What is GameFi, how does it work and future developments

Oluwatoni Olujinmi

GameFi, which straddles the divide between the gaming industry and decentralized finance, has received a lot of attention from the cryptocurrency community. 

GameFi is revolutionizing the way people invest in and participate in digital experiences and online games by bringing together a number of appealing themes, such as the ability to own assets and make money from playing one’s favorite game. 

You may want to learn more about GameFi because it is at the forefront of technological advancements that are revolutionizing the gaming industry. Below is a look at what gamefi is and how it works.

What is GameFi

The term “GameFi” is an anagram of “game” and “finance.” Through the integration of blockchain technology – including decentralization, NFTs, and cryptocurrencies – and cutting-edge gaming mechanics, it enables users to earn money while playing games. 

With the help of GameFi, blockchain games can provide players with monetary rewards for their time and effort. Play-to-Win describes this model more accurately. Completing missions, defeating enemies, and making it to higher levels in a game are all common ways for players to earn in-game rewards. Virtual land, Tokens, avatars, upgrades, and other monetary incentives could all be on the table. 

GameFi is revolutionary in that it not only lets players earn and collect assets within the platform, but also transfer those assets outside the platform to buy and sell on cryptocurrency exchanges and NFT marketplaces, something that is impossible in traditional video games.

This allows players to make money off their hobby by buying, selling, and trading virtual goods. In other words, GameFi offers its users the chance to acquire digital assets. These are usable in cross-platform transactions, in addition to monetary gains. 

NFTs and Decentralization, which introduce a novel form of digital ownership, make this a reality. Until recently, video games existed in a closed system that was entirely governed by studios.

This development is not to underestimate. Because billions of dollars are going to be invested in the blockchain gaming industry between the first quarter of 2022 and the first quarter of 2023. It is probable that the blockchain market will grow by double digits over the next decade. Thus reaching 545.98 billion dollars by 2028, as a result of developer interest in the technology.

How does GameFi work

There are a variety of ways to be rewarded in GameFi, from virtual currency to in-game items like houses, cars, and clothes. It is planned that each GameFi project will use its own unique model and in-game economy. Game assets are typically NFTs on the blockchain that can be bought and sold on NFT exchanges. On the other hand, there are games where players can’t buy or sell items unless they first convert the item into an NFT

Players can increase their earnings by making use of the advantages afforded by in-game assets. Some games, however, also let you customize your character with a variety of avatars and cosmetics that are largely decorativ. And, have no bearing on your success in the game or your ability to earn money. Depending on the game, players can advance in the game and acquire rewards by engaging in battle with other players. Thus completing tasks, or constructing money-making structures on their land. 

Some games also provide players with the opportunity to earn money outside of the game itself. This, through staking or lending their gaming assets to other players. Take a look at some of these common features of gamefi. 

Non-fungible Tokens (NFTs)

Non-fungible tokens are usable to represent assets and facilitate trade in P2E games. It is possible to trade NFTs earned in-game for other NFTs, cryptocurrency, or real-world currency. P2E NFTs guarantee the authenticity of all game assets, making them impossible to copy or fake like in other types of online games. Many free-to-play games reward players for spending money on in-game items, virtual currency, or upgrades for their avatars as they progress through the game’s levels (or avatars).

Blockchain

The technology behind GameFi platforms is blockchain based. While Ethereum remains the go-to platform for blockchain gaming, GameFi guidelines like Polygon, Polkadot, and Solana are seeing increased adoption thanks to their superior capacity and transaction speed. The distributed ledger provided by a blockchain can find use to run a game. This, in a way that promotes player ownership and guarantees the openness, fairness, and transparency of all transactions.

Play-to-earn model

GameFi is the antithesis of pay-to-win games because it rewards you for actually playing the game. The further you get into the game, the more NFTs and cryptocurrency you’ll be able to collect. The trade-off is usually the successful completion of quests and battles. These items have worth and can be bartered or sold to other people.

Read also: The endless possibilities of blockchain uses and applications

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