What is GameFi? Blockchain Gaming and Play-to-Earn Explained

GameFi uses blockchain technology to create gaming experiences that allow players to earn crypto tokens while playing online games.

September 26, 2023
What is GameFi? Blockchain Gaming and Play-to-Earn Explained

Welcome to the world where gaming isn't just a pastime but a lucrative endeavor. GameFi is a rapidly growing sector within the blockchain space that offers an opportunity to earn crypto tokens while playing online games.

GameFi games are built on the secure and transparent foundation of blockchain, ensuring players genuine ownership of in-game assets and the safety of their earnings. In this blog post, you will learn more about GameFi, why it is so popular. Furthermore, you will discover a list of popular play-to-earn (P2E) games.

What is GameFi?

GameFi, or "Gaming Finance," combines the elements of online gaming and decentralized finance (DeFi) for an in-game economy and convenience. It introduces play-to-earn (P2E) mechanics, allowing gamers to earn cryptocurrency and other digital assets, such as non-fungible tokens (NFTs), while enjoying their favorite games. These rare items can be traded, sold, or used as collateral in other decentralized applications (dApps). GameFi's fusion of blockchain technology, digital assets, and decentralized finance enhances player experience and brings monetization opportunities.

How Does GameFi Work?

While GameFi varies depending on specific projects, the core idea is to provide players with ways to earn token rewards and assets for their gaming achievements and skills. The main components that make GameFi what it is include:

  1. Blockchain technology - which powers the games and the in-game tokens.
  2. Smart contracts also play a crucial role in helping decentralize much of the online gaming experience.
  3. Decentralized finance, non-fungible tokens (NFTs), and play-to-earn mechanisms help to make GameFi possible.

Let's explore these three aspects further.

Non-fungible Tokens (NFTs) in Games

NFTs are used in games to enable seamless exchange of in-game assets and to give players true ownership of their digital assets. NFTs can represent anything from avatars and costumes to weapons, virtual land, and collectibles. Rarer items are typically more expensive. NFT marketplaces within games make it easy for players to exchange their assets and build a thriving in-game economy.

Decentralized Finance (DeFi)

DeFi contributes to the GameFi economy by creating opportunities for players such as staking and liquidity provision. When it comes to GameFi initial DEX offerings (IDOs), DeFi plays a key role in raising funds for GameFi projects, and providing in-game rewards and incentives.

Play-to-Earn (P2E)

Traditional video games, especially massively multiplayer online role-playing games (MMORPGs) like World of Warcraft, require players to pay to play. In contrast, GameFi games allow players to earn rewards by engaging with the game. These rewards can range from tokens to rare collectibles, and can be earned through completing levels, breeding in-game characters, developing virtual land, competing with other players, and more.

GameFi games also feature gaming DAOs and community decision-making, which help to create a fairer environment for players.

Benefits of GameFi

There are advantages to the GameFi emergence such as:

  • Play-to-earn (P2E) is a new gaming model that allows players to earn rewards by engaging with blockchain-based games. This is a departure from the traditional pay-to-play model, and it opens up new opportunities for players to generate income. P2E also incentivizes more people to participate in the gaming industry, which can lead to wider adoption.
  • NFTs give players true ownership of their in-game assets, without the need to rely on centralized entities. This is a major benefit for players, as it allows them to trade and sell their assets freely. NFTs also open up new ways for players to generate income, as they can sell their valuable and rare collectibles.
  • GameFi transcends borders and allows players from all over the world to participate. This is a major advantage over traditional games, which often restrict access to players from certain countries. GameFi also promotes financial inclusion and encourages players to learn more about the tech industry.

Disadvantages of GameFi

There are disadvantages to the GameFi emergence such as:

  • Playing blockchain games can be challenging for people who are not familiar with video games. Game developers need to create more user-friendly games to make them more accessible.
  • NFT and GameFi token prices can fluctuate wildly, which means that you could lose money during periods of high volatility.
  • Not all crypto projects are developed with good intentions. The rising number of scams, rug pulls, hacks, and other attacks means that any crypto user is at risk of being exploited by bad actors.

Popular GameFi Projects

what-is-game-fi-a-beginner-s-guide-to-blockchain-gaming-and-play-to-earn-2.png There are several examples of GameFi projects that are currently in development or already launched. Here are some of the most popular ones:

Axie Infinity

Axie Infinity is a blockchain-based game that allows players to breed, raise and battle creatures called Axies. Players can earn the native token of the game, AXS, by playing, breeding and battling Axies. They can also stake their AXS tokens to earn governance rights and earn rewards from different liquidity pools.

The Sandbox

The Sandbox is another blockchain-based virtual world that allows players to create, own and monetize their own gaming experiences. Players can purchase and trade LAND tokens, which represent virtual land in the Sandbox and use them to create and sell their own games and experiences. They can additionally earn SAND tokens, the native token of the Sandbox, by playing games and contributing to the ecosystem.

Decentraland

Decentraland, on the other hand, is a virtual world built on the Ethereum blockchain that allows players to create, explore and monetize their own virtual environments. Players can purchase virtual land using the MANA token (the native token of Decentraland). They can also create and sell virtual assets, such as buildings, art and games and earn MANA tokens in return.

How to Start Earning Money with GameFi Games?

what-is-game-fi-a-beginner-s-guide-to-blockchain-gaming-and-play-to-earn-3.png

Earning income through GameFi necessitates a blend of skill, strategy, and a touch of luck. To identify trustworthy GameFi opportunities, it's crucial to research well-established and reputable GameFi platforms and familiarize oneself with their tokenomics (economic models) before getting involved.

  • Newcomers are advised to start by investing a modest amount of time and resources to test the platform's withdrawal procedures and assess its reliability without exposing themselves to significant potential losses.

  • Once you've chosen a GameFi platform, the next step is creating an account and configuring a wallet address to receive and securely store your earnings.

The process for cashing out one's earnings after gameplay varies depending on the platform. Some platforms impose minimum withdrawal thresholds that must be met before earnings can be withdrawn. Additionally, players might encounter withdrawal fees for converting earned tokens or cryptocurrency into fiat currency or other digital assets.

Conclusion

GameFi is a new and exciting category of decentralized applications that combines elements of traditional gaming and decentralized finance. It demonstrates the potential of blockchain technology beyond digital currencies, and it offers innovative use cases and applications. As GameFi projects become more popular and interest in blockchain gaming grows, we can expect to see even more innovation and development in this field in the coming years.

Are you ready to dive into the world of GameFi? Rollspace launch is just around the corner. A fully on-chain and fully decentralized casino that will let you enjoy seamless gaming while maintaining complete control over your funds.

Don't miss out on the launch of Rollspace. Join us on Telegram today to seize the future of crypto gaming!

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