GameFi is a combination word made from Games + DeFi. When you incorporate elements of decentralized finance from the world of crypto into gaming, you open new frontiers. You might think, how is GameFi any different from simply including money incentives in games? We can think of gaming sports tournaments and gambling websites, where money and games go together. But GameFi is a more long-term and sustainable strategy to grow a crypto community around games, and also involves a key component: ownership for the game players.
The GameFi industry is in its very early stages, and it has huge growth prospects. It spans the entire lifetime of a project, not just the phase where the game is being actively played by a community. Community-driven growth is a central part of it. A GameFi project can involve you in its bootstrapping through Initial Coin Offering (ICO), to planning the project roadmap, changes in governance protocols, soft launching of the game in beta, hard launching to the wider community, various elements of gameplay and assets to be won and traded, to the sunsetting of the project or transitioning the community to the next project. In short, you don't have to be a gamer to be in GameFi.
GameFi Goes by Many Names...
Due to its novelty, the term GameFi is just beginning to find its roots in 2021-2022. We can find GameFi projects and crypto tokens by their various names:
- Blockchain games
- Web3 games
- Crypto games
- NFT games
- Play-to-Earn games (P2E games)
- DeFi games
- Dapp games (decentralized gaming apps)
When you hear the term "Blockchain Game", you might imagine that the entire game is hosted on a blockchain. But this is not really true. While web3 and dapp game developers have the ambition to fully decentralize a game and put it entirely on a blockchain, this has many challenges. For now at least, it is simpler and cheaper to host multiplayer games on the mobile and web platforms. And only the economic or financial elements of the game can be decentralized, using crypto tokens and NFTs on a blockchain. Anything that you can own inside a gaming world, whether it is crypto-money or digital assets like avatars, skins, accessories, weapons, vehicles, buildings and land, falls under the "Fi" of GameFi.
Ownership in GameFi thanks to Blockchains!
In traditional video games, any points and assets that you win remain within that game. They have no meaning outside the game. Even if you have spent thousands of hours inside a game and surpassed all its levels and challenges, you don't own anything you earned in it for real. It remains trapped within that gaming world, which is the property of the company that developed and published that video game. All you have is the gaming experience and memories, and bragging rights with other people for being a great gamer. In short, you spent a lot of money, time and energy in that gaming world, and got lots of awesome experiences, but you don't own anything. If the company decides to end the game, it can pull the plug, and everything will be wiped out.
GameFi turns many of things around, thanks to the power of blockchain. Let's say the points and powers you won in a game are in the form of crypto-tokens. Then you can openly trade these winnings on crypto exchanges like Binance, FTX or Kraken, and DEXes (decentralized exchanges) like UniSwap, PancakeSwap or SushiSwap, then they become real earnings and investments for you. Similarly, when you buy or win any digital assets like avatars, skins, accessories, property etc. inside a game, minting them into NFTs (Non-fungible tokens) will make them into assets that have some real-world value. Many crypto games offer digital assets natively as NFTs, while in other cases you will need to mint the assets into NFTs using OpenSea, Rarible, or other NFT platforms.
The Top 10 GameFi Projects
Let us continue to understand what GameFi is by diving deep into some of the best GameFi projects. Through the lens of these projects, we will see how GameFi occurs in practice, how the crypto and DeFi elements interact with the gameplay, how NFTs and crypto-money function as real-world investments and earnings, and how GameFi is bigger than the games and covers many other aspects of the project lifecycle.
Axie Infinity is the biggest GameFi universe as of 2022. Sky Mavis, a Vietnamese company with a young team has developed this blockchain game. All digital assets in this game are in the form of NFTs. Axie Infinity's tokenomics is run by two crypto tokens, AXS and SLP.
Axie Infinity Shards (AXS) is the governance token of the Axie Infinity project. It is how the community can vote around changes in the protocol and project roadmap. By staking AXS, community members lock their tokens as a way to fund and support the project, and in turn earn newly generated AXS tokens. AXS serves as the currency in the Axie Infinity NFT marketplace, so you can buy and sell the digital assets.
Smooth Love Potion (SLP) is the in-game currency that is useful within the metaverse of the game itself. SLP has unlimited supply. Gamers earn SLP by playing the Axie Infinity game, and they can convert it into their local currency on crypto exchanges. Axie Infinity isn't free-to-play, you need to buy three Axies, the pet characters from this game, to get started. As the price of SLP is volatile like most cryptocurrencies, this initial investment can be anywhere from $100 to $2000.
You need a crypto wallet like Metamask or Trust Wallet, and the initial investment amount, if you want to play Axie Infinity. All your earnings and digital assets will be stored in your crypto wallet. However, the initial investment poses as a huge barrier to entry for many people. To get around this obstacle, there are Axie Infinity scholarships and gaming guilds, where someone else invests for you, or rents out their Axies to you, in exchange for a share in your earnings.
Decentraland is a 3D metaverse virtual world built by Argentinian game developers Ari Meilich and Esteban Ordano. The project is run by the nonprofit organization Decentraland Foundation. You can trade virtual estate or pieces of land in Decentraland, and build your own projects, worlds, games and assets in this virtual world. Thus, gamers, game developers, traders and investors can all take part in the Decentraland metaverse. The token of Decentraland is called MANA.
3. The Sandbox
The Sandbox is another 3D virtual world metaverse platform, like Decentraland. It is developed by a game studio called Pixowl (based in San Francisco, US and Buenos Aires, Argentina), which is acquired by a Hong-Kong based company called Animoca Brands. The Sandbox, as the name suggests, is a sandbox game world where gaming and metaverse projects can be developed by anyone, whether you are a big brand or an indie developer. The token of Sandbox is SAND.
