What is GameFi? ‘Play-to-Earn’ Gaming Explained
GameFi is the combination between “game” and “finance”, mentioning blockchain games that are played for earning money. The GameFi ecosystem uses cryptocurrency, NFTs and blockchain technology to create a virtual gaming environment. Normally, players can get rewards from games by completing challenges, competing with other players and making progress through levels. They can also bring their assets outside of the games and make transactions on cryptocurrency exchanges and NFT markets.
How does GameFi work?
The rewards in GameFi can be in different forms such as cryptocurrencies or game assets (virtual lands, avatars, weapons and costumes). In most cases, the in-game assets are NFT on the blockchain, which means they can be traded on the NFT market. However, in some other cases, the in-game assets need to be converted to NFTs before they can be traded or sold.
The in-game assets usually offer certain benefits to players, allowing them to earn more rewards. However, some games also feature avatars and decorations that are purely visual and do not affect the playing process and earnings.
Depending on each game, players can get rewards by completing challenges, competing with other players, or building structures and earning money on their land. Some games also allow players to generate passive income without having to join playing via staking activity or lending their in-game assets to other players. Let’s take a look at some common features in GameFi.
Play-To-Earn Model (P2E)
The core of GameFi projects is the revolutionary play-to-earn (P2E) mechanism. It is completely different from the pay-to-play model that is applied by traditional video games. Pay-to-play requires players to make an investment before they can start playing. For example, video games like Call of Duty require players to purchase a license or a subscription.
Normally, traditional video games will not generate any financial return to the players, and their in-game assets are controlled by the gaming company. On the contrary, a P2E game can grant players full control over their in-game assets, and also offer them the opportunity to earn money at the same time.
However, it depends on the game model and design of each GameFi project. Blockchain technology can (and should) provide players with full control over their in-game assets, but not always. Therefore, you’d better understand how the game works and who is in charge of the project before engaging in any P2E game.
Another thing to keep in mind is that P2E games can be played freely and still generate financial rewards for players, but some GameFi projects require you to purchase NFTs or crypto before you start playing. Therefore, it is vital to DYOR and assess the risk. If a P2E game requires a large investment to start and the rewards are small, there will be potential that you can lose your initial investment.
One of the most popular P2E games is Axie Infinity, which is becoming more common since 2018. Players can use their NFT pets (Axies) to earn SLP tokens by completing daily missions and joining battles with other players.
They can also get AXS rewards if they achieve a certain PvP rank. In addition, AXS and SLP can be used to generate new Axies, which can be used in-game or traded on their official NFT marketplace.
Besides buying and selling Axies, players can lend their Axies to other players, allowing owners to earn money without having to play the game. This lending model is called a Scholarship. It allows players to borrow Axies to play and earn rewards.
In other words, Axie owners can earn passive income while players can play the game without any investment. The rewards earned are then divided among the players and owners of the Axies.
Digital asset ownership
As mentioned above, blockchain technology enables digital asset ownership, which means that players can monetize their in-game assets in a variety of ways.
Similar to video games, players can own avatars, pets, houses, weapons, tools,… But in GameFi, these assets can be issued or created as NFTs in the blockchain (also known as minted NFTs). This allows players to have full control over their assets, with verifiable authenticity and ownership.
Some popular metaverse games, such as ”Decentraland” and ”The Sandbox”, focus on the concept of land ownership. It allows players to earn money from their virtual lands. In “The Sandbox”, gamers can purchase pieces of digital real estate and develop them to generate revenue. For example, they can charge when other players visit their land, earn token rewards by hosting events or rent out their land to other players.
The DeFi applications
Some GameFi projects also offer DeFi products and features, such as staking, liquidity mining, and yield mining. Typically, players can stake their tokens to earn rewards, unlock exclusive items, or access new game levels.
Bringing DeFi elements into games could also make crypto gaming more decentralized. Unlike traditional game studios which control their game updates, some GameFi projects allow the community to participate in their decision making process. They can propose and vote for future updates through decentralized autonomous organizations (DAOs).
For example, Decentraland players can vote on in-game and organizational policies by locking their governance tokens (MANA) in the DAO. The more tokens they lock, the higher their voting power. This allows gamers to communicate directly with game developers and make an influence game development.
DRIVEZ — The 1st Drive-To-Earn
DRIVEZ is a Web 3.0 lifestyle application and the first NFT DAO mixed up with GameFi and CommunityFi. By joining DRIVEZ, users are able to make their daily commuting become exciting and profitable at the same time.
In general, DRIVEZ users can use their NFT cars to earn tokens ($INCO and $DRIV) by driving every day at a required minimum speed and distance. Users also have other methods to earn freely and effortlessly with DRIVEZ such as renting cars or becoming land owners… (these features will be launched soon).
In the long run, with some key highlighted features that are designed to reduce potential risks for the in-game economy as well as to bring high profit for users, DRIVEZ project is forecasted to bloom in the near future.
The future of GameFi
The number of GameFi projects has exploded in 2021 and will continue to grow in the coming years. Until March 2022, there are over 1,400 blockchain games listed on DappRadar. We currently have popular games on multiple blockchains such as Ethereum, BNB Smart Chain (BSC), Polygon, Harmony, Solana, and more.
As blockchain technology continues to evolve, the GameFi trend is expected to continue growing at a rapid pace. The ability to own assets and earn money from games makes GameFi very attractive, especially in developing countries.
Since the early days of Bitcoin, there have always been people willing to try their luck with simple browser games, hoping to make profit on BTC. While BTC games are still available, the emergence of Ethereum and smart contracts has certainly changed the world of blockchain gaming, offering more complex and exciting experiences.
It is easy to see that GameFi has attracted gamers by combining entertainment with financial incentives. With the increasing popularity of blockchain games, it is possible that we will see more and more big companies join in building the metaverse like Google, Facebook, etc.