Gamefi

What Is GameFi?

The term "GameFi" is a combination of the words "game" and "finance." It refers to blockchain games where players may gain monetary rewards by playing games. The Web3 Gaming ecosystem creates a virtual gaming experience using cryptocurrencies, non-fungible tokens (NFTs), and blockchain technology.

In general, players can earn cryptocurrency and NFT rewards by:

• battling other players

• completing tasks

• progressing through the various game levels

Play-to-earn (Play2Earn) or move-to-earn games are the two main designs that provide monetary rewards to attract gamers. 

The number of crypto gaming projects has been growing since 2021, and the trend is projected to continue for decades. As of March 2022, DappRadar has shown approximately 1,400 blockchain games. 

Game developers create games in Layer1 blockchains, such as Ethereum, BNB Smart Chain (BSC), Polygon, Harmony, Solana, etc., which are the core architectures of a base network. As a result, industry growth is expected to continue rapidly.

Characteristics: GameFi vs. Traditional games

The following are the distinctions between typical computer games and Web3 Gaming.

Gameplay

There are a few differences between GameFi games and traditional games. GameFi, as defined by its definition, is a blend of gaming and finance, so it is similar to regular games except that it includes economic incentives for gamers to engage.

Genres

Web3 Gaming includes a wide range of gaming genres, although it is primarily limited to simple-to-play games to lower the threshold for newcomers. Here are some of the most popular game types:

• Turn-based strategy (TBS): Axie Infinity, NFT Champions

• Move-to-earn (M2E): STEPN, Step App

• Sandbox game: The Sandbox, Decentraland, NFT Worlds

• Trading Card game: Gods Unchained, Splinterlands

• Fighting game: Battle of Guardians

• Sports game: Monkey League, Sorare

• 3rd person shooter games: My Pet Hooligan

Turn-based Strategy (TBS)

A turn-based strategy (TBS) game is a strategy game (typically a wargame, especially at the strategic level) in which players take turns.

Axie Infinity is one of the hottest turn-based strategy games in the Crypto Gaming industry in 2021, with several average monthly players of 2.7 million counted in January 2022.

Move-to-Earn (M2E)

Move-to-Earn (M2E) is another new type of game arising in 2022. The games need players to participate in routine physical activities, i.e., moving at a distance at a specific speed, to earn the tokens.

Stepn is the biggest move-to-earn game at the time of writing (May 2022).

Sandbox Game

A sandbox game is similar to an open-world video game (or a part of a video game). The player is not restricted to attaining specified objectives and has much freedom to explore, interact with, and modify the game environment.

The Sandbox, Decentraland, and NFT worlds are examples of Sandbox games. 

Angry Boars World #5471 NFT world

Trading Card Game

In most collectible card games (CCGs), a player starts with a premade starter deck and then customizes it with a random variety of cards obtained from booster packs or trading with other players, accumulating their card library.

Gods Unchained and Splinterlands are examples of trading card games.

Fighting Game

A fighting game (sometimes known as a versus fighting game) is a video game genre in which two (or more) players engage in combat.

For example, battle of Guardians is a fighting game in the Web3 gaming world.

Sports Game

A sports video game is a video game that simulates sports practice. Monkey League and Sorare are more popular sports games in the Web3 Gaming community.

3rd Person Shooter Games

A third-person shooter is a shooting game in which you see the main character from an external perspective rather than through the eyes of the main character.

My Pet Hooligan is a 3rd person shooter game built in Unreal Engine 5.0, and it is expected to release an Alpha version in May 2022.

Targeted Gamers

In general, traditional gamers and Crypto Games players can be distinguished by their motivation to play:

Traditional gamers are enticed to play games with well-designed gameplay. They primarily want a gripping story, a sound gaming system, and stunning graphics.

Play-to-earn has become a reality for many young people to earn a living since the launch of GameFi, so Crypto enthusiasts focus on the token rewards system as most of them are driven by rewards to play. 

Prerequisite For Playing 

Players in a typical gaming world would pay for the game, or the game may even be played for free. Traditional games, as a whole, have lower entry requirements.

