The blockchain network has had several innovations over the years that have transformed the dynamics of the decentralized ecosystem. However, one innovation that is poised to take over decentralized finance (DeFi) and encourage widespread adoption of blockchain technology is GameFi.
By combining gaming with finance, GameFi aims to utilize models like the play-to-earn (P2E) system to incentivize gamers and encourage them to make more money through blockchain games.
What is GameFi?
GameFi is a modern gaming solution that utilizes blockchain technology and decentralized finance to incentivize gaming for game enthusiasts and investors. It combines blockchain technology, gaming, and decentralized finance to create financial solutions through gaming platforms. This is why GameFi is also referred to as blockchain games.
GameFi uses cryptocurrencies, non-fungible tokens (NFTs), and blockchain technology to create its virtual gaming environment and facilitate payments and rewards for gamers. GameFi platforms operate using smart contracts. These are automatic mechanisms that execute a contract as soon as the requirements for the contract have been met. Smart contracts make GameFi more reliable and efficient when running transactions and activities on the GameFi chain.
How Is GameFi Different From Traditional Gaming Models?
Just like traditional gaming models, GameFi games include a variety of avatars, costumes, lands, weapons, and more. However, the value of these game assets goes beyond simply playing a game. Many of these game assets are NFTs running on the blockchain that can be traded on GameFi platforms and decentralized exchanges (DEXs). This promotes incentivized user engagement by helping gamers earn cryptocurrencies and NFTs that they can trade in the future.
In addition, GameFi platforms encourage a passive income stream for gamers or investors who do not want to play the game actively. A gamer can rent out his in-game asset to another gamer or even host events on his virtual lands for other users, earning him rewards. GameFi investors can also participate in staking and liquidity mining on the decentralized gaming platform to earn interest on their digital assets. However, some games can include features and avatars that do not correspond to an NFT and only have visual value. These particular game features would not increase a gamer's earnings or game experience.
The Growth of GameFi
GameFi, initially developed by Andre Cronje, was meant to be a decentralized finance (DeFi) platform with gaming components. The GameFi ecosystem has, however, developed far beyond that through its seamless adoption of blockchain technology, cryptocurrencies, and non-fungible tokens.
According to recent data, over 3 billion active gamers worldwide have risen by over 1 billion in seven years. Game finance (GameFi) accounts for over 50% of user activity in the blockchain industry, gathering over 840,000 daily users and $698 million in transactions. It is an impressive feat considering that GameFi only came into the limelight in 2015.
Source: DappRadar
The second quarter of 2021 was notable for a growth of 503% in the GameFi industry. This was after the COVID-19 pandemic which prompted many gamers from developing economies to seek new ways of earning money. GameFi projects that experienced augmented growth during this period include Alien Worlds, Axie Infinity, and Decentraland.
Source: Cointelegraph
Source: DappRadar
The growth of game finance (GameFi) has positively impacted the widespread adoption of cryptocurrencies and NFTs, especially since the gaming model utilizes said cryptocurrencies and NFTs to settle gamers' rewards and transactions. The game technology has attracted hundreds of gamers into the blockchain space, as a recent survey from ChainPlay proves that 75% of investors got into the blockchain space because of GameFi.
A study made on CoinmarketCap also discovered that nearly 75% of online gamers are willing to exchange their in-game assets for a cryptocurrency they can trade on other exchanges. This study shows how interested many gamers are in the benefits of GameFi, and this has prompted them to participate in the innovation.
The GameFi ecosystem has grown exponentially since its inception and has a token market cap of nearly $9 billion. With the gaming solution's steady growth, the industry is forecasted to surpass a $74.2 billion valuation in 2031 from its $8.9 billion in 2021.
How GameFi Is Transforming The Gaming World
GameFi projects are unique in many ways and they operate differently from the traditional gaming models that many gamers use. Unlike traditional gaming models, GameFi uses a play-to-earn system that helps gamers monetize their gaming skills.
GameFi also ensures digital asset ownership for users, a benefit unique to this gaming model. In GameFi, users own their digital assets, including game avatars, land, houses, and more. These assets correspond to NFTs that gamers can trade on cryptocurrency exchanges solidifying their status as the owners of their game assets.
