GameFi, a combination of the words “game” and “finance,” is here to revolutionize the existing traditional games. If usually playing games is only a means of entertainment, with GameFi, that entertainment can be a source of income. With GameFi, you may sell any in-game collectibles, including characters, weapons, skins, and other accessories, for cash. Not surprisingly, GameFi is now one of the most popular trends in the crypto industry.
- 🎮 GameFi is a combination of games and decentralized finance that presents the concept of play-to-earn. With GameFi, players can get rewards in the form of cryptocurrency or NFT, which can be exchanged into fiat money.
- 🏆 Players can earn rewards by successfully completing missions, defeating other players in games, or leveling up.
- 📉 GameFi market capitalization has fallen by 81% from its peak of 29.18 billion US dollars in November 2021 to 5.52 billion US dollars in mid-August 2022. However, the amount of funding from institutional investors into the GameFi industry continued to grow, reaching 4.1 billion US dollars as of June 2022.
- 💵 If you want to play a GameFi, players must set up a crypto wallet that is compatible with the blockchain network where the game is built. In addition, some GameFi also require players to meet requirements such as having a certain number of crypto tokens or possessing certain accessories or equipment.
What is GameFi?
GameFi is a combination of games and finance in the form of decentralized applications (dApps). The difference between GameFi and traditional online games is that GameFi project is run on a distributed ledger network that allows players to own verified items in the game. GameFi also brings a play-to-earn concept for gamers, which means players can earn money while playing the game instead of spending them.
In the pay-to-play concept, players usually have to pay a certain amount of money to get some features or items in the games. Meanwhile, in the play-to-earn, the players will get incentives when playing the games or have the item in a GameFi.
Usually, the players will get their economic incentives when completing a particular mission, winning matches against other players, or when successfully advancing to the next level. In addition, players can trade their assets on GameFi with other players outside the game. Usually through crypto exchanges or NFT marketplaces.
How does a GameFi Work?
GameFi’s popularity stems from CryptoKitties, a blockchain-based game built on the Ethereum network. Ethereum’s smart contract technology paved the way for innovations including DeFi and later GameFi. Recently, the adoption of smart contracts and other blockchains such as Solana, Polkadot and Polygon, has also begun to be used to build GameFi.
As mentioned earlier, GameFi works with the concept of play-to-earn. The rewards obtained have various forms, ranging from cryptocurrency to in-game items such as avatars, weapons, costumes, and virtual lands. In contrast to the traditional gaming concept, where the asset has no value outside the game ecosystem, the assets acquired on GameFi have real value, and players can trade them. As a result, players can earn real income through GameFi.
In addition to cryptocurrencies, the GameFi ecosystem also involves non-fungible tokens (NFT) as assets in the game. So, it allows players to trade those assets on the NFT marketplace. GameFi’s use of blockchain technology allow users to acquire digital assets for potential revenue. Combined with the metaverse, A few GameFis enable players to earn money from their virtual properties. Then, all those data will be stored on a decentralized public blockchain network. This system allows every asset’s ownership to be seen and tracked by anyone. These assets are also the players’ property, no longer owned by the development team, like in traditional games.
- Through GameFi, players can earn rewards. Players will earn rewards when playing the game and completing specific missions. In addition, users can also get passive income through features in GameFi, such as staking, liquidity mining, and yield farming.
- GameFi has easy and cheap access. Many GameFi projects are free to play and only require an internet connection. However, certain GameFi games required the use of local tokens or the purchase of specific characters or things.
- GameFi has low barriers to entry. Not only are they cheap, but most GameFi projects also have a simple game system, so they are easy to learn and play. This simple approach allows groups of all ages and experience backgrounds to play GameFi.
- Participate in GameFi development. GameFi allows its users to participate in making decisions regarding the development of game projects. It can be done by voting through the Decentralized Autonomous Organization (DAO).
💡 To become a DAO member of a GameFi, each player usually must have a governance token from the project. Generally, the voting power will be determined by how significant the share of the token ownership is.
The Development of GameFi
GameFi is actually in a bad period. This is reflected by the decrease in transaction volumes and the number of new players on GameFi. This pressure is also inseparable from the condition of the crypto market, which has been underperforming in the last few months.
Based on charts from Footprint Analytics above, in mid-August 2022, GameFi’s total market capitalization was only US$5.52 billion. This figure decreased by 81% from the end of November 2021, which amounted to 29.18 billion US dollars. This data shows that the GameFi industry is still not completely independent of the crypto market itself.
In line with the market capitalization, weekly GameFi volume decreased from its peak in November last year, as seen on the graph above. On November 7th – 13th, 2021, the weekly GameFi volume broke through 1.45 billion US dollars. Meanwhile, the weekly GameFi volume for 2 – 8 October was only US$39.15 million.
As you can see, in September, the number of new GameFi players every month grew by 10.36% to 1.78 million. However, in September, the total number of GameFi players fell 5.49% to 19.27 million. Meanwhile, GameFi volume in September also fell to US$202.20 million from US$340.25 million.
