Without mincing words, GameFi is arguably one of the hottest trends in the crypto-verse right now. Thanks to GameFi, play to earn crypto games are prepped to disrupt the over $175 billion global video games industry. Top games like Axie Infinity together with its whopping $1 billion in total in-game asset sales are wooing traditional gaming giants into uncharted territories. With the rise of GameFi, we are beginning to see video games giants like Ubisoft entering the GameFi ecosystem.
Also, we will highlight some excellent dynamics for gameplay monetization in existing GameFi titles. Here we will look at the play-to-earn feature and asset ownership. And yes, we will also take a minute to closely look at some popular blockchain networks deployed for the GameFi ecosystem.
But before we get ahead of ourselves, let’s quickly let you know that today’s post will introduce you to everything you need to know about the GameFi ecosystem, just in case you aren’t familiar with it just yet. We will start by closely looking at the definition of the term and take it further by exploring the origins of blockchain gaming.
And if you’re new to the whole concept of web 3.0 technology, you’re sure to get some tips on how you can get started in the world of GameFi. And before we wrap up with what we think the future of blockchain gaming will look like, we will take a detour to understand the concept of a decentralized autonomous organization or what is popularly known as DAO and how this concept is playing a major role in shaping today’s popular GameFi titles.
What are play to earn crypto games?
As we mentioned right from the get-go, play to earn crypto games (or GameFi) is one of the hottest trends in the crypto space lately. This unique ecosystem refers to the financialization of video gaming. Just like DeFi or decentralized finance, GameFi draws itsfunique name from a fusion of two words, game, and finance.
Just so you know, GameFi is a pretty broad term. And as you’ll learn shortly, titles that are termed GameFi may have quite different financial elements from one another. For instance, while some popular blockchain-powered games reward players for completing in-game tasks, others allow for revenue generation via the various assets owned by players.
And just so you don’t confuse yourself, GameFi isn’t gambling. Titles we consider to be part of this growing ecosystem usually require players to leverage a blend of skill and strategy to generate income. While we aren’t ruling out the element of luck when playing GameFi titles, it’s important we add that it isn’t the predominant factor when determining who wins or who is eligible for a reward.
What’s the history of GameFi?
The origin of the GameFi ecosystem can be traced back to November 2019, when the brains behind Mixmarvel, a robust blockchain game publishing platform in their speech delivered at the Wuzhen World Blockchain Conference in China, expounded on how the technology powering the crypto-verse could potentially revolutionize the video gaming industry. And sure enough, this isn’t the only time we get to hear about GameFi.
For many western readers, the term GameFi was used by Andre Cronje, the founder of Yearn, in a tweet from his official Twitter handle in 2020. Since then, the term GameFi has become commonplace and gained massive traction as it has been used by many professionals and projects to describe games with financial elements powered by blockchain technology.
Despite GameFi rising to prominence more recently, it’s important to state the fact clearly. First off, GameFi’s history goes as far back as the history of Bitcoin itself. From early Minecraft servers, which had BTC integration to platforms like Gambit.com, to popular titles like Bombermine, which featured peer-to-peer services that enabled gamers to monetize mainstream titles with cryptocurrencies, there were tons of early efforts and projects that championed the course of GameFi.
Subsequently, projects like Huntercoin used blockchain technology for more than just payments. With Huntercoin, players could monetize gameplay to mine cryptocurrencies.
As if that wasn’t enough, the launch of Ethereum in 2015 opened video game developers to tons of opportunities as they leveraged the superior programming language provided by the Ethereum network to build sophisticated applications. The launch of the Ethereum network meant that programs could now be seamlessly stored and executed on-chain for the very first time. This allowed for the creation of dApps. Games like CryptoKitties were some of the first Ethereum powered games to hit the scene. The game leveraged the newly launched ERC-721 standard to represent in-game assets in the form of Non Fungible Tokens.
In the years to follow, interest in NFTs has reached astronomical levels, resulting in the launch of blockchain optimized for performance. This has spearheaded some of the remarkable advancements we are currently witnessing in the GameFi ecosystem. Today, we are beginning to enjoy some of the unique benefits from these innovators’ efforts even as blockchain gaming continues to grow at an exponential rate.
Sweet world mobile GUI set elements web games
Unraveling the GameFi ecosystem and how it works
As we mentioned, GameFi comes in many exciting forms and designs. To this end, the infrastructure through which gamers can generate revenue or earn rewards from their gameplay varies. That said, keep in mind that there are a few important themes that are worth highlighting. In today’s GameFi ecosystem, many of the famous blockchain-powered games use a blend of the following features to monetize the gameplay experience.
