GameFi 101 — an introduction to the core concept
With a global value of some $300 billion it is safe to say that gaming is one of the world’s most popular pastimes. A recent report from Accenture has shown that on average gamers spend some 16 hours a week playing their favourite games and as much as an extra 6 hours interacting with other players through various forums and communities.
However, as popular as it continues to be, other than a feel good sensation and bragging rights over your friends, gaming offers little in the way of end product.
Now, imagine a future where all that time spent playing your favourite game is rewarded somehow. With the rise of Gamification or GameFi for short, the future of real world rewarding gameplay is closer than you might think.
Inevitable evolution
In a move which many view as a step in the inevitable evolution of gaming, the last 2 years have spawned a new breed of gaming concept which ensures players are rewarded in a variety of ways. Coined by Yearn Finance creator Andre Cronje, GameFi refers to the intersection between blockchain, cryptocurrency and gaming worlds.
There is little doubt that games generate considerable value. Whether that value comes from income generated through the purchase of in-game items or earning in-game currency, there are a number of ways in which value flows into traditional gaming economies. For example, some of the rarest skins on popular first person shooter Counter Strike can fetch anywhere upwards of $1000. However, the problem with traditional gaming concepts is this value is often locked within that eco-system.
Blockchain based GameFi or Play to Earn (P2E) games introduce compatible third party marketplaces where assets earnt, bought or traded in-game can be sold on the open market. This new concept opens avenues and revenue streams that previously ‘walled garden’ traditional games could only dream about.
Whilst trading within games is nothing new, the ability to interact with the wider marketplace brings a completely new dimension to the industry. The tokenized nature of blockchain technology is revolutionising the gaming industry at a record pace.
Blockchain
Due to the distributed and global nature of blockchain technologies, gamers now have the opportunity to transfer or trade their in-game items out of the confines of a publisher’s back-end server.
With GameFi, a blockchain acts as a decentralised global computer which plays the role of a traditional centralised game server. Built on top of the blockchain and into the game design are smart contracts which have been designed to create and facilitate the movement of tokenized assets — in this case game-native cryptocurrencies or digital items earnt in play.
The latter exist as non-fungible tokens (NFTs) in so much as they are unique and hold their own worth. In the GameFi environment such in-game NFTs can be held, traded or swapped with other in-game players or sold on the open marketplace through markets like OpenSea or exchanges such as Binance.
This new paradigm in the gaming concept not only gives the power back to the player but it opens up a whole new world for those of us for whom gaming is a way of life. When you consider that one of the fundamental tenets of blockchain is its ability to interoperate with other neighbouring blockchains, it becomes apparent what a new world this technological innovation has to offer.
The three core elements of GameFi — asset ownership, open markets and in-game incentives — are each having a huge impact on what we think about and how we interact with our favourite gaming platforms.
GameFi is finally providing players with sovereign ownership over their hard won digital assets. Whether you decide to carry-on developing your character or in-game inventory or sell them on the open market, blockchain games are forcing players to reconsider how they value their time, effort and motivation.
Alternative income
As you can see, Gamification provides players with additional incentives to play and brings another dimension to the world of digital gaming. The concept is becoming so popular that in emerging economies like the Philippines, P2E platforms such as Axie Infinity provided players with a legitimate alternative source of income during the recent Covid-19 lockdowns.
Alongside traditional gaming incentives, GameFi is also helping players to connect with games and other players like never before. GameFi is driving game developers to further empower fans who enjoy playing games and spend hours working hard to advance within the game.
GameFi is bringing the real and gaming worlds closer than they have ever been before by introducing tangibility to in-game assets. By allowing players to interact with, develop, trade and swap elements of their gameplay, GameFi is finally providing the sense of ownership,GameFi is bringing the real and gaming worlds closer than they have ever been before by introducing tangibility to in-game assets. By allowing players to interact with, develop, trade and swap elements of their gameplay, GameFi is finally providing the sense of ownership, tangible reward and sovereignty which has long been the missing element of traditional gaming.
