Gaming Finance (GameFi)
INTRODUCTION
The gaming mode (pay 2 play), which is familiar to ordinary games has so much exploited innocent gamers and less encouraged some of them to continue in their gaming activity, while others who still play the games keepplaying just for the fun of it. The traditional games are such that you pay to access features of a game online, and even after making the payments, one is still required to purchase virtual tools or objects in the game, and also make payments for upgrades in different in-game characters or payments to reduce or skip waiting time. All these purchases in the game can be expensive most times and can discourage a gamer. Also, the assets acquired in the game by the game users are ‘under threat. Yes, they are,
Stay with me!
Because they are being held by the publisher or the studio in which it was developed. It means that once the studio of the game or the publisher decides to shut down the game, it could be the end of the user’s achievements, items, assets, time, and strategy, in the game, which its effect can be likened to the effect of a break and could cause emotional or even brain damage as the case may be.
Now, what if there exists, a decentralized model of gaming that allows gamers to have full and permanent ownership of their rewards from a game, and also has in it the ability to allow gamers to earn from just playing games, a model that encourages gamers in their hobbies, and also creates opportunities for interested individuals to choose gaming as a full-time profession.
In this article on GameFi, we will be discussing in detail what GameFi is, its Model of operation, GameFi games Examples, Tokenomics of GameFi, and How to get started. Stay tuned!
What Is GameFi?
The word GameFi is the merging of ‘Gaming’ (video games) and ‘Financing’ (Decentralized Financing) together, two entirely different words in other to solve a problem that already exists. It is a web3.0blockchain gaming ecosystem that uses a special model of operation ‘play to earn model’ which allows users to receive rewards that are valuable both in the game and in reality. Clearly, the problem GameFi is handling is not how the games can be installed on gadgets; neither is it learning how the games could be played. What then is the problem?
Well, a good number of problems have been associated with gaming industries and their games, one of which is the inability of gamers to earn from playing games. It doesn’t really sound like a problem, but Yes, it is. Playing games requires one’s time, energy, strategy, and effort, and a user of a particular game should be able to earn or at least receive real-world benefits from playing games. This is the main problem GameFi is here to solve. Apart from allowing users to earn while playing games it also allows the formation of groups/teams (Guilds) in other to make games easier and more interesting to play for beginners.
The interest to understand how the GameFi ecosystem would solve such a seemingly impossible problem then leads us to the mode of operation of GameFi.
How does GameFi work?
It is worthy to note that GameFi projects are launched on blockchain technology and the mode of operation of projects (games) is decentralized, varying from one project to another. It means that methods of earning rewards fromblockchaingames are totally different and it depends on the game being played. Some games may choose to reward users for completing stages in the game or winning battles, some from acquired assets in the game (you can own assets by claiming items from the game).
Other passive ways to earn are either through renting out gaming assets (tools/equipment) to other players or by staking games. Rewards and assets in the games could be in various forms also, like weapons, costumes, avatars, cosmetics, or even cryptocurrencies. The majority of the blockchain games permit users to transfer their rewards and assets-which in most cases are NFTs or cryptocurrencies-from the virtual gaming world to the physical world and they could be converted and sold in NFT marketplaces (like opensea.com, and Binance not the marketplace) or exchanged on decentralized exchange platforms (Uniswap). The GameFi ecosystem is made up of three main characteristics which are;
DeFi
Staking, liquidity, mining, and yield farming are features that some DeFi applications offer, and introducing it into different games can make them more decentralized. DeFi is a mode of financing/ transacting that does not rely on any middle agent or any central financial intermediaries (E.g. banks, exchanges setups, etc.) to function, but leverages on web3 (smart contracts)which are already established on the blockchain. DeFi games allow their community member to participate not just only in playing their games and owning assets but also in their governance i.e. in the decision-making process. As a member of a blockchain game community, one is privileged to partake in their decision-making by voting or proposing updates later in the game. These votes can be done through decentralized autonomous organizations (DAOs) and by possessing their governance token.
Digital Asset Ownership (NFTs)
It will interest you to know that NFTs are also included in this promising GameFi ecosystem. NFTs are assets that are in the digital space (in-game assets) created through the blockchain (minting). It represents an individual's assets whatsoever, whether digital or physical, with a complete permanent ownership signature that is verifiable and can also be monetized to the maximum in different ways.
Just like the traditional games in which a user of a game can own an avatar(s), lands, houses, etc. as assets in the game, these assets now, in the GameFi ecosystem are modeled as NFTs. These assets can consistently be upgraded and improved on and finally sold in exchange for cryptocurrencies.
