The Five Aspects of GameFi that You Should Know

According to Newzoo’s 2021 Global Gaming Market Report, the number of gamers around the world has grown by 5.3% YoY from 2015 to 2021, now exceeding 3 billion. The report also predicts that more players will enter the gaming market in the future.

Currently, Asia accounts for 55% of all video game players, followed by the Middle East and Africa (accounted together) at 15%.

Gaming was a pivotal shift in entertainment, and blockchain could be the first technology that radically changes the nature of gaming. The possibilities of the metaverse is the main example, but GameFi is the next logical progression that could serve as a bridge from traditional Play-to-Earn games to this radically new form of entertainment.

What is GameFi?

GameFi stands for Game Finance. It combines the concepts of DeFi, NFTs and gaming. The idea was first introduced in 2019 by Mary Ma, CSO of blockchain game publishing platform MixMarvel, at the 2019 World Blockchain Conference in Wuzhen, hosted by 8btc, the world’s leading blockchain media outlet.

Since then, hundreds of Play-to-Earn games have emerged on the blockchain, allowing users the ability to enjoy games while earning revenue. Some games, such as the well-known title Axie Infinity, have even given people in less developed countries like the Philippines livelihoods to support their families.

Currently, the 2 main types of games are “farming games” and “gold-based games”.

• Farming games: Games where assets such as props of equipment are generated based on the amount of time a player plays the game.
• Gold-based games. Games that require players to pledge a token or purchase in-game items before they can start.

Data Performance

Early GameFi projects mainly deployed on Ethereum, whose congestion and gas fees hindered the user experience. With the introduction of BSC, Flow and Sidechain, developers have more options.

According to Footprint Analytics, the number of games began to soar after July, exceeding 1,000 as of Dec. 26, with Ethereum accounting for 43.14%, followed by BSC 26.13%, and other blockchains accounting for less than 10%.

The number of daily cross-chain GameFi users is increasing, with more than 30 blockchains in the gaming sector. The most prominent is WAX, which has maintained a continuous user base of 300,000 to 350,000 since April and is relatively stable compared to other blockchains.

WAX is exclusively a blockchain in the NFT and gaming sector, using a Delegated Proof of Stake (DPOS) based consensus mechanism to improve transaction throughput of items in games. Users don’t need to create a wallet to play, thanks to the Cloud Wallet technology.

In addition, Hive and BSC grew rapidly between August and December, with the number of Hive and BSC users peaking at 490,000 (Oct. 31) and 480,000 (Dec. 7), respectively. BSC was mainly influenced by EpicHero, Bomb Crypto and MOBOX: NFT Farmer, which overtook WAX in November-December.

Hive’s rapid growth has been driven by the on-chain game Splinterlands (a card game). Other blockchains are also gaining momentum, but cannot be compared to these three chains.

The Hottest Games Right Now

GameFi applications are diverse, and the top 10 GameFi transactions show that most are built on Harmony, Ronin, Solana, BSC and Ethereum are a few common blockchains.

Some of the more active GameFi projects today are DeFi Kingdoms, Axie Infinity, MetaverseMiner, Bomb Crypto, Alien Worlds, and Faraland.

Below, we will analyse the largest, DeFi Kingdoms, to better understand GameFi. 

DeFi Kingdoms Leads in Trading Volume With a Wide Range of Features

DeFi Kingdoms is a Play-to-Earn game based on Harmony, a DEX, a liquidity pool and an NFT marketplace powered by rare utilities. The development team’s vision was to package DeFi elements into a fun and synergistic game that provides meaningful and tangible value to holders of its token, JEWEL.

JEWEL is different from other ordinary crypto tokens.

• JEWEL is the primary value symbol of the game DeFi Kingdoms and a governance token.
• JEWEL can be used to purchase useful equipment and unique NFTs that allow game gain effects and faster build times as well as stamina recovery.
• JEWEL can be used for liquidity mining to earn revenue through staking.

At its core, DeFi Kingdoms is a decentralized exchange that uses the DEX header protocol UniswapV2. Also available are the following features.

• The development team provided approximately $15,000 of ONE (Harmony) to the initial ONE/JEWEL pair.
• Can add liquidity through any Token pool the user wants to become a liquidity provider, earning fees for the user once a transaction is made.
• Acts as a bank to deposit JEWEL to receive xJEWEL shares.

DeFi Kingdoms has also built gardens where unique features such as token pairs and liquidity mining can be represented, enhancing user revenue and the Play-to-Earn experience.

Fundraising for GameFi

According to Footprint Analytics data and early news reports, September, October and November represented the peak of financing, with the prominence of seed rounds reflecting the fact the global blockchain sector is still in the early investment stage.

Challenges Ahead for GameFi

GameFi is a major innovation in Play-to-Earn gaming, which can both increase enjoyment of games while creating revenue for players. However, GameFi still faