The blockchain appears to have captured the public’s imagination, creating significant interest from investors and offering endless use cases for industries such as healthcare and finance. Nonetheless, the promise has frequently overshadowed its potential.
Despite this, the digital ledger may have found its savior in online gaming, which is poised to become its first actual use case as the benefits of DeFi propel the gaming industry forward a generation. This multibillion-dollar industry is undergoing rapid transformation. Traditional gaming seeks a more immersive experience for players – a new era of online gaming that has opened up avenues of opportunity to a growing crypto community.
GameFi is at the forefront of this transformation, with a mission to create an ecosystem that combines entertainment, crypto-powered economic incentives, and novel social interaction – where gamers want to stay, play, live, and grow.
In this article, we will explore how GameFi uses DeFi to power the future of online gaming. We will also touch on some of this intersection’s advantages. Stay tuned!
What is GameFi?
The idea for GameFi (GAFI) arose from the convergence of two fast-paced industries: decentralized finance (DeFi) and gaming. GameFi is a DeFi platform used to create new types of blockchain-based games.
GameFi is a platform that allows developers to publish their games while gamers can buy GameCredits (GAME) using fiat money and then utilize them to acquire gamers.
Additionally, gamers can use their in-game assets as collateral for borrowing and lending. The GameFi protocol enables developers to create in-game economies powered by DeFi, allowing players to trade, lend or rent out their game assets and winnings. This not only creates a more engaging experience for gamers but also provides them with new ways to generate income from their hobby
Without a doubt, GameFi, is the meeting point of decentralized financial instruments (DeFis) and blockchain-based gaming.
On the one hand, GameFi solutions include software programs that integrate gamification tools into DeFis. In this case, the gaming is merely a cover for the underlying DeFi protocol, which is a key component of the project’s business model.
GameFi also develops actual video games powered by DeFi protocols. The end goal is to build a system where players can use their game assets as collateral for borrowing, lending, and trading.
The other GameFi solution involves introducing DeFi-specific concepts into the volatile world of decentralized gaming. Such systems list digital collectibles or non-fungible tokens (NFTs) as game assets. These can be used to power in-game economies and drive player interactions.
The MOBOX ‘play-to-earn’ platform best exemplifies the concept of GameFi as ‘gamified DeFi.’ MOBOX, like other modern DeFi ecosystems, includes modules for a wide range of applications, including staking schemes, liquidity pools, yield farming tools, NFT environments, etc.
The History of GameFi
Amazon Game Studios launched GameFi in 2013 to create a new line of digital entertainment products. A year later, GAFI released several experimental games developed by Amazon Game Studios, such as Cat Fling, Tales from Deep Space, and Toontown Rewritten. GameFi also contributed to the design of Crossy Road, which went on to become one of the best-selling iOS apps of the year.
By 2015, Game Fi had evolved into an internal service that powers Amazon Game Studios apps and games and games from other companies. Game Closure, which uses GameFi to power its popular social platform for game development, GameHouse Social, was its first external customer. According to Lior Tal, CEO of GameClosure, GameFi “performs better than anything else out there.”
In 2016, GameFi was made available to all Amazon Game Studios partners. The same year, the company launched Amazon Lumberyard, a free game engine with GameFi built-in. Amazon Lumberyard was designed to make it easy for developers to create high-quality games.
The following year, Amazon Game Studios released several successful games powered by GameFi, including The Grand Tour Game, Breakaway, and New World. By the end of 2017, Amazon had begun selling GameFi to developers via its Amazon Web Services Marketplace.
GameFi is now available as a GPU instance, with support for various programming languages such as Java, C#, and Python. GameFi gives you unrestricted access to aggregate functionality (tracking users across games) and per-game user behavior. It also provides APIs for game data, social features, and in-app purchases.
