GameFi is an emerging concept on the forefront of the cryptocurrency space; the concept merges decentralized finance (DeFi) with video gaming, creating new gaming experiences and dynamics.
Non-fungible tokens, or NFT’s, are a central component of the future of GameFi. By incorporating non-fungible tokens into video games, developers can create new dynamics in their games. With non-fungible tokens, there can also be real-world value associated with these assets, in theory incentivizing the player to be more engaged with the game.
For example, if a rare CS:GO skin were to be offered as an NFT, the player that unlocks it first would be granted provable ownership of the item. They can then choose to sell it on the open marketplace to whomever bids the most money (or cryptocurrency).
Video game studios are incentivized to incorporate NFT’s into their games because they can receive a cut of any future sales on those NFT’s in perpetuity. This means that for as long as NFT’s remain viable, these studios can create an entirely new revenue stream.
Though it is unclear whether incorporating non-fungible tokens in video games will prove to be popular amongst gamers in the long run, many game studios have already begun planning their NFT strategies. Some companies have outright said they won’t be using NFT’s in their games whatsoever, while other studios have noted that they are exploring the NFT space.
Play to earn gaming
Another interesting concept that has arisen from the intersection of DeFi and gaming is ‘play to earn’. Play to earn, or P2E, is a concept where gamers are rewarded in cryptocurrencies and NFT’s simply by playing the game or winning matches against opponents.
One such example of this type of game is Gods Unchained, a blockchain-based trading card game on the Immutable X network. Gods Unchained is free to play, but as players rank up in the game, they unlock digital packs of cards. Included in some of these packs are cards that are minted on the blockchain, which the player can either sell on the marketplace or use in game.
Another popular example is Zed Run, a horse racing game hosted on the Polygon network. In Zed Run, players collect, breed, and race their digital horses to earn digital currency. Since its inception, over 812 ETH (approximately $2.5 million USD) has been transacted on the Zed Run platform.
One more example of this is a game called Axie Infinity, created back in 2018. Inspired by Pokemon and Tomegotchi, Axie Infinity players collect, breed, and battle their digital pets (called Axies). As players win battles against their opponents, they earn the in-game currency, Smooth Love Potion (SLP), which is used to breed Axies.
To begin playing Axie Infinity, players must own three Axies. This barrier to entry has created some interesting scenarios, including players from third-world countries renting Axies and paying a percentage of their crypto earnings back to the owner.
Axie Infinity became extremely popular over the last year, garnering a staggering market cap of over $2.5 billion USD.