Regarding this, most games require users to own NFTs before playing; for example, Axie Infinite requires players to acquire three NFTs pets to play the game and gain rewards.

How does GameFi function?

GameFi primarily relies on the token and asset value to manage the entire virtual world economy.

Therefore, it is more beneficial to comprehend the nature of game rewards.

What Are The Types Of Rewards?

It offers rewards in different forms, they include:

• cryptocurrencies (both game tokens and governance tokens)

• in-game assets such as avatars, outfits, weapons, and virtual land

Each Gaming project will have its game economy and model. The in-game purchases are usually NFTs that run on the blockchain and may be exchanged on NFT marketplaces such as Opensea or Immutable X.

In other words, in-game assets must be converted to NFTs before trading.

What Are The Types Of In-game Assets?

When it comes to in-game assets, remember that not all the assets are equally valuable, and they can be categorized into two main groups:

• Some could provide players with particular advantages, allowing them to earn additional rewards

• Some are only decorative and have no bearing on gameplay or earnings.

Before you spend your time earning rewards, you need to know what assets have monetary value and can be sold afterward.

Prospects Of GameFi

In 2021, the number of Web3 Gaming initiatives exploded. It is expected that this growing trend will continue in the coming decades. As of March 2022, DappRadar now lists over 

1,400 blockchains. Popular games are now available on several blockchains:

• Ethereum
• Polygon
• Avalanche
• BNB Smart Chain (BSC)
• Solana
• Harmony

"CryptoRush" For Developing Countries

As blockchain technology advances, the Web3 gaming growth pattern is expected to continue rapidly. GameFi is extremely appealing, particularly in developing countries, because it allows individuals to own and profit from in-game assets.

In South American countries, such as Colombia, Peru, Argentina, Mexico, Brazil, and Venezuela, the minimum wage is $300 or less. 

While the P2E model can provide around $400 a month in blockchain P2E games when the market is bullish, this scene is expected to continue.

How to get started with GameFi games?

Plenty of blockchain games are available, each with its own set of rules. Moreover, scam projects and bogus websites should be avoided. Understanding the projects before diving into them is extremely important to reduce your chances of being scammed.

Creating a new crypto wallet exclusively and only utilizing funds you can afford to lose is a good beginning to staying safe. Connecting your wallet with millions of funds or downloading games from strange websites is risky. 

If you're confident that the game you found is secure, follow these steps.

Create A Cryptocurrency Wallet First

Entering the Web3 Gaming world requires a good crypto wallet, such as Trust Wallet or MetaMask. Depending on the game, you may need to use various wallets or connect to different blockchain networks

Go to the game's official website to find out who they support. You may also connect your cryptocurrency wallet to the Ethereum blockchain and play most Ethereum-based games. Nonetheless, titles like Axie Infinity and Gods Unchained will be released.

Axie Infinity is based on Ethereum, but their team created the Ronin network as a sidechain. Therefore, to interact with the Axie Infinity network, you must utilize the official Ronin Wallet. 

The Ronin network is a sidechain that makes trading and breeding Axies significantly cheaper, lowering the cost of playing.

Register Your Wallet With The Game

You must connect your wallet to play a blockchain game. Find the option to connect your cryptocurrency wallet on the game's website. Ensure you're linking to the actual website rather than a spam one.

Most blockchain games use your crypto wallet as a gaming account. Therefore you'll need to sign a message on your wallet before joining the game.

Review The Game's Prerequisites

Most initiatives will ask you to buy their cryptocurrency token or in-game NFTs. Of course, the prerequisites differ in each game, but you should always examine the earning potential and the overall hazards. 

Be careful when calculating how long it will take to recoup your initial investment and begin profiting.

You'll need three Axies in your game wallet to play Axie Infinity. The Axie Marketplace is where you can get them. 

You'll need wrapped ETH (WETH) in your Ronin Wallet to buy Axies. Using the Ronin bridge, you can buy ETH on crypto exchanges like Binance and transfer it to your Ronin Wallet.

Play-to-earn strategy (P2E)

Play-to-earn (P2E) is an innovative gaming mode at the heart of Web Gaming projects. It's considerably different from the usual video game pay-to-play concept. 