DeFi Kingdoms is a pixel-art fantasy world. Kingdom Studios, a team of pseudonymous people have created it. JEWEL token is the official currency of this project. While the plan is to make DeFi Kingdoms into a proper MMORPG (massively multiplayer online role playing game), it is currently a gamified version of a DEX (decentralized exchange) and NFT marketplace. You can trade "Heroes" the gaming avatars and their various assets as NFTs, and also do DeFi activities using JEWEL and other compatible tokens.
Singapore-based Pixelcraft Studios has developed Aavegotchi, which gamifies the experience of NFT collectibles and adds DeFi activities to it as well. In this game, you can customize and trade the gaming avatars known as Aavegotchis. The GHST token was the official token of this project, but now they have expanded Aavegotchi to the Gotchiverse which has 4 new tokens, ALPHA, FOMO, FUD, and KEK.
Do you like to walk and run for fitness? Interested in investing in NFTs? What if you can do both at once? StepN is a GPS-enabled movement-based game. You install their Android or iOS app, buy their "Sneaker" NFTs on their marketplace, and then every time you move around, you will earn their GST in-game tokens. StepN's governance token is GMT. By investing in different Sneaker NFTs, you can increase your odds of winning more. Soon, StepN will add "social" features to their game experience, which will drive more competition both in fitness challenges and NFT investments.
Splinterlands is a blockchain-based collectible cards game. It is developed by a US-based company with the same name. Like in real-life trump cards, every Splinterlands card has different attributes like Health, Speed, Attack, Armor etc. You collect a deck of cards and battle against other players based on these attributes. You can choose to play for free in which case you don't win real earnings. Or you can invest in a $10 summoner's spellbook to begin playing to win real money. Splintershards (SPS) is their in-game currency.
8. Alien Worlds
Alien Worlds is an NFT game where you can collect and trade plots of land, spacecrafts, accessories and avatars. Its developer company name is Alien Worlds which is from in Zug, Switzerland. Trilium (TLM) is the main token of this NFT metaverse. The gameplay is similar to Splinterlands, with online cards-based battles and missions, but with the theme of "space", "planets" and "aliens". Thus, we can say it is more of a gamification of NFTs and DeFi, rather than a proper game that can be fun to play in and of itself.
Farmers World is a blockchain based farming game by the company G.Jit Japan. It has three in-game tokens called Food, Wood and Gold, and is built on the WAX blockchain. Its gameplay involves buying land, mining, farming & harvesting crops, building structures, breeding cattle, and protecting resources from wild animals. The various elements are in the form of NFT cards. You need to have a WAX wallet to participate in Farmers World game.
10. Bomb Crypto
Senspark game company from Vietnam is the publisher of the Bomb Crypto NFT collectibles game. BCOIN is the official token of this game. You use BCOINs to buy heroes and houses, create squads or teams from the heroes, and participate in treasure hunts, battles or adventures to win BCOINs or other in-game assets. The gameplay happens on a pixel-art map where your selected heroes will complete tasks according to their attributes.
Future Improvements in the GameFi Universe
GameFi is in its nascent stages and lots of new projects are rising all over the world. So it is worth pondering about where the GameFi industry is weak and needs improvements. Having a big-picture vision for the true potential of gaming and blockchain will give inspiration to all communities and developers.
1. Games ought to be fun
The first thing to remember is that people have been paying money to play games for decades, because they enjoy it and derive meaning from it. GameFi developers must focus on the playability and fun-aspects of games, as that is the primary value offering of the medium of games. It shouldn't be limited to NFT collectibles and crypto trading.
2. External rewards are double-edged swords
Play-to-earn aspects have become the highlight of GameFi that attracts crowds. And it is all good in an up market, when the token prices appear to be rising to the moon! But when the bears arrive and all tokens are dipping with major losses, the value of the in-game earnings and assets also drops precipitously. If earning was the chief motive of the players, then down market will cause a major demotivation for the players and they will drop off, leaving behind ghost towns.
3. Security concerns need critical attention
While people laud blockchains for their security, hacks, scams, frauds and thefts are a common news in crypto. GameFi developers need to inspect the weak links in their product and services chain. They must diligently adopt and follow best security practices in safeguarding their keys, auditing their source code and smart contracts, and keeping all team members accountable. Often, the weakest link in a network is human error.
4. We are just scratching the surface
GameFi is full of potential for innovative applications that touch all aspects of our work, social, and personal lives. Gamification of social collaboration for the greater good can have huge upsides, that we cannot express in terms of money. By bringing elements of play, power of decentralization, and the unlimited creative potential of the metaverse medium, we have the possibility of undertaking global scale projects that were impossible to execute in the real world alone.
GameFi has seen some highly successful projects in terms of numbers of participating people and the money being made. The top 10 GameFi projects showcase the early days of blockchain games, where NFT collectibles and DeFi activities are the primary objective more often than not. The gameplay is built around these main goals, as a way to offer a more fun way to interact with the tokenomics. Play-to-earn gaming and NFT games offer new sources of income and investing, especially for the global south with rising inflation and decreasing yields in the post-pandemic era. However, for long-term sustainability and for achieving the true potential of GameF, we must remember to make games intrinsically rewarding first, and to stretch our creativity to tap into the unseen applications of blockchains and metaverse in the 21st century.