What is GameFi?
Summary:
GameFi links decentralized finance and the gaming industry by offering to players and crypto enthusiasts entertainment and investment opportunities. In this article, we discuss: how to get involved with GameFi, its impact, and the top games in this space.
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What is GameFi? And how can you profit from it? In this article,we discuss one of the hottest topics in the crypto space – GameFi – to help you understand this relatively new phenomenon and to let you discover the most popular GameFi platforms.
What is GameFi?
GameFi (a mix of ‘game’ and ‘finance’), also known as play to earn (P2E), is a new type of gaming that allows users to earn digital assets while they play. The premise is simple — you complete tasks or challenges within the game, and in return, you earn rewards that can be cashed out for fiat money.
GameFi is an all-encompassing hub and one-stop-shop for game finance, serving: game studios, players, traders, and investors.
The idea behind GameFi is to provide an alternative income stream for gamers and motivate players to continue to play games even after the storyline has been completed.
GameFi isn't just for hardcore gamers, either. The platform is open to all gamers, from casual mobile gamers to career PC gamers. Any game that has a built-in microtransaction system can be used on the GameFi platform.
How does GameFi work?
Now that you know what GameFi is, let's look at how it works.
GameFi is built on two basic concepts: challenges and rewards.
Challenges are tasks or objectives that players can complete to earn rewards. These challenges can be anything from simple tasks, such as killing a certain number of enemies, to more complex challenges, such as solving a puzzle or completing a level within a set amount of time.
Rewards are the prizes that players earn for completing challenges. These rewards can be anything from in-game currency to physical prizes, such as gaming gear or gift cards.
The GameFi platform is powered by blockchain technology. This means that all rewards are stored on the blockchain and can be accessed by anyone. It also means that players can trust that the rewards they earn are genuine and have not been tampered with.
How to get started in GameFi?
To get started in GameFi, follow the steps below.
Get a crypto wallet
You first need to get a crypto wallet. A crypto wallet is a digital wallet that stores your cryptocurrencies. There are many different types of crypto wallets (hardware, web, etc.) and each one has its own set of features.
Fund your wallet
Once you have your crypto wallet, you need to fund it. This can be done by transferring cryptocurrencies from an exchange or another digital wallet into your new crypto wallet.
Start using the platform
According to the platform you choose, you might be asked to have a minimum amount of capital before you start playing, or to buy beginner items in the GameFi games you want to play. These items are typically low-cost and can help you get started in the game.
But GameFi platforms also allow users to benefit from financial services or other features that don’t need you to play – as we will see later.
How do GameFi companies make money?
There are a few ways that GameFi companies generate revenue. The most common way is through in-game items purchases-when you buy their games on app stores. Users can purchase extra lives or coins.
Another way companies can make money is through advertising. Advertisers will pay to have their ads displayed within the app, and the company will earn a commission on those sales.
Many games require you to make an initial investment if you want to play them. The company profits off said investment even if you lose it due to not being able to complete a challenge.
Finally, some companies offer paid subscriptions, which give users access to additional features or content.
How Substantial is GameFi?
According to Crypto.com, the market size of GameFi amounts to over $55 billion – as of February 2022.
Pros and cons of GameFi
The world of DeFi gaming has many advantages.GameFi goes beyond sole entertainment being that crypto traders and investors can also use them just to benefit from the crypto assets offered.
Moreover, users are directly involved in the gaming platform – especially thanks to DAOs.
Gamifying the blockchain can also be a useful way to bring the blockchain technology to a larger audience.
On the other hand, a possible downside can be that a significant amount of focus placed on financial assets – more than on games – can cause harm to the user experience.
Traditional games vs. GameFi Games
Traditional games have been around for many years and have well-established gameplay. Some examples of traditional games are chess, checkers, and poker.
Traditional video-game makers are also getting in on the action: Assassin's Creed publisher, Ubisoft, has invested in Animoca Brands, which makes its blockchain games and is also an Axie investor.
GameFi games are based on blockchain technology and use cryptocurrencies as their currency. They are often called "smart games" because they use blockchain technology to create a more immersive and engaging gaming experience.
There are many different types of GameFi games, but the most popular ones involve collecting and battling pets or building virtual worlds. These games tend to be more interactive and engaging than traditional games, and they often have a stronger social component.
When it comes to GameFi, being a part of the DeFi space, Ethereum plays a major role – and its presence might be stronger after the merge.
The level of complexity reached, thanks to smart contracts and decentralized finance, produces another major difference between traditional games and GameFi.
Moreover, the use of DAOs allows users to be actively involved even in the management of the platform they choose.
Top GameFi games
There are many different GameFi games to choose from, but we want to list some of the most popular ones.
The Sandbox
- Market cap: $3,201,136,997
- SAND price: $2.74
The Sandbox, the metaverse fueled by SAND, can be used to play, build, buy lands and much more.
Axie
- Market cap: $2,807,637,132
- AXS price: $46.10
Axie Infinity is a decentralized game that runs on the Ethereum blockchain. The main goal of the game is to collect characters, called Axies, and make profit. But players can also keep them as NFT, or sell them thanks to the marketplace integrated with the platform. You can even choose to hire someone else to play for you!
Decentraland
- Market cap: $3,845,472,607
- MANA price: $2.09
One of the most popular virtual worlds, Decentraland, started in 2021 a partnership with the virtual casino Atari, proving to be an essential project in the GameFi industry.
Conclusions
GameFi is an interesting crypto sector to discover, since it managed to put together decentralized finance and the gaming industry.
If you want to know more about the crypto space, Saddle has all the resources you need!
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