The Future of GameFi
GameFi Industry Challenges
According to The Global Web3 Gamer Study, a research conducted by Coda Labs, most people who play Web3-based games intended to earn crypto from the game. This indicates that most GameFi projects have not met the gamers’ needs because fewer users play the game for the sake of playing the games, as compared to those who aim to earn income from the game.
Also, gamers who have never played GameFi games tend to have bad sentiments towards GameFi and NFT. From the survey, they gave a score of 4.5 for GameFi and 4.3 for NFT (Scale of 1-10). This means there are still significant challenges to the mass adoption of the GameFi project.
Another challenge facing the GameFi industry is sustainable gaming. A game will continue to survive and develop if the players persist in the long term. However, based on data from DappRadar, the number of Axie Infinity players, GameFi with the largest capitalization, has decreased by 95% from its peak on November 26th of 744,190 to only 35,420 on August 20th. In addition, another popular GameFi, Defi Kingdoms (DFK), also experienced the same thing. As of August 19, there were only 5,290 players, while at its peak in December, the number reached 36,670.
The massive users decline in those two games could have been caused by the unattractive and unsustainable gameplay of the Web3 game. It could be a sign that many Web3 games can still not attract players in the long term. There is a possibility that Web3 games players only intend to earn crypto. In the end, these things become a challenge for the development team and the GameFi industry going forward.
GameFi Industry Potential
Based on the 2021 trend, the GameFi industry shows promising potential. Over the past year, according to Drake Star Partners, at least US$3.6 billion of fresh funds have gone into various GameFi development companies. Several well-known institutional investors, such as Andreessen Horowitz, Coatue, and Softbank, are keen to invest their funds in the GameFi industry.
Meanwhile, this year, the potential of the GameFi industry still looks promising. Based on research conducted by Binance Research during the first semester of 2022, the GameFi industry is still showing an increase in various aspects.
The number of GameFi projects is still growing and has reached 1,551 games by June 2022. However, the growth of new GameFi projects on a monthly basis is no longer significant, especially in May and June 2022.
Apart from the number of GameFi projects that continue to grow, another indicator that shows the potential of the GameFi industry is the injection of funds from institutional investors. During the first half of this year, the total funds injected into the Game industry have reached 4.1 billion US dollars. This number is much higher than the 2021 period.
The most significant injection of funds came from Epic Games, which invested in the GameFi industry worth US$2 billion. Then, there are also Andreessen Horowitz and Immutable, who have disbursed funding of US$600 million and US$500 million, respectively. Meanwhile, traditional video game companies such as Square Enix also set up $300 million to take blockchain development initiatives. Other companies such as Ubisoft, EA, and Tencent are slowly also entering the space of blockchain-based games.
The massive injection of funds allows developers to make the games better. On paper, this could lead to higher adoption rates and further development of the GameFi industry. Meanwhile, the entry of traditional video game companies is expected to increase competition in the GameFi ecosystem which can lead to more innovations.
Popular GameFi Recommendation
Here are some popular GameFi recommendations that you can try if you decide you want to try GameFi:
1. Axie Infinity
Axie Infinity is an NFT-based GameFi project and one of the most popular games. Axie Infinity is a game similar to the Pokemon series, where in Axie Infinity, players will build teams of characters called Axies. Each Axie is an NFT with a unique body shape that determines its skill and rarity. Later, players can use these Axies against other players through arena or adventure mode.
Axie Infinity has two native tokens: Axie Infinity Token (AXS) and Smooth Love Potion (SLP). To get AXS, you need to enter the game’s PvP leaderboard. As for SLP, it can be obtained by completing adventure mode levels and winning matches.
This year, the fate of Axie Infinity is arguably not good. Last March, Axie Infinity’s blockchain, Ronin, was hacked. Then, the number of players has also dropped from a high of 744,000 in November 2021 to only 21,000 in October this year. Similarly, the price of AXS dropped from US$97 at the beginning of the year to US$11.67 at the time of writing. However, the good news is that the lowest Axies price is now much more affordable, only in the range of 2-3 US dollars.
To play Axie Infinity, users need to create a Ronin Wallet and have 3 Axies which can be purchased through the Axie Infinity marketplace or borrowed through a scholarship program. Then, users must create and set up an Axie account and download the Axie Infinity app.
Next, is an NFT-based game, named Splinterlands. Based on DappRadar, Splinterland is ranked the 2nd for the most popular game, with 147,050 daily active users. The game revolves around collecting and trading cards. The cards containing the Splinterlands monster can use in battles with other players. At least there are more than 500 monster cards that players can use.
To play Splinterlands, users need to connect a MetaMask, Venly, Wombat, or WAX wallet and create an account for Splinterlands. You can play this game for free for basic levels. However, to enjoy the full-featured game, users are required to pay 10 US dollars.
