Blockchain technology is revamping the gaming industry and making gaming more immersive than ever. In the last few years, the multi-billion dollar blockchain gaming industry has grown tremendously.
Research shows that blockchain gaming – GameFi, is already on track to disrupt the $175 billion global video games market.
In Q3 of 2021, the number of wallets relating to gaming activity rose tremendously by 2,453%, from 29,563 during the first week of 2021 to 754,000. In January 2022, the top 10 blockchain games handled more than $841 million in transaction volume and attracted more than 2 million unique active cryptocurrency wallets.
GameFi, also known as Play-to-Earn, has become the new craze. Several blockchain gaming projects incorporating different functionalities like NFT collectibles, DeFi and other elements under the "Play to Earn" (P2E) concept have generated a lot of buzz in the market.
Play-to-Earn offers a unique gaming model and financial framework that’s focused on rewarding gamers with cryptocurrencies or Non-Fungible Tokens just for playing games they would probably play for free.
For example, Axie Infinity – one of the most popular play-to-earn games, is an Ethereum-based NFT game that has been growing in popularity since 2018. On the gaming platform, gamers are able to use their NFT pets (Axies) to earn SLP tokens by completing daily tasks, battling other players, and progressing through the different game levels.
Players can earn income by selling SLPs (smooth love potions), breeding rare Axies, and through AXS staking. They can also earn crypto just for playing different games the platform offers.
In contrast to traditional gaming projects, P2E games offer players complete control over their in-game assets while also offering unique opportunities for them to make reasonable passive income.
How does GameFi function?
GameFi projects use cryptocurrencies, NFTs, and blockchain technology to create a virtual gaming environment. Basically, gamers can earn in-game rewards by completing quests and progressing to new game levels. More so, players can transfer their assets outside of the game to trade on crypto exchanges and NFT marketplaces.
Unlike traditional games that only operate on a “pay-to-win” model and allow players to purchase upgrades for a better gaming experience, GameFi has established a revenue system for blockchain gamers, investors, and traders to earn incentives.
It also integrates Decentralized Finance (DeFi) tools such as farming, algorithmic stablecoins, and loans to offer an all-inclusive service to gamers. As a result, the GameFi space has become a platform for earning crypto assets for users around the world. Clearly, the GameFi industry is set to revolutionize the traditional gaming market.
NFT and Crypto mainstream adoption
GameFi projects vary in their mechanics. These games are fueled by NFTs, digital assets that represent in-game items. Typically, in-game assets are built as non-fungible digital tokens running on the blockchain and they can also come in different forms, such as avatars, weapons, costumes, virtual land, tokens, gold, and pets.
Most games leverage NFTs to build virtual economies by adding in-app purchases, essentially tokenizing assets that players can purchase within a game.
According to research, the Non-fungible token (NFT) games generated $2.32 billion in revenue in Q3 2021, this is approximately 22% of all NFT trading volume industry-wide in the quarter as blockchain games gathered steam.
The NFT is an important tool for blockchain gaming to become an industry-standard in the future. Non Fungible Tokens allow users to create their own gaming content and sell it on NFT marketplaces by encoding NFT-unique rules into the actual asset itself, unlike the need to rely on hidden rules within a centralised gaming application.
Non Fungible Token does not only offer game enthusiasts full ownership of in-game assets they acquire, but also allows them to safely trade them. They receive these items as they participate in the games and also trade them on NFT marketplaces for profit or exchange them for popular cryptocurrencies, thus earning passive income. Furthermore, gamers can generate passive income without playing the game, either via staking or by lending their gaming assets to other players.
The fusion of crypto metaverses and NFT games is sure to offer more fascinating financial and social opportunities in the coming future. The crypto metaverse provides gamers with new and unique ways of playing, investing, gathering and interacting. Interestingly, gamers can earn from all these activities. By integrating VR’s immersive environments, the addictive power of video games, value propositions of blockchain’s crypto, and social media’s interactivity, the metaverse games will become one of the key elements in the new era of the internet.
The Future of GameFi
The blockchain gaming ecosystem is evolving at a raging pace. Clearly, one of the popular topics in crypto space right now is GameFi, with new technical developments seen at an increasing rate thanks to the promising gameplay and economic incentives it offers.
A recent study showed that the total market cap of GameFi skyrocketed to $55.38 billion in Q1 2022. Interestingly, blockchain gaming is projected to hit a staggering $50 billion by 2025, a growth rate 10x of traditional gaming. The rush of enthusiasm for GameFi benefits has facilitated an ever-increasing community of gamers, crypto investors and NFT enthusiasts who are leveraging innovative blockchain gaming projects.
Over the years, NFT-powered gaming has caused a huge shift in not just how gamers interact with each other but also how they are able to participate in the gaming world. NFT technology proposes new methods of financial payment that will empower both gamers and developers for years to come. And with their endless potential, NFTs hold tremendous opportunities to enhance the gaming experience both fundamentally and aesthetically.
Thus, with the innovative combination of NFT and DeFi tools, GameFi projects like Axie Infinity, DeFi Kingdoms, Illuvium, CryptoBlades, and many more, will be paving the way for the next generation of gaming. And as more people plug into the metaverse and GameFi industry, there’s a huge potential for further explosion in NFT and crypto space.