spreading globally.
Interest in NFTs has surged thanks to Vitalik Buterin’s Ethereum blockchain. Performance-optimized blockchains have been introduced, which led to vast innovation in the GameFi industry and is highly likely to continue since it attracted a much bigger audience than expected.
How does it actually work?
In many blockchain-based games, players can earn real financial rewards for completing in-game tasks. These rewards are typically paid out in the form of the game’s native token, which is generated from a smart contract.
For instance, Axie Infinity. A part of the game’s proceeds is used to pay the players for several accomplishments, such as winning various brawls and competitions, taking care of one’s virtual soil, exchanging stuff on the NFTs has surged marketplace, or reproducing Axis.
Numerous blockchain games nowadays are based on the concept of possessing non-fungible digital goods. The blockchain was used by Bitcoin to introduce digital scarcity, and NFT technology is built on that. NFTs could also be used to represent a wide range of things, including digital products and in-game components.
Digital ownership of such in-game objects opens up previously unimaginable economic possibilities. In CryptoKitties or Axie Infinity (AXS), for instance, users can take care of NFT-based creatures and upgrade them. They can then use this new asset to take advantage of a game’s play-to-earn features, sell or lend it to other players, and divide all profit made among owners and lenders.
Online virtual universes, often referred to as metaverses, allow their residents to monetize their presence through asset ownership, despite not being games in the true sense of the word. Furthermore, these lands trade freely on online marketplaces. The concept of land ownership is one of the main ideas of projects like The Sandbox (SAND) and Decentraland (MANA), both of which are truly popular and widely used crypto gaming projects.
Also, landlords might commercialize their lands similarly to how they would in actual life. In addition to selling the property, they can create a revenue-generating attraction or lease it to someone who can profit from it. You can notice many initiatives on how to effectively utilize space if you “move” around specific open digital environments. Casinos, digital stores, and music festivals are just a few examples of where you can spend your time inside these online games.
Surprisingly, these universes have begun to see the emergence of real-life economies. Last year, some of the metaverse businesses even hired human employees to offer general assistance. This is a trend that many people believe will continue. Some experts predict that the “metaverse economy” will eventually outweigh the real economy of some countries since individuals benefit hugely from the new opportunities offered by these virtual environments.
How to start playing and being part of GameFi?
Before proceeding, always be careful when doing anything with crypto. Since it is a developing sphere, scam projects and fake websites are all over the place. It’s unsafe to link your wallet or download content from unknown websites. You should, preferably, create a fresh crypto wallet strictly for this purpose and only utilize the money you can afford to lose.
Also, it should be no surprise that there are tons of projects, and every blockchain game is unique and has different principles. As a result, we can only offer general instructions on getting started with GameFi and being part of it.
1. Set up a crypto wallet
A functional crypto wallet, such as Trust Wallet or MetaMask, is required to enter the GameFi industry. You may have to use multiple wallets or access separate blockchain networks based on the game you’re playing.
To play online games running on blockchain, you can, for instance, utilize MetaMask or any other compatible crypto wallet to the specific network. To find out which wallets the specific game supports, visit the game’s online webpage.
Moreover, you also may integrate your cryptocurrency wallet with the Ethereum blockchain and play most of the Ethereum network’s games. Some games, such as Axie Infinity, have their own wallet to cut costs and enhance performance.
With Axie Infinity it is, however, a little more complex. Axie Infinity is based on Ethereum. However, the Ronin network was created as a sidechain by the development staff. As a result, to engage with the Axie Infinity network, you should utilize the authorized and official Ronin Wallet. The Ronin network, as a sidechain, makes it considerably cheaper to exchange and raise Axis, cutting the cost of playing.
2. Log your crypto wallet into the game
It’s worth noting that most of today’s most popular GameFi games can be played on the internet browser. As a result, anyone who wants to play must log in using the crypto wallet explicitly created for the journey.
Unlike conventional online games that want you to create a login and password, most blockchain games use your crypto wallet as a gaming account, so you’ll probably be required to accept a pop-up message on your wallet before you can play. To do that, go to the main page and seek the “Connect Your Wallet” or similar option. The wallet should request you to accept the site’s message to verify the activity. The wallet automatically generates the signature, which you confirm by pressing the Sign button.
As previously stated, your crypto wallet will function as your account, and whatever achievement you make will be recorded there. It also serves as your equipment storage.
