The DeFi explosion last year and NFT mania this year introduced a new audience to the world of crypto. If you’re into new blockchain and crypto applications, brace yourself: the Metaverse and GameFi age is here, and is here to stay.
Pressing play on a new Era
Earlier this year, Axie Infinity ushered in a new era of blockchain gaming, with play-to-earn (P2E) games booming in popularity ever since. This is demonstrated by the proliferation of various P2E games such as Alien Worlds, CryptoBlades, Splinterlands, Gods Unchained, and many others.
The main draw of P2E is the ability to generate real money, as users can earn cryptocurrencies while playing thanks to the decentralised finance (DeFi) and non-fungible token (NFT) aspects built inside them. Players can eventually trade these cryptocurrencies for fiat currency in order to pay their mundane, real world bills.
The P2E is currently generating a revolution in some countries, such as Venezuela and the Philippines, where tens of thousands of gamers now earn more money playing games like Axie Infinity than working an office job.
What exactly is GameFi?
GameFi is the incorporation of real-world financial features into a video game by combining the functions of gaming, DeFi, and NFT technologies to produce innovative game dynamics. The video game application essentially serves as GameFi’s front-end, with DeFi and NFTs acting as critical pieces working behind the scenes.
The seamless integration of these three technologies has resulted in a profusion of P2E games that have been released or are now in development, all of which are exploring the potential that this new concept has to offer. In the last year, we’ve seen incredible gaming incentive systems and retention strategies that have never been used in popular gaming. That could soon change.
Specialized economic models, staking features, smart contract-based incentive systems, yield farming, token minting, and other features provide players with possibilities to earn both within and outside of the games. It enables blockchain games to have their own crypto-based in-game currency with real-world value outside of the games.
Many of these games also allow players to make money by staking in-game currencies or governance tokens.
NFTs are vital components of P2E games since they allow players to genuinely own in-game assets like swords, virtual real estate, characters, monsters, or pets even when they are not playing the games. These assets can be held in crypto wallets, traded, or even rented out to other gamers.
Play-to-Earn Games (P2E)
P2E games are blockchain-based games with business models that incentivize participants with monetary prizes, allowing them to earn money in an open economy. The incentives vary based on the gameplay and in-game objectives, with P2E games allowing gamers to earn money while playing.
The Most Popular P2E Games
Axie Infinity is an NFT game inspired by Nintendo’s classic series, Pokemon, in which players compete by allowing their virtual pets to battle, breed and raise their own “Axies” (cute monsters) as assets, and complete daily tasks and other in-game activities.
Smooth Love Potion (SLP) tokens, the platform’s money, are awarded to gamers who collect them and use them to improve their traits, acquire new ones, or convert to fiat currencies.
Axie Infinity is presently one of the most popular NFT games, with a $2.65 billion total NFT trade volume. The native token AXS is currently trading at $126.58.
Alien Worlds is a blockchain-based video game that uses the Trilium (TLM) game token to simulate the Earth’s economy. It is supported by an NFT-based social metaverse in which users can complete missions to mine TLM.
The player takes on the role of an adventurer from the year 2055 in the game, which features a metaverse where everything may be tokenized through NFTs, letting players acquire complex in-game tools to boost their mining productivity.
Splinterlands is a collectible card trading game in which players can earn cryptocurrency prizes by completing in-game achievements such as skill-based matches and player-versus-player (PvP) game modes. Players can possess NFT-based digital cards in the game, which can be traded and sold.
Splinterlands native token, Dark Energy Crystals (DEC) supports the game’s incentive system and is awarded to players when they win tournaments, rated battles, or complete in-game tasks.
The incorporation of DeFi and NFTs into gaming apps has brought both disruption and innovation to the video game sector, as P2E games are rapidly developing in terms of new players and incoming games.
What is the Future of GameFi?
It’s hardly a stretch to believe that GameFi will soon acquire a large portion of the mainstream gaming business, especially given the incentivization features that allow players to turn hours of gameplay into digital currency.
The crypto sector is infamous for its boom and bust cycles, which causes some market participants to feel that a price correction is certain to occur at some point, perhaps dragging GameFi platforms down with it.
Yet, when blockchain development progresses and converges with other key technologies such as AR, VR, and AI over the next decade, GameFi has the potential to be absorbed into the ever-expanding metaverse, forever the crypto space, digital world and real world economies.
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Jay Speakman is a technology writer based in San Francisco, California. He writes on the topics of blockchain, cryptocurrency, DeFi and other disruptive technologies. Clients include Avalanche, Be[in]Crypto, Trust Machines and several blogs devoted to blockchain gaming. He will not rest until fiat currency is defeated.