A Beginner’s Guide to GameFi Models
The world is currently tapping into the power of Web3, finding innovations within the finance industry, but we have seen a rising trend of Web3 being explored to find a way to combine finance and gaming. This has led to the formation of the GameFi industry.
In the GameFi ecosystem, the game and rewards are decentralized which means platforms that tap into Web3 allow gamers and creators to have the ability to build immersive games and combine that with engaging mechanics. This results in rewards that have a tangible, real-world value and also provide full ownership of in-game assets to the player. Additionally, value is not only created within the game but also outside of the game’s ecosystem.
Currently, according to , the GameFi industry has over 800 Thousand gamers with a daily volume of $12.75 Million USD. These numbers are only rising and bringing forth various innovations within the gaming revenue stream.
Here are the different models within the GameFi industry along with how they impact the user:
Current GameFi models
This is the most popular model present within the GameFi industry. Play-to-Earn (P2E) is where players earn real-world monetary revenue by playing the game, through in-game actions like completing quests, challenges and being a part of tournaments, among others. This model uses crypto and Non-Fungible Tokens (NFTs) to monetize the in-game economy. NFTs in this ecosystem usually represent in-game items including avatars, clothing, outfits, weapons and cryptocurrencies as the incentives for the players.
The NFTs represent complete ownership of in-game assets which allows players to not only have certain in-game items but to also use these items in the real world by trading, selling, or buying NFTs on the marketplace for cryptocurrency/real-world money.
P2E allows gamers to earn money, own assets, and generate real-world value but this does come with its shortcomings. P2E focuses on the earning experience and prioritizes it over the gaming experience, thus hindering gameplay. This can lead to inflated tokenomics and this is not helped by certain popular games having heavy entrance costs.
Play-to-Own is an extension of the P2E model and this allows players to turn their in-game assets into NFTs for the real world. This allows for proof of ownership for the items they possess in-game. The in-game items can be sold on the marketplace or can be traded peer-to-peer.
This model allows for players to retain their P2E mechanics as well as help find new use cases for their assets. Players are also provided with the choice of how they want to spend their rewards and in-game earnings.
Thanks to the Play-to-Own model developers can shift their attention to the gaming experience. This also eases the barriers to entry and also provides ownership of resources and virtual currencies, controlled by a player-driven economy. The Play-to-Own model retains players longer than the P2E model since it provides real, tangible ownership along with engaging gameplay. The P2E model engages players who are motivated by Return on Investments and it can turn into a race to push others to the bottom for profits. Players seeking the Play-to-Own model will stick around for a longer duration and will be active in the community since it predominantly determines the in-game economy.
The Play-and-Earn model focuses on gameplay and progressing through the game over focusing on how players can earn. Rather than just playing to win, gamers earn rewards, tokens and NFTs by progressing through the game's story, quests and objectives whereas the P2E model loses sight of playability and fun, only being relevant for however long the profits hold. The Play-and-Earn model works towards making the game entertaining, engaging, and enjoyable and at the same time making it rewarding for players through earning money and obtaining ownership. This model incorporates what gamers have wanted for a long time within the GameFi space, which is a good AAA title with a story and engaging gameplay as opposed to the current state where most of the efforts go into how can players earn.
This was developed so that players spend their time playing and enjoying the game, and also improving the community. The Play-and-Earn model tackles the issue of user retention that was present within the P2E model. Even though players can earn rewards and in-game tokens, this model doesn’t necessarily allow ownership of in-game resources. This can affect those looking to enter the industry, looking for a passive income or uneven value propositions. This also leads to missing out on decreased extra utilities such as ownership of in-game items as NFTs, buying and selling on an active marketplace, and peer-to-peer trade.
GameFI is a rising sector. Despite the bullish crypto market, we can see the GameFi industry still booming. Given that the technology is still in its infancy, we can expect new innovations and new technologies to be released in the future, allowing for new models.
This story was written in partnership with Linx Games
Linx Games is a community-driven blockchain game distribution platform for gamers and developers to interact, socialize and exchange ideas.