GameFi 101: When Gaming & Finance Merge
Introduction
The integration of blockchain technology into gaming has been one of the mesmerizing ideas in cryptoverse.
The gaming industry is gigantic. Who doesn’t like playing games, right?
Well, apparently tiny crowd. Because the gaming industry is bigger than the film and music industries combined.
If blockchain technology reaches the masses, it is safe to say gaming is one of the convenient areas.
The gaming industry has been growing exponential rate. And continuously evolving. How we play games changed drastically with new technologies over the past decade.
Will GameFi change how we play games in the future as well?
GameFi opens new opportunities for gamers and developers. One of the fundamental conceptions of web3 is to make things more unrestricted, transparent, and decentralized. These conceptions could merge under the GameFi concept.
Despite the current challenges and problems in play-to-earn games, blockchain gaming can disrupt the gaming ecosystem we know today.
Today we’re going to dive deep into crypto gaming. We’ll take a closer look at how we should define GameFi, what to expect from it, and what kind of future is waiting for us in the GameFi ecosystem.
What is GameFi?
Game and Finance. The financialization of gaming.
The phrase “GameFi” is much more than combining two words.
The “Finance” part refers integration of Defi applications like staking, adding liquidity or farming, not traditional finance. The “Game” part also requires blockchain knowledge. This shapes the general game experience of GameFi today.
Other than one and only Bitcoin, the crypto industry is constantly evolving. Whether Defi, Metaverse or Web3, it’s in the experimental stage in most cases. And GameFi is not an exeption. There is a long way before it reaches the masses.
That’s why defining GameFi is a bit tricky task. And current attempts can be irrelevant when we look at from future.
How Does GameFi Work?
In traditional gaming, you pay for the game and hopefully enjoy playing the game. That’s it. Simple as that. They make the game, and you pay for the entertainment.
Blockchain gaming offers something fundamentally further than that.
Well, at least on paper.
With GameFi, the games become more like an investment. At least for now. It features a complex game economy based on blockchain technology and using cryptocurrencies. With GameFi, the game usually comes for free; every asset in the game becomes an NFT and smoothly tradable, you own your assets, and you can earn rewards when you complete specific tasks or goals.
Play-to-Earn Model
The play-to-earn model allows players to monetize their assets in the game using NFTs, cryptocurrencies, and blockchain technology.
Generating income is usually a challenging and -let’s accept- tedious process for many individuals. But generating income while enjoying the game you love is an appealing value proposition.
But at least for now, this is problematic. When we look at the GameFi projects, even the most popular ones, they couldn’t create a sustainable game economy that works. Because when games give rewards to players all the time, this will eventually cost a tremendous inflation problem, which will destroy the value of the game token.
When we are in bull markets, this is no big deal because the projects can easily find new investors or gamers.
But during the bear markets? For sure, that’s not the case. This is the most prominent issue in the GameFi ecosystem. But we see fresh approaches to making the play-to-earn mechanism more sustainable.
Will the play-to-earn model have to evolve to achieve that?
Well, probably.
With the right approach, this model has the potential to benefit both gamers and gaming companies by bringing the benefits of GameFi into the game industry.
Benefits of GameFi
The Possibility of Earning While Playing
The immense promise of GameFi is rewarding players for their progress in the game.
In addition, integrating DeFi elements into a game creates a chance to give players additional avenues, which is common among play-to-earn games.
Of course, the idea of getting rich by playing games sounds rubbish, but GameFi could allow people to earn -maybe not too much- sustainable money. The key word is “sustainable.”
Asset Ownership
When we talk about GameFi or P2E games, and the benefits they can bring, we often think about earning money.
But the benefits of asset ownership in blockchain gaming are often underrated.
Whether it’s your data, money transactions, or real-world assets, Web3 offers a more transparent and decentralized world. That’s the fundamental idea. To ensure that in the gaming world, asset ownership is one of the key benefits that GameFi brings. The upside of asset ownership includes:
- To be able to own your assets in your wallet in the form of NFT, which can’t be chance and is easily monetizable.
- You can control all of your assets in your digital wallet, without trusting a third party.
- Asset ownership adds a layer of security to the gaming experience, as player-owned assets are stored on the blockchain.
Participating in the Gaming Experience
Community is one of the most important aspects of crypto.
