In 2020, GameFi was the hottest trend. The billion-dollar gaming industry, on the other hand, it expected to surpass $178 billion by the end of 2021.
Imagine joining two hugely successful industries. Since the pandemic, a community of gaming and blockchain enthusiasts has merged DeFi with gaming.
“GameFi” is the industry. And can you really make money playing video games?
Who Invented GameFi?
As you might expect, the name “GameFi” combines the words “gaming” and “finance.” GameFi creates a virtual world where players can participate, have fun, and earn money.
In 2019, the World Blockchain Conference in Wuzhen, China, Chinese blockchain game developer MixMarvel believed to have introduced the concept of “GameFi.” HyperSnake, the world’s first multiplayer real-time competitive blockchain game, was released just before the event. HyperSnake was discontinued in September 2020, but it served as a model for future games.
Before the term was coined, games like CryptoKitties and Axie Infinity allowed Ethereum users to earn crypto through gaming.
What Is GameFi?
GameFi’s main draw is its “play-to-earn” business model. Playing a game and progressing through its levels pays off financially. Tokens and NFTs used as financial incentives here.
Play-to-earn is not a new idea. But the innovative technology that powers GameFi games today is new. Many elements of a game use blockchain, smart contracts, and in-tokens. Tokens earned in games to exchanged for Ethereum, Bitcoin, or stablecoins, and then fiat currency.
A lot of GameFi projects use NFTs Every game’s land, weapon, outfit, and skin is unique. They can be bought and sold in-game, but they can also be used to farm yields and collaterals on DeFi. Companies like Yield Guild Games now allow users to stake in-game tokens to earn passive income.
Every GameFi game has its own mechanics. The player must own a cryptocurrency wallet to store the game’s tokens or NFTs. The wallet should also pre-loaded. Many GameFi games also require you to buy starter characters.
GameFi’s business model deviates from the traditional “pay-to-win” and “pay-to-play” video game models. Preferably a game like Farmville where players can buy upgrades to gain an advantage over other players. With “play-to-earn,” game studios and developers can make money. Users can now earn money by playing games, promoting financial inclusion.
The Philippines is one example of how GameFi can generate revenue. Many people who lost their jobs in early 2020 signed up to play Axie Infinity. Filipinos were soon earning $50 per day playing Axie Infinity, compared to the minimum wage of $8.15. According to CoinDesk, some Filipino players make Axie Infinity their full-time job.
The inclusion of NFTs in a game increases its monetization potential and creates true digital ownership. Because in-game purchases and transfers are recorded on a distributed blockchain ledger, players own items like outfits, not the game developer. No in-game item destroyed or copied. In the event of a technical failure, players rest assured that their purchases will not be lost.
GameFi: Earn Crypto by Gaming
The convergence of DeFi and gaming has resulted in a new generation of video games that benefit everyone. Anyone looking to earn money while gaming, from game studios to casual and competitive players, can use GameFi.
However, GameFi is still a newcomer to the blockchain world, and its full potential has yet to discovered. It’s only a matter of time before you’re bidding for a rare NFT skin for your favorite video game character.