After accessing the play-to-earn feature, there are four ways to earn from this NFT game. To earn the rewards, users can participate in existing tournaments, complete daily missions, buy and sell or rent cards, and burn their cards. Meanwhile, Splinterlands has a native Splinterlands token (SPS)
3. The Sandbox
One of the leading GameFi projects is The Sandbox, which carries the concept of a blockchain-based metaverse world. Through The Sandbox, users can create, build, and buy digital assets or land. The Sandbox only has a limited supply of 166.464 land.
The Sandbox metaverse world offers users a decentralized platform for creating tradable and monetized 3D worlds. In terms of graphics and interface, The Sandbox is similar to Minecraft. The best way to play while making money in The Sandbox is to trade Land and other objects and complete in-game tasks.
The Sandbox has collaborated with several big companies and celebrities, such as Atari, Rollercoaster Tycoon, Snoop Dogg, The Walking Dead, GameFi Ventures, and many more. The native token from The Sandbox is a SAND that can be used for buying and selling land and assets in the metaverse of The Sandbox.
The next play-to-earn GameFi project is Era7: Game of Truth. A card-trading game built on the Binance Smart Chain network. Era7 also utilizes NFT to turn the cards into a tradable asset. Later, users can play PvE or PvP by arranging and arranging the cards to make the strongest deck.
As the cards in Era7 are valuable NFTs, users can acquire high-value cards through matchmaking, trading, or synthesizing certain cards. Meanwhile, Era7 has two native tokens, Era and GOT. To own an Era, users can get it through matches, liquidity mining, or community incentives. Era tokens are used for transactions in Era7 games. As for GOT, users can buy it using Era tokens or play-to-earn. The GOT token itself is used for summoning or synthesizing.
Based on DappRadar, the game has seen significant growth in recent times. At the time of writing, Era7: Game of Truth was ranked 10th with 22,970 users, with volume and balance of US$24,130 and US$29.2 million, respectively
Some of the examples of games above carry the concept of play-to-earn. However, StepN is here to bring a different idea: move-to-earn. StepN is one of the most talked about GameFi games lately. As the name implies, users can get rewards when moving. The concept of move-to-earn is more closely related to lifestyle rather than games. Thus, rewards will be obtained when users perform physical activities like walking or running.
Users will get StepN native tokens, namely Green Satoshi Tokens (GST), when walking or running. However, although it sounds fascinating and easy, unfortunately, access using StepN is quite expensive. Users must first buy virtual shoes on the marketplace to get GST tokens.
When writing this article, the floor price was 1.39 SOL (around 43.5 US dollars). Moreover, if you want higher returns, users need several pairs of virtual shoes, which means they need more money. The good news is that StepN will soon launch a leasing feature, where users can later borrow virtual shoes from other users and share the profits.
Preparation Before Playing GameFi
There are some general preparations you should make before beginning to play GameFi games.
1. Setting Up a Crypto Wallet
Setting up a crypto wallet is essential since GameFi involves transactions and the need to keep virtual or NFT money. The cryptocurrency wallet selected must, however, be compatible with the blockchain network on which GameFi is based.
Use Ethereum-based crypto wallets like Metamask, for instance, for a GameFi, which is built on the Ethereum blockchain network. Remember to connect the GameFi wallet.
2. Pay Attention to The Requirements
Most of GameFi projects are free to download. However, each GameFi certainly has terms and conditions that are different from each other. If it is free-to-play, players can immediately play and get financial rewards.
However, there are also GameFi that have certain conditions that require users to purchase NFT, in the form of characters or accessories, or to own the game’s native crypto tokens, to purchase specific equipment first.
3. Don’t Forget to DYOR
Similar to choosing other crypto assets, users must do Do Your Own Research (DYOR) before selecting a GameFi project. Given that some GameFi requires players to invest a certain amount of funds, it is essential to calculate the potential profit and risk.
For example, find out how long it will take to recoup your initial investment and start reaping the benefits. Then, if it turns out that the required capital is too large, does GameFi offer “scholarships” or can borrow from other users or gaming guilds (Yield Guild Games, Merit Circle, and Avocado DAO) with a profit-sharing system. Next, ensure the selected GameFi is bona fide and not just a scam.
As the GameFi industry is currently only in its early stages, there is still a long way to go regarding this industry’s development. Undeniably, the GameFi industry holds a lot of potentials to grow and be more successful. But, at the same time, the GameFi industry still has a lot of homework to do to ensure the sustainability of this industry going forward.
Start Investing at Pintu
You can start investing on GameFi tokens such as, AXS, SAND, MANA, and others through Pintu App. Through Pintu, you can invest in various crypto assets such as BTC, BNB, ETH, and others safely and easily.
Pintu is also compatible with popular wallets such as Metamask to facilitate your transactions. Download Pintu app on Play Store and App Store! Your security is guaranteed because Pintu is regulated and supervised by Bappebti and Kominfo.
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- Binance Research, Binance Research publishes Half-Year 2022 Report, Binance, accessed on 10 October,
- Charlie Butler, Top 10 Best GameFi Projects to Play and Earn, Dapp Radar, diakses pada 10 October.
- Dean Takahashi, Coda Labs: Global poll shows gamers haven’t embraced Web3 games yet, Venture Beat, accessed on 10 October.