GameFi, better known as play-to-earn (P2E) games, is a rather new term in the field of both gaming and cryptocurrency industries. It references games that are designed with economic and financial aspects of blockchain and cryptocurrencies, enabling players to exert full control over their in-game assets to generate revenue.
GameFi is an amalgam of two words: gaming and decentralized finance (DeFi). It is also referred to as play-to-earn (P2E) games. The concept of GameFi relies on the intersection of blockchain technology, gaming, and several forms of decentralized financial products, like non-fungible tokens (NFTs), yield farming, borrowing and lending, and algorithmic stablecoins, etc.
The term, “GameFi,” first made its appearance in a tweet from Andre Conje, the father of DeFi, on September 10th, 2020. With the introduction of the term, gaming has lowered the entry barriers in the crypto space and revolutionized traditional gaming by offering participants an opportunity to generate income while playing.
In conventional games, the in-game assets that you purchase have no value outside the game’s universe. Players invest money to procure these assets, but they don’t have complete control over them. GameFi transforms this concept through blockchain technology, cryptocurrencies, and DeFi products.
Almost all of these blockchain-based games are accompanied by a corresponding in-game currency, a marketplace, and a token economy, usually managed and governed by the community. Players own their in-game items rather than developers with this model, thereby eliminating the need for any type of server infrastructure and preventing the possibility of game hacking or cheating.
By developing an economic model of making money while playing, the concept of GameFi has exposed the world to a new use case for cryptocurrencies. One of the significant reasons behind GameFi’s popularity is that no centralized authority controls the ecosystem, unlike traditional games. Additionally, the underlying blockchain technology allows for zero-fee transactions so that players can buy, sell, and trade digital assets without incurring fees.
The in-game currency offered by GameFi games can be swapped for other cryptocurrencies and fiat money. Players can also purchase (invest in) in-game NFTs and trade, rent, or sell them in open marketplaces to gain returns. For instance, you can buy a plot in the game and sell it to another player at your set price. Or, you can rent out the “Level 100 armor” to other players and earn extra income.
Simply put, GameFi has redefined the concept of ownership of in-game assets while adding extra layers to a token-based economy and the option to yield good returns via several DeFi products. With 800,000 active players in July, a staggering 121% growth from June, the GameFi universe has established itself as one of the fastest-growing sectors of the blockchain ecosystem.
Sean Rach is the co-founder of hi, a not-for-profit blockchain-based financial platform. Before joining hi, Sean was the founding CMO of Crypto.com, one of the world’s largest crypto exchanges. He has also handled leadership roles in some of the most prominent global brands, including Prudential Corporation Asia, Mobile Marketing Association, Eastern Innovation, and OgilvyOne Hong Kong.
A Doctor of Business Administration candidate from the Warwick Business School (University of Warwick), Sean has decades of experience in brand management, digital media, marketing, and operations management. He has also overseen the development of several innovative digital platforms like Safe Steps (with NatGeo and Red Cross) and Cha-Ching (financial literacy).
Connect with Sean on LinkedIn.
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