Understanding GameFi: What is it and How Does it Operate?

The cryptocurrency market always has elements that drive development and set the stage for a 'bull run.' Examples include ICOs in 2017, DeFi in 2020, and in 2021, GameFi took the spotlight.

Exploring GameFi and its Operational Dynamics

I. Understanding GameFi

The concept of GameFi merges blockchain-based games with decentralized finance (DeFi), empowering players as the sole verified owners of virtual in-game assets.

Traditional games often rely on the 'pay-to-win' model, where players pay to unlock character skills or virtual items. In contrast, GameFi introduces the 'play-to-earn' model, allowing players to earn money through their knowledge or time investment.

II. Unique Features of GameFi

GameFi emerges to address persisting issues in blockchain gaming. Noteworthy features include:

- Allowing players to explore and play blockchain games distributed across multiple blockchain networks.
- Centralized storage for in-game items and NFT assets owned by players.
- Providing real-time display of games and in-game items by developers.
- Introducing Initial Game Offering (IGO) for early investor access to in-game assets and tokens.
- Offering developers opportunities to enhance visibility and interaction with the GameFi community.

III. How GameFi Operates

The standout feature of GameFi is its play-to-earn (P2E) model, where players receive rewards for participating in the game. These rewards can be cryptocurrencies, tokens, and NFTs playing a stimulating role in finance.

Play-to-earn isn't a new concept, but the innovation lies in advanced technology fueling GameFi projects. Elements like Blockchain, smart contracts, and tokens have become integral in these games. Players can convert earned in-game tokens into cryptocurrencies like Ethereum, Bitcoin, or Stablecoins, subsequently exchanging them for cash.

Many GameFi projects incorporate NFTs, where in-game items such as weapons, costumes, and skins are deemed 'one of a kind.' Besides trading within the in-game market, these items serve various functions in DeFi, including collateral for assets or participation in yield farming.

In GameFi, every game mechanism is unique, but a common requirement is for players to own a digital wallet to store in-game tokens or NFTs. The wallet must be preloaded with cryptocurrency. Additionally, some GameFi games may necessitate players to purchase characters before starting.

IV. Play-to-Earn Model

Play-to-Earn, or P2E, is the central or core gameplay model in all GameFi projects. In this model, players need to make a specific investment to get started.

Unlike traditional games that don't generate any financial profit or in-game assets for players, P2E gives players full control over assets and even provides them with opportunities to earn money.

While blockchain technology can grant players full control over their in-game assets, it's crucial to note that this depends on the model and game design implemented by GameFi projects. On the other hand, some free-to-play P2E games can still generate financial rewards for players, but others may require players to purchase NFTs or cryptocurrency before starting.

V. The Future of GameFi

Although the origins of GameFi may trace back to the initial development of cryptocurrencies, it has now gained widespread acceptance and implementation. A prime example of the success of this intriguing new trend is Axie Infinity. This popular GameFi project became the first to surpass a $1 billion token sales volume in August 2021, with over a million daily active players.

The technology behind crypto games is advancing to the point where new GameFi projects are attracting massive investor interest. Industry experts believe that crypto games are a gateway with the potential for widespread adoption of blockchain technology. As GameFi projects establish their presence in the market, familiarity with cryptocurrencies is expected to grow.

VI. Top Potential GameFi Titles Today

1. Axie Infinity

Developed by the Vietnamese startup Sky Mavis and described as a fusion of Pokémon and CryptoKitties, Axie Infinity has quickly become one of the most popular GameFi games today. Players undertake tasks such as breeding, training, and collecting adorable creatures called Axies, earning the 'Smooth Love Potions' (SLP) token.

By August 2021, Axie Infinity became the first Ethereum blockchain game to achieve a $1 billion USD sales volume, with over 1.8 million daily players, according to CryptoSlam.

2. Decentraland

Originally a 2D network, Decentraland evolved into a 3D virtual reality universe where players can buy, develop, and sell virtual land. It stands as one of the most captivating destinations to kickstart the Metaverse.

3. CryptoKitties

Built on the Ethereum blockchain, CryptoKitties is a GameFi game that allows players to collect and raise adorable cats. Each CryptoKitty created is a unique NFT and can be sold at high prices. To date, the most expensive CryptoKitty, named 'Dragon' with the ID #896775, was sold for 600 ETH.

This article from Mytour has just provided answers to your inquiries about GameFi: What is it and how does it operate? If you have any more questions or need further clarification, feel free to share with Mytour in the comments section below the article.