Here we are again, putting complex concepts into simple words. And this article is dedicated to GameFi. Shortly, GameFi or game finance are blockchain projects that allow users to earn money through gameplay. But let’s dive deeper and understand what is GameFi and how does it work?
History of GameFi
Andre Cronje, the creator of the DeFi project yEarn Finance, originally announced GameFi in 2020; however, support for cryptocurrencies had already been included in gaming projects for a long time before that. Some online casinos permitted Bitcoin deposits back in 2014.
Minecraft, a sandbox video game, was integrated with bitcoin servers as an experiment by the creators. Players on the MinecraftCC server received rewards in the first cryptocurrency for carrying out a variety of tasks, including putting blocks, slaying enemies, and constructing. The server is still operational despite the application losing support for bitcoin in 2016 due to instability.
One of the first widely played online games on Ethereum was the CryptoKitties app, which was released in 2017. Everyone could purchase, raise, and trade digital kittens in CryptoKitties using ERC-721 tokens.
User interest in the program was high; in less than a week after its release, crypto-kitties accounted for more than 11% of all network transactions. The Ethereum blockchain has frequently been overloaded by the game.
Since 2020, the GameFi industry has started to grow quickly. Tokenized in-game items have been used in a sizable number of games, which was made possible by the rise in popularity of DeFi and NFT.
The reason why the summer of 2021 is known as the “summer of NFT” or gamification is because various blockchain games that use cryptocurrency as background had repeated jumps in the value of their tokens during this time. The Axie Infinity frenzy and the growth of the AXS token are two examples. The Ethereum-based gaming platform eventually generated more than $800,000,000 in revenue in 30 days, surpassing all other DeFi protocols, and rose to the top of this indication.
The GameFi market gives creators the chance to build brand-new metaverses and virtual worlds for their games, complete with characters, plotlines, and in-game currency that gamers find appealing. Users may profit from in-game activities while having fun. Blockchain games come in both action and strategic categories.
Gaming apps are helpful because they provide beginners with a discrete, easy introduction to cryptocurrency and decentralized money.
NFT tokens are gaining interest from people other than only collectors and followers of famous people as they grow more and more in demand as a financial instrument (the market capitalization of this market has already topped $14.2 billion). The in-game economy also looks much more flawless than the actual one since GameFi blurs the distinctions between gaming and banking.
What Makes GameFi Different From Traditional Video Games
The traditional “pay to play” model (pay to play) calls for the user to fork over money in exchange for a license or subscription to access features that enhance the game experience.
On centralized servers owned by gaming firms, this kind of video game is played. As a result, the player cannot completely own the environment and in-game purchases.
For instance, the user could purchase additional armor or weaponry to boost the gaming character’s performance. Items are frequently restricted to a particular game platform or virtual setting. They are only used by the player in the location of purchase.
The traditional video games business is shifting because of GameFi. Gaming and monetization projects blend business and pleasure, and the blockchain enables this paradigm of decentralization and transparency.
The idea’s main component is maintaining ownership of digital items in the form of NFTs. Ownership of game objects is determined by fixed data in the blockchain. It is unable to edit or delete data.
Maintaining ownership of digital objects in the form of NFTs is central to the idea. Game artifacts’ owners are identified via fixed data in the blockchain. Data cannot be changed or removed.
Users also get prizes for wagering on project tokens. On the markets, the player can sell tokenized prizes or trade them for fiat currency or another cryptocurrency.
GameFi offers a huge selection of genres, ranging from the traditional lottery to intricate multiplayer multiverses. Gala Games, a blockchain game creation startup, wants to eventually build a unified ecosystem with a single economy for many game genres.
What Blockchain Is Used to Create GameFi Projects
The original GameFi was built on Ethereum and Bitcoin; however, at present, they mostly employ less expensive and quicker options.
For instance, Axie Infinity was initially introduced on the Ethereum platform, but a whole ecosystem was later introduced on the Ronin sidechain.
