As of today, GameFi is one of the fastest growing segments in the game industry, and an increasingly popular trend in crypto. Let’s find out what is hidden behind GameFi, and why people find it so lucrative.
The term ‘GameFi’ is a combination of the words ‘game’ and ‘finance.’ It was invented in 2020, in a tweet by the CEO of Yearn Finance. GameFi refers to play-2-earn games that offer economic incentives to the players.
This booming industry mixes blockchain technology, NFTs, cryptocurrency and game mechanics to create a virtual environment (or a metaverse) in which players can participate and receive valuable rewards.
How does it work?
Typically, players in GameFi earn in-game rewards like crypto tokens, player cards, skins and avatars, guns and other NFT items by completing tasks, battling other players or progressing through game levels.
Some games require initial investments. For example, in the most popular blockchain game Axie Infinity you first need to buy several NFT collectibles to start earning with them.
Unlike traditional video games, DeFi projects let users buy and sell their in-game assets on a marketplace, as well as transfer them to other virtual worlds and metaverses (if a game supports interoperability).
There are several already defined types of blockchain games with possibilities of earning, but the industry is evolving, and new models are rapidly appearing.
P2E is the basic business model for GameFi projects. These games incentivise users to play and progress within the game by offering rewards that have measurable value outside of the project — cryptocurrencies or NFTs.The P2E model is attractive for the gaming studios, too, as it benefits from each transaction made with its tokens and NFTs.
Examples: Axie Infinity, Zedd Run, Gods Unchained.
M2E is a subtype of P2E, represented by blockchain games which pay crypto rewards for running, jogging, walking or doing other sport exercises in real life. They track users’ moves with GPS, and motivate them to maintain a healthy lifestyle.
Examples: STEPN, Walken, Genopets.
Why are P2E games successful?
The core idea of P2E is very compelling: the industry attracts users by offering them an opportunity to make money while having fun. Also, native tokens of the popular blockchain games are often on the top of the charts along with Bitcoin, Ethereum and other cryptocurrencies. It brings additional attention to GameFi projects.
The P2E model is becoming popular among traditional game studios, too. Rumors about adopting NFTs and crypto-based rewards systems can be seen across the gaming industry.
What do I need to enter GameFi?
The starter pack should include a crypto wallet for receiving tokens and NFTs, as well as your free time and desire to earn. And of course, a PC or a smartphone.
It’s necessary to mind the entry threshold. It’s higher in popular games such as Axie Infinity and STEPN, as their communities are already large and very competitive for beginners. You may need more initial investment, time and effort to start earning on them than those who began playing them years ago.
Try to find emerging but promising GameFi projects, if you are a newcomer to the industry.
GameFi is believed to become a decent rival to the traditional gaming industry, as it’s growing rapidly. According to DappRadar, there are 1.09 million daily blockchain game players, and the number is increasing. GameFi projects attract big money flows and investors, who also see blockchain games as a lucrative and prospective sphere.