If you are interested in play-to-earn (P2E) games, you have probably come across the term “GameFi” many times. What is GameFi and how does it work? We’ll answer those questions and more below:
What is GameFi?
GameFi consists of P2E blockchain-based games that reward players via crypto or non-fungible token (NFT) rewards. The term combines “game” and “finance.” In GameFi, blockchain technology is used to create a gaming environment where you, as a player, can earn digital rewards and transfer them outside of the game.
The process of GameFi
The rewards from GameFi come in various forms, including crypto tokens as well as in-game virtual assets (typically in the form of NFTs) such as lands, characters, skins, and weapons. The assets can be easily traded or sold on NFT marketplaces depending on the game’s economy or business model.
Some in-game assets or NFTs will greatly help you complete tasks faster or get a higher chance of winning. Other in-game assets will have no impact on gameplay and earnings but will improve the visual aspect of your character or land instead.
With GameFi, your ability to earn money is not limited to playing alone. You can also earn passive income by staking or renting your NFTs or other assets to other players.
Features of GameFi
Take a look at some of the main features of GameFi that gives it its essential benefits below:
Play-to-earn business model
GameFi projects utilize the play-to-earn (P2E) model, which is different from the traditional pay-to-play (P2P) model. You need to purchase gaming consoles, licenses, or recurring subscriptions in the pay-to-play model to play the game.
Most often, games that use the P2P model do not allow you to get any financial returns from your investments. Moreover, the in-game assets that you buy within those traditional games will be controlled and held under the management of the gaming companies.
P2E, on the other hand, gives you full control over the in-game assets you bought. The model also offers income opportunities. Most P2E games require you to invest in the required digital assets or NFTs to enter the game. In return, you will be able to earn money from winning battles, improving your NFTs, or renting the assets to other players.
However, some P2E games also use the free-to-play model, where you can download and enter the game without a cost. However, most games that adopt this business model will still require you to invest in an NFT or other digital assets if you want to earn from playing the game.
DeFi products and features
Some GameFi projects, especially P2E games, have decentralized finance (DeFi) applications. DeFi apps enable digital financial transactions between parties that can’t be accessed by governments, banks, or other centralized institutions.
The DeFi apps enable GameFi projects to include financial features like liquidity mining, yield farming, and staking. In most P2E games, you can stake your in-game tokens to get rewards, access higher gaming levels, or unlock exclusive items.
Digital asset management and ownership
As mentioned earlier, the in-game assets you buy within traditional games are still owned and managed by the gaming company. However, in GameFi, you will have full control over the in-game assets that you have bought. To be able to transfer or manage these in-game assets, they should be in the form of NFTs.
The NFTs will then be distributed or transferred within the blockchain ledger by your choice and not the game developers. Moreover, NFTs are unique and immutable. Thus, you can rest assured that your NFT will not be altered or counterfeited, even if there is a technical fault within the game’s system.
How to start your GameFi journey
Before starting with GameFi or any P2E game, take note that every project has its own differences and uniqueness. If you want more specific guidance on how to get started with GameFi, make sure that you check out the game’s whitepaper or website. In the meantime, here are the general steps you need to follow to start your GameFi journey:
- Create your crypto wallet
To get access to the financial aspects of GameFi, you need to have a crypto wallet that will support your game. Depending on the GameFi project’s requirements, you might need more than one wallet to play different games. Some of the reliable crypto wallets are MetaMask and Trust Wallet.
It is vital that you choose a compatible crypto wallet for the blockchain where the game is operated. For instance, if the game you want to play is created on the Ethereum blockchain, you need a compatible crypto wallet that can connect to that network.
Some games may require you to create an account on their own wallet to reduce costs. One example of such a game is Axie Infinity. At first, Axie Infinity was operated under the Ethereum blockchain. However, the game decided to create a sidechain named Ronin to make the breeding and trading of Axies much cheaper. As a result, players will need to create a Ronin Wallet to play and earn within the game.
2. Connect your crypto wallet to the game
Once you have created your crypto wallet, you can now link it to your target game. To do this, you just have to go to the game’s official website and find the button where you can connect your wallet.
One advantage of P2E games over traditional video games is that you don’t have to create a username or password to sign up for the game. All you have to do is just link your crypto wallet.
3. Familiarize yourself with the game rules and start to play and earn
After you have linked your wallet, you can now purchase the required NFTs or other in-game assets that you need to enter the game. Every game requires different digital assets.
Make sure to do in-depth research about the game, its earning potential, and the overall risk that you will take once you play the game. Moreover, it is also important to check how long it will take you to make some profits or get your initial investments back.
