The world of gaming and finance has come together to create a new and exciting concept known as GameFi. It refers to integrating blockchain technology into the gaming industry, allowing for monetization and the security of in-game assets. In this article, we will explore GameFi, how it works, and why it is rapidly growing in popularity.
What is GameFi?
GameFi is a term that combines the worlds of gaming and decentralized finance (DeFi). It refers to integrating blockchain technology into the gaming industry, allowing for monetization and the security of in-game assets. This concept has gained traction recently as small game publishers investigate how to compete in the highly competitive gaming industry.
How GameFi Works:
Small game publishers will issue tokens with monetizing their games, usually based on the ERC-20 standard within the Ethereum network. These tokens are issued as part of an ICO, and their purpose is to finance the cost of developing the game. In addition, the games developed within the GameFi sector have smart contract capabilities baked into them, automating the transfer of tokens to gamers in exchange for payment using existing crypto coins.
In-Game Assets with Real-World Value:
In the GameFi world, rewards take many forms. Besides cryptocurrencies, gamers can receive in-game assets such as weapons, avatars, and costumes. These in-game assets are often in the form of NFTs minted and secured on a public blockchain, allowing them to be traded on secondary NFT marketplaces. In addition, depending on the game mechanics, players can earn rewards for completing tasks, battling with other players, or creating structures on plots of land.
The play-to-earn (P2E) model is at the heart of all GameFi projects. This model is the opposite of the traditional pay-to-play (P2P) model, where players have to pay real-world money to access higher levels and better items within a game. With the P2E model, gamers have complete control over in-game items and numerous opportunities to reap real-world financial rewards.
Popular GameFi Projects: Here are some of the most popular GameFi projects of 2022:
- DeFi Kingdoms: DeFi Kingdoms is a game and decentralized exchange where players collect yield from liquidity pools by staking the JEWEL in-game token.
- Decentraland (MANA): Decentraland launched after a $24 million ICO in 2017 and has since become one of the most popular GameFi crypto projects. It features two tokens, MANA and LAND, with MANA used for various purposes in the game and LAND as ERC-721 NFTs.
- Axie Infinity (AXS): Axie Infinity is a blockchain-based battle game where players collect, breed, raise, and battle creatures called Axies. The project features an ERC-20 governance token, AXS, intending to align player and developer incentives.
- Splinterlands: Splinterlands is a trading card game built on the Hive blockchain and has grown into one of the biggest DApps in the world. The governance token, SPS, is the key to success in this game.
- Benji Bananas: Benji Bananas is a mobile game with play-to-earn (P2E) functionality, where players swing from vine to vine and earn rewards paid out in PRIMATE, which can be swapped for ApeCoin (APE).
GameFi has emerged as a new frontier in gaming and decentralized finance. Integrating blockchain technology and smart contracts into the gaming world has opened up new opportunities for players to monetize their gaming experiences and secure their in-game assets. Whether you're a seasoned gamer or a newcomer to the world of crypto, a GameFi project out there suits your style. Whether battling creatures, trading cards, or swinging from vine to vine, you can earn real-world rewards while playing games. However, it's essential to be cautious and research before investing in any GameFi project. Not all projects are fully decentralized, and some require a significant initial investment, so weighing the risks and rewards before deciding is essential. In the end, the play-to-earn model offers an exciting new way for players to engage with the gaming world and reap financial rewards.