What is GameFi? Play-2-Earn Model Explained
2 Sep 2023 by Crypto Presale 3 min read
What is GameFi? Play-2-Earn Model Explained

GameFi is a concept introduced in 2020 by Andre Cronje, the founder of Yearn Finance, through his twitter post to mark the union of two industries: Gaming and Finance, made possible by Blockchain technology. This unison led to a new era where players can not only enjoy gaming but also make money while doing what they love. This is something players have been clamouring for.

GameFi since its inception was well received by gamers and investors all thanks to the foundation laid by traditional video gaming. The GameFi industry witnessed a remarkable rise with a market valuation of $9 billion in 2021, followed by a steep decline in 2022. However, Business Research Insights projects the market valuation of GameFi to reach $38 billion in 2028. This projection seems achievable with new GameFi trends emerging where developers are finding ways to balance user earnings with user experience.

Are you a gamer or an investor looking to tap into this evolving industry but seeking more insights? This article is the answer to your prayers.

Now let’s get started with understanding what GameFi is and how it works.

What is GameFi?

GameFi like I said earlier is the union of two industries, “Gaming” and “Finance” which led to the definition “Financialisation of Gaming”.

Prior to its introduction, video games were being played majorly for fun with players having no true ownership of in-game achievements ranging from in-game assets to winnings accumulated during gameplay. These in-game assets could be avatars, costumes, and weapons, most of which have no value outside of the game.

Another thing to note is that before GameFi, there were only two gaming models available on video games – Free to Play and Pay to Play. The Pay to play benefits the developers as they were earning profits due to its subscription based model. The free to play, like the name implies is free to play but for this luxury users must play with an ad-filled experience, which is also a win for the developers.

In contrast to these, GameFi came into play with a totally new business model called “Play-to-Earn” where Players can earn in cryptocurrencies which can be converted into cool cash. Also, GameFi brought decentralisation to the table, a move that allows players to have control and ownership over their digital assets (In-game) and they can sell these assets for fiat money via an in-game marketplace on whichever game they are playing.

GameFi Mechanics and Overview: How Does it Work?

GameFi aims to reward players for time spent on the game but how? Through cryptocurrencies and NFTs which enables monetization.

Each GameFi project operates with its unique model, game economy, and in-game currency. Players are granted varying rewards based on the specific game and their progress.

While GameFi mechanics and economics can differ between projects, there are some shared elements:

  • All GameFi Projects are launched on blockchain technology

  • All GameFi projects adopt Play-to-Earn model

  • All GameFi projects promote decentralisation through true ownership

Some GameFi Projects integrate some aspects of  DeFi (Decentralised Finance) applications such as yield farming, liquidity mining and staking to create a more comprehensive and engaging experience.

The Latest GameFi Trend

Let’s move away from boring stuff and explain how you and I can capitalise on this new latest GameFi trend where everyone can be a winner regardless of whether you’re an investor or a gamer. Intrigued? Let me explain

Away from the positives for now, let’s address whether GameFi has any downsides. The answer is yes and the major downside is that most GameFi projects favour rewards over user experience. In other words, they work more on earnings while sacrificing engaging visuals and captivating gameplays. This has led to poor adoption of GameFi among gamers that put passion and quality over anything.

However, GameFi projects are responding to the present market conditions by adopting innovative approaches that resonate with a broader audience thereby spurring a new era of GameFi. By prioritising user experiences, GameFi projects are working to reduce entry barriers for newcomers and make blockchain technology more accessible to individuals who are newbies.

One of such projects at the forefront of this new trend is Pikamoon, an emerging project based on the Play-to-Earn Model. 

Final Words

No matter where your opinion lies regarding GameFi, there's no denying the fact that it’s one of the biggest cryptocurrency sectors of recent times. It's definitely an area worth keeping a close watch on.

Want more top-tier cryptocurrency content?

Follow Us: X TikTok Instagram Telegram LinkedIn 

Sign up to our newsletter at the bottom of the page

Check Out Our Top 10 Crypto Currencies of 2023

This article is intended for educational purposes and is not financial advice.