- 1 GameFi has a mixed reputation as it provides a chance to earn while playing but it usually has uninspired game mechanics.
- 2 It offers exciting new opportunities for Web2 gamers to be part of the creation of a game.
GameFi is a system where gamers and creators can earn during the gameplay. These games are often hosted within virtual spaces called metaverse. It facilitates gamers and creators to engage.
Game Finance is the term that refers to the financial nature of blockchain games. It combines decentralized finance (DeFi) with gaming to create a financially incentivized gaming experience. That is made possible by the assemblage of cryptocurrencies non-fungible tokens and play-to-earn gaming models.
Opportunities of GameFi
A few benefits associated with GameFi are discussed below
GameFi Provides the Opportunity to earn Passive Income
GameFi offers players the opportunity to earn passive income. With the in-game assets, the gamers can participate in various DeFi protocols, such as liquidity pools and yield farming. It will permit them to earn dividends and fees from the protocol. It is a notable money-making opportunity.
Access to the Secondary Market
Gamers have access to the secondary markets. These are the markets where the players can sell their NFT-based in-game items. It is also a way to earn. They can also buy NFTs or other in-game items like weapons, tickets, skin, etc to enhance their gaming skill or access the game or metaverse.
Advantage Over Traditional Gaming
In traditional gaming, there is no chance to earn. The player has to spend money in buying the in-game items but they do not receive any income in return. Whereas, GameFi permits players to earn in return by completing certain tasks or by investing in games and thus it makes the task more profitable.
Offers New Use Cases and Applications
GameFi has increased the potential of blockchain technology beyond cryptocurrencies. The new use cases and applications of blockchain are created which are diverse and sustainable. Thus, the opportunity for new players and investors to enter the blockchain industry has increased. It promotes the growth and development in the sector.
Some GameFi Examples
Some of the examples of GameFi are Axie Infinity, Decentraland, Sandbox, etc. Axie Infinity is a blockchain-based game that allows the breeding, and raising of creatures called Axies. AXS is the native token of the game, which is earned by playing, breeding, and battling the Axies. The AXS tokens can be staked to earn governance rights and earn rewards from liquidity pools.
Decentraland is a virtual world on the Ethereum blockchain that permits the players to create and monetize virtual environments. MANA is the native token of Decentraland. The token is used in buying and selling virtual land. Other virtual assets like art and buildings can be sold and MANA tokens are earned in return.
Sandbox is another virtual world based on blockchain. It also allows players to create, own, and monetize their gaming experience. SAND is the native token of the platform. It is used to buy virtual land and in-game items. The tokens can be earned by playing games and contributing to the ecosystem.
Some Challenges Related to GameFi
There are a few challenges associated with GameFi. Some of them are discussed below:
Simply Ponzi Schemes
There are many Ponzi schemes in GameFi to attract the early adopters. Oleg Fomenko, co-founder of the platform Sweat Economy, is highly doubtful regarding the sector. He said, “The belief that a game which simply incorporates Web3 elements automatically belongs to a distinct category of GameFi is quickly fading.”
He has a view that Axie Infinity and StepN initially led to believe that they had created a whole new gaming world where players could earn this turned out to be a temporary and disappointing phenomenon.
Fomenko said that the games will flourish in Web3 but he is excited to see the innovation in the space specifically in the usage of NFTs within the games.
GameFi security is essential for the interest of players. The gamers invest their time, interest, and effort to level up their characters and acquire their valuable assets. Security measures like smart contract audits, data encryption, and protection against scams are a must.
There are some security challenges in GameFi as it is exploited by malicious actors seeking profit or challenge. GameFi has on-chain and off-chain challenges.
GameFi’s Redemption Arc
GameFi has to overcome the negative perceptions that surround the industry. Les Borsai, co-founder and chief strategy officer of Wave Financial said “Looking towards 2024, the journey of GameFi is at a critical Juncture.”
However, he sees an opportunity for the industry to include other new technology trends such as artificial intelligence (AI) and digital technologies.
Rob Grieg and Josh Jones, co-founders of Cornucopias, favor the view that 2024 will be a landmark year for the industry. Both had the view that there is a lot of potential for 2024, where they think that the personal ownership of in-game assets is underpinned by blockchain technology.
GameFi Lacks the Game Fun
GameFi focuses more on earning and ignores the fun related to play. The games are simply fun to play with but GameFi focuses more on earning instead of gamers experience. This hinders the adoption of GameFi.
GameFi attracts gamers who want to earn and make money while playing. It has the benefit of open economies and is permissionless by nature. It provides benefits like the chance to earn passive income and also some challenges like ponzi games and security threats. However, it is grabbing attention from users.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.