What is Play-to-Earn?
In many popular blockchain-powered games, players get rewarded financially for completing game tasks. Most times, the funds awarded to players in play-to-earn titles usually come from a reserve of native tokens, which has been hitherto locked away in a smart contract.
A very good example of the play-to-earn theme is observed with the popular Ethereum powered game Axie Infinity. This popular GameFi, from its inception, had a portion of its AXS token reserved to reward gamers for executing the following objectives:
- Breeding Axies
- Tending your plot of land
- Winning battles and tournaments and
- Trading on the Axie Infinity marketplace.
What is Asset Ownership in GameFi?
One of the integral aspects of most blockchain-powered games today is the concept of ownership of scarce digital assets. While the number one cryptocurrency by market cap introduced digital scarcity through the bitcoin blockchain, NFTs has expanded on it. And just so you know, NFTs can represent all manner of assets, physical, digital, and even in-game items.
The thing about digital ownership of a unique asset is that it creates economic opportunities that weren’t possible in the past. For instance, in blockchain-powered games like Axie Infinity and CryptoKitties, players can breed two creatures represented by NFTs for an opportunity to create a third creature. With these assets, players can leverage a game’s play to earn features, sell it or lease it out to other gamers to use. At the end of the day, all parties split any revenue generated.
Even though it isn’t exactly games in the real sense of the word, online virtual worlds, dubbed the metaverses, allow members to monetize their time through asset ownership. At the crux of projects like the Sandbox, Cryptovoxels and Decentraland sit the concept of land ownership. And yes, these plots trade freely on secondary markets.
With projects like Decentraland, Sandbox, and Cryptovoxels, owners are pretty much able to monetize their plots in almost the same way they can in the physical world. Besides outrightly selling owned assets, owners can also develop an attraction that can generate revenue through leasing the land to someone else to monetize. Go through some of these shared virtual spaces and you’ll be pleasantly surprised at the efforts to monetize land. Some examples include virtual shops, casinos, and concert venues.
Interestingly, these virtual worlds are spearheading the rise of emerging economies. For example, the Tominoya Casino hosted on Decentraland hired the services of real people to greet punters on arrival while also acting as general support. And yes, many experts expect this trend to continue. According to professionals in this niche, the metaverse economy will eventually outperform the real world and that’s because people would be looking to take advantage of the new opportunities available in the virtual world.
GameFi and the DeFi ecosystem
With the advancement of the GameFi sector, we are beginning to see new GameFi projects leverage concepts from the DeFi sector to reward gamers. If you have some experience with DeFi, you’ll know a thing or two about concepts like staking, yield farming, and liquidity mining. These concepts are leveraged by diverse GameFi projects to provide opportunities for players to generate passive income from blockchain-powered games.
If you’re new to DeFi or have no experience in this sector, now is a good time to read up on the DeFi ecosystem and how it is disrupting the crypto-verse.
Some examples of successful blockchain-powered games that leverage features common to the DeFi ecosystem include Aavegotchi, Axie Infinity, and Nine Chronicles.
Playing field mega win window for game user interface. Vector illustration screen to the computer game Shadowy forest GUI. Background image to create buttons, banners, graphics.
What are the top GameFi protocols?
While some of the very first GameFi titles were built on the Bitcoin blockchain, most modern GameFi tiles today are built on smart-contract enabled networks. And when we talk about smart contracts, Ethereum was and still remains one of the most popular blockchain networks for developers and gamers.
That said, you must always remember that Ethereum is optimized for decentralization and security and not performance. And considering that Ethereum’s block space is limited, people who want to fast-track transaction times have to incentivize miners to include their transactions by paying higher transaction fees.
When the demand on the Ethereum network exceeds the amount of block space available, what happens is that transaction fees rise sharply, pricing some users out. This situation results in problems for blockchain game developers. Because of some of these lapses as seen on the Ethereum network, many developers are shifting their attention from Ethereum to more sophisticated networks with higher performance, scalability, and more. Some of these networks include:
- Polygon Network
How to get started with play to earn crypto games?
Each blockchain-powered game is different. To this end, we would like to provide GameFi enthusiasts with general guidance on how to get started with GameFi. On the flip side, if you want more advanced help, we highly recommend consulting the relevant GameFi project documentation.
