GAMEFI — WHAT IS IT?
What is GameFi?
GameFi are video game projects that include financial features, and may be thought of as a combination of Game and DeFi (Decentralized Finance). It blends cryptocurrency, blockchain, non-fungible tokens (NFTs), and game mechanics to create a virtual world in which users may engage and earn money. GameFi is based on the “play-to-earn” concept. The idea is to incentivize people to play and progress through levels in games by providing money incentives. Some blockchain games allow players to make a full-time living while playing them. Things are easier in the GameFi ecosystem: all you have to do is play and get perks. Some gaming projects require you to invest some of your cryptocurrency to start gaming. NFTs will be used to represent virtual assets in the game, such as avatars, land, costumes, weapons, equipment, goods, jewels, tokens, and pets. These assets will be obtained via gaming, and players will be able to profit by trading them on the NFT marketplace or swapping them for crypto and then converting to cash.
Players will get money based on various games, depending on the type of GameFi. The following are some of the most popular aspects of contemporary blockchain game platforms:
- Play to Earn
- Asset ownership
- Features of Defi
- Blockchain Technology
- No or little upfront costs
How does GameFi work
GameFi is the project’s way of combining many mechanisms to create a balance for the game’s tokens, as well as systems for earning prizes. When it comes to creating a sustainable economy, projects will frequently reward users for engaging in peer-to-peer (PvP) or bot-to-bot (PvE) interactions while doing daily activities (login attendance, complete the request from the system,…). Breeding (the spawning of new characters), token withdrawal fees, and other processes for using these tokens are also included. Finally about the NFTs. Usually, these NFTs are the key to playing the game. In addition, the NFT also has a balancing mechanism through burning, if breeding generates too much NFT.
History of GameFi
The phrase “GameFi” is thought to have first surfaced in September 2020. Since then, the phrase has gained in prominence, and many people now use it to refer to games that have both financial and non-financial aspects.
The original GameFi used Bitcoin blockchain technology, however it didn’t suit GameFi’s development objectives due to high transaction fees and slow transaction rates. The Ethereum smart contract was created to track the Bitcoin blockchain since then.
Ethereum was widely used by game publishers, and the technology is still widely used today. However, when the Ethereum network bottleneck that Crypto Kitties experienced in 2017 happened, Ethereum’s speed dropped, leading transaction costs to soar.
To represent in-game digital assets, Crypto Kitties used the ERC-721 standard NFTs. Since then, there has been a surge in interest in NFTs and, as a result, blockchains that are geared for speed. This is a significant advancement in the realm of GameFi.
The future of GameFi?
Many investors and gamers are now interested in GameFi. This symbolizes the enormous potential it possesses in a short period of time. Experts on the blockchain feel that this sort of game will help to spread awareness of cryptocurrencies and other digital assets.
The incorporation of NFT into the realm of video games has demonstrated a lot of promise beyond traditional games, giving a better user experience than ever before. Analysts predict GameFi to take use of breakthrough technology advantages such as VR virtual reality, XR augmented reality, augmented reality, etc. due to the concurrent development of Metaverse.
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