Other specialized blockchain platforms, including Flow from the makers of CryptoKitties, have been modified for GameFi. The blockchains for Tron, BNB Chain, Wax, and Polygon have all seen a lot of game releases.
What Categories Are Gamefi Projects Divided Into
Free2Play – projects that do not require initial investment – you can immediately start playing.
For example, Gods Unchained is a blockchain collectible card game. It is similar to Hearthstone in many ways but allows players to freely trade and sell NFT cards, as well as receive rewards for progress in the game.
Play2Earn – this category includes all blockchain projects that enable users to monetize their gaming experience.
Move2Earn are projects that reward users for physical activity and not for gameplay.
A well-known representative of the segment is a fitness application for the STEPN mobile device. The application tracks the movements of players using GPS, and the user receives project tokens for walking or running. To participate, you must have a pair of digital sneakers in the form of NFT.
Metaverses is a virtual world in the form of a three-dimensional game, “sandbox,” where users own digital objects and plots of land presented in the form of non-fungible tokens.
For example, in The Sandbox and Decentraland, any player can buy digital real estate, develop it and earn income, and in the multiplayer My Neighbor Alice, you can buy an entire farm.
Companies that provide tools for developing and distributing gamified projects on the blockchain deserve special attention.
For example, Enjin provides projects with tools for developers, implements blockchain technologies and virtual economy into existing video games, and helps to release in-game cross-chain NFTs.
What is Play-to-Earn
Play-to-Earn (P2E) is a term for video games where gamers can earn cryptocurrencies and NFTs through their gaming activities. The play-to-earn trend has gained a lot of momentum over the past few months.
Gaming itself is a huge global market. There are over 2.7 billion gamers in the world. At the same time, analysts expect that in the next few years, the value of the industry will exceed $300 billion. However, there are two important problems in the industry:
- Players do not own their purchases in the full sense of the term. In-game items (equipment, weapons, power-ups, and so on) increase the player’s performance and enjoyment of the game but serve no other purpose. As a result, they fall into the category of entertainment expenses rather than investments;
- Lack of choice of business model. 80% of total digital gaming revenue comes from free-to-play games. This limits developers and the types of gameplay mechanics, as well as the development of the industry itself. However, as new business models emerge for game developers (such as NFT resale commissions), new forms of gameplay will also emerge.
Play-to-Earn can change the existing landscape of the gaming industry. This trend immediately embraced the development of a variety of blockchains. The number of games has already exceeded 200, while they occupy up to 45% of the traffic of all decentralized applications. As a result, the trend is even singled out as a separate area of GameFi (Game Finance).
The concept is simple: users can earn real money or other rewards just by playing the game!
What is Move-to-Earn
In recent months, blockchain games based on the “move-to-earn” (M2E) concept have emerged, such as the STEPN and Genopets projects. They combine elements of GameFi and fitness apps with rewarding users for exercising.
Move-to-Earn is becoming a new trend after the STEPN (GMT) project, which caused a lot of hype when its price was over 200 times the IEO price.
Move-to-Earn is a form in which users can earn money by moving themselves. Movements will be recorded using sensor technology, GPS, on the phone.
What Does DeFi Have to Do With GameFi
The projects integrate DeFi mechanics into the gaming ecosystem, namely profitable farming, staking, and liquidity mining.
For example, in the metaverse of The Sandbox, players can stake the SAND token. The user receives a profit in accordance with the number of blocked funds, as well as valuable game resources GEM and CATALYST.
Thanks to elements of DeFi, games become even more decentralized. Some GameFi projects provide an opportunity for the community to influence the future of the project through decentralized autonomous organizations (DAOs) and smart contracts. The number of tokens held by holders affects voting rights.
Top 7 Best GameFi Projects
Finalizing the whole concept of GameFi, let’s see what the best projects in the field are and what they do.
