GameFi has become a popular concept in the blockchain industry. By the end of 2021, we saw a plethora of active GameFi projects, recording a 172% increase over the previous year, according to DappRadar.
That momentum continued into 2022, with GameFi’s top 10 projects amassing over $841 million in transaction volume, scattered by 2 million unique active wallets.
Games to Win or GameFi projects are combining NFTs, gaming and finance to revolutionize the traditional gaming industry.
What is GameFi and how does it work?
GameFi, also known as play-to-earn, is often seen as the combination of gaming, NFTs and finance – all powered by blockchain technology.
In traditional games, we saw the ‘pay-to-win’ model, where users had to pay to gain a competitive advantage over other users. For example, players can purchase ‘skins’ for their weapons and unique outfits for their characters in games like PubG and Fortnite to stand out from the crowd.
GameFi changes that by introducing a new model known as ‘play to win’ that rewards them for their time and effort, rather than making users pay to play the game. By completing in-game missions or trading digital assets, GameFi gives users the opportunity to earn for their in-game efforts.
To understand how GameFi rewards users, it is important to understand how they combine blockchain technology, NFTs, and decentralized finance, also known as DeFi.
Built on blockchains, GameFi projects allow users to store their assets on a distributed network that is not controlled by anyone, unlike traditional gaming software. This allows users to retain custody of their in-game digital assets and actually own them. We cannot talk about true ownership without NFTs. They are unique, indivisible assets created using blockchain technology that allows users to truly own their character. For example, users have an avatar in a game like Fortnite, but they don’t. In a ‘play to win’ game, each avatar is an NFT with a unique owner.
But where does DeFi fit into all this? It puts all the pieces together as it allows GameFi projects to build an in-game economy where users can trade non-fungible token digital assets (NFTs) and earn for their efforts. Furthermore, as GameFi evolves, DeFi concepts such as staking, liquidity mining and yield farming are also becoming part of these projects, allowing users to earn passive income through their digital assets.
How to start playing GameFi games?
Playing GameFi or games to win has many benefits, which appeal to users from all walks of life. On paper, all users need to get started is a funded wallet to buy an NFT and make in-game transactions. However, this is not as easy as it sounds because there are many fraudulent projects in the ecosystem that scam users and drain their wallets.
So, if you’re new to the GameFi ecosystem, it’s essential to start with a game that’s known, trusted, and safe to play. In addition to using a hot wallet, which means that the wallet used to connect to play NFT games should not store a large amount of funds. But it should be used for the sole purpose of connecting to NFT games. So if the games turn out to be a scam or steal user funds. Only a part of the liquidity stored in the hot wallet will be impacted.
There are GameFi projects like Squid Squad OG Games that aim to restore users’ faith in the ecosystem by creating a game that exists only for users who have been scammed. The project gives these users the chance to start over with $1 lottery ticket to receive an NFT airdrop to participate in a game where $45,600 USDC will be rewarded to survivors. In addition, the game is also quite easy to understand as it revolves around the concept of a children’s game called ‘Rock, Paper, Scissors’, a game we’ve all played.
GameFi is revolutionizing the gaming industry
What started with the hype around Axie Infinity, a play-to-win game that helped multiple players earn life changing amounts of money, has now turned into a revolution. GameFi’s projects feature a unique model to reward gamers for their time and effort, attracting millions of traditional game users. The GameFi concept, combining NFTs, gaming, and finance, is certainly an improvement over traditional gaming, and it will be interesting to see how the industry grows in the future.
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