Play-to-Earn Model (P2E)
The concept of the play-to-earn model is the center of the GameFi ecosystem. It is different from the pay-to-play model which traditional games function with. This new model of gaming is programmed to reward players with financial benefits for their time and effort spent while playing through the game and also growing at different levels in the game.
In contrast with the pay-to-play model of operation, P2E not just only make gamers earn while playing, but it also allows them to have maximum control over their rewards because the game’s activity records will all be stored on the totally immutable blockchain ledger.
I guess this mode of operation is heartwarming and mind relaxing as it enables the GameFi ecosystem to fulfill its purpose of existence.
Blockchain games are easily accessible and also easy to participate in. You can participate easily through your mobile phones, tablets, or laptops once there's an internet connection. But before starting your journey into the blockchain P2E games, you have to understand how the game works by making your research about the game you want to play and the producers and understand what it takes to play their game.
Most Play-to-earn games require you to purchase some crypto assets or a particular amount of their game tokens before you can have access to play.
Tokenomics of GameFi
Economies (Architecture and structure, mode of operation) of GameFi projects are built around the project's token after it must have been released. GameFi projects normally have one token economy on which they operate. The single token for the project has two functions, both for utility and for governance. Utility in that the token is used for activities in the game, like buying characters in the game, buying clothes, tools, and other items in the game. They can also be used to distribute incentives and rewards to the community of players. Whereas Governance function is that it gives the holders franchise (voting rights), making them eligible to participate in the decision making for the game.
Examples of game projects with both utility and governance functions in one token are; League of Ancients (LOA token), Crypto zoon (ZOO), Alien Worlds (TLM token), Sandbox (SAND token), HashLand (HC) among many others. The listed games are popular and well known.
Apart from the one token economy that is general, some projects rather decide to release two separate tokens to perform the two functions separately (Dual-token economy). The Splinterlands game project, for example, uses its DEC token for the utility function and SPS token for its governance functions. VeChainThor game and Anchor games also partake in the dual economy.
Note: Voting and the right to vote (Governance) and all other activities take place in DAOs (Decentralized Autonomous Organizations) which can be formed by the game project.
Surprisingly also, gaming projects in the GameFi ecosystem can issue more than two game tokens. Let’s take, for example, the GALA GAMES project economy, you’ll observe that they operate with three different tokens. They have the Materium, which is the projects utility token, the gala token recognized across all of GALA’s blockchain games. Then they indicated that their third token the voxcoin will be used in the future primarily to reward incentives.
Axie Infinity, the eye-opener to blockchain games, with the credit of the first GameFi (blockchain) game assigned to it, is also guilty of the three-token economy as it uses SLP token as its utility token, AXS token as its governance token, and RON token which is used exclusively for transactions on their sidechain RONIN.
GETTING STARTED WITH GAMEFI?
WHAT TO DO!
First things first, the security of whatever you involve in most before anything else, therefore one has to be careful and vigilant against scam projects and websites. There is no doubt about the existence of fraudsters and hackers in the blockchain space, so you should not link your wallet to any random and untrusted project or website. It would be a very risky thing to do as they can do away with all the funds in it (an experience you won’t want to journey through).
The requirement for beginners to start playing an online game differs. Many of them though, requires players to possess a funded wallet and buy a few items or characters for them to participate.
What to do!
CREATE A CRYPTO WALLET
Creating a gaming wallet differs from game to game, as was stated earlier. It all depends on the particular game you are playing. The compatibility (fitness) of the wallet with the game is another part to be conscious of. The wallet must be suitable to work with the game so you must have to check the game's official website of the game project for a compatible wallet with the game.
FUND YOUR WALLET
What you fund your wallet with depends also on the game project you’re into. Some games may require that you purchase their in-game NFTs before getting started or maybe purchase their cryptocurrencies. They all vary. Also, it all depends on you the player of the game, to know how much you can afford to invest so that you don’t invest more than your estimated budget. To avoid regrets.
Log in through your wallet
Most of the web 3.0 GameFi games are played online so you’ll need to log in to the game with your created wallet to join in the playing.
Interestingly, your wallet serves as your account in the game where all your progress and winnings are saved. Your wallet also serves as your equipment inventory. Your assets (items, characters, equipment) in the inventory can also be used to play the game as the need arises.
CONCLUSION
It is interesting to experience how the web3.0 (GameFi) ecosystem combines entertainment with financial benefits and for some commentators in industries, gaming (GameFi) is the most likely route to widespread blockchain adoption. With the rise in global recognition and acceptance, it won’t be too hard for the web3.0 gaming ecosystem to beat the video games global record of $175 billion.