What is GameFi? How to earn money playing video games?
DeFi has become the hottest new trend in 2020. On the other hand, the revenue of the billion dollar gaming industry continues to grow every year. It is estimated that by the end of 2021, the global video game market will be worth more than $ 178 billion.
So what if you merge two extremely successful industries? A community of game and blockchain enthusiasts has already merged DeFi with games, and since the pandemic its popularity has only increased.
The industry is called “GameFi”. So how does GameFi work and can you really make money playing video games?
What is GameFi and who invented it?
As you may have already guessed, the name “GameFi” comes from the fusion of the words “gaming” and “finance”. GameFi combines cryptocurrency, blockchain, NFT, and game rules and mechanics to create a virtual world where players participate, have fun, and earn money in the process.
It is unclear where the term âGameFiâ comes from, but the concept is believed to have been first introduced by Chinese blockchain game developer MixMarvel at the 2019 World Blockchain Conference in Wuzhen, China. Before the conference, MixMarvel already had published HyperSnake, the world’s first competitive real-time multiplayer blockchain game. HyperSnake was close in September 2020, but the game served as a model for the future development of GameFi games.
But before the term was first used, games like CryptoKitties and Axie Infinity already offered Ethereum users the opportunity to earn crypto through gambling.
How does GameFi work?
The main attraction of GameFi is that it operates on a âplay to winâ business model. This means that players are financially rewarded for playing a game and progressing through its levels. In this case, cryptocurrency, in-game tokens, and NFTs serve as financial incentives.
The âplay to winâ model is not a new concept. What is new, however, is the innovative technology that powers GameFi games today. Blockchain, smart contracts, and tokens are present in many elements of a game. Users can convert tokens earned from a game into other well-known cryptocurrencies such as Ethereum, Bitcoin or stablecoins, then exchanged for fiat currency.
Many GameFi projects include NFTs. Every land, weapon, outfit, and skin in a game is unique. Not only can they be bought and sold in gaming markets, but they can also be used to perform various functions on DeFi, such as guarantees and yield farming. As more game studios join the GameFi hype, there are companies like Yield Guild Games that are now offering users the option of wagering in-game tokens to earn passive income.
In GameFi, the mechanics of each game are different. However, a common requirement is that a player must have a cryptocurrency wallet to store the game’s tokens or NFTs. The wallet must also be pre-loaded with the cryptocurrency. Before you start, many GameFi games also require you to purchase starter characters.
Advantages of GameFi
Play to win
GameFi’s business model is moving away from the traditional “pay-to-play” and “play-to-win” models in the world of video games. Think old-fashioned arcade games or any other popular game like Farmville where players had to pay real money to buy upgrades in order to gain an edge over other players. With “play-to-earn”, making money is no longer limited to game studios and developers. Users can now earn money by playing their favorite games, creating opportunities for financial inclusion.
The Philippines is a concrete case that shows how GameFi can become a source of income. When the country braced for a nationwide lockdown in early 2020, many of those who lost their income signed up to play Axie Infinity. Coming soon reports of Filipinos who earn more than minimum wage playing Axie Infinity earn $ 50 per day compared to about $ 8.15 per day. Some Filipino gamers have also turned Axie Infinity into a full-time job, according to CoinDesk.
Securing the property
Integrating NFTs into a game expands the monetization possibilities of a video game and brings real ownership into the digital space. The fact that the purchase and transfer of in-game items is recorded on a distributed blockchain ledger means that it is the players who own, for example, an outfit, and not the game developer. No in-game items owned cannot be destroyed or counterfeited. If the game studio experiences a technical outage, gamers can rest assured that anything they buy won’t be deleted.
By monetizing the ownership of digital assets, GameFi games also build customer loyalty.
Popular GameFi games
- Infinite Axis: Created by Vietnamese startup Sky Mavis and described as PokÃ©mon meets CryptoKitties, Axie Infinity has become one of the most popular GameFi games. Players breed, train, and collect adorable creatures called Axies, and earn in-game tokens called “Smooth Love Potions” (SLP). In August 2021, Axie Infinity became the first blockchain game on Ethereum to hit $ 1 billion in sales with over 1.8 million daily users, per CryptoSlam.
- Decentraland: Decentraland started out as a 2D pixelated grid platform but has evolved into a 3D virtual reality universe where players can buy, develop and sell virtual land. Now, the game has become one of the top destinations to start a metaverse. In November 2021, a group of investors purchased land on Decentraland for $ 2.4 million, the largest metaverse land acquisition to date.
- CryptoKitties: Built on the Ethereum blockchain, CryptoKitties is a game that allows players to collect and breed cute cats. Each CryptoKitty generated is a unique NFT and can be sold for a high price. The most expensive CryptoKitty to date is kitty # 896775, named “Dragon,” which sold for 600 ETH, or around $ 172,000 at the time. However, it appears that Dragon is currently for sale once again.
GameFi: play games to earn crypto
The intersection between DeFi and gaming has spawned a new generation of video games that benefit everyone financially. From game studios to casual and competitive gamers, just about anyone looking to earn passive income has the option of using GameFi to earn while playing.
While GameFi interacts with many aspects of DeFi, it is still relatively new to the blockchain scene, and its true potential has yet to be fully discovered. Nonetheless, integrating DeFi into the global billion dollar gaming industry is good news for the widespread adoption of blockchain, and it’s probably only a matter of time before you do. find yourself bidding for a rare NFT skin for your favorite video game character.
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