Gaming has come a long way from the pixelated world of the Mario brothers. For a long time, making money from gaming was a one-way street, where only the gaming applications would earn off the customers through subscriptions, in-game top-ups etc. However, over the years, the psychology of gamers has evolved. They now want to play a more significant role in the games and be rewarded with actual and warrantable stores of value. This financialisation of video gaming is called GameFi.
GameFi is simply a combination of the words "game" and "finance." It integrates cryptocurrency, blockchain, NFTs, and game mechanics to build a digital world where players can participate and earn money. GameFi employs a "play-to-earn" business model.
This concept provides players financial incentives to play and advance through different game levels. For example, some blockchain games allow players to earn a full-time income while playing. In addition, such online games can be integrated with DeFi tools like landing pages, loans, farming, tools for issuing new tokens, algorithmic stablecoins, and so on.
This type of gaming project gets launched on the blockchain distributed ledger. It means that all objects received by players become their comprehensive property. Everything is simple in the GameFi ecosystem: you play and welcome bonuses. Some gaming projects require you to invest some of your cryptocurrency to begin a gaming activity.
Some blockchain games, for example, reward players for accomplishing in-game tasks, whereas others may allow revenue generation from the player's different assets. The Axie Infinity project is an excellent example. According to the DappRadar portal, the developers of this blockchain game earned $800 million in one month.
How do GameFi projects work?
The mechanisms used by various GameFi projects vary. In-game items, such as avatars, land, costumes, weapons, gold, tokens, and pets - are typically built as NFTs—non-fungible digital tokens. As a result, you have proof of full ownership of any in-game items you acquire.
As the players play the games, they earn these items, which they can then trade on NFT marketplaces for profit or exchange for popular cryptocurrencies. For example, Binance NFT Marketplace allows users to buy and invest in digital arts while earning more money.
In addition to levelling up and claiming items, there are numerous other ways to earn money in GameFi:
Some gaming projects like "Bet Naija" allow making money by betting on the outcomes of gaming competitions.
Participating in tournaments allows players to increase their gaming revenue.
The public blockchain is where the GameFi ecosystem's achievement and item ownership data are stored, making it secure. In addition, it provides players with full ownership of the game assets.
So, if you created or purchased an asset, no one can take it away from you, and it will not vanish even if the game's servers go down. As a result, the GameFi sphere has become a destination for users worldwide to earn crypto assets. As a result, the GameFi industry is now poised to compete with the traditional gaming market.
The Evolution of Blockchain gaming
The factors that hindered the development of the NFT phenomenon CryptoKitties, based on the Ethereum network, gave rise to Blockchain Gaming.
The NFTs economy was a viral hit, with CryptoKitties reaching over 14,914 users per day at its peak. Unfortunately, the success of these NFTs caused the Ethereum network to get clogged, resulting in massive spikes in transaction fees and slower transaction confirmation times.
Since then, developers have shifted to more advanced blockchains that promise faster transaction speeds, greater scalability, and lower fees. These include BSC, Solana, Polkadot, Polygon, Wax, and Cardano.
The rise of Decentralised Finance (DeFi) platforms boosted GameFi, as new blockchain-native financial platforms based entirely on Smart contracts emerged. It provided the infrastructure for users to launch, trade, lend, or stake their in-game tokens.
Future of GameFi
As the Blockchain Gaming industry incorporates all of these functionalities, the decentralised finance and asset tokenisation world is rapidly gaining popularity. The BSC-based game MOBOX, for example, combines yield farming withcollectablesibles and other Defi services.
Furthermore, blockchain games are easily scalable because they do not necessitate significant hardware or investments to participate in the project. Instead, you can easily participate using your smartphone, tablet, or computer. As a result, GameFi expands the use cases for cryptocurrency and NFT gaming, making it very profitable and affordable.
The use of NFT in-game items contributed to GameFi's growing popularity. As a result, the top blockchain games now have more than $14 billion in market capitalisation.
The number of GameFi projects has boomed in 2021 and will likely continue to grow in the coming years. As of March 2022, more than 1,400 blockchain games are listed in DappRadar. In addition, we now have popular games across multiple blockchains, such as Ethereum, BNB Smart Chain (BSC), Polygon, Harmony, Solana, and many more.
The GameFi growing trend is expected to continue rapidly as blockchain technology advances. In addition, GameFi's ability to own in-game assets and earn money from games makes it very appealing, particularly in developing countries.