GameFi is a popular word used in the world of play-to-earn blockchain games. Players in the P2E terrain can earn NFT and crypto rewards when they battle other players, complete tasks, and progress through various levels of the game.
Unlike traditional video games, blockchain-based games allow gamers to transfer their gaming items, such as NFTs and digital assets out of the virtual world. In other words, they can trade these items on marketplaces and exchange them for fiat money.
So, what has GameFi has to do with all of these? In this post, we will look at what the concept of GameFi is all about and also dive deeper to see how it works.
What is GameFi?
GameFi is a combination of two words – game and finance. It uses NFTs, cryptocurrencies, and blockchain technology to develop a virtual gaming platform where players can explore games, participate in events, complete tasks, go head-to-head with other players, and earn rewards for their activities.
Players can transfer earned assets and trade the same on NFT marketplaces and crypto exchanges. GameFi has gained popularity in the last few years since the launch of Axie Infinity. The play-to-earn game attracts players by providing them a chance to make money while getting entertainment.
How GameFi Works
Players get rewarded in different ways in GameFi, including in-game assets, such as avatars, virtual lands, costumes, and weapons. They also come as cryptocurrencies. Different GameFi projects adopt different game economy and game model to deliver their products to gamers.
Most games offer NFTs as in-game assets and these NFTs run on the blockchain, which means they can be exchanged in the marketplace. Some other projects offer other digital in-game assets that players need to convert into NFTs before they can sell or trade them.
Usually, the in-game assets provide specific benefits to gamers and allow them to earn more rewards. Different games offer different ways that players can earn rewards. Some require that you complete tasks or fight with other players and conquer.
Some require that you build structures on a plot of land, which you can monetize. Some GameFi projects also offer players the chance to earn passive income without engaging in any games.
Play-to-Earn as a Feature of GameFi
GameFi projects have play-to-earn as their core. This is a revolutionary gaming model that is completely different from the traditional pay-to-play model of video games where players have to invest money to play the games. While you invest in traditional video games, you do not earn any financial rewards from the game.
All in-game assets you purchase are held and controlled by the game developer. However, play-to-earn games offer players full control over the in-game assets they purchase and also allow them to make money from them.
It is worth mentioning that some play-to-earn games also offer a free-to-play model and players can also earn financial returns from these. Most GameFi projects need that you buy crypto-assets or NFTs before you can play. Axie Infinity is one of the most popular GameFi projects.
It is an Ethereum-based game where gamers can use Axies (NFT pets) to earn SLP tokens. All they have to do is complete daily tasks and fight with other players. They can also earn AXS rewards when they attain a specific PvP rank. Players can also lend their Axies out to other players to earn without playing the game.
Digital Asset Ownership as a Feature of GameFi Projects
One other feature of GameFi is digital asset ownership where players are allowed to own and monetize their in-game assets in any way they want. Players can own weapons, houses, pets, avatars, tools, and more. These assets can be created or issued as NFTs through NFT minting on the blockchain.
Players have full control over the assets with verifiable and authentic ownership. Examples of games that offer digital asset ownership at their core are The Sandbox and Decentraland. These games let players own and monetize virtual land on their platform.
GameFi combines entertainment with financial incentives, which are a strong attraction for players. With the growth in the popularity of blockchain, the world will see more enterprises building the metaverse and creating a virtual world that will be home to all game lovers.