GameFi is a mixture of Gaming and Finance. It allows people to have economic gains from playing games. The term first became popular after the price surge of Axie Infinity (AXS). AXS is a play-to-earn digital game. Users make money online while having fun.
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What is GameFi?
GameFi is an ecosystem of play-to-earn blockchain games where participants acquire cryptocurrencies, NFTs, and other economic incentives after completing tasks or leveling up in the game. The digital rewards can then be sold or traded on crypto marketplaces to earn money.
GameFi has three elements; a digital gaming environment, virtual assets, and blockchain technology. Multiple objects in the game such as avatars, swords, and weapons hold a real-world value. Hence players receive economic incentives for their struggles within the game.
Working Model of Crypto GameFi
Crypto GameFi projects come in different shapes and forms. They vary in terms of economic models. However, all of them contain in-game assets.
The in-game assets like cosmetics, avatars, weapons, and digital lands exist as NFTs on blockchains. Participants can trade these NFTs on marketplaces and earn in cryptocurrencies.
Also Read: What is Metaverse?
Sometimes the assets are only available as game features. Users need to convert them into NFTs before selling them on a marketplace.
The game assets can be used to earn additional rewards as well. For instance, you can use the weapon to kill the enemy, level up in the game, and unlock a new fancy avatar. Also, you can turn your virtual piece of land into something much more valuable like a park or a house.
Some GameFi projects allow users to earn passive income via staking or staking of their virtual assets.
Top 5 GameFi Projects
The number of GameFi projects is increasing every day with the popularity of the ecosystem. How a few of the projects stand out with their market cap in billions of dollars.
Decentraland is a GameFi platform with a native $MANA token. Users can acquire lands, customize the features of their lands and monetize their creations in the virtual world of Decentraland. All transactions are conducted via MANA token.
MANA is a fungible, ERC20 token. It has a total market cap of $3.28 Billion.
Sandbox is pretty much a decentralized version of Minecraft. It is a play-to-earn blockchain game. Players use Non-Fungible Tokens (NFTs) on the Ethereum blockchain for constructing a virtual game environment.
SAND token is used for purchasing in-game assets and lands in Sandbox virtual world. it is also an ERC20 token with a market cap of $3.02 Billion.
Axie Infinity is a blockchain game where players can breed, grow, acquire and trade token-based creatures known as Axies. The game is governed by Axie Infinity Shards (AXS).
AXS is earned via playing games or staking the token. Axie Infinity Ecosystem is partly controlled by AXS token holders. These holders can earn a reward for voting in governance decisions. AXS has a market cap of $2.65 Billion.
Gala is a players-owned blockchain game. The users get to play fun-filled games to earn rewards such as a magical sword. You can trade rewards for other in-game assets.
Players have voting rights and can get to decide the future of the Gala ecosystem. The total market cap of Gala is $1.36 Billion.
Enjin platform is rapidly growing with its utility in content creation. Game developers can manage the trade of virtual in-game assets using Enjin Smart Contract.
Enjin platform is powered by ENJ token. It has a crypto market cap of $1.48 Billion.
Traditional Video Games Vs. GameFi
GameFi projects look similar to traditional video games. However, they differ greatly from each other. Here are some of the main differences between video games and GameFi.
Play-to-earn Vs. Play-to-Play
Traditional Video games are based on a pay-to-play model. There is no monetary reward for leveling up in-game or acquiring new avatars. The feature you unlock in the game is only useful within the game.
GameFi users make earnings from playing games. The game rewards have an actual economic value. They can spend the virtual world money in the real world.
Non-Tradeable Assets Vs. Tradeable Assets
The assets from Video Games are not useable outside the scope of the game. They cannot be spent in the real world.
GameFi assets, on the other hand, can be traded outside the game. Players can earn both crypto and fiat earnings from selling them on marketplaces.
Programing Vs. Blockchain Technology
Traditional Video Games are based on programming. They are created using Artificial Intelligence and developmental tools.
GameFi is powered by blockchain technology. All in-game assets are minted on a blockchain.
Subscription Fee Vs. Free
Video games need to be purchased. You either buy their license or purchase a subscription.
Most of the GameFi play-to-earn games are free of cost. There is no price hence anyone can play them and earn financial rewards.
Centralized Vs. Decentralized
Traditional games are often owned by a company. As a result, the future developments in the game depend on a central authority.
GameFi games are owned by the players. They have a say in decision-making via the voting process.
How to Participate in GameFi?
Crypto games have different requirements for players. You can check those requirements on the official website of the game. Here are the general steps that you can take to become part of any gamefi project.
- Create a decentralized cryptocurrency wallet such as Trust Wallet or MetaMask.
- Sometimes the games have a requirement such as you need to purchase a certain cryptocurrency of NFTs. Check for those requirements on the website and proceed accordingly.
- Connect your wallet to the blockchain and access the game. Start playing to earn rewards.
The crypto industry has pulled off many new GameFi projects in 2021. The number of these projects will likely keep growing in 2022 and beyond. GameFi provides an exciting opportunity of making money while having fun. By far, it is a beloved industry for gamers and tech geeks.