GameFi is arguably the hottest trend in the DeFi space and is all thanks to NFTs. Non-fungible Tokens, digital items that uniquely represent real-life objects, are the force that powers this aspect of DeFi. NFTs first started as digital artworks that hold meaning. Since then, they have expanded to other use cases beyond allowing digital artists to monetize their creativity.
But, our focus is GameFi. How are these digital collectibles driving the adoption of the blockchain gaming industry? Before we proceed, let’s explain what it is.
What’s GameFi?
GameFi or Game Finance infuses gaming, blockchain or DeFi, and NFT to create a gaming ecosystem where players can participate and earn simultaneously. GameFi is also known as Play-to-Earn/P2E or blockchain gaming. So, you can use the terms interchangeably.
The mechanics of P2E involves rewarding players for their participation with incentives in NFTs or cryptocurrencies. Some games also integrate DeFi tools like farming and loans to provide an all-inclusive service to the players. So, the concept of GameFi is much more than gaming.
Gaming projects are built on blockchains. Ethereum wears the crown when it comes to hosting P2E games, but this isn’t to discredit other blockchains. In fact, developers run to other networks, such as BSC and Solana, due to the massive rise in transaction fees and slow throughput of Ethereum. This was experienced when CryptoKitties hit over 14k users in a single day.
We may attribute the growth of GameFi to the popularity of NFTs, but the rise of blockchain played a huge part undoubtedly. This decentralized gaming offered the infrastructure developers need to launch their projects. Because these games run on a blockchain, every item earned by a player becomes their property. They can sell it on the marketplace immediately or sell it later when its value appreciates.
How GameFi Works
Game projects are based on the P2E model and have their in-game tokens as NFTs. These tokens come in the form of costumes, pieces of land, weapons, etc., depending on the game’s mechanics. Players can claim the items after winning and trade them on the marketplace or exchange them for popular cryptocurrencies.
Interestingly, some game projects allow the players to make money by predicting. If the results their your way, they can cash out. Games, such as Decentraland, enable the players to rent their land for mouthwatering sums. So, in GameFi, the model is similar, but the mechanics differ.
As we said earlier, all the items earned by the player belong to the player. Since the records are stored on the blockchain, there are no disputes about who has the ownership right over an item. This is what makes blockchain games good, and it won’t surprise anyone if the industry surpasses its traditional gaming counterparts. Experts predict that GameFi could hit $322 billion in revenue by 2025.
How NFTs Are Driving the Adoption of GameFi
If you told someone in 2016 that NFT games would be the face of the gaming industry, they could mistake you for a lunatic. The truth is no one expected blockchain-powered games to disrupt the gaming world so fast. Interests in NFT games have risen exponentially in the last two years, and we owe it to two factors – the earning model and NFTs.
Before 2016, the idea of developing games that reward players with money that can solve real-world problems sounded alien, given that most game companies milked players to grow their pockets. The idea of banking some money never occurred to anyone.
Blockchain showed the world that playing while earning wasn’t insane at all. Not only do P2E games provide entertainment, but they serve as a source of income, thanks to their unique earning model. Players, especially those in developing countries, are more than eager to get into the act of gaming because of the monetary rewards that make a huge difference in their lives.
NFT is the other reason. These digital collectibles are scarce and expensive, and these are two factors that attract gamers. Everyone wants to jump at the opportunity of owning a rare item, especially when they consider that NFTs have fetched huge sums for many in the past. It’s not a coincidence that GameFi is growing tremendously. NFTs are the driving factor for its adoption.
Final Take
GameFi is rapidly gaining popularity every day. It incorporates a unique earning model and offers more utilities for NFTs and digital currencies. With a market cap of more than $14 billion, there’s no doubt that blockchain games will rule the gaming world.
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