Imagine a world where you can make money just by playing a video game. No fake money involved, but the kind of money that helps pay the bills and keep the food on the table. And imagine if all of a game's assets—the characters, the outfits, the weapons—could be bought and sold in the real world.
In a nutshell, this is GameFi - one of the hottest sectors on the Web3. And it's a reality that some of the most active players in this space say isn't too far away.
What is Gamefi?
GameFi, a portmanteau of “game” and “finance,” refers to blockchain games that offer economic incentives to players. Typically, players earn rewards such as crypto tokens, virtual land, avatars, and other NFTs by completing tasks, competing against other players, or progressing through different game levels. Unlike traditional video games, you can Play-to-Earn Play Purchase in-game assets and then transfer them outside of the game's virtual world.
According to industry veteran Tracy Spaight, GameFi is one of the fastest growing segments in the video game industry. Spaight, who has over 20 years of game design experience, now serves as head of gamification at Synesis One, which is said to be the world's first decentralized autonomous organization (DAO) for data yield farming. Though the industry is still fairly new, he says what excites him most about GameFi is the "new kind of ownership" the industry's structure allows for.
Until now, video games have been hosted on central servers owned by a game company that had the power to shut down the world whenever it felt like it. Also, players didn't own the items they accumulated through their character - the clothes, the weapons, the prizes. This all existed only within the confines of the game and had no real value in the outside world.
Our casino expert Moritz Fischer, who knows the technology first hand, tells us that this does not apply to the GameFi products as they are decentralized and based on blockchain technology.
The benefits of actually owning the digital assets in a game are beginning to be recognized not just as something cool, but as something that empowers you as a player, explains Spaight.
And many of Web3's key players are excited about this next chapter, including Telstra Ventures, a prolific investor in crypto companies. The VC firm has backed crypto exchange FTX, which recently launched its own gaming unit, and general partner Yash Patel said Telstra is actively exploring an investment in GameFi tokens, which, if materialized, will be its first non -Equity investment at all would be.
“The idea of really owning these assets, so that they are not tied to a game environment or server, but actually have liquidity and value and can be traded, allows players to earn their way to the top and to buy. That's pretty exciting," Patel said. "It's kind of unbelievable how big this market already is."
GameFi - a portmanteau of "game" and "finance" - includes blockchain games that provide economic incentives to play, also known as play-to-earn games.
Typically, players can earn in-game rewards by completing tasks, competing against other players, or progressing through different levels of the game. Many of the play-to-earn games currently on the market rely on something called a grinding mechanic, where players have to spend a lot of time completing repetitive in-game tasks in order to progress or unlock prizes - or in this case crypto tokens.
Rewards also come in the form of in-game goods such as virtual land, avatars, weapons, or costumes (also known as skins). In most cases, these assets are non-fungible tokens, or NFTs, which essentially serve as a "virtual deed" that transfers ownership of a piece of digital art or media file. Like cryptocurrencies, NFTs run on the blockchain, meaning they can be taken out of a game and traded or sold on a marketplace.
Each game has its own model and game economy. More often than not, however, these digital assets provide players with some sort of financial benefit — whether that's because they won a fight and earned crypto, sold an in-game purchased NFT, or rented from other players to stay on require their virtual country.
Some play-to-earn games even allow players to generate passive income without even playing the game by generating liquidity or lending their gaming assets to other players. The introduction of such abilities not only further decentralizes the game, but also allows players to influence the development of the game via DAOs.
Of course, tokenomics — or supply and demand for a particular cryptocurrency — varies by game. But most studios developing these games raise their capital through token sales. How these tokens are allocated, how they are unlocked, and whether they are finite or not varies. And many of these games are built on Ethereum, Solana, and Polygon, a layer 2 chain over Ethereum that enables faster and cheaper token transactions.
There are thousands of blockchain games, and each of them follows its own economic model. Unlike traditional video games, play-to-earn games allow players to purchase in-game assets and then transfer them outside of the game's virtual world - they can sell their NFTs on a marketplace like OpenSea or their crypto earnings on a crypto Exchange exchange like Coinbase for money. All of this means that GameFi, like every other facet of the burgeoning Web3 space, needs a crypto wallet. After that, it's all about finding games that are safe and managing your finances responsibly. Here's a quick guide on how to get started:
Set up a crypto wallet compatible with the game you want to play. While crypto wallets don't store money like traditional wallets, they contain encryption keys linked to digital assets and allow you to access, send, and receive cryptocurrencies.
This is also your means of logging into the game. Unlike traditional online games that require you to set up a username and password or ask for your email address, blockchain games use your crypto wallet as an account.
Many play-to-earn games require players to purchase their cryptocurrency tokens or NFTs in-game to get started. In general, it's good to weigh the earning potential against the overall risks of a particular game, including how long it will take to recoup your initial investment and start making profits.
Also, a good rule of thumb is to create a new crypto wallet for every single game you play. This way you are more likely to only lose funds that you can afford to lose.
Remember that GameFi, like everywhere else on the internet, has many scammers, so be careful with fake sites. Always check the authenticity and reviews whether it is a gaming platform or a gambling site. For example, one of the best games to make money is Axie Infinity, and the safest and most innovative gaming platforms are Bitcoin online casinos. And to learn more about these platforms, has casino spot prepared for you a list of the best bitcoin casinos that you should definitely visit.
One of the most famous play-to-earn titles out there right now is Axie Infinity, a two-dimensional game in which cute creatures called Axies battle each other Pokémon-style. It was founded in 2018 by Vietnamese game developer Sky Mavis and has since grown into a huge success. The company is now worth around 3 billion euros and is backed by large investors such as Andreessen Horowitz and Paradigm.
To get into the game, players must purchase or rent three NFTs connected to Axien, each with their own stats and combat cards. For winning battles, players receive tokens called “Smooth Love Potion”, or SLP for short. Using SLP and another governance token called AXS, Axies can also be farmed to produce new NFTs that can then be traded, sold, or used.
The game model provided full-time employment for some people in developing countries like the Philippines and Venezuela -- an opportunity for "wonderful income redistribution," according to Edward Castronova, a professor of game design at Indiana University who literally co-authored the book on virtual economies.
At the peak of Axie Infinity's development, the starting price was $1.000 and players were making thousands of dollars a month just playing a few hours a day. And while it never made it to major app stores, the game ended up being the #1 NFT collectible for last year, according to DappRadar. Within months, Axie and its hugely successful capital market became living proof that the play-and-earn model can work.
In short: Axie's main goal was to generate a currency that could be used to create more NFTs, which only works if there are enough people willing to participate. Axie acknowledged that its economy "depends on new entrants."
The GameFi industry is currently experiencing a massive funding surge as venture capital firms pour millions into crypto gaming ventures. According to Drake Star Partners, investors poured $3,6 billion into these startups in the last year alone, with heavyweights like Andreessen Horowitz, Coatue and Softbank leading the rush.
There are an estimated three billion gamers in the world today. Many of them would like to have the opportunity to own and benefit from their virtual items, says Spaight. If they are loyal fans and play the game for a long time while adding value to the game, then it's only logical that they also want to make money. As long as there is this demand, there will also be companies that adapt to it.
GameFi brings together blockchain-based games of the Play to Earn model that offer cash rewards. Your players can earn cryptocurrency and NFT rewards for completing tasks, battling other players, and completing levels in the game.
Unlike traditional video games, most blockchain-based games allow in-game items to be taken from the virtual world to the real world. They can be sold on NFT marketplaces, and the cryptocurrency purchased can be traded on cryptocurrency exchanges.