GameFi and Play-to-Earn? Axie Infinity and the rise of NFT Games

GameFi
Image Source: GameFi

In the gaming and blockchain industries, GameFi has recently become a very popular thought. Traditional video game players, who are used to paying to play an online game, are drawn to blockchain video games, in which they can be compensated for their time and work.

Last year was arguably the year of artistic NFTs and mainstream awareness that digital assets and crypto as a category are here to stay. This year, I think crypto gaming also called GameFi, will solidify itself globally as an equally compelling use for NFTs. So let’s get into it. In this article you will learn:

1. What is GameFi

2. How does it work to combine DeFi, NFTS, and Online Gaming

What is GameFi

GameFi is one of the biggest developments to emerge from the digital asset industry, and it offers a new twist on the traditional console or PC-based gaming experience by combining decentralized finance or DeFI, and non fungible tokens or NFTs along with blockchain-based online gaming.

GameFi can be defined as a combination of video games (Gaming) with decentralized finance in a simple way (DeFi). Blockchain technology is employed in this form of a video game, and it allows players to be the single and verified owners of the game’s virtual components.

Unlike many traditional online games that operate on a play-to-win model, and allow players to purchase upgrades in order to gain an advantage over others, GameFi introduces the play-to-earn business model.

The most common paradigm in traditional video games is “pay-to-win,” in which players must pay to get an advantage, such as upgrading.

GameFi, on the other hand, implements a “play-to-earn” strategy. In this situation, it is the players who profit from their knowledge or time investment.

This approach is providing financial incentives for players to play and develop through games. In some cases, this has allowed gamers to earn a full-time income through gaming.

 

How does GameFi work?

All objects in crypto games are expressed as nonfungible tokens, which are NFTs. And to recap, these are digital tokens used to prove the ownership of scarce intangible items. If you want to deep dive into NFTs, I’ve got you covered.

Read More: What is NFT? Best 5 NFT Marketplaces to Buy and Sell in 2022

For all items in a game, such as Plots of land, Avatars, Costumes, Weapons, or other Healing potions, these are now all able to be tokenized as NFT objects.

Once players find and accrue these items through gameplay, there’s now the option to trade these items with others using game-based marketplaces for specific game NFTs, or to sell the game-based NFT for actual tokens, such as Ethereum.

The ability to tokenize in-game objects is a key innovation enabled by blockchain technology and turbocharged by the ability of people around the world to now selling those items from the game for Ethereum or any other form of crypto.

And this is what makes today’s play-to-earn model totally different from the world of Sonic The Hedgehog and Mario Brothers.

So depending on what game you’re playing, users can increase their earning potential by dedicating time to leveling up and improving their characters or creating monetized structures on their land that other gamers can pay to use or by competing against others in tournaments.

In order to keep track of what every player owns in the game, such as characters and items unique to the specific game, these NFTs and transaction data are stored on the public blockchain, such as Ethereum or the Binance Smart Chain, which is a fork of Ethereum.

So combining a blockchain with gaming provides a number of benefits:

  1. Players can easily prove ownership of their in-game items.
  2. There’s no single point of failure. For example, players are no longer at risk of losing track of what they own, if the underlying gaming company has technical issues.
  3. We’ve got items accrued during gameplay that cannot be counterfeited, removed, or destroyed because remember, these items are now NFTs on the blockchain.
  4. Finally, we’ve got game native cryptocurrencies that can be sent and received without the need for intermediary settlement, clearing, or custody.

And this is the example of using Ethereum or any other tokens to buy or sell the NFT assets that are part of the game.

So next we can look at DeFi and how DeFI plays in to this GameFi ecosystem. So some games specifically such as AxieInfinity include DeFI elements, such as staking, where players can lock away certain tokens in order to earn interest and other rewards that they can save to purchase in-game items or to unlock new content.


Axie Game
Image Source: Coniccu News

Axie Infinity is an NFT-based online video game developed by Sky Mavis in Vietnam, which uses the Ethereum-based coins AXS and SLP.

In Axie Infinity, the staking yield for the Axie token is currently around 110%, which is impressive. My ten-year-old self really wishes this existed when I was a kid. So other games have also incorporated these features and allowed players to lend out their in-game assets to other players and earn a yield on those lend-out assets.

Top GameFi Projects today?

I think the most well-known is Axie Infinity, Other projects are Alien Worlds and CryptoBlades, The Sandbox, Decentraland among many that have sprung to life and gained large followings in the last few months.

So let me know in the comments, what gaming projects are you most excited about, either playing or looking forward to launching in the future. 


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