3. Review the game’s criteria
First, most GameFi initiatives will ask you to buy their token or NFTs, which will be found in the game. The criteria always differ in these games, but you should carefully examine the potential earnings and the overall dangers. Be careful and calculate how long it will take to recoup your upfront investments and start profiting off of it.
As an example, consider Axie Infinity. You’ll need three Axis in your game wallet to start enjoying the experience of Axie Infinity. The Axie Marketplace is where you can obtain them from. However, to get them, you’ll have to have a wrapped ETH (WETH) in your Ronin Wallet to buy Axis. You can purchase such assets on cryptocurrency exchanges and send them to your Ronin Wallet.
Now, what are the most popular games in the GameFi industry?
Axie Infinity (AXS)
When it comes to the most popular crypto gaming projects lately, Axie Infinity is clearly one of the best. This earn-to-play game was inspired by Pokemon and enabled players to purchase, exchange, and fight with Axis. These Axis take the shape of NFTs, each with its characteristics and exceptionality.
Individuals began spending a lot of time at home behind the screens to seek a tool to generate passive revenue during the COVID-19 outbreak. That being the case, Axie Infinity gained dominance. AXS has shown remarkable progress in the blockchain ecosystem and has become one of the greatest GameFi crypto tokens.
This coin’s worth has surged by approximately 20,000 % since its debut in late 2020. You can trade it for fiat money using a cryptocurrency exchange in addition to utilizing these tokens to make in-game purchases. This suggests that you don’t even have to play Axie Infinity to benefit from the the rise of AXS tokens.
The Sandbox (SAND)
The Sandbox was first launched as a mobile game in 2012. Over time, this play-to-earn game has become one of the most common GameFi apps. In this game, you can buy virtual parcels of land and customize your adventures in The Sandbox metaverse.
The Sandbox economic system is underpinned by SAND, the Sandbox’s native digital token. Inside this network, the SAND serves a variety of purposes. First, SAND tokens could be used to purchase Property NFTs and other digital items in-game.
Additionally, users who stake the SAND tokens can participate in the Sandbox network’s governance. What’s exciting and attractive is that the Sandbox metaverse features dozens of new advertisements and cooperations from various celebrities, such as Snoop Dogg, Justin Timberlake, and Will Smith, among others.
To sum it up, the network is rising in popularity and continues to bring in more people on a daily basis.
The third most popular crypto gaming project is a Decentraland metaverse, where you may purchase and sell digital property and houses. Since this type of video game allows users to create and sell online moments, its concept is comparable to The Sandbox. MANA tokens are required to purchase private land in Decentraland.
Participants of this virtual universe can indeed build structures, play games, host showcases, and engage in online tourism. Furthermore, MANA tokens serve as the ecosystem’s official currency, allowing for a wide range of transactions. Besides that, the token functions as Decentraland’s governance asset.
MANA, like any other coin in its lifetime, has seen some ups and downs. MANA token reached a historical maximum of almost $5 in November 2021 and came no nearer ever since. Despite this, since its debut in 2018, this coin’s value has increased by over 5,500%.
Despite its beginnings in the first half of the last decade, GameFi is just now gaining public acceptance. The most popular projects, which at their peak had over a million daily active users, were one of the blockchain’s best performers, generating massive sales. For example, the triumph of Axie Infinity, one of the iconic releases, effectively demonstrates the rise in the GameFi industry.
There are currently hundreds of millions of gamers around the world involved in GameFi. Many are aware of the concepts of finite virtual objects, tokenization, and in-game currencies. In the meantime, blockchain technology benefits these participants both financially and in terms of game creativity. As a result, it’s not impossible to picture GameFi devouring a growing portion of the multi-billion worldwide video game market.
Many would say that GameFi has a bright future ahead of it, given the popularity of constantly developing crypto gaming projects on multiple blockchain protocols. However, it is difficult to anticipate how this future will play out, considering the volatile crypto market on which these tokens depend. While many of the capabilities covered in this article will most likely appear in future GameFi releases, the rate at which blockchain technology advances today means that new breakthroughs are not uncommon. Many of these innovations will undoubtedly find their way into video games, bringing new and intriguing ways to commercialize new experiences.
It’s clear that GameFi encourages gamers by combining enjoyment and financial benefits. With the increasing popularity of blockchain games, we may expect a growing number of large corporations to invest in metaverse projects.