What is GameFi?
GameFi is a fusion of the words game and finance. It refers to play-to-earn blockchain games that offer economic incentives to players. The GameFi ecosystem uses cryptocurrencies, non-fungible tokens (NFTs), and blockchain technology to create a virtual gaming environment.
Typically, players can earn in-game rewards by completing tasks, battling other players, and progressing through the different game levels. They can also transfer their assets outside of the game to trade on crypto exchanges and NFT marketplaces.
Users of such games can receive in-game rewards by completing tasks, fighting with other players and passing levels in the game. After that, they can sell their assets on crypto exchanges and NFT marketplaces.
How does GameFi work?
In games belonging to the GameFi segment, there are NFT objects that can be bought or received for various game achievements.
Such non-fungible tokens can come in different forms:
- game territories;
- resources, etc.
NFT technology allows the user to secure ownership of any object, including the gaming one.
In many GameFi projects, a large number of levels are available to complete. Therefore, you can start working even with minimal experience: characters and other objects will gradually improve and become more expensive. Tokenized trophies, avatars and other assets can be sold for impressive amounts on the NFT market. The more popular the game, the more expensive the items in it.
In addition to the gradual passage of the game and the extraction of items, there are many other ways to earn money in GameFi. For example:
- Some games allow you to bet on the results of various competitions and earn on forecasts.
- Land and other objects can be rented out.
- Players can increase their stock of cryptocurrency funds by participating in tournaments.
All information about achievements and ownership of various items is stored in a public blockchain. This format of working with data allows users to own game assets, not developers. If a player has developed a character or bought it, then no one can take this object from him. Ownership will not disappear even if the game servers are shut down.
Play-to-earn model (P2E)
In most cases, traditional video games won’t generate any financial returns to players, and their in-game assets are controlled and held by the gaming company. In contrast, play-to-earn (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.
Why the popularity of GameFi is growing?
Gaming has managed to become a full-fledged industry with millions of users involved. Now the sphere of decentralized finance and tokenization of objects is rapidly gaining popularity. All these areas are combined in the GameFi industry.
Plus, blockchain games do not require serious hardware to participate in the project. You can play from mobile phones, regular tablets or weak PCs. Thanks to such characteristics, GameFi projects are very profitable and affordable.
The use of NFT objects in games had a strong influence on the level of popularity of GameFi. If decentralized finance allows you to earn digital money, then non- fungible tokens make it possible to invest in objects that can become very expensive. By selling weapons, artifacts, characters and land plots of popular game projects, investors can earn hundreds of thousands of dollars.
Prospects for the development of the GameFi industry
The sale of game objects has become popular, and many users have managed to earn large sums on this. In the usual gaming industry, you need to use third-party platforms for trading. This involves additional actions and commissions. In GameFi, everything is done inside a blockchain game.
Projects that allow characters from different games to compete on the same platform are already being developed. Users will pump NFT objects and compete with other players.
All this will lead to the creation of a full-fledged market for gaming non- fungible tokens.