What is GameFi?
GameFi is a new gaming model that combines two aspects: gaming and decentralized finance. It counts on cryptocurrency, blockchain, NFTs, and game dynamics to achieve a space where players can play and earn money in the process.
This new vision revolutionizes the traditional gaming industry as it combines the joy of playing with the joy of gaining in a concept known as Play2Earn. In the Play2Earn era, players can be rewarded with financial incentives as they participate and improve their skills in a game.
The GameFi industry is highly integrated with decentralized finance (DeFi) tools such as landing pages, loans, farming, tools for issuing new tokens, algorithmic stablecoins, etc. as well as it is very community-driven, and depends mainly on users to keep the games active.
However, there are certain issues when it comes to the industry. The first one is high entrance fees due to the necessity developers have to sustain their projects. They ask their users to invest on the game with fees and other costs for assets, however this causes the community to hesitate on taking part in the GameFi industry and ends up being negative for token sustainability.
Another issue is the ownership of the in-game assets. Usually, all the objects belong to the player but in some cases, players do not see their efforts and value recognized, causing a loss of interest in the game environment.
GameFi is an innovative model that has disrupted the traditional gaming industry and allowed players to discover a new way of playing where they can profit from their passion for games. In 2021, this new paradigm of gaming increased its popularity, mainly because of the COVID-19 pandemic, when players from emerging economies were seeking new sources of income. The second quarter was especially successful for the GameFI industry with a growth of 503%.
As GameFi increases, more players are interested in trying the new phenomenon, even though most traditional players and AAA companies were resistant to shifting their focus from a conservative perspective of gaming. Regardless, the model is expanding and growing as blockchain technology becomes a key aspect of the online world. It’s inevitable to shift the paradigm, as the blockchain universe is opening quickly to the new possibilities of games and industry.
One main aspect that proves the acceptance of the GameFi model is the increasing wave of investments since 2020. While only $70 million were raised by blockchain game companies in 2020, the sector attracted $4 billion in VC investment in 2021 and has already seen an influx of another $2 billion in the first quarter of 2022. Another important aspect is big companies and projects sympathizing with GameFi, especially South East Asian ones like Animoca Brands or Sky Mavis, creating an optimal scenario for new games in the industry.
The combination of NFT, DeFi, and the Metaverse is a powerful force in the gaming industry. The use of these technologies creates the possibility of a future where gamers can fully develop their ideas and have their expectations met through the increasing interoperability, decentralization, and democratization of games.
However, while GameFi is an innovative model that draws many players in through the opportunity to earn and play, many factors are producing a loss of interest among gamers.
Two main aspects need to be considered when discussing GameFI: The game economy and the community.
Firstly, the game economy consists of two actors: investors and fees. Many of the GameFi games count on their investors to help maintain and balance the ecosystem, as well as they expect the economic support of a loyal fan base through certain fees and costs to purchase assets.
Therefore, GameFi tokens are especially dependent on the market forces of demand and supply. In this case, the value and price of tokens can completely change as the market fluctuates. Of course, this is a problem for players that can lose interest in the project or panic and take out their investments.
There is also an issue that arises with the Play2Earn model. The assumption of money regardless of the actions taken in the game. Players believe the game is just easy money to make, which eventually also results in a lack of interest of developers to create unique graphics and fascinating storylines.
At the end of the day, choosing to play a GameFi game should also be enjoyable, it cannot be just a job. Because then, games create isolated individuals that don’t contribute to the community, they’re just doing their tasks and getting paid.
Lastly, some of the games are focused on earning money and therefore players can get scammed or hacked. The absence of a good security system brings a bad reputation to the industry and increases the doubts that many gamers have about the GameFi experience.
The GameFi industry has proved to have many positive traits for a new generation of gamers that can see their efforts finally rewarded. However, there are still many shadows that need to be addressed in the industry.
The focus on the game economy is a key aspect when players decide to participate in the GameFi industry. Games should be more inclusive and support their participants with income, distributing rewards and reducing fees in order to create a balanced ecosystem where rewards are distributed according to each player’s merits.
A good example of a healthy and balanced game ecosystem is Codyfight. This blockchain-based AI vs. human competition metaverse game allows players to exchange, trade, and distribute tokens freely through its ecosystem. This is achieved through a new concept called Create2Earn, where players can create their assets in the game as well as build bot farms to earn income passively.
Therefore, the ecosystem is not focused on the number of tokens that players can win or the big benefits for the game developers, but more on the different abilities and wits players can showcase to earn rewards through passion and community.
The community in Codyfight is an important piece of the game and allows players to bond and create experiences organically, leading to a universe where the competition is healthy and driven by the own players.