One of the most popular offerings in blockchain gaming right now, StepN is an earning platform that gives people money for playing sports. In order to start earning, you will need to purchase sneakers (NFT), which currently have a minimum price of 8.2 SOL (almost $400 at the time of writing). This is a fairly high financial threshold to enter, especially considering that in order to earn more serious money, the user needs to have multiple running shoes to unlock the higher earning potential.
StepN will soon introduce a rental feature on the platform, where players can rent sneakers from other users and share profits with them.
These little creatures are based on Tamagotchis that would be recognizable to anyone born in the 1990s. They were small digital pets that had hatched from an egg and were in need of care and attention. Aavegochi are ghosts that roam the blockchain. The entry threshold is quite high: Aavegotchi’s minimum price is currently 599 GHST (the game’s native token) or $900. Luckily, users can rent Aavegotchi and collect all the goodies on offer in Gotchiverse. The game also features staking, where users can stake their GHST for income. Loyal players are rewarded at Aavegotchi, so be prepared to put in the time and effort if you want to make some money.
Genopets is another money-making game, but this game has a unique trick. Instead of just training and earning tokens for it, users level up their Genopet NFT game avatar by moving around in the real world. The game recently launched Genopets Habitat, virtual worlds through which owners can earn rewards that they can redeem for real money. Genopet avatars are currently available in secondary markets for a minimum price of 58 SOL ($2700). Genopets Habitat NFTs are available for a minimum price of 75 SOL ($3500).
The fate of Axie Infinity in 2022 was ambiguous. The exclusive blockchain of the Ronin platform was hacked back in March, and the price of the in-game AXS token fell from the November 2021 high. In-game NFTs and items have also fallen in price since the start of the year, and the game’s developers have been working hard to ensure that its economy remains sustainable in the long run. The cheapest Axie NFTs are now available for $4. This means that for less than $15, anyone can start playing the game now. Sky Mavis, developers of Axie Infinity, have also launched a new Origin series that promises to bring more rewards.
Mirandus is an MMORPG and one of the most exciting future games of Gala Games. The game launched its playable avatars, Exemplar, in December 2021 when they became available for purchase at Gala Games. Users can now choose the cheapest ones and start playing Mirandus after it launches (later this year). It is an open world with absolute freedom. Gala Games stated that it does not include maps and quests. Players own history as well as the economy with the Materium Token (MTRM), which has been on a rollercoaster ride since its launch.
This is a game for everyone who loves to collect and trade cards. The Hive blockchain was created specifically for Splinterlands, so it’s no surprise that the game is by far the largest DApp in the world. Over 500,000 unique active wallets have connected to it in the last 30 days. The best way to play Splinterlands is to stick to a plan. Before you start, decide if you want to earn money or play for fun. There are also in-game tournaments that you can regularly take part in. Splinterlands’ governance token is called Splintershards (SPS), and the best part of the game is that it’s free to start playing at a basic level. It is recommended that players spend $10 for the full experience.
Illuvium is a AAA free-to-play fantasy RPG that launched its open beta in Q1 2022. Players explore the 3D world and capture illuvials, mythical creatures that inhabit the virtual world. While the game is free to play, it gets a lot better if you spend some money and get yourself some illuvial avatars. The in-game token is ILV, which, like all cryptocurrencies and tokens, has suffered from a bear market and has fallen in value in recent weeks. Players can earn rewards by winning battles against opponents or betting on the outcome of other users’ fights. Hunting, capturing, and selling illuvials is another way to earn money in this game.
Prospects for the Development of the GameFi Industry
The sale of gaming objects has long become popular, and many users managed to earn large sums on this. In the normal gaming industry, you need to use third-party platforms to trade. This involves additional actions and commissions. In GameFi, everything is done inside the blockchain game.
Projects are already being developed that allow characters from different games to compete on the same platform. Users will upgrade NFT objects and compete with other players.
All this will lead to the formation of a full-fledged market for gaming non-fungible tokens. The rapid growth of various projects also confirms the promise of the GameFi industry.