Get started with GameFi

Since the rise of Axie Infinity, GameFi has continued to attract more and more players around the world. Earning while playing is GameFi's weapon to attract players. What exactly is GameFi?

What is GameFi?

GameFi is a combination of the words Game (game) and Finance (finance), which means blockchain games that provide players with economic incentives and can earn while playing. The GameFi ecosystem uses cryptocurrencies, non-fungible tokens (NFTs) and blockchain technology to create virtual gaming environments.

Players can usually earn in-game rewards by completing missions, playing against other players, and leveling up through levels, as well as transferring game assets out to trade on cryptocurrency exchanges and NFT marketplaces.

How does GameFi work?

Rewards in GameFi are diverse, including cryptocurrencies and in-game assets such as virtual lands, avatars, weapons, and costume items. Each GameFi project has a different model and game economy. Most in-game assets are NFTs on the blockchain and can be traded directly on the NFT marketplace. In some other projects, in-game assets need to be converted into NFTs before they can be sold or traded.

In-game assets often create perks for players, allowing them to earn more rewards. However, avatars and skins in some games are only visual and have no effect on gameplay or rewards.

Different games are played differently. Players can often earn rewards by completing quests, playing against other players, or building monetized structures on owned plots. In some games, players can stake or loan game assets to other players to earn passive income without playing the game. Let's take a look at the commonalities of GameFi.

Earn while playing (P2E)

Play to Earn (P2E), an innovative game model, is at the heart of the GameFi project. This model is very different from the pay-to-play model of traditional video games. In pay-to-play games, players need to invest money before they can start playing. For example, video games like Call of Duty require players to purchase licenses or recurring subscriptions.

Traditional video games generally don't bring any financial rewards to players, and game companies control all in-game assets. In contrast, players can fully control their in-game assets in P2E games and have a better chance of earning money.

It’s also important to note that some P2E games are free to play while generating financial rewards, while others require the purchase of NFTs or crypto assets to start playing. Therefore, it is important to do your own research and conduct a risk assessment.

Digital asset ownership

As mentioned earlier, blockchain technology allows players to take ownership of digital assets, monetizing in-game assets in various ways.

Like video games, players have assets such as avatars, pets, houses, weapons, tools, etc. in the game. The difference is that assets in GameFi can be issued or created as NFTs on the blockchain (a process also known as "NFT minting"), giving players full control over their assets. These assets are genuine and verifiable ownership.

DeFi applications

Some GameFi projects also have decentralized finance (DeFi) products and functions, such as staking and liquidity mining and liquidity mining. Players can often stake in-game tokens to earn rewards, unlock exclusive items, or participate in new game levels.

Introducing DeFi elements can also deepen the decentralization of the cryptocurrency game. Traditional game studios centrally control game updates, while in some GameFi projects, players in the game community can participate in update decisions. Players can submit proposals and vote on future updates to the game through the Decentralized Autonomous Organization (DAO).

Do video games belong to GameFi?

In traditional video games, players can also upgrade their characters by earning in-game currency and collecting digital assets. However, these tokens and items cannot (or cannot) be traded outside of the game. In most cases, they are worthless outside the game. Even if they have value, players often cannot buy, sell, or monetize these assets in the real world.

In blockchain games, in-game tokens and assets are often cryptocurrencies and NFTs. Some blockchain games use virtual tokens instead of cryptocurrencies or NFTs, but players can still convert in-game assets into NFTs. That is to say, players can transfer earnings into cryptocurrency wallets and trade assets on cryptocurrency exchange platforms or NFT markets, or convert cryptocurrency earnings into fiat currency.

GameFi Game Beginner's Guide

There are thousands of blockchain games in the market today, and the mechanics of these games are also different. Players must be carefully screened to avoid falling into the trap of scam projects and fake websites. Freely downloading games from websites or linking wallets is a security risk. The ideal operation is to create a dedicated cryptocurrency wallet and invest within the personal affordability. If you are sure that the game is safe and secure, you can join the game in the following ways.

1. Create a cryptocurrency wallet

To participate in GameFi games, you need a compatible cryptocurrency wallet (eg Metamask). In different games, you may need to use different wallets or connect to different blockchain networks.

For example, MetaMask needs to be connected to the Binance Smart Chain network first to participate in blockchain games on the chain. You can check the official game website for supported wallets.

2. Associate the wallet with the game

Before participating in blockchain games, you need to associate your wallet with the game. When linking, it is necessary to carefully identify the official game website and fake and counterfeit websites. Visit the game's website and find the option to link a cryptocurrency wallet.

Traditional online games require setting up a username and password, but most blockchain games use cryptocurrency wallets as game accounts, so players need to sign a message in the wallet to associate it with the game.

3. Check the game requirements

Most GameFi projects require the purchase of crypto tokens or in-game NFTs to participate. Each game has different requirements, but it's important to understand the revenue potential and overall risk before joining, and estimate how long it will take to earn back your initial investment and start making money.