And this is no different when it’s come to blockchain gaming.
The gamers’ ideas, choices, or feedback can significantly influence the game they play. The transparency that blockchain brings makes this much more accessible and opens new types of possibilities for both gamers and studios.
Despite these advantages, blockchain gaming is still in the experimental stage, and mass adoption seems far away.
Nevertheless, as blockchain technology matures and better games show up and are ready to play, the situation surrounding blockchain-based games can change positively in upcoming years, considering the benefits GameFi offers.
How to get started with GameFi?
Are you looking forward to trying some play-to-earn games?
Getting used to using Metamask wallet might be tricky initially, but it becomes kid’s play when you get used to it.
For blockchain gaming, there are three primary stages you should pay attention to:
1. First things First: Create a crypto wallet
You need to create a cryptocurrency wallet first. Metamask is the most common to use. Different chains might require other wallets. But the principles are the same. Make the wallet, set a password, and save your private key.
2. Connect your wallet
Instead of using a username and password to log in to the game, you use digital wallets for blockchain gaming. You have to permit to connect your wallet. All your belongings in the game can transfer into this wallet.
3. Assure that you meet the conditions
As you probably know, many video games require in-game purchases to progress. This can be anything from buying a new weapon to paying for a quest.
But when it’s come to blockchain gaming, be prepared to buy some NFTs before even starting the game.
The requirements vary from game to game. This mostly depends on tokenomics, story, and game dynamics.
Famous Examples of Play-to-Earn Games
2. The Sandbox
3. Decentraland
5. StepN
7. Star Atlas
8. illuvium
All the games above have an extensive and engaging community; that’s why we saw a lot of attention to these games during the last bull market.
Card games, breeding, and metaverse hype have been the most popular genres in the GameFi ecosystem. But the lack of “real” game experience started the emerge.
So far, we are still looking for a blockchain-based game that offers a unique gaming experience. Something that keeps you in the game without the “earn” part.
If blockchain gaming has millions of users someday, this will come from gamers. Building solid, endurable games with excellent visuals is fundamentally essential.
What Does the Future Hold for GameFi?
According to Zion Market Research, the gaming sector is expected to be $435 Billion By 2028. This means “the pie” keeps getting bigger and bigger. It is safe to assume that blockchain gaming will get its share.
Okay, but how much will that be?
That will depend on how much GameFi can have adoption from users and investors. The advantages of GameFi can drastically change how we play games in the future because crypto gaming brings practical solutions to some of the current problems traditional gaming has. These solutions can be summarized like this:
- Much more security in digital assets for both trading and saving
- Transparency to the gaming experience
- The more diverse range of games on the market since the integration of DeFi technology opens a new type of game economy.
- Free games. On GameFi, the games usually come free to download. Because the game builders don’t rely on selling the game to generate income, they can earn by selling their tokens if the game is successful.
The bottom line is blockchain gaming has many advantages over traditional gaming. But to use these advantages, the GameFi ecosystem has to overcome issues like the game economy and tokenomics, lack of high-quality games, and make the gaming experience less crypto-native.
There is a good chance that GameFi will look different from the current situation. So what should we expect?
- The Rise of “Play and Earn”: It’s safe to assume that the current play-to-earn model has to evolve. When the ecosystem grows, we will see more big-budget, assertive games. This will likely draw people’s attention to the “play” side rather than the “earn” part.
- Web3 games from Web2 game studios: We are already seeing great attention to GameFi and NFTs from big game studios. As the ecosystem becomes more mature, we will likely see web3 games from web2 giants. This can be crucial to moving players to the web3 area since these companies already have a huge user base.
- Faster and cheaper blockchain gaming experience: Smooth experience is a must when it’s come to gaming. Currently, blockchains need to be faster and cheaper to provide that. But as the blockchains will improve every day, this will help make mass adoption easier.
Wrapping Up
The world of video games is rapidly evolving. With GameFi and NFTs, a new paradigm of video games is emerging — one that is more open, transparent, and decentralized.
These games are currently in their infancy but offer players a unique and rewarding experience.
One of the biggest challenges facing play-to-earn games is player adoption.
Despite the challenges, GameFi has a lot of potential.
Will this potential ever turn into reality?
Only time will tell.
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