What is GameFi?
GameFi is a combination of “game” and “finance”, similar to the term DeFi that we are used to in the cryptocurrency world that combines “decentralized” and “finance” together.
GameFi games are well structured for players to earn income while playing games, wherein they are required to have starting tokens or the game's starter items within their digital wallets before playing the game. After that players will then be able to start playing and earn profit from various in-game activities, such as completing missions or through in-game assets ( such as real estate, items, decorations, etc.) Players can also earn passive income from the DeFi feature of the game.
What does the GameFi structure consist of?
1. Play-to-Earn (P2E) Model
Play-to-Earn (P2E) is the latest GameFi game model adopted by the gaming industry. This allows players to create or receive in-game assets such as items, characters, decorations, virtual land, etc. in the form of NFTs, coupled with the secure use of blockchain technology in the game system.
2. Non-fungible Tokens (NFT)
NFTs (Non-Fungible Tokens) are tokens created on the blockchain system that can show ownership over unique, one-of-a-kind assets, such as in-game items, artwork, music, virtual land, etc. that no one can change the ownership or create a copy of.
3. Game’s Native Token
Each GameFi platform relies on its own platform utility tokens to operate within the system, distribute rewards, and maintain its project’s value. For example, Axie Infinity uses Axie Infinity Shards (AXS) tokens as Governance Tokens and Smooth Love Potions (SLPs) as in-game rewards, making them the platform’s native tokens.
4. DeFi Features
In addition to earning from the Play-to-Earn model, some GameFi projects also offer passive income earnings to players in the form of additional DeFi features, such as staking tokens and providing liquidity (Yield Farming).
5. Blockchain Technology
GameFi games were originally developed on Bitcoin’s blockchain network, however, because of the limitation in scalability and complications of the system, it became necessary to move to other blockchains, such as Ethereum, but there are still issues of high fees and it is focusing on security and decentralization rather than speed. Since speed is essential in gaming, most GameFi platforms nowadays are starting to be developed on faster blockchains, like Solana, which offers enhanced transaction processing.
What players must have in order to play
1. Digital Wallet
Players will need a digital wallet to store their cryptocurrency or NFT for in-game transactions. The digital wallet that you need depends on the blockchain that the game is created on. For example, MetaMask's cryptocurrency wallet can connect to GameFi games that are built on the Ethereum blockchain.
2. Native token or starter item of the game
Although all GameFi games are free to download and play. However, many games force players to buy native tokens or starter items before beginning.
How to profit from GameFi
The most interesting thing about playing a Play-to-Earn game is that players can earn money while enjoying the game just like any other game. Players can make profit from the game by the following ways:
1. Selling in-game assets such as weapons, characters, cards, virtual lands, etc. on the marketplace, which may be in the form NFT.
2. Earning rewards for completing in-game missions.
3. Earning rewards by defeating your opponents
4. Creating in-game characters with unique attributes or more skilled then reselling it at a higher price.
5. Using DeFi features, such as locking coins for rewards (Staking) and adding liquidity to the system for rewards (Yield farming).
GameFi is a concept that combines “game” and “finance” together, and also implements interesting technologies in the cryptocurrency world such as DeFi services and NFTs to attract a larger number of users to play GameFi games and spend time and money to invest in this new type of game.
Moreover, GameFi gaming platforms do have the potential of receiving increased amounts of investments in the upcoming years from major tech companies that may start to take an interest in GameFi.
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