From Free-to-Play to Earn-to-Play: An Overview of the GameFi Industry
The way people think about games has changed, and making money in games is no longer just one way. Now, players want to get something for the time they spend online, and GameFi lets them do that. GameFi is one of the most popular sectors on Web3.
It is a combination of the words “game” and “finance,” and it refers to how video games are becoming more like “real” businesses. It goes beyond the usual model of the player as a consumer by giving you the chance to play as an owner.
It’s based on a “play-to-earn” (P2E) business model, which refers to blockchain games that attract users by giving them tokens. Keep reading to learn more about GameFi, including what they are and how you can play them.
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Andre Cronje, the CEO of Yearn Finance, came up with the term “GameFi” in 2020. It is a combination of the words “game” and “finance.” So, it’s a new industry with a lot of possibilities that haven’t been found yet. GameFi uses game mechanics, non-fungible tokens (NFTs), and blockchain technology to make a digital space where people can play games and get tokens.
Why did they come up with this idea? Players spend a lot of time in the world of a video game just to get to the top and collect weapons and outfits (called “skins”). The only way to earn money from this is the old-fashioned way:
Playing in tournaments in a competitive way
Streaming on Twitch and blogging. Plus, they have no control over or ownership of their virtual “possessions.” So, there isn’t really a way for them to get paid. GameFi projects are not like this. By entering this world, moving through the different levels, and completing tasks, you can also earn in-game rewards that have real-world value.
How GameFi works
The “play-to-earn” label comes from the fact that tokens for achievements or NFTs received as in-game items can be traded on crypto exchanges and NFT marketplaces. Even though “P2E” is a popular term, it’s important to remember that playing GameFi is not risk-free. For example, players may have to pay large initial fees that they may not get back or lose.
Almost every blockchain-based game has an in-game currency, token economy, and marketplace that go along with it. Unlike traditional games, there is no central authority in charge.
But GameFi projects have a few things in common, even if their economies and game mechanics are different, like the following:
The blockchain system. The distributed ledger of a blockchain is used to build GameFi projects. This makes sure that all transactions are visible and keeps track of who owns what.
P2E is a business plan. GameFi has games that reward players for making progress, which is different from traditional games where people play to win. They are given NFTs, which are in-game currencies with a real value, as a reward.
Having access to assets. In traditional games, in-game purchases are investments that can only be used in that game. Through P2E, players own their tokenized in-game assets and can trade them for digital coins and, in the end, real money.
DeFi solutions. Many GameFi projects may have decentralised finance features like staking, liquidity mining, and yield farming. These give players more ways to grow their token assets.
How to start using GameFi to play games
Even though blockchain games are new, there are a lot of them on the market, and each one works in a different way. Also, if you’re excited about this new technology, remember that safety is the most important thing and watch out for scams and fake websites. Also, you’ll have to download games and connect your wallet. If you don’t choose a secure game, this could pose a security risk.
You will also need to make a cryptocurrency wallet that works with GameFi. Keep in mind that, depending on the game you choose, you may need more wallets or to connect to different blockchain networks. Also, to play some games, you may need to buy certain NFTs or crypto tokens.
But games like Axie Infinity start by having you buy Ethereum, put it in your Ronin Wallet, and buy 3 Axies from the market.
If the platform and game you picked are safe and you need to buy Ethereum first, check the Ethereum price in USD. It’s important to know what you’re getting into, buy Ethereum based on how much you can afford, and only invest what you’re willing to lose.
Last but not least, check the game’s requirements. They can be different from one project to the next. Also, think about how much you can earn and how much risk you’re willing to take. Let’s say you don’t want to take risks or put money into GameFi, DeFi, cryptocurrencies, or NFTs. You can still play if you can find a scholarship programme that will lend you NFTs and are willing to share your winnings with the owners of the NFTs.
Some examples of well-known P2E games
As we’ve already talked about, Axie Infinity is an online game based on NFT that was made by the Vietnamese Sky Mavis studio. As of November 2021, 2.7 million people used the company every day. You can do the following things by playing it:
Breed, Fight, Raise, Gather, and Trade Axies.
Another well-known GameFi project is the Sandbox. It’s a virtual world where you can build, play, own things, and use your digital skills. Also, the game lets you use tools to make your own 3D games and experiences that you can sell for tokens, rent out, or share.
The Sandbox’s four types of users—players, land owners, curators, and creators—all use different tokens to keep the platform’s economy going in a circle. Among them are the following:
LAND is a piece of virtual real estate in this metaverse. SAND is a utility token that is used all over the ecosystem (a token that players who build user-generated content have created).
Last but not least, one of the play-to-earn games of the year is the Game of Silks. Through blockchain, it creates a parallel virtual world to the real world of thoroughbred horse racing. Each virtual Silks Horse NFT is based on a racehorse in the real world. Also, as a user of this platform, you can own in-game NFTs like Stables and Silk Avatars, trade them, and do other things with them.
But many people in the industry think that gaming is the most likely way for blockchain to become widely used. Also, a DappRadar x BGA Games report found that 1.22 million UAW played blockchain games in March 2022 alone, which backs up this idea (unique active wallets).