On the GameFi platform, several protocols are currently live and in use. However, only a few of them are frequently used by the majority of the players. The most popular protocols on the GameFi platform are:
- Advanced Encryption Standard (AES)-128 is used to encrypt some protocols. However, all of this is rendered obsolete when both parties employ the same protocol. As a result, it does not affect your chances or ability to predict your opponent’s behavior.
- GameFi Protocol (GFP) is the first GameFi mining pool protocol to create the first global GameFi aggregation platform. Its governance token is GFI. GFP-DAO is formed spontaneously by token holders. Carry out community governance for the GameFi Protocol.
- GFI is the native token of the GameFi Protocol and is used to power all platform aspects. It is currently on several exchanges, including Binance, Huobi, and OKEx.
- Notably, User Datagram Protocol (UDP) is used for all communication between players and the GameFi server. It is a connectionless code that does not require a dedicated connection between two parties. It makes it well-suited for games, where players come and go as they please.
Raw UDP is the default protocol that everyone uses when they first start playing on GameFi. The protocol provides no packet protection. As a result, you should only use it against other users who use the protocol.
UDP-R extends the UDP protocol that uses a slightly different packet format. Its developers designed it to be more resistant to packet loss and corruption. However, it is not as widely used as UDP due to the slightly higher overhead required.
Advantages of GameFi
GameFi is transforming the video games industry by bringing together the best of two worlds: the gaming industry and blockchain technology.
The main advantages of GameFi are:
GameFi provides an incentive for players to play to earn, which is a massive intervention for the gaming industry. The revolutionary concepts rejected traditional game business models, which rely heavily on in-app purchases and advertising.
On the contrary, blockchain-based play-to-earn games allow for exchanging in-game tokens and items for cryptocurrencies. As a result, players’ in-game assets can now be used outside of the game environment, unlike in traditional games. Trading their in-game tokens on the marketplace, for example, can help players earn financial incentives.
- Decentralized Gaming Experience
The assurance of complete control over your assets is the best value advantage in the world of GameFi NFT. Gaming Finance projects permanently store all data about your in-game assets and NFTs on blockchain networks.
You don’t have to fear losing all of your assets if the game crashes. Players have full control over all assets they own in the game, and they can use them however they see fit.
- Friendly Learning Curve
Many people are skeptical of playing GameFi games because they are unsure of the new play-to-earn model. However, there are no complicated steps or instructions to follow when playing such games. On the contrary, simple gameplay mechanisms are one of the most notable features of play-to-earn games. As a result, there are almost no barriers to entering the world of play-to-earn games.
The use of blockchain technology in GameFi provides an entirely transparent ecosystem. All the transactions and game data are stored on the blockchain, which is publicly available for anyone to view.
The Most Popular GameFi Projects
The following are some of the most popular GameFi projects:
Axie Infinity became popular in the Philippines during a global pandemic in 2020. The majority of the country’s unemployed used Axie Infinity as a source of income.
The game primarily employs the play-to-earn model and includes fundamental mechanics such as asset trading and task completion.
In this GameFi project, players can collect, breed, and train Axies in the form of NFTs. AXS, the native token of Axie Infinity, has a staggering market capitalization of over $8 billion, making it one of the frontrunners in Gaming Finance.
Decentraland is a famous virtual world that runs on the Ethereum blockchain. It is one of the first projects to implement the play-to-earn model in a gaming environment successfully.
The game allows players to buy, sell, or trade virtual land and experiences. It also includes a virtual world builder, allowing players to create their own experiences.
With various in-game items, players can customize their parcels of land with new experiences targeted at a specific audience. The latest auction of virtual real estate on Decentraland for nearly $4 million is undoubtedly an indicator of its future role in the GameFi revolution.
GameFi (GAFI) is a decentralized platform that allows players to join the thriving blockchain game economy. As a player, you can obtain GameFi tokens to store your in-game assets on the blockchain and provide feedback to developers and publishers via surveys. Every transaction gets carried out using GFI tokens, allowing players and developers to spend the currencies they have earned within the GameFi network.