Check If A Prerequisite Is Required To Play

Pay-to-play games need players to make an initial investment before they begin playing. 2022 Trible A video games such as Elden Ring, for example, require users to acquire licenses or recurring subscriptions.

While P2E games can be played for free and still generate revenue, some GameFi projects demand you to acquire NFTs or crypto assets before you can participate. 

As a result, it's critical always to do your own research and assess the risks. You will likely lose your money if a P2E game takes a significant initial commitment and offers minimal rewards.

In other words, Axie owners can make a passive income while players can enjoy the game for free. The money earned is divided between players and Axies owners. 

Understanding the game items system

Traditional video games rarely create financial rewards for gamers, and the gaming corporation controls and holds their in-game assets. 

P2E games, on the other hand, can give players complete control over their in-game assets while simultaneously allowing them to earn money by trading their in-game items

However, remember that the gaming economy depends on the game design. Players can have complete ownership over their in-game assets owning to blockchain technology, but this is only sometimes the case. 

Before joining a P2E game, similar to investing, it is better to understand how it works and who is behind the project.

The items are allowed to be traded on the NFT marketplaces and monetized the assets in the following way:

• Trading gaming items, and

• Generating income from NFTs

Trading Gaming Items

Players can possess different assets, such as avatars, pets, residences, weapons, equipment, etc. These assets can be issued or produced as NFTs in blockchain (also known as NFT minting). 

This design gives gamers complete control over their possessions and the assurance of authenticity and ownership.

Generate Income From NFTs

Land ownership is a prominent theme in popular metaverse games like Decentraland and The Sandbox. This is because they enable players to profit from their virtual properties. 

In The Sandbox, players can buy digital real estate and develop it to make money. They can, for example, charge visitors to their land, earn token rewards by hosting content and events, or rent out their customized land to other players. 

Applications for DeFi

Staking, liquidity mining, and yield farming are all DeFi products and features offered by several GameFi ventures. They are combined with games in the following ways:

• Tokenization of game features

• Decentralized control over the gaming system

Tokenization Of Game Features

Players can use their in-game tokens to acquire awards, unlock special items, or access additional levels.

For instance, Gods Unchained has its token GODS, which has a monetary value, i.e., players can trade GODS for U.S. dollars and be used to purchase additional card packs.

Decentralized Control Over The Gaming System

DeFi features can also help to decentralize cryptocurrency games. 

Unlike typical game studios, which have centralized control over game updates, some Web3 Gaming involves the community in decision-making. Through decentralized independent organizations, they can propose and vote on future upgrades (DAOs).

Decentraland players, for example, can use their governance tokens (MANA) to vote on in-game and organizational policies. Their voting strength increases as they lock more tokens. 

Decentralization allows gamers to have a direct channel to communicate with the game developer and their influence on the game development process.

Final thoughts

People have been trying their luck with basic browser games in the hopes of making Bitcoin gains since its launch of Bitcoin in 2009, but progress has begun with the evolution of Web3 Gaming. 

While Bitcoin games are still available, Ethereum and competent contracts have transformed the blockchain gaming landscape, allowing for more complex and engaging experiences, such as the hype of CryptoKitties in 2018, which promoted the emergence of NFTs. 

It draws gamers by mixing entertainment and cash incentives. With the growing popularity of blockchain games, the metaverse will almost certainly see an influx of large corporations.

Game company Ubisoft, valued at $5.57 Billion U.S. dollars in 2022, has outlined its plans for cryptocurrency.

Ubisoft has already operated nodes on public blockchains and developed its own NFT series. In addition, the company has invested in Animoca Brands, a blockchain startup, and hopes to create play-to-earn capabilities. It is expected that more gaming corporations will invest more in the GameFi world.

Some games collect fees on specific transactions, with the proceeds going to affiliated corporations or treasuries, from which developers are paid.

Risk management also applies to investing in Web3 Gaming. Security should be the core consideration before making any decisions. And last but not least, Happy Investing!

Researched & authored by Ka Chun CHIU | LinkedIn

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