GameFi - what is it and how does it work?

What exactly is GameFi?

GameFi refers to play-to-earn blockchain games that offer economic incentives to players. Players can earn cryptocurrency and NFT rewards by completing tasks, battling other players, and progressing through the different game levels.

Unlike traditional video games, most blockchain games let players transfer the gaming items out of the game’s virtual world. This allows players to trade their items on NFT marketplaces and their crypto earnings on crypto exchanges.

In most of these games, rewards are given for completing tasks or fighting other players. Players can also earn passive income from staking or by lending their gaming assets to other players.

What are the main functions of GameFi?

At the core of GameFi projects, we have play-to-earn (P2E) as a revolutionary gaming mode. It’s quite different from the pay-to-play model adopted by traditional video games. Pay-to-play requires gamers to invest before they can start playing (purchase licenses or recurring subscriptions).

Traditional video games won’t generate any financial returns for players, and their in-game assets are controlled and held by the gaming company. In contrast, P2E games can give players full control over their in-game assets while also offering opportunities for them to make money.

Some GameFi projects also offer DeFi products and features, such as staking, liquidity mining, and yield farming. Typically, players can stake their in-game tokens to earn rewards, unlock exclusive items, or access new gaming levels.

Since blockchain technology allows you to own digital assets, this means that players have many options for monetizing them.

Similar to video games, players can own avatars, pets, houses, weapons, tools, and much more. But in GameFi, these assets can be issued or created as NFTs in the blockchain. This allows players to have full control over their assets, with authenticity and verifiable ownership.

What is the future of GameFi projects?

The number of GameFi projects is getting bigger. In 2022, over 1400 blockchain games have been registered. Today, players can choose from a variety of popular games available on the Ethereum, BNB Smart Chain (BSC), Polygon, Harmony, Solana, and many more blockchains.

Blockchain technology continues to develop rapidly, so the number of GameFi projects is also growing at a rapid pace. After all, such games provide an opportunity not only to have fun and play but also to own in-game assets and make money.