Years later, decentralized finance continues to reshape different industries, and the gaming industry is no exception. Popularly known for transforming the financial ecosystem, Decentralized Finance or DeFi, known by many, is now spreading its influence to the gaming industry.
Over the last few years, the gaming industry has been booming at an unprecedented rate that is
Blockchain Gaming
Initially, the gaming industry was characterized by players who desired to have fun online and entrepreneurs benefiting from their activities. Blockchain gaming has games built on blockchain technology.
Before blockchain games, traditional games required players to purchase in-house gaming assets that allowed them to navigate within the gaming environment. The games feature a marketplace where players can buy, sell or trade items such as weapons, avatars, or their collected treasures. However, the funds received never truly go to the players in most games. The game owners (centralized monopoly) had created the games to profit only one side of the coin, themselves. In addition, the gaming structure was heavily flawed, lacking transparency and inability to modify the game's mechanism.
Fast forward to the introduction of blockchain-based games that have restructured the monology giving both parties a share of the pie. The decentralized nature of blockchain now gives players power over their gaming experience. Notably, this goes beyond the virtual space. Players can now own and manage their in-game assets in real life through an innovation called non-fungible tokens (NFTs). In addition, these games enable interoperability, allowing multichain trading and transparency of records providing a fair gaming environment.
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Blockchain gaming meets DeFi
With a booming market comes great expectations, and developers have been forced to look for ways to keep the ongoing trajectory, thus the emergence of GameFi. GameFi has attracted many investors, developers, and players alike who share a common goal of getting the most from the market while enjoying their favorite gaming projects.
GameFi refers to the play-to-earn blockchain games that offer users economic incentives for their engagements. The concept combines blockchain technology, NFTs, and games.
Game Features
While different GameFi games differ, there are a few fundamental features that cut across the board. These include:
- Plat to earn model (P2E)
- Ownership of digital assets
- DeFi applications
- Blockchain technology
DeFi meets blockchain by proving users with protocols that enable the transfer of in-game assets to acquire during the game. These rewards could come in different forms, including avatars, virtual land, weapons, or costumes. Different GameFi projects employ different models and gaming economies. After earning in-game rewards, players can transfer their assets outside the game to trade on NFT marketplaces and cryptocurrency exchanges.
In some games, players earn passive income without having to play the game. Players can engage in staking activities, lending (offering liquidity), mining, yield farming, or participating in reward programs like referrals.