#Blockchain
#Web3
Gaming finance, or GameFi, is an emerging category that aims to merge the colourful gaming sphere with the revolutionary opportunities of blockchain.
KEY TAKEAWAYS:
• GameFi refers to game finance and is a marriage between gaming and DeFi where players can engage in a robust economy within a game.
• This thrilling combination brings the idea of play-to-earn into the game, which means that users can earn digital assets, rare items, and more by playing games.
• Applying blockchain and non-fungible tokens guarantees that the digital assets are unique and belong to the player.
Video games are considered a multi-billion dollar industry, and the growth is anticipated to continue, with the industry expected to break through the $390 billion mark by 2028, especially considering the emergence of decentralised finance (DeFi), NFTs, and the metaverse. Generally, video games have enabled players to gain rewards. However, the most valuable items, including skins, have been hard to trade and have limited value within the game. Plus, the ownership of these items has always been with the game publishers, as these are based on centralised servers.
Blockchain technology and NFTs have shifted this paradigm in the GameFi domain. These technologies give players full ownership of their virtual belongings. GameFi refers to game finance and is a marriage between gaming and DeFi where players can engage in a robust economy within a game. Thanks to in-game earning mechanisms that provide players with cryptocurrency tokens, players can now be paid for the time spent playing games.
Combining gaming and decentralised finance (DeFi) always sounded intriguing and potentially game-changing. Named after the fusion of gaming with DeFi, GameFi has captured the attention of many gamers to date due to its promise to reward creators and allow full ownership of their assets.
Applying blockchain and non-fungible tokens guarantees that the digital assets are unique and belong to the player; earning digital tokens during gameplay makes the games more interactive for players.
Per a report by 360 Market Updates, the GameFi market was worth over $11.4 million in 2022 and is expected to grow to $48.8 million by 2031 with a CAGR of 27.33%. The new blockchain-based gaming model has become a significant player in the Web3 economy due to its massive potential to reward gamers like never before.
GameFi is a term that combines gaming finance and is a relatively new type of decentralised application that integrates the gaming and financial worlds into a new kind of decentralised application. This emergent category aims to merge the colourful gaming sphere with the revolutionary possibilities of blockchain. Thus, GameFi improves the game’s interactivity and offers the players a chance to earn money and initiate the transition to the gaming economy, turning entertainment into monetisation.
Game finance (GameFi) combines online gaming and decentralised finance (DeFi). GameFi’s play-to-earn nature enables games to earn virtual assets and rare items through in-game activities. Before GameFi, gaming assets remained under the control of centralised gaming platforms, so players did not have full ownership over their assets. GameFi gives the players sole ownership of assets and the opportunity to earn assets such as cryptocurrencies and non-fungible tokens (NFTs).
At the core of GameFi is blockchain technology, which underpins the games and the in-game economies through tokens. Several key elements can be considered the foundation of GameFi, regardless of the details of the project. Smart contracts are central to this process, creating a decentralised environment that alters the existing paradigms in gaming. To get started on a play-to-earn (P2E) GameFi game, you need to purchase tokens or NFTs. As you play and complete rewarding in-game tasks, you earn tokens to sell for a profit.
Integrating decentralised finance, non-fungible tokens, and play-to-earn models is key to realising the concept of GameFi. All these elements help build a strong foundation that helps create a more engaging and financially rewarding gaming environment.
Here is what each of them represents:
• Decentralised Finance (DeFi): DeFi supports the GameFi economy by facilitating tokens, NFTs, etc.
• Non-fungible Tokens(NFTs): NFTs are assets through which players earn in-game assets such as avatars, costumes, weapons, land, and other collectables.
• Play-to-earn Model (P2E): The P2E model encourages players to participate in online gaming by rewarding them through tokens or collectables.
Advantages | Disadvantages |
Earn tokens and NFTs while playing | May lead to losses in the case of wildly volatile price movements |
Have the sole ownership of virtual assets | Can be challenging for newbies to become proficient if unfamiliar with blockchain technology |
Play and earn from anywhere | The sector has experienced numerous scams in the last few years and requires additional attention |
Below are some factors that might make GameFi more attractive to players:
Players can own their digital assets with blockchains since no one can rob them from the blockchain wallet. This actual ownership is not unique to GameFi alone but is inherent in all blockchain assets. In GameFi, players can become owners of their in-game assets, a major factor differentiating blockchain games from other games. Before the introduction of blockchain, owning game assets was an unearned benefit. With blockchain games and GameFi, everyone has the right to own things. This shift changes how players perceive the value of their time, energy, and focus in games.
In most games, such as MMORPGs, MOBAs, or other social games, these rewards are critical to motivating players and giving them something to strive for. Due to the application of blockchain technology, these in-game items and currencies can be bought, sold, and traded in the open market. This setup allows players to earn real cash from gaming. Of course, profit is not guaranteed, and the value of these items might vary.
Suppose you have two games in front of you. The only difference is that one has GameFi elements integrated via blockchain technology, and the other does not. Comparing the two, you would probably choose the GameFi option because it comes with all the features of the other game, plus the ability to earn rewards. Besides entertainment, personal development, and socialisation, the incentive to be rewarded for playing also makes GameFi a better choice than other games.