GameFi offers many impressive benefits due to the technologies the gaming solution utilizes, and some of the ways GameFi has transformed the gaming world are:
1. Lower Transaction Costs
While traditional games often require payments from users before they can access the game, advance their gaming levels or unlock new game features, GameFi projects offer these features to gamers at lower costs while also offering them the chance to earn cryptocurrency tokens and NFTs.
2. Digital Assets Ownership
GameFi projects offer gamers control and ownership over their assets in the gaming platform. This means that gamers can choose to rent or trade their game assets to make more money. For traditional games, users do not own their game assets, and the company or game developers can take away these assets at any time. Video games like Call of Duty require users to purchase recurring subscriptions to retain ownership of their game assets. Still, these gamers cannot resell or make money off these digital assets. GameFi solves this problem by helping gamers earn using their gaming skills.
3. Improved Gaming Experience and User Engagement
Some GameFi models allow gamers to participate in the network's decision-making process and vote on in-game policies and upgrades. GameFi projects achieve this through decentralized autonomous organizations (DAOs), where gamers can lock governance tokens into the DAO and participate in the project's decision-making, thus influencing the game's development and boosting the user gaming experience.
How GameFi Works
Hundreds of blockchain games are available on the Metaverse; because of this, some malicious actors have created fake GameFi projects to trick users. For this reason, it is necessary to do your research (DYOR) before connecting your crypto wallet to a GameFi project.
Once you're ready to join a GameFi project, these are the steps to follow:
Create your cryptocurrency wallet
You need a crypto wallet before you can access GameFi projects. These projects have specific crypto wallets that they support on their platform. You can learn a game's supported wallets by visiting their website. It is advisable to use a new crypto wallet when you're starting out with GameFi and also make use of little funds until you are fully aware of the dynamics and vulnerabilities of the game.
Connect your wallet to the game's network
After obtaining your compatible crypto wallet, you should connect it to the game's network to begin playing and earning rewards. As stated earlier, there are many fake copies of blockchain games on the Metaverse so it is necessary to confirm a game's official website before connecting your crypto wallet to it. Your crypto wallet serves as your account identity on the GameFi network requiring you to only sign a message on your wallet to begin.
Be aware of game regulations
Each game has its regulations. Some games require users to purchase in-game NFTs before they can begin playing while others don't. It is necessary to understand a game's unique regulations, requirements and earning potential before you begin playing or investing.
Categories of GameFi Projects
There are thousands of GameFi projects existing on different blockchains. In this section, we will discuss a few notable GameFi projects.
The Sandbox
The Sandbox is a gaming platform that allows users to monetize their assets and earn using their gaming skills. The Sandbox focuses on land ownership, allowing gamers to earn revenue from their virtual lands by hosting events and charging other users for visiting their lands. Currently, The Sandbox has a market cap of $762.83 million.
Axie Infinity
As one of the most popular GameFi projects with a market cap of $578.55 million, Axie Infinity features avatars known as Axies that exhibit different abilities. Axie Infinity experienced impressive growth after the COVID-19 pandemic which compelled many gamers to search for new sources of income.
Legends Reborn
Legends Reborn is a collectible card game that features various game heroes who create decks of cards from an extensive collection to settle their differences and become recognized champions. The GameFi is currently at $43.94 million daily traded cryptocurrency on the network.
Polus Pay As a Leading Contributor To The Growth Of GameFi
Polus Pay is a cutting-edge decentralized payment gateway that ensures speedy transaction processing, limitless payment boundaries, and effortless user registration.
The pioneering payment service is the first decentralized payment solution to integrate seamlessly with decentralized applications. Leveraging smart contract adoption and its decentralized systems, Polus Pay enhances security, minimizes transaction costs, and boosts transaction transparency.
Polus Pay also participates actively in the growth of GameFi in the blockchain space and its increased adoption worldwide. Partnering with GameFi developers and enthusiasts, Polus Pay is at the forefront of advancing innovation in the dynamic world of cryptocurrencies and blockchain.
Visit our website here to learn more about us.