What Is GameFi and How To Earn From It
GameFi has become one of the most popular concepts of Web3 and it has every reason to be considered so. With a market valuation that is projected at $10 trillion by 2030 and hundreds of millions of dollars paid out to players since 2021, it has proven to be the fastest growing segment in blockchain.
Currently, GameFi has successfully enticed millions of new users into DeFi as well as attracted some of the biggest names in the traditional tech and gaming industry into blockchain due to its redefined ownership and reward structures.
In this edition of Web3 and More, we’ll have a full grasp of GameFi by answering the following questions:
- What is GameFi?
- Where Is The Money Coming From?
- How is GameFi Different From Traditional Video Games?
- What Are The Various Models or Types of GameFi?
- How Can You Get Started In GameFi?
WHAT IS GAMEFI?
The term GameFi was coined from the combination of ‘Game’ and ‘Decentralized Finance’ by Andre Cronje in 2020. It refers to blockchain powered games that offer gamers ownership rights to the games they play and incentivizes them with real-world financial rewards.
Though popularly referred to as play-to-earn (P2E), GameFi also encompasses other facets like move-to-earn, learn-to-earn, stake-to-earn and more. The primary concept is the gamification of any event or activity which has to be backed by decentralized finance.
Unlike traditional games where in-game rewards have no real world financial value and players have no ownership rights over the assets they’ve bought in the game, GameFi is designed to give players full ownership right to their gaming assets, facilitate listing on NFT marketplaces where players can sell their gaming assets and also compliment each game with a cryptocurrency by which players are paid for every completed task or battle.
WHERE IS THE MONEY COMING FROM?
Thanks to the success of games like Axie Infinity, the model of getting paid for winning a battle was proven.
How does this happen?
It’s all due to the DeFi mechanisms behind the games. GameFi uses smart contracts that is native to decentralized finance to convert traditional video gaming assets into NFTs that are hard-coded to automatically generate a certain amount of rewards (cryptocurrency) whenever certain parameters are fulfilled by the gamer or owner of the NFT. The rewards are then claimed by the gamer and moved to a decentralized exchange where they can be swapped for BTC, ETH or USDT etc.
Similar to any other DeFi product, these in-game assets and rewards are subject to price fluctuation based on demand. They can be minted, burned or staked and they can be traded on various marketplaces, or used in completing the required tasks for more daily rewards.
This is very different from how traditional video games work. For example, when you play traditional video games like Fantasy Football, you earn a certain amount of money in the game, but you can only use this money to upgrade your gaming assets or pay for other features within the game, it holds no value outside the game. Also, a gamer does not have the right to resell his assets to another person.
Hence, the heightened rush towards GameFi.
DIFFERENCE BETWEEN GAMEFI AND TRADITIONAL GAMES
From the above definitions, some of us can already tell the differences between GameFi and traditional video games, however, the following table further highlights the four (4) unique traits that makes GameFi very appealing:
MODELS OR TYPES OF GAMEFI
Play to Earn
Play-to-Earn (P2E) is just as it sounds, play games to earn rewards in the form of cryptocurrency or in-game assets. It is the hottest category in GameFi right now and in 2021 alone, P2E games generated over $121 million in gaming rewards for players.
The most popular P2E game is Axie Infinity which rewards players with the SLP token for completing quests and winning battles. This reward can either be sold or used to breed new NFTs which can also earn more rewards for the gamers.
Move to Earn
Move-to-Earn (M2E) is another model of GameFi that allow users to earn income for engaging in fitness routines such as jogging, running or walking. Similar to P2E, the in-app assets belong to the users and can be traded on secondary markets or kept to generate more passive income.
This model was first proven by Sweatcoin in 2015, a fitness app that pays you Sweat coins for walking. The coins can then be redeemed for gift cards or discounted products. However, for some weird reasons the founders saw it wise to name it Sweatcoin, but didn’t integrate it with DeFi all these years. From recent updates on their app, they seem to be making the needed move now. (If you’re using Sweatcoin you can link with me here)
So, other players like StepN, the most popular M2E app came in and integrated the same idea with DeFi in 2021. StepN offers training shoes as NFTs, which a user can buy and apply to their account whenever they wish to go for a run, jog or walk. For each completed distance, the user earns GST tokens, which at some point was capped at $100 a day for starters.
M2E games are projected to be top gainers in the near future as they actively promote healthy living and at the same time, financially reward users.
Learn to Earn
Learn-To-Earn (L2E) models are getting more adoption as categories like P2E attracted millions of new users into the space. There’s now an obvious need to educate these new users and quickly onboard them to other opportunities in the blockchain space.
Learn-to-earn works quite differently from other models, in that you don’t need an NFT to learn and earn, you simply need to read an article, watch a video and answer some questions in order to earn for that task.
Currently, Binance has the best L2E platform where you can simply learn about blockchain, cryptocurrency, DeFi or others to start earning.
Stake to Earn
Staking in DeFi is the act of depositing your tokens on a DApp or DEX in order to earn additional coins for free. The same model is applied in some blockchain games where instead of completing daily tasks or battles, you simply stake your NFT on the platform to earn daily financial rewards.
This model was best proven by Cold Blooded Creepz, which at their all-time-high (ATH) was paying stakers more than $2000 a day.
Rent to Earn – Scholarships
Last but not least, is the Rent-to-Earn (R2E) model. While this is not an active GameFi model, it has enabled a number of multi-billion dollar companies to be born out of GameFi. Due to the high financial rewards attached to gaming NFTs, most of them come at a high price tag which most gamers or users cannot afford. On the other hand are whales (rich investors) who can buy multiples of these NFTs but have no time to play the games.
Hence, the R2E model is created for both investors who can’t play games and gamers who can’t afford NFTs to earn together. Generally, a game enables the rent functionality and gamers are able to access NFTs for free, then the owner receives a percentage of every amount the gamer earns.
The biggest and first player in this category is Yield Guild Games (YGG) which is a blockchain gaming guild that acquires gaming NFTs for their pre-qualified players to play and earn with.
HOW TO GET STARTED?
Getting started with GameFi is as simple as having a fair knowledge of interacting with DApps (decentralized apps). However, if interacting with DEX is too complicated for you, then Binance also offers a user-friendly NFT marketplace that launches gaming collections every now and then.
Next, you’ll need to do some careful research on the GameFi category that appeals to you the most. Make a shortlist from the available options and read the litepaper of these games to determine how they work and which of them might suit you best.
GameFi is effectively redefining the gaming industry at large and even though it is still at its early stage, it has already yielded much profit for early adopters. With a projected market valuation of $10 trillion in the next 8 years, GameFi still holds enormous opportunities for gamers and investors alike.
However, as with any other Web3 concept, there’s a steep learning curve to it, but there are equally significant opportunities for collaborations that can make up for the learning curves. You can either join a DAO with interest in GameFi and grow with them or collaborate with an investor (if you’re knowledgeable in this area) or sponsor a gamer (if you’re an investor) to get your foot off the ground.
The industry is still young but it is not lacking honeypots that can part you from your hard-earned money, thus, it is important to thread carefully in whatever way that you choose to get started,
Do you have any questions or is there something you’d like to suggest? Please don’t hesitate to share them in the comments.
I’m not a guru of any kind, but I hope that I can help you and others to make informed choices in Web3 and More.