It’s hard to talk about GameFi without mentioning guilds, which are an essential part of the ecosystem. Guilds have been a part of online gaming for as long as anyone can remember. For example, in games like World of Warcraft and Eve, players form guilds and corporations, respectively, to achieve certain objectives in the game.
In GameFi, guilds share a similar role but more exaggeratedly compared to traditional gaming. GameFi guilds go as far as to create opportunities for members to earn a livelihood in the game. Since these guilds form a community, they usually consist of many members working together towards a shared goal. It also assists new players in breaking into the game by renting required NFTs or providing resources.
This setup benefits everyone—entirely new players can more easily enter play-to-earn games, guilds can expand their membership, and more resources and assets can be gained. The positive effects of the GameFi guild can clearly be seen in gamers, but what about game publishers?
How GameFi Helps Game Publishers
Recently, we have witnessed that large-scale AAA games switch to the crypto sphere with significant capital backing this trend. It attracts both conventional investment funds that are looking for early-stage blockchain investments and web3 investors who are looking to increase their adoption.
At this time, these investors are interested in supporting game studios and independent creators to try and discover new possibilities for using blockchain in the gaming industry. For example, Sky Mavis, the organisation behind Axie Infinity, became valued at $3 billion in 2021. Such funding can enable a whole community of open-source developers.
While this new sector is growing, GameFi projects must identify the ways that lead to their success. Similar to other blockchain applications, one of the concerns is GameFi's environmental footprint. There are high expectations that games running on proof-of-stake blockchains instead of proof-of-work will become the most innovative, as environmental concerns remain a significant issue in the crypto community.
Explore six leading GameFi projects available on BitDelta, each offering unique gaming experiences and financial opportunities.
The Sandbox allows players to immerse in a vast space where they can build, own, and sell gaming experiences on the Ethereum blockchain. It is an online game that can be played without charge, and players solve puzzles to advance to the next level. The first game, The Sandbox (2011), and the second, The Sandbox Evolution (2016), have over 40 million downloads on iOS and Android.
Created by the Vietnamese-based Sky Mavis, Axie Infinity offers players a colourful world of cute and robust characters called Axies. The blockchain-powered game enables players to fight, breed, collect, and profit from trading Axies in the marketplace.
Decentraland provides an online virtual reality game where players can invest in and develop virtual real estate. The game goes beyond land purchases, allowing designers to create and sell different types of apparel and accessories for avatars.
Aavegotchi is a GameFi platform owned by the community that encompasses the ability to develop games, tools, and services and manage the governance within the AavegotchiDAO.
Race Kingdom is set to launch a next-gen metaverse racing game that allows users to race using ultra-rare NFT assets. It is an exciting blockchain-based game and business model with an economic engine that allows players to earn $ATOZ crypto tokens.
My Neighbor Alice is an attractive multiplayer builder game where players can build virtual plots, communicate with neighbours and do various daily activities. The game is entertaining and adventurous and empowers gamers to earn while playing.
Opportunities in GameFi go beyond traditional gaming. Blockchain and decentralised finance (DeFi) propound a new economic paradigm in gaming, where players are not only passive consumers but also holders of monetary stakes in their gaming endeavours. This model has shifted the gaming concept and incorporated a form of investment into the equation.
This evolution is a positive shift for gamers and improves the overall playing experience. Gamers are not only able to engage in their favourite games but also have the opportunity to earn cryptocurrency as a reward, which may later be exchanged for fiat money. Blockchain technology adds value to the gameplay, provides more opportunities to meet and interact with other players, and opens the door to lucrative financial opportunities.
The integrations of GameFi also do not exclude game developers, as they are presented with more tools and opportunities for enhancing the compatibility of ecosystems. This leads more players to their games. This means that developers can create new tokens or use other cryptocurrencies to engage players or gain access to larger audiences of gamers.
It provides solutions to some of the challenges associated with real-money gaming. It can, therefore, be said to have paved the way for adopting blockchain technology in the gaming industry. Two years ago, many of the concepts we discussed above were still in the realm of theory. Nowadays, these concepts are already being realised within the gaming industry, proving the effectiveness and potential of GameFi.
If you ask if crypto gaming is something you should be interested in, then our answer is a resounding yes. There is a high potential for decentralised finance (DeFi), and gaming catalyses the industry's widespread acceptance.
GameFi is the fusion of online gaming and DeFi, where players can play to earn assets such as cryptocurrencies and NFTs.
While traditional online gaming is centralised, GameFi is decentralised, giving players sole ownership. Besides, many conventional games work on the pay-to-earn model, while GameFi is based on the play-to-earn model.
GameFi has three main components: DeFi, NFTs, and P2E. DeFi supports the GameFi economy by facilitating in-game tokens and NFTs.
GameFi allows players to earn by playing games, completing in-game tasks, or trading NFTs.
GameFi is challenging for players new to blockchain technology. Due to cryptocurrencies' volatility, gamers risk losing their assets’ value.
The best GameFi tokens to trade on BitDelta are the Sandbox (SAND/USDT), Axie Infinity (AXS/USDT), Decentraland (MANA/USDT), Aavegotchi (GHST/USDT) and Race Kingdom (ATOZ/USDT).
This article is for informational purposes only and not intended as investment or financial advice. It contains opinions and speculations that are subject to change without notice.
The author and publisher disclaim any liability for decisions made based on the content of this article. Readers are advised to conduct their own research and consult a financial advisor before making investment decisions.
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