What Is GameFi and How Does It Work?

GameFi is a combination of two words: Game and Finance. It literally means a blend of these two. Ever since the dawn of crypto and now Web3 companies, innovation in this emerging sector has outpaced every other sector. The breakneck speed at which new products and services are launched is truly mind-boggling.

GameFi is also a result of this fast-paced innovation which can be simply explained as Play-to-Earn games where a user or player is rewarded with cryptocurrencies, NFTs (non-fungible tokens), or through other means for playing online blockchain-based games. The benefit of these games is that, unlike traditional games, the items earned in these games are available for transferring outside the game’s virtual world and can be exchanged for other items. The cryptocurrencies can be sold on exchanges and the NFTs can be traded on marketplaces. 

The most famous game which has catapulted to success and has fast  replaced traditional gaming is undoubtedly Axie Infinity, along with several others like Splinterlands, Alien Worlds, The Crypto You, and a lot more that are being added everyday. All of these games have their native tokens which can be earned by playing these games and can be traded on exchanges for other crypto currencies or converted to fiat. Players earn the tokens and more rewards for playing these games online. In addition, there are even reports of people joining in full time as gamers by quitting their regular jobs.

GameFi industry is on the rise.  Last year alone, a massive influx of capital , about $3.6B, was done by private blockchain/NFT gaming companies. Animoca, a16z, Coatue, and Softbank were some of the most active  investors and large rounds of investments were raised by Forte, Sorare, and Dapper Labs. This massive momentum is not showing any signs of slowdown as the industry is still in its infancy and there are alot of games being launched every other day. Infact, the latest DappRadar report suggests that just in 5 months of 2022, the investments in GameFi has surpassed the entire investments of 2021 by pegging them to be $4.5 billion. Most of the biggest gaming studios of the world are jumping in and launching their own games or adding the GameFi elements to their existing popular games by adding NFTs in them. As of March 2022, DappRadar data showed that there are more than 1,400 blockchain games. We now have popular games across multiple blockchains, such as Ethereum, BNB Smart Chain (BSC), Polygon, Harmony, Solana, and many more.

Now that we know those crazy numbers, we can see a lot of you just want to know how to get started. Well, there are 1000s of blockchain games and they all differ in some respects. You should start with some of the top names and only trust their genuine websites because the crypto industry is plagued with scams and ponzi schemes. We would even suggest you create a separate wallet just for the purpose of blockchain games and fund them with smaller amounts to be absolutely safe. Once you are confident and want to go ahead with a game, do the following.

  • Create a crypto wallet

This should be the easiest option for crypto natives. Depending on the game you want to play, you will need to choose a popular wallet like MetaMask or Trust wallet or any other wallet that the game supports.Once you select the wallet, you will need to connect the same to a blockchain network(s). Most games will support the most widely used wallets connected to the Ethereum blockchain, but some of them might have their own wallets to save costs, create a better ecosystem and playing experience or even to simply improve performance. Axie Infinity does so by requiring its players to be on the Ronin network and have a Ronin wallet for playing its game. This reduces the cost of playing and breeding the Axies for the players and keeps them invested and closely interlinked in the Axie Infinity ecosystem.

  • Connect your newly created wallet to the game

Once you are done with setting up the wallet, all you need to do is head on to the game website and connect your wallet with the game. You do not even need to set up a username and password as the game will identify you as the owner of the wallet and you will just need to approve your wallet to be used as a gaming account. 

  • Check you meet all requirements to play

Most GameFi projects will require you to start off with purchasing their tokens or in-game items to get started on their platform. The requirements may vary depending on the game but you should have a vague idea of what time it will take for you to recoup your initial investment and start earning from the game. 

For example, Axie infinity requires you to have 3 Axies in your gaming wallet which you can purchase from their marketplace using wrapped ETH (WETH). You will need to buy ETH from a crypto exchange like Coinbase or Binance and using the Ronin bridge, transfer the same to your Ronin wallet. If you do not want to plunge straight in, you even have the option of a scholarship program where you borrow the Axies and start playing. In this case, you will have to share your earnings with the NFT (Axie) holders

Now that you have an idea of how you can get started and how most games work, you should also know that GameFi has got the attention of the biggest game developers of the world and most of the massively popular online games will add NFTs and go the same route. Activision Blizzard, Nintendo, Epic Games, Electronic Arts, UbiSoft are all in the process of adding NFTs to their games and we will see an explosion of more P2E games online this year.

You just have to remember that when you decide to spend your time on these games, you look at the best crypto gaming tokens, their price history and how they are performing overall. If the games also have NFTs and other in-game items, you will need to potentially have a look at the sale prices of these NFTs on some marketplaces.

Also, NFTs are subject to washtrading and plagiarism, popularly known as copymints, and while most NFT marketplaces are waking up to these malpractices, not all of them have measures to combat them. You will have the ability to better understand the actual price of an NFT with our tools like Scour and Liquify which are already available to major marketplaces and  will be made available soon for individuals.

So go on a new adventure today and start your GameFi journey and let us know how your experience was on our socials.

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