Because of NFTs, GameFi is arguably the hottest trend in the DeFi space. This aspect of DeFi is powered by non-fungible Tokens, which are digital items that uniquely represent real-life objects. NFTs began as digital artworks with deep meaning. They’ve since expanded beyond allowing digital artists to monetize their work to other use cases.
Our main focus, however, is GameFi. What role do these digital collectibles play in the blockchain gaming industry’s adoption? Let’s start with an explanation of what it is.
What exactly is GameFi?
GameFi, or Game Finance, combines gaming, blockchain, and NFT to create a gaming ecosystem in which players can both play and earn. Play-to-Earn/P2E, or blockchain gaming, is another name for GameFi. As a result, the terms can be used interchangeably.
The mechanics of P2E entail rewarding players for their participation with NFTs or cryptocurrencies as incentives. Some games also include DeFi features such as farming and loans in order to provide a comprehensive service to players. As a result, GameFi is about much more than gaming.
Blockchains are used in gaming projects. When it comes to hosting P2E games, Ethereum reigns supreme, but that isn’t to say that other blockchains aren’t capable. In fact, due to the massive increase in transaction fees and slow throughput of Ethereum, developers are flocking to other networks like BSC and Solana. When CryptoKitties reached over 14k users in a single day, this happened.
We can attribute GameFi’s success to the popularity of NFTs, but the rise of blockchain undoubtedly played a significant role. This decentralised gaming provided the infrastructure that developers required to get their projects off the ground. Because these games are based on the blockchain, every item a player earns becomes their personal property. They can sell it right away on the market or sell it later when its value rises.
The P2E model is used in game projects, and in-game tokens are NFTs. Depending on the game’s mechanics, these tokens can take the form of costumes, land, weapons, and other items. After winning, players can claim their prizes and sell them on the market or exchange them for popular cryptocurrencies.
Surprisingly, some game projects allow players to profit from their predictions. They can cash out if the results are in your favour. In games like Decentraland, players can rent their land for astronomical sums. The model is similar in GameFi, but the mechanics are different.
As previously stated, the player owns all of the items he or she earns. There are no disputes about who has ownership rights to an item because the records are stored on the blockchain. This is what makes blockchain games so appealing, and no one should be surprised if the industry eventually outperforms traditional gaming. GameFi is expected to generate $322 billion in revenue by 2025, according to experts.
How NFTs are Helping to Drive GameFi Adoption
In 2016, if you told someone that NFT games would be the face of the gaming industry, they might think you were crazy. No one expected blockchain-powered games to disrupt the gaming industry so quickly. In the last two years, interest in NFT games has skyrocketed, thanks to two factors: the earning model and NFTs.
Prior to 2016, the idea of creating games that reward players with money that can be used to solve real-world problems seemed outlandish, given that most game companies milked players for profit. No one had ever considered putting money in a bank.
Blockchain demonstrated to the rest of the world that earning money while playing isn’t insane. P2E games are not only entertaining, but they also provide a source of income due to their unique earning model. Players, particularly in developing countries, are eager to participate in gaming because of the monetary rewards that can make a significant difference in their lives.
The other reason is NFT. The scarcity and high cost of these digital collectibles are two factors that draw gamers in. Everyone wants to get their hands on a rare item, especially when they know that NFTs have fetched astronomical prices in the past. It’s no coincidence that GameFi is exploding in popularity. The adoption of NFTs is fueled by them.
Every day, GameFi is gaining in popularity. It has a one-of-a-kind earning model and more features for NFTs and digital currencies. Blockchain games will undoubtedly rule the gaming world, with a market capitalization of more than $14 billion.