Blockchain development has transformed numerous industries across the world, whether it is finance or gaming. Also, focusing on blockchain financial products and services, decentralized finance (DeFi) is not only a mass term. The Defi pulse shows that since July 2020, the value locked in decentralized finance has grown over eight times. In a technological world, nothing is impossible Defi has proved it right as the value stood at $79.1 billion in march 2022, which is, in single substitution, imposing.
If we look at the gaming and financial industry combined or in other words, GameFI, it is immense and larger than the combined music and movie industries. The expectation from these industries is very high and assumed that by 2025 they will generate more than $260 billion in revenue.
Moreover, the initial iteration of the gaming blockchain in the form of a play-to-earn model has gained immense attention. So the collaborative efforts by the global communities of gamers and blockchain enthusiasts result give GameFi. And it is going to be the hottest trend in the crypto industry. But the question arises, what is GameFi? How does it work? Let’s go deep dive into it.
The fusion of the words “game” and “finance” stands for GameFi, which is the suitcase of decentralized finance and gaming. It represents the mixture of cryptocurrency, non-fungible tokens (NFTs), and the play-to-earn(P2E) gaming mechanics to create a virtual environment. The manifests of Gaming and Defi meeting in two ways:
As we all know, the GameFi works on a play-to-earn mechanism, and through this concept, the players get rewards. It is with financial incentives to play and grow their level in games. In some conditions, blockchain games permit gamers to earn a full-time income as they engage in the board game/video game elements such as point scoring, leaderboard, rewards, competitors, avatars, badges, and real-time feedback.
While such decentralized online games are incorporated with Defi elements to provide financial opportunities for gamers. Also, many options for Defi integrated games are available that range from simple lottery-based games to massive online multiplayer role-playing games. These all games allow players to earn in-game rewards, and these rewards are mostly in the form of cryptocurrency and NFTs.
Gaming and decentralized finance interflow have one obvious advantage they attract younger, tech-savvy, and fun-loving users. With Defi functionality, the GameFi understanding as a decentralized game adorning can be best by Axie Infinity, a play-to-earn game. The players can make money by earning tokens and trading in NFTs. If we look at another side, then MOBOX the Defi space presents the concept of gamified Defi as GameFi. As per the knowledge about MOBOX, it is the Defi platform that follows a play-to-earn mechanism. Also, it includes staking schemes, liquidity pools, yield farming tools, and the NFT environment.
The mechanics of every different GameFi project will vary, and the basis of characterization is on its play-to-earn model. It allows monetary incentives to players and is introduced mainly to blockchain-based games. By playing these games and advancing via their level the player gains financial rewards in cryptocurrency, in-game tokens, and NFTs. The conversion of the in-game tokens is into other more popular cryptos like Ethereum and Bitcoin and further exchanged for fiat currency.
The play-to-earn mechanism is not recent, and due to the innovative technology that powers them, there are a lot of talks on a play-to-earn model of the GameFi application. There are several things that keep these games separate from regular games and give them a mind-blowing experience. And this is from the inclusion of blockchain technology and smart contract to in-game tokens. Moreover, the building of some GameFi projects are as NFTs and include the form of avatars, plots of land, outfits, weapons, and skins. In the space of GameFi, there are diverse numbers of games available, and every one has its needs and mechanism.
There are two most important benefits of GameFi
In many conditions, there is a lot of difference in the play-to-earn mechanism from traditional play-to-play and play-to-win models, which is integral to the GameFi business model. For upgrades and assets, players pay actual money in some traditional games. Also, from legacy games, there is a deviation in GameFi that they permit to earn money by playing their favorite games. Thus it gives a base for financial inclusion in the gaming industry.
Drastically, the lockdown issued in 2020 has snatched many people’s jobs, have nowhere to go, and nothing to do at that time GameFi shows its original picture as most people signed up for Axie Infinity and earned a lot of money.
Allowing real asset ownership to players and enhancing their monetization potential, there is an integration of NFT into decentralized games. It is due to purchasing in-game items and moving on a distributed blockchain ledger. There are no game developers who own them and no counterfeited or altered in-game items.
The buzz of GameFi is on the top, and it includes a play-to-earn mechanism. Axie Infinity and running GameFi titles on the different blockchain protocols is the success of GameFi. In recent times it is more difficult to assume which is next to be that can define GameFi’s future. It is because there is regular evolution in blockchain technology.
If you are willing to take deep dive into GameFi or want to develop a GameFi app with robust Defi functionalities, feel free to connect with our Oodles blockchain solution experts.