GameFi 2.0: A New Era In Web3 Games
The term GameFi has been gaining steam since it was coined in 2018. At its core, GameFi combines gaming and finance to offer players the opportunity to earn economic incentives through gameplay.
What’s innovative about GameFi is that these rewards can later be exchanged outside the virtual game’s platform for crypto or fiat currency - thus allowing players to earn disposable income by playing games.
Although the GameFi ecosystem is still extremely new, the future looks bright. While the cryptocurrency market has suffered considerable losses in 2022, funds have been flowing into the GameFi industry at an unmatched rate. Thanks to improvements in Blockchain and the emergence of new stakeholders, GameFi platforms will continue to evolve and draw new players in by offering faster, more sophisticated games and more attractive financial incentives.
GameFi 2.0 is already here. Let’s dive in.
What is GameFi?
One-third of the world’s population regularly plays video games. Chances are you are a gamer yourself. You probably spend several hours a day battling a new enemy, acquiring powerful weapons, or building a sophisticated virtual world. And what do you receive in return? Nothing but a few hours of fun.
Well, GameFi came into the Web3 scene to change that. What if you were allowed to keep what you built? It is in GameFi that video games meet the financial world. Games run on blockchain technology and use the play-to-earn model (P2E). By progressing to the next level of the game or battling an enemy, players can earn cryptocurrency and Non-Fungible Token (NFTs) rewards, which can then be transferred into NFT marketplaces or crypto exchanges outside the game’s platform.
Every sword, pet, or piece of land you own in GameFi platforms is a token in the blockchain network. So you’re not only a player but also an owner.
Although game narratives may differ, accumulating assets is a common goal. By playing and progressing in the game, you accrue coins or different types of tokens that will improve your chances of getting additional rewards. Assets are tied to your crypto wallet, which in turn provides you with proof of ownership.
A brief history of video games (and how GameFi came into life)
Although GameFi is relatively new, the concept is a somewhat logical evolution of recent video game history.
When video games first appeared in the market in the 1980s, most games used the pay-to-play model. Think of games like Pac-Man or World of Warcraft, which you had to buy to be able to play on your computer.
Years later, the internet democratized access to games, with platforms offering free games that everyone could play. Within this model, companies made money by serving ads. Social media platforms, like Meta (previously Facebook), took this model a bit further by offering free games that could be played with friends (Candy Crush, anyone?).
Although the concept of play-to-earn games already existed in very niche corners of the internet, blockchain technology built on this idea by giving players autonomy over their assets. The digital ledger and tokenization are critical to GameFi because players are the real owners of their assets, regardless of whether the operator or the platform shuts down or goes bankrupt.
GameFi 2.0 and its main stakeholders
Since the beginning, GameFi has been changing and evolving fast, with new stakeholders regularly joining the market.
If you’re thinking of diving into the GameFi world, understanding the landscape will probably help you navigate this new ecosystem better.
- Game Studios:
You can’t have a GameFi ecosystem without the games. Game studios are responsible for creating engaging experiences that attract players to their platforms.
Axie Infinity was the first company to have deployed P2E with relative success. Their Pokemon-inspired metaverse game was released in 2018. It initially ran on the Ethereum blockchain but eventually switched to the Ronin network (an Ethereum-linked sidechain made specifically for the game).
Web3 games can be standalone apps or part of a virtual metaverse world.
Users of a metaverse environment get together to play games but also to shop or attend an event.
Being part of a metaverse aids GameFi platforms with user retention: the games attract players while the environment encourages them to spend the tokens they acquired in the P2E. It’s like winning cash at the casino and then splurging on an expensive dinner.
Decentraland is a well-known metaverse.
- Gaming Guilds:
To participate in a P2E game, players need to acquire NFTs. For many players, especially since most come from developing countries, $100 or $200 can be a significant investment.
That is where guilds come in. Guilds solve the affordability problem through scholarships and NFT renting. They buy NFTs from the gaming platform and rent them out to scholars (gamers), who can then play P2E games. Scholars then use their winnings to pay back rent. Merit Circle is an example of a gaming guild.
- Gaming marketplaces:
Marketplaces try to assist in turning Web2 gamers into Web3 gamers. Given the emergence of so many new GameFi platforms, users need help selecting the best experiences.
Marketplaces like Rainmaker Games test, select, and curate the best games for their users while sometimes offering adjacent services, such as NFT marketplaces.
- GameFi launchpads:
Launchpads work as incubators for emerging gaming studios. They provide an environment in which these new companies can thrive while also helping them connect with investors to scale their projects.
And, of course, GameFi would not exist without the gamers themselves. According to a Footprint Analytics report, GameFi users reached 1.2 million during the first quarter of 2022.
How to start playing Web3 games:
If you need help getting started playing Web3 games, or the whole thing feels a little overwhelming, check our step-by-step guide below:
- Open a crypto wallet: opening a crypto wallet will be vital to funding your game account and storing the assets you earn while playing the games.
- Pick a game you want to play: if you’re looking for recommendations, you can give Axie Infinity or Sandbox a try! Once you pick the game, connect your wallet to the game (most games will use your crypto wallet as the gaming account).
- Fund your player account: an initial investment is almost always required. In Axie Infinity, for example, you’ll need to put together your team of characters. In Sandbox, you’ll have to purchase a plot of land.
Either way, you’ll have to either make your own investment or find a scholarship. You will usually find available scholarship programs within the game platform.
- Start playing and earning rewards.
The future of GameFi
The number of GameFi projects exploded during 2021 and is expected to continue to rise in 2022, thanks to record investment. There are more than 1400 games listed in DappRadar, with titles running across several blockchain networks, including Ethereum, Solana, Harmony and many others.
The possibilities of GameFi are virtually endless and yet to be fully explored. Blockchain technology could allow one in-game asset to be transferred and incorporated into many different games to create one huge virtual world. Or, eventually, game NFTs could be used as collateral in a DeFi loan agreement.
It’s easy to see how the mix of fun and money-making opportunities will continue to attract players in the future, thus fuelling the growth of the GameFi industry as a whole.
A (virtual) world of possibility lies ahead.
How can Rather Labs Help
Rather Labs specializes in new technology and the development of blockchain solutions.
Whether it is the design of a Web3 game, the development of a DeFi trading platform or the creation of an NFT marketplace, the engineering team at Rather Labs takes on their clients’ most challenging projects and brings them to life. Rather Labs has already published Celebrity Smackdown, a Web3 game that runs on the Nervos Blockchain, and is currently working on the development of a GameFi platform: Terrae, a medieval metaverse. If you or your company think you might need help with your GameFi proposal, you can contact Rather via: firstname.lastname@example.org
About Rather Labs.
Rather Labs is a Blockchain Technical partner who provides the blockchain expertise along with the partner intensity founders need.
Rather Labs is committed to work alongside our clients as a technical partner, providing insights, technical design, engineering team management, recommendations, maintenance and technology projection.
The company is led by co-founders which have been involved in blockchain projects in finance, real state, gaming, and other industries for years.