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Ever since Axie Infinity burst onto the scene, the term ‘GameFi’ has been steadily gaining steam with many enthusiasts beginning to explore the title. Unlike traditional games where people play for fun or to improve their skills, GameFi games incentivize people by offering them a chance to make money while having fun gaming. So, what is GameFi? How is it different from the games we already play? Here is everything you need to know to get introduced to the world of GameFi, and its importance to blockchain gaming.
What is GameFi?
GameFi is a combination of the words "Game" and "Finance." It is typically used to refer to blockchain games that players can play to earn money. Usually, players can earn real-world cryptocurrency and non-fungible tokens (NFTs) by completing tasks, fighting other players, and moving up through the game levels. In games using GameFi technology, the rewards are usually cryptocurrencies or in-game assets like virtual land, avatars, weapons, and costumes. Most of the time, the in-game assets will help players in some way, letting them earn even more rewards.
A Brief History of GameFi
The idea for GameFi originated from a blockchain game called CryptoKitties, which was built on the Ethereum network, at a time when the concept of NFTs was incredibly niche. Then the NFT economy took off, and at its peak, CryptoKitties had more than 14K users playing the game every day. Unfortunately, the popularity of these NFTs slowed down the Ethereum network, which caused transaction fees to skyrocket and confirmation times to slow down.
It was at that time that developers realized the need for improved blockchains that promise faster transaction speeds, more scalability, and lower fees. These platforms include BSC, Solana, Polkadot, Polygon, Wax, and Cardano, among others.
The expansion of Decentralised Finance (DeFi) platforms boosted the popularity of GameFi. Because new blockchain-native financial systems that operate only on smart contracts developed. This gave users the tools they needed to launch, trade, lend, or bet their in-game tokens.
How Do GameFi Projects Work?
Almost all GameFi projects have in-game items that are NFTs– which act as "virtual deeds" that show who owns that piece of digital art or media file (using blockchain technology), tied to your crypto wallets, meaning that you will have proof of ownership of these items.
Players can earn these items by spending time in the game, completing tasks, achieving in-game objectives, leveling up, or other means. These items can then be taken out of the game and then can be traded or sold on various NFT marketplaces.
This is the fundamental basis of how these games turn into play to earn, bringing in money for full-time players. Unfortunately, many of the play-to-earn games out there right now rely upon "grinding" to make these NFTs rare and inflate the price of these items.
However, a few upcoming GameFi titles like Zed Run and The Sandbox use mechanics like betting and renting to pay out NFTs to their players.
How Do I Start Playing Games on GameFi?
1. Make a crypto wallet
First off, you need to make a cryptocurrency wallet that works with GameFi and is compatible with the game you are playing. For instance, you need to use the Ronin Wallet for Axie Infinity while you can useMetaMask, Bitski, or Venly for The Sandbox.
2. Make your initial investment or get a scholarship
Typically, you'll most likely need to make an initial investment to play GameFi games. You usually set up a team of characters (Axie Infinity), and purchase in-game land (The Sandbox), cards (Splinterlands), or other in-game items to place yourself in a position to earn money.
Obviously, this puts you at risk of losing your investment. So do your due diligence about the game, the security of its wallet, and its potential and only then invest your money if you are absolutely sure of getting into the digital crypto-economy. It comes with its own due risk.
If you are unsure about investing your money, there are programs in titles like Axie Infinity called “scholarships,” where players can basically borrow NFTs from another player and use them to play the game, in exchange for sharing a percentage of your income with the lender.
3. Start playing and earning
Then all that's left for you to do is to start playing and start earning.
What Are Some of the GameFi Games? How Are They Doing?
As the field of cryptoverse is booming various GameFI games are coming into the spotlight. Some of the best-known examples of GameFi projects are:
Axie Infinity
Developed by the Vietnamese company Sky Mavis, Axie Infinity is an online video game that employs the Ethereum-based currencies AXS and SLP. "Axies" (axolotl-based characters digitized as NFT) can be collected and bred in this game, as well as fought and traded. Usually, the rarer and stronger an Axie, the more players are willing to pay to obtain it.
At the initial stages of Axie Infinity, the player base could earn more from playing the game than their daily jobs. But as the number of the player base is rising and the increment of circulation of SLP in the market rather than using in-game decreased the profit players can make from the game, causing a huge drop down in player base in recent times.
Decentraland
Decentraland is a virtual world where every region and object on the virtual globe is an NFT. Players rent, buy and sell these NFTs depending on various factors.
According to Wagner James Au, Decentraland co-founder Ari Meilich claimed that the game has 300K monthly active users, 18K daily active users, and a peak concurrent player base of 2.5K.
CryptoBlades
CryptoBlades is a play-to-earn NFT RPG game that can be played on the BSC, Heco, Polygon, OEC and Avalance networks. Riveted Games is the maker of CryptoBlades. When a player first starts playing CryptoBlades, they begin in a plaza where they have to customize their first character. The character’s elements are assigned randomly. The player can use a small amount of BNB gas to fight an enemy. The game then keeps rolling to decide the outcome of the fight and adds the result to the blockchain. When a player wins a round they get two types of rewards: SKILL and character experience.
What Are the Challenges That GameFi Games Are Facing?
A large number of games are currently available on the market that is based on the P2E(Play to Earn gaming) concept. Most P2E games are made to get players interested in making money, but gaming products should be more about how people feel when they play. So, players lose interest in the game and start looking for other ways to spend their money where the assets are worth more. This makes sense from their point of view because there's no reason to keep playing if the value of your asset keeps going down every hour.
Take, for instance, Axie Infinity, a well-known game. A gamer needs three characters to get started, and each character used to cost an average of $220. Thus, the cost of a single entry ticket is around $660. There's a good chance that most gamers won't be willing to shell out that much money for the game. However, this is changed now. On the Marketplace, some Axies are for sale for 0.008 ETH, which is just over $20. This means that if you only bought these NFTs, you could put together a starting team for less than $100. That is still quite some investment as the pricing of SLP is dropping drastically.
GameFi's data suggest that the majority of players are from nations with developing economies. Working-class people cannot have access to such a high barrier.
Renting video game avatars and another NFTs is becoming increasingly popular, as a result. This issue hampers growth and the influx of new players.
Some common problems that the GameFi games are facing are:
Huge waiting time
Slow-paced games
Huge transaction fees
Inability to integrate GameFi into existing gaming communities.
Complex blockchain user interface
A Look at What Lies Ahead for GameFi
As blockchain technology keeps getting better, GameFi is likely to keep growing at a fast rate. GameFi is very popular, especially in developing countries, because you can own things in games and make money from them.
It's easy to see how GameFi draws in gamers by offering both fun and money-making opportunities. As blockchain games become more popular, it's likely that more and more big companies will start building up the metaverse.