1. Set up a web 3.0 wallet
Quite distinct from many popular web applications, most GameFi titles do not use traditional usernames and password systems. Instead, users identify themselves via a Web 3.0 wallet they will need to provide when exploring the game.
Keep in mind that the wallet required to play GameFi titles depends on the network that is powering the game. For instance, Axie Infinity players will need to have an Ethereum compatible Web 3.0 wallet just like the one provided by Metamask.
2. Purchase any assets needed for gameplay
Before you can play many of the popular GameFi titles out there, you’ll need to own one or more in-game assets. In Axie Infinity, for instance, players must have up to three Axies in their Web 3.0 wallet. Also, some GameFi titles require players to buy an in-game digital currency. And because the process has been made almost seamless, gamers can buy the said currencies via the game itself or directly from exchanges.
3. Log in via a Web 3.0 wallet
Many of today’s most sophisticated GameFi titles can be played via your browser. Therefore, you’ll need to log in via the Web 3.0 wallet you earlier created to join the action.
To get started, all you need to do is navigate to the relevant GameFi website, locate the section where you’re required to enter your wallet. You’ll then be required to confirm the action by signing a message from the website. Just so you know, the wallet itself has been configured to create the signature, leaving you to simply confirm it by hitting the Sign button.
As we mentioned earlier, the Web 3.0 wallet you entered will act as your account. To this end, any progress made while exploring the game will be saved in your wallet. And yes, it also doubles as your item inventory.
Play to Earn and DAOs
Video game development has been highly centralized. What we simply mean here is that a studio can design a game, produce it and publish the title, and have sole responsibility for any future updates. But with GameFi projects, we are seeing things play out quite differently, and that’s because most GameFi projects strive to extend decision making to their teaming community.
The mechanism through which they are able to achieve this is popularly known as a decentralized autonomous organization. Thanks to DAO, token holders have the power to vote on project update proposals. And yes, these proposals tend to impact the game’s monetary features. For instance, token holders in a DAO project can vote to increase the reward for executing certain actions within the game as a means of promotion.
To be part of a GamFi DAO, you’ll need to own the project’s governance token. And yes, the number of tokens members have is directly proportional to their voting power. In most GameFi DAO, the biggest stakeholders have the loudest voices when it comes to determining the project’s direction.
With the advancement in the GameFi ecosystem, we are beginning to see blockchain-powered games launch their native DAOs. A brilliant example of this is the multichain title, Alien Worlds. This blockchain-powered game has six DAOs, with each DAO, representing a different planet in the game’s ecosystem.
Interestingly, many GameFi DAOs aren’t entirely specific to a particular title. Great projects like Yield Guild Games are attempting to harness value from various play-to-earn blockchain games so their members can benefit. Thanks to YGG’s primary DOA and other sub-DAOs pool in-game assets, gamers can deploy assets into games to generate more income for the entire community.
The future of GameFi
Despite GameFi having roots that can be traced to the very onset of cryptocurrency, the GameFi ecosystem is only starting to gain mainstream acceptance. One of the many projects in the crypto space that is spearheading the advancement of this ecosystem is the flagship title Axie Infinity. In August this year, this blockchain-powered game became the very first blockchain project to surpass a whopping $1 billion in total token sales. And just so you know, one-fifth of this money was raised in a single week. Since the game launched, it has continued to host more than a million daily active players.
Even though previous blockchain games have found it pretty challenging to attract mainstream appeal, the robust technology powering these titles and the understanding of it has reached a point where new GameFi titles are enjoying tremendous fan bases. For many mainstream industry commenters, the GameFi ecosystem will most likely spearhead the widespread adoption of blockchain.
With over 2.7 billion video gamers worldwide already familiar with the concept of in-game currencies, scarce digital items, and tokenization, we expect the GameFi industry to continue to gain widespread acceptance by the day. And yes, blockchain technology has been able to empower gamers in ways they are able to benefit from gameplay actions, both financially and in terms of title development. Within the next couple of years, we expect GameFi to take a larger chunk of the global video games market which is currently worth $175 billion.
Thanks to the overwhelming success enjoyed by popular GameFi titles like Axie Infinity, we are beginning to see a number of games currently under development on different blockchain protocols. This is a clear indication that the future of GameFi is bright.
About the Author
Isaac Francis is a crypto enthusiast. He enjoys writing about the trends in the crypto space. He has over six years of experience trading the cryptocurrency market, providing market insights, breaking down technical analysis, and writing news events on everything cryptocurrency. He currently holds Bitcoin, BnB, and Ethereum in his portfolio.