What is GameFi?
GameFi is becoming more and more popular in the crypto word. Even through you are a ‘crypto wolf’ or a newbie like me, you ought to know about GameFi. Because GameFi can full fill money in your pockets. The phrase GameFi is a combination of Game (shortened from Video Game) and Finance. In other words, GameFi is a game project combined with unique cryptocurrency features that help players can earn money while playing games. That sounds interesting!
GameFi projects apply a play-to-earn model. They are totally different from traditional games where gamers play to win. The very first GameFi project conceptual with the Minecraft servers integrated Bitcoin; Gambit.com; online games like Bombermine; and P2P services where gamers earn money based on players online results.
How Does A GameFi Project Work?
Different GameFi projects often have a few elements in common. They have in-game items such as avatars, territories, costumes, weapons, gold, tokens, and pets are represented as NFTs — non-fungible digital tokens that prove ownership of these digital objects or assets. Players can get these items in during playing games and can trade them on NFT marketplaces for profits or for kind of cryptocurrencies, which can then be exchanged for fiat money (such as USD, CNY, GBP, EUR…)
The development story of GameFi
GameFi initial is developed and integrated with Bitcoin blockchain. However, Bitcoin blockchain are high transaction costs and slow processing speeds. As a result, many GameFi developers tried to find another solutions to replace it. The new Ethereum (ETH) is a new blockchain which provides the smart contract-enabled blockchain network, saving costs and faster processing.
Cryptocurrency game developers have widely adopted Ethereum and it remains popular today, but it has also faced technical performance issues due to limited block space. This vulnerability became more increased when the growing popularity of Crypto Kitties blocked the Ethereum network in late 2017, causing Ethereum fees too high.
Because block space on the Ethereum blockchain is limited, transactions of gamers are requiring faster settlement times encouraged miners to add these features first through a fee-based model. As a demand of solving block space technical error and transaction costs spiked. As a result, it is forcing many GameFi developers to abandon the ETH network. To get rid of that problem, there are some crypto game developers have moved from Ethereum’s base layer to other better networks such as Solana, Polkadot, Polygon, Wax, and BSC.
GameFi projects have many levels to become game winner or archive the goals. Game players can increase their income by spending time complete their characters perfectly as requested, monetizing their territory’s assets by building structures alone or with other players, pay to visit or invite to visit. One of the most exciting playing mode is participating in battles with peers (P2P) in tournaments.
GameFi Compared to Traditional Online Games
GameFi is a game changer. Definitely, it has started to disrupt the traditional online gaming industry. GameFi is changing the very well know online gaming by combining DeFi, NFTs, and blockchain technology elements for players to earn money while playing games. Gamers are paying their time to get profits, not wasting time as they did in past.
GameFi projects come in different forms, but the most popular crypto and NFT games share common key features that set them apart from traditional online games.
Play-To-Earn Model
The play-to-earn model of GameFi projects is a revolution of game word. Traditional online games make money through in-app purchases, affiliate marketing, and advertising. As a player, you have to spend money to buy in-game items to win or gain an advantage over other players. Absolutely, the game operators will be the first one to take benefits by your payment in during game play.
GameFi is totally different with traditional online games. The play-to-earn crypto games have changed the scenario: gamers are allowed to add real-world value to in-game purchases. In-game characters and items are stored on a distributed public ledger or blockchain that runs on a cryptocurrency network. Based on each blockchain technology, tokens and in-game items can be traded for cryptocurrency and eventually exchange to real cash.
To improve play skills and reach to be top player, online gamers have to buy items such as coins, weapons, extra lives, custom characters, costumes, avatars, accessories, etc. directly from the game. Traditional game players must buy assets from game developers’ stores, enriching them rather than the players. This can lead to a limited online gaming experience for players, especially those who do not have much money to spend. However, for cryptocurrency games, these purchases are made with cryptocurrencies and often involve trading valuable assets between GameFi players.
Conventional online games allow digital ownership but do not have the monetary value or value of cryptocurrency games. You cannot trade your in-game assets with other players for valuable assets. This is a key element difference from DeFi system of the GameFi projects, where players own globally digital assets with no limit to distribute or exchange freely word wide.
Little or No Advance Costs
Most of GameFi games are more accessible than traditional games. Because they are free to download and play. There are a few of games may require you to purchase tokens, characters, and other in-game items but didn’t request pay in advance fee.
Fixed Ownership of In-Game Assets
GameFi players’ assets and NFTs are stored forever on the blockchain. It differ to traditional games where players can lose all at any time due to shutdown or out of membership. Players have no control over the life of the game platform and all assets, everything belongs to the game developer. If the game developer goes bankrupt, gamers are losers and lost all.
Furthermore, traditional online games are vulnerable to attacks because they are not as secure as blockchain-based cryptocurrency games. Players’ entire assets only can be lost in a hacking incident. But some GameFi developers are willing to make compensation to their players upon on some major requirements.
Further more, GameFi projects are quite simple to understand, discover and play to earn. Any players, regardless of age and experience can participate games and enjoy their spare time.
Conclusion
GameFi may started as a relaxing purpose for cryptocurrency traders rather than a investment strategy. But it became the mainstream adoption as well as a game revolution. An example often given to confirm its fantastic growth is the terrific success of Axie Infinity game. In August 2021, it was the first high-profile GameFi project to surpass $1 billion in token sales and have over a million daily active players.
It was out of developers expectation. GameFi increased dramatically to take over the growing $175 billion gaming market. Video gamers have long been fascinated and intrigued by the concepts of in-game currencies, limit digital items. All of them have no monetary value, and GameFi projects are certainly more appealing because they incorporate all of these elements while also directly empowering users benefits.
We can see lots of GameFi industry leaders such as Ubisoft and MOBOX and semiconductor manufacturer AMD are all took part in the GameFi blockchain market.
GameFi is growing rapidly and has already reached a combined market capitalization of $14 billion for top blockchain games and keep developing in future.