GameFi

November 21, 2023 - Around 3 mins mins to read

Understanding GameFi: The Intersection of Gaming and Decentralized Finance

GameFi, also known as play-to-earn (P2E) games, is a revolutionary concept that combines gaming and decentralized finance (DeFi). It encompasses the use of blockchain technology and various decentralized financial products, such as non-fungible tokens (NFTs), yield farming, borrowing and lending, and algorithmic stablecoins, to create a new gaming experience.

The term “GameFi” was coined by Andre Conje, the father of DeFi, in a tweet on September 10th, 2020. This term has transformed the traditional gaming landscape by offering players the opportunity to generate income while playing.

In traditional games, the assets purchased within the game hold no value outside of the game’s universe. Players invest money in these assets, but they have limited control over them. GameFi changes this dynamic by leveraging blockchain technology, cryptocurrencies, and DeFi products.

Most blockchain-based games incorporate an in-game currency, a marketplace, and a token economy, all managed and governed by the community. This model allows players to truly own their in-game items, eliminating the need for centralized control and preventing issues like game hacking or cheating.

GameFi has introduced a new use case for cryptocurrencies by enabling players to earn money while playing. Its decentralized nature sets it apart from traditional games, as there is no central authority governing the ecosystem. Additionally, the underlying blockchain technology facilitates zero-fee transactions, enabling players to buy, sell, and trade digital assets without incurring fees.

The in-game currency offered by GameFi games can be exchanged for other cryptocurrencies and fiat money. Players can also invest in in-game NFTs and trade, rent, or sell them in open marketplaces to earn returns. For instance, players can purchase a plot of land within the game and sell it to another player at their desired price. Alternatively, they can rent out valuable in-game items, such as the “Level 100 armor,” to other players and earn additional income.

In summary, GameFi has revolutionized the concept of ownership in gaming by integrating token-based economies and providing opportunities for earning through DeFi products. With a remarkable 121% growth in active players from June to July, reaching a total of 800,000 active players, the GameFi universe has emerged as one of the fastest-growing sectors in the blockchain ecosystem.

Author: Sean Rach

Sean Rach is a co-founder of hi, a not-for-profit blockchain-based financial platform. He previously served as the founding CMO of Crypto.com, one of the world’s largest crypto exchanges. Sean has held leadership positions in renowned global brands such as Prudential Corporation Asia, Mobile Marketing Association, Eastern Innovation, and OgilvyOne Hong Kong.

Sean is currently pursuing a Doctor of Business Administration from the Warwick Business School (University of Warwick) and possesses extensive experience in brand management, digital media, marketing, and operations management. He has also contributed to the development of innovative digital platforms like Safe Steps (in collaboration with NatGeo and Red Cross) and Cha-Ching (financial literacy).

Connect with Sean on LinkedIn.