What is GameFi?
GameFi is a portmanteau of two terms namely Game and Finance. The term represents the amalgamation of two important technologies and industries namely DeFi and gaming. GameFi projects are gaming programs that are based on blockchain technology or added attributes of DeFi such as tokens, decentralized applications, and DAOs to the gaming industry.
GameFi has also introduced unique gaming models such as play-to-earn and participate-to-earn etc. Furthermore, GameFi has integrated various aspects of Web 3.0 tech such as NFTs, A.I., smart contracts, edge computing, machine learning, 3D graphics, semantics, and spatial web etc.
How does GameFi Work?
GameFi monetizes a gaming ecosystem using blockchain and cryptocurrencies. In this manner, the players can create NFTs and trade them with their peers in exchange for a designated cryptocurrency.
In the same manner, GameFi projects aim to be highly immersive using the Web 3.0 framework. These programs allow players to enter a virtual world with 3D rendition. Furthermore, GameFi allow players to earn cryptocurrencies as rewards for completing levels and other tasks.
Rather than points, rewards earned in the form of cryptocurrencies can be used to trade in the spot market or stake in liquidity pools for earning yield rewards. Additionally, GameFi also makes up a sizeable portion of Metaverses, where players are able to create, design, edit, and trade virtual real estate.
The value of virtual real estate is estimated to rise in the future on account of new users or players added to those platforms. At the same time, GameFi is a place for developers to generate income by designing user interfaces, themes, weapons, skins, and other in-game articles that players can purchase or sell using different cryptocurrencies.
How to Earn in GameFi with Play-to-Earn Model?
GameFi projects have introduced a unique business model of play-to-earn or P2E. This model allows players to earn cryptocurrencies as income by creating an account and playing the game.
A GameFi project can remain decentralized and generate income by the way of issuing a native in-game token. This token is also listed on centralized and decentralized exchanges. The value of a Game-Fi token is influenced by player participation, supply/demand, and active playing time etc.
Using the P2E model, a GameFi project can remain free for participation. The players may also stake the in-game tokens in different liquidity protocols or PoS blockchain networks to earn yield.
The investors who are not participants may also trade and stake the in-game tokens via decentralized and centralized trading platforms. Another major income generator for GameFi players is NFTs. GameFi projects may allow players to make NFTs and trade them on dedicated trading platforms.
How does Play-to-Earn (P2E) Work?
Here are some important steps for participating in a GameFi project with P2E model:
Create GameFi Account
GameFi projects are available in various formats such as decentralized applications, DAOs, applications, or dedicated Web 3.0 platforms. The players have to decide a suitable GameFi program that suits their interests and budget. Once the players have selected a program, they need to create an account. It is best for the players to conduct detailed research about a project before investing in it.
Connect Wallet to GameFi
It is not possible to earn in GameFi without having a secure cryptocurrency wallet. Therefore, the players who have created an account at the gaming project must also connect a digital wallet account in order to collect and manage all their token earnings.
There are two types of wallets namely custodial and non-custodial. Players may prefer to use a non-custodial wallet to make sure that they have full control and ownership of private keys and wallet reserves.
Check Playing Terms
When it comes to GameFi, DYOR (do your own research) players have to conduct research about different aspects before and after creating an account. Once the players have created an account and set up the digital wallets, it is now time to understand the dynamics of token collection and criteria.
The more knowledge a player has about the token distribution mechanism of the project, the more their chances to maximize their rewards.
GameFi is the latest addition to the world of the blockchain industry. GameFi is not only a way to earn while entertaining oneself but it also improves the aptitude and skillset of players associated with the project.