GameFi 101: Everything To Know
Read on to find out what GameFi is, the potential of this field, and its related aspects.
Decentralized finance, or DeFi, manages financial transactions using cryptocurrencies and blockchain technology. Decentralized finance began to gain significance in July 2020 with an estimated $9.1 billion in value locked. By March 2022, the total value locked in this distinctive financial ecosystem rose by roughly nine times, which is $79.1 billion, according to DeFi Pulse.
Unlike Decentralized finance, gaming has been the key industry for years. As stated by Mordor Intelligence, the gaming market was worth USD 198.40 billion in 2021. It is predicted to grow to USD 339.95 billion by 2027, with a CAGR of 8.94% between 2022 and 2027.
Now, imagine when Defi and Gaming — two promising industries — collide, what will happen? Another potential field of the blockchain industry, which is GameFi, will emerge and rise to a new generation of video games that is financially beneficial for everyone.
What Is GameFi?
As a buzzword in the cryptoverse, GameFi refers to blockchain-based games allowing players to gain real financial benefits. In other words, unlike the traditional “play-2-win” gaming model, GameFi uses a “play-to-earn” (P2E) model: play and earn money for game progress.
The model requires not only DeFi but also non-fungible tokens, NTFs. Through P2E crypto games, NFTs help players verify ownership of in-game assets such as avatars, lands, costumes, weapons, pets, tokens, and many others. These items can be traded for profit on NFT marketplaces or swapped for cryptocurrencies, which can then be exchanged for government-issued currencies, known as fiat money (Decentralized finance).
Explosive Growth Of GameFi
Around 2017, there were collectible trading games on the market that merged blockchain’s “transaction properties” and “the only private features of assets” with the gameplay. However, at this period, blockchain games can only be defined as chain games and do not own the GameFi features.
GameFi arose from the growth of the NFT concept as well as the DeFi and gaming industry, all within the context of the blockchain metaverse concept. The on-chain financial system has completed the gamification process when the Metaverse’s game form integrates the principles of NFT and DeFi. The GameFi concept was introduced and extensively accepted in 2020 by the industry. As a result, beginning in the second half of 2020, a number of GameFi developments have successfully drawn the attention of the blockchain sector such as DeFi Kingdom or Guild of Guardians.
After a year of market testing, GameFi has proved its unique ecosystem concerning digital asset value and chain game value interaction. Since March 2021, GameFi has experienced rapid growth. It has swiftly grown into an independent field of the blockchain industry by September 2021 and is expected to overtake the DeFi field in near future.
GameFi vs Traditional Gaming
You can find the comparison between GameFi and traditional gaming in the table below.
Play To Earn
As mentioned above, play-to-earn is the unique selling point making GameFi special. During the game, participants will not only enjoy playing the character but also obtain game tokens, equipment which can be traded in a decentralized marketplace.
With GameFi, these assets can be issued or created as NFTs on the blockchain, also known as NFT minting. Players have complete control over their assets, as well as the assurance of legitimacy and proven ownership.
Updates/Roadmaps Are Decided By Players
GameFi games are not owned by anyone or companies like traditional games. In other words, players can contribute to a game change. Typically, users receiving game tokens have the right to vote to enhance and upgrade the game for a better gaming experience. This can lead to a higher level of interaction and engagement between the players and the games.
Into The GameFi World
It’s a dream, right? Earning money just by playing video games. But, how do you begin playing GameFi games? Don’t hesitate to follow these steps to get started.
Create A Cryptocurrency Wallet
Firstly, you need to build a compatible wallet to store the in-game currencies and NFTs earned during the game. In the universe of GameFi, your identity is your cryptocurrency wallet, not your username.
Put Money in Your Wallet
All GameFi games are available for free download. However, some games, such as Axie Infinity, may require a beginning package, which in most cases will include your digital avatar. To purchase it, you will need to deposit an initial sum of money into your wallet in the form of a suitable cryptocurrency.
Purchase Essential Digital Assets
Once you have the funds in your wallet in a compatible cryptocurrency, you must exchange them for the digital assets required to play the game.
Conclusion
GameFi can be defined as the combination of blockchain-based games (Gaming) and decentralized finance(DeFi). With easy access and some benefits over traditional gaming, the GameFi industry is expanding rapidly and expected to outclass the DeFi sector.
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Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such.
