Why GameFi Is The New Crypto? (and What Is It?). GameFi is one of the most talked-about projects in the cryptocurrency world right now. Its name refers to the combination of the old-fashioned pleasure of winning prizes. With new crypto advances in what is known as DeFi, as reflected in the name. Players on GameFi can trade, lease, and rent out their earnings. And they can even borrow against their winnings. With the stuffed kitty you scored at the county fair. You won’t be able to accomplish that.
Because of its growing popularity. There is dispute about whether GameFi will revolutionize gaming. Or will instead simply remove the credulous from their money. Reports of people borrowing money to play GameFi raise the possibility. That the platform will democratize cryptocurrency opportunities. Or that it will become a type of digital sharecropping.
What is GameFi?
Decentralized finance (also known as DeFi) is a field in which token-based transactions. Such as lending and borrowing take place on blockchains, decentralized digital ledgers. Similar to those first used with Bitcoin. Which are decentralized digital ledgers similar to those first used with Bitcoin. In its most popular usage, the term “GameFi” refers to decentralized applications (“dapps”). That offer financial incentives to participants.
Those mainly consist of tokens awarded as prizes for completing game-related tasks. Like as winning battles, mining rare minerals, or cultivating digital crops. Among other things. It’s a strategy that’s also known as “play-to-earn.” Many GameFi programs, such as Alien Worlds, allow users to generate money passively. By allowing others to mine their virtual lands. A feature that many users find appealing.
Using mechanisms established by DeFi platforms to lend assets. Such as digital characters or deposit them in a process known as staking. They can also earn interest on their investments.
How does GameFi work?
Specifics can vary, but here’s the most fundamental — and most successful — model to yet. Which was first implemented in the game Axie Infinity, which, according to DappRadar. Has $564 million in on-blockchain transaction traffic just in the last 30 days.
There are two tokens, AXS and Smooth Love Potion (SLP), as well as non-fungible tokens (NFT). Which are digital certificates of authenticity representing game characters. And digital real estate, that are used to power Axie’s economy. Players often invest roughly $700 to purchase Axies. As these are small blob-like monsters that appear on the screen.
They are compensated in SLP for victories in fights and by completing tasks. Axies are also capable of reproducing and selling their offspring. AXS is what is known as a governance token. Because it grants the right to participate in conversations about the project’s future direction. AXS tokens can also be used to earn interest by being staked.
Why GameFi and Isn’t that a lot to pay to play a game?
It is, but many other games do not. Playing can also be incredibly gratifying in some cases. Basically, if you win tokens in a popular game, their value can skyrocket. AXS went from 54 cents to $94 in 2021.
Playing is not only a game of digital dragons, but also a type of monetary speculation. Whether or if that strategy is sustainable. It drew players from low-income countries like the Philippines. Those unable to purchase Axies typically rented them from other gamers. In many situations, they paid by splitting gaming profits.
Last year, a flurry of social media articles claimed that people in the Philippines. Were earning more money from Axie than typical day employment.
