GameFi or Game Finance is a concept emerged in the cryptocurrency industry that combines the ecosystem of Decentralized Finance (DeFi), blockchain gaming, NFTs and even DAOs. Game Finance is revolutionizing the gaming industry worldwide by allowing players to earn money while playing games or interacting with other users. NFTs are the main ingredient of GameFi, by allowing users to maintain ownership over the digital objects they create or obtain within the game, enabling their monetization.
How GameFi is driving a new wave of blockchain adoption
What is GameFi
The combination of gaming and finance is becoming a global trend in the cryptocurrency and digital gaming industry. The digital gaming industry has evolved over time. Their quality, themes, graphics, and sounds have changed significantly since the first video games were invented, back in the 1950s. Until now, the industry has grown and evolved under a model where players got almost no reward for the time spent playing the game. A reality that began to change when the industry connected with blockchain technology.
From “Play to Win” to “Play to Earn”.
The traditional digital gaming industry is dominated by the “Play to Win” model, where players who wish to gain advantages over their opponents must pay for that advantage. GameFi is governed by “Play to Earn“, which is the new game mechanic popularized by Axie Infinity. This game has pointed the way to new open, digital economies, built by the players themselves.
Although playing the “Play to Earn” mechanic requires time, strategy or skill, players are rewarded with real value for their effort, time and knowledge. For reference, in 2021 Axie Infinity generated a sales volume of over $3.8 billion, through NFTs. DappRadar data shows that the blockchain game has celebrated more than 11 million sales from its 1.4 million users.
Blockchain Games: Why Play-to-Earn is the Future of the Gaming Industry
Metaverses
Axie Infinity is just one of the most popular titles within blockchain games. Others, such as Splinterlands, Alien Worlds and Somnium Space, also allow players to monetize within their platforms. Either because they contribute to the game or because they trade the digital objects and items they obtain within them as NFTs. Decentraland and The Sandbox are also among the most popular digital games and metaverses where to generate value. Moreover, since Facebook changed its name to Meta, the value of its native tokens skyrocketed.
Blockchain technology is proving its strength in transforming the digital gaming industry and shaping the new future. In the traditional industry, it is the company or game developer who commonly designs, produces and controls the game, according to their vision. In contrast, in blockchain, players can participate in making decisions about the games they play. Axie Infinity has a governance token, called AXS, that allows its holders to vote on the development and future of the game. The Sandbox and Decentraland also have their own governance tokens, SAND and MANA, which gives their users decision-making power to influence those games.
Quite limited
Despite the potential that encompasses this new trend in the gaming industry, blockchain game developers still have a long way to go. Not all blockchain games that allow monetization are attractive to players. Some lack an eye-catching theme or have rather low graphics and design. In addition, entry to some of these digital games, especially the most popular ones, such as Axie Infinity, has become inaccessible to many players. To start playing Axie requires a team of 3 creatures called axies, whose price ranges from 140 to 460 dollars each, according to the game’s marketplace. However, there are alternatives and companies, such as Yield Guild Games and Binance, that offer scholarships for those who want to participate.
Decentralization of mobile gaming with Blockchain technology
Another limitation of GameFi and blockchain games is the scalability of blockchains. In the case of Axie Infinity, the game’s developer company, Sky Mavis, had to create its own network, called Ronin. The company had to create its own network to escape Ethereum’s high gas costs, due to its current low scalability.
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