An introduction to GameFi features and protocols
GameFi is now one of the trendiest subjects in the crypto world. The $175 billion worldwide video game sector appears to be on the verge of being disrupted by blockchain gaming. Axie Infinity, with its more than $1 billion in total in-game asset sales, has grabbed the curiosity of the traditional gaming business, and we’re now seeing heavyweights like Ubisoft enter the GameFi space.
We will introduce the idea of GameFi to people who are unfamiliar with it in this article. We’ll start with a basic definition before moving on to the history of blockchain gaming. Following that, we look into various popular gameplay monetization dynamics in existing GameFi products, such as play-to-earn features and asset ownership. We also go through some of the most common networks that are used to create blockchain games.
We’ve included an overview on how to get started in the realm of GameFi for individuals who are entirely new to web 3.0 technology. Before we go into the future of blockchain gaming, we’ll look at the notion of decentralized autonomous organizations, or DAOs, and how they’re already influencing today’s popular GameFi titles.
What exactly is GameFi?
GameFi is the term for the financialization of video games. GameFi is a combination of the terms “game” and “finance,” similar to the famous crypto phrase DeFi, or decentralized finance.
GameFi is a wide phrase, and as we’ll see later in this article, different titles that are called GameFi may have completely different financial aspects. Some blockchain games, for example, reward players for performing in-game objectives, while others enable revenue production from a player’s numerous assets.
It’s vital to remember that GameFi isn’t a gambling platform. Players in the games we consider to be part of this developing industry must use a combination of skill and strategy to produce income
The name GameFi was coined in November 2019 by the creators of MixMarvel, a blockchain game publishing platform, who spoke at the Wuzhen World Blockchain Conference in China on how the technology that underpins cryptocurrencies may transform video games business.
However, the word was apparently first used by Andre Cronje, the creator of Yearn, in a September 2020 tweet – primarily for western readers. Since then, the term “GameFi” has become more commonly used to denote games that include financial components enabled by blockchain technology.
Despite the fact that the phrase has just recently gained popularity, GameFi has a history that dates back almost as long as Bitcoin. Some of the initial initiatives in the industry that we now refer to as GameFi include early Minecraft servers with BTC integrations, the 2013 website Gambit.com, titles like Bombermine, and peer-to-peer systems enabling players to monetise mainstream titles with BTC. Later, ventures like Huntercoin extended the use of blockchain technology beyond payments, allowing players to earn money by mining cryptocurrencies.
Because of the sophistication of its programming language, Ethereum’s introduction in 2015 provided new prospects for video game makers. For the first time, programs could be saved and performed on-chain, allowing for the construction of apps. Blockchain games such as CryptoKitties, which used the newly created ERC-721 standard to represent in-game assets in the form of NFTs, were among them.
Interest in NFTs has surged in recent years, and performance-optimized blockchains have been released, sparking enormous innovation in the GameFi industry. Today, we’re starting to see the results of these pioneers’ work, with blockchain gaming rapidly expanding.
What’s the deal with GameFi games?
Today, GameFi is available in a variety of formats. As a result, the methods through which players can earn money from their games differ. There are, however, a few key elements worth addressing. To monetise the activity, many of today’s most popular blockchain games employ a mix of the following characteristics.
Players in certain blockchain games are rewarded financially for accomplishing game objectives. The monies provided in these play-to-earn games are usually sourced from a smart contract’s native token reserve.
For example, a part of the AXS token in the extremely popular Ethereum-based game Axie Infinity is set aside to reward the following behaviors:
- Winning arena battles and season rewards (tournaments)
- Tending your land plots
- Buying and selling axis
- Breeding your axis
Ownership of resources and assets
The notion of ownership of limited digital assets is at the heart of many blockchain games today. The blockchain established digital scarcity, and NFT technology built on it. NFTs may be used to represent a variety of assets, both digital and real, as well as in-game goods.
Digital ownership of one-of-a-kind items creates previously imagined business opportunities. In CryptoKitties or Axie Infinity, for example, users may mate two NFT-based creatures to generate a third monster. They may then utilize this new asset to take advantage of a game’s play-to-earn features, sell or lease it to other gamers, and share any cash made between owners and borrowers.
Online virtual worlds, often known as metaverses, allow their residents to monetise their time through asset ownership, while not being games in the strictest sense. The notion of land ownership is at the center of locations like Cryptovoxels, The Sandbox, and Decentraland, and these plots trade freely on secondary markets.
Owners may monetize their plots in similar ways to how they might in the real world. In addition to selling the property outright, they can create a revenue-generating attraction or lease it to someone else to monetize. You may notice many attempts to commercialize land if you go around one of these shared virtual environments. Casinos, virtual stores, and music venues are just a few examples.
Surprisingly, these planets are beginning to see the emergence of economies. In March 2021, the Tominoya Casino in Decentraland, for example, recruited genuine employees to meet customers and provide general service. This is a trend that many people believe will continue. Some experts predict that the “metaverse economy” would eventually outnumber the real-world economy as individuals take advantage of the new opportunities offered by these virtual
Features of DeFi
To reward players, several GameFi initiatives use principles from the DeFi industry. Anyone with DeFi expertise will be familiar with concepts like yield farming, liquidity mining, and staking, which may give a passive way to earn money from a blockchain game. If you’re unfamiliar with DeFi, check out our DeFi explainer to learn more about it and how it relates to GameFi.
The most popular GameFi protocols
Although the BTC blockchain was used in the early GameFi releases, most recent blockchain games are now available on smart contract-enabled networks. Ethereum was the first of these, and it continues to be the most popular among developers and gamers.
Ethereum, on the other hand, prioritizes decentralization and security over performance. Because Ethereum’s block space is limited, users that want the quickest settlement times must pay a fee to miners to include their transaction. When demand outstrips available block space, the cost of transacting skyrockets, effectively pricing certain users out. For blockchain game makers, this is an issue. If many of the activities a player makes demand an excessive transaction charge, a game will never gain the user base of major games.
As a result, many developers are abandoning Ethereum’s basic layer in favor of quicker, higher-capacity networks.
- Polygon Network
- BSC are few examples.