From Pay-to-Play to Play-to-Earn – Everything You Should Know About the GameFi Industry

The psychology of gaming has changed, and earning money in games is no longer a one-way street. Players now want to be rewarded for the time they spend online, and through GameFi, they can do so. 

GameFi is one of the most popular sectors in Web3 and is a combination of gaming and finance, referring to the financialisation of video gaming. It’s going beyond the standard player-as-consumer framework, offering the chance for you to play as an owner. Shortly put, it’s based on a “play-to-earn” (P2E) enterprise format, referring to blockchain games that allure users through tokens.

Scroll on to understand more about the world of GameFi, from what they are to how you can play them.

What GameFi is

“GameFi”, a combination of the terms “game” and “finance”, was first invented by the CEO of Yearn Finance, Andre Cronje, in 2020. Therefore, it’s a new industry with endless possibilities yet to be discovered. GameFi combines game mechanics, NFTs and blockchain technology to create a digital environment where users play and receive tokens. What’s the reason behind this innovation?

Players spend valuable time in the video game world only to rank at the top and gather weapons and costumes (or “skins”). The only way to make money out of this is through the traditional method:

• Playing competitively in tournaments
• Twitch streaming
• Vlogging.

Plus, they don’t have control or ownership over their virtual “belongings”. Therefore, there’s no real way for them to get compensated. This isn’t the case with GameFi projects. By entering this world, progressing through different levels, and completing tasks, you, too, can gain in-game rewards that have measurable value outside the gaming ecosystem. 

How GameFi works

Tokens for achievements or NFTs received as in-game items can be traded on crypto exchanges and NFT marketplaces, earning the sector the “play-to-earn” label. It’s crucial to remember that while “P2E” is the popular term, playing in GameFi is not without risk, including potentially significant initial fees that a player may fail to recoup or lose.

Almost every blockchain-based game is linked to a corresponding in-game currency, token economy, and marketplace. There’s no central authority in control, compared to traditional gaming. 

However, there are a few things that GameFi projects have in common, even though their economics and mechanics may differ, like the following:

• Blockchain technology. GameFi projects are built on a blockchain’s distributed ledger, ensuring that all transactions are visible and keeping track of who owns what.
• P2E business model. Unlike traditional gaming, where people play to win, GameFi offers games that incentivise players’ progress. They are rewarded with NFTs or in-game cryptocurrencies with a measurable value.
• Possession of assets. In conventional gaming, in-game acquisitions are non-transferable investments bound to the game. Players own their in-game tokenized assets through P2E and can exchange them to digital coins and ultimately, to fiat money.
• DeFi solutions. Staking, liquidity mining, and yield farming are decentralised finance elements that many GameFi projects may include, and these provide players with more methods to increase their token assets.

How to begin playing GameFi games

The market abounds in blockchain games, even though they’re in their infancy, and each works differently. Also, If you’re excited about this new technology, remember that safety comes first and be wary of fake websites and scams. Also, You’ll have to download games and connect your wallet, which brings about cybersecurity risks if you’re not going with a secure game.

You’ll also need to create a crypto wallet that supports GameFi. Take note: depending on the chosen game, you may need more wallets or connect to separate blockchain networks. Also, you may required to buy certain NFTs or crypto tokens to play some games. 

However, games like Axie Infinity begin with buying Ethereum, wrapping it in your Ronin Wallet and purchasing 3 Axies from the marketplace.

If the platform and game chosen are secure and you need to start by purchasing Ethereum, proceed by checking the Ethereum price USD. It’s important to know what you’re getting into, buy Ethereum according to your budget limit, and invest only the amount you’d be comfortable losing. 

Last but not least, check the game’s requirements, as they vary from project to project; and balance the earning potential and risks you’re subject to. Suppose you want to avoid taking risks or investing in GameFi, DeFi, cryptocurrency, or NFTs. You can still play if you find a scholarship program that can lend you NFTs and if you’re comfortable splitting your winnings with the NFT owners.

Examples of popular P2E games

Axie Infinity, as discussed above, is an NFT-based online video game created by the Vietnamese Sky Mavis studio. The company had 2.7 million active daily users as of November 2021. By playing it, you’ll be able to do the following things:

• Breed
• Battle
• Raise
• Collect
• Trade Axies. 

The Sandbox is another popular GameFi project. It’s a virtual metaverse where you can build, play, own assets, and put your digital experiences to use. Also, The game offers tools to create personalized 3D experiences and games which you can sell in exchange for tokens, rent out, or share. 

The Sandbox employs a variety of tokens to maintain a circular economy among the platform’s four sorts of users: players, land owners, curators, and creators. These include the following:

• LAND (a virtual piece of real estate in this metaverse);
• SAND (a utility token used throughout the ecosystem);
• ASSETS (a token that players who build user-generated content have created).

Last but not least, the Game of Silks is also among the play-to-earn games of the year. It provides a virtual parallel to the tangible world of thoroughbred horse racing through a blockchain-enabled metaverse. Each virtual Silks Horse NFT is a derivative of a real-world racehorse. Also, As a user of this platform, you can own, trade, and interact with various in-game NFTs like Stables and Silk Avatars.

However, Many industry commentators see gaming as the most likely path to mainstream blockchain adoption. Also, This belief is supported by a DappRadar x BGA Games report which discovered that, in March 2022 only; blockchain games drew 1.22 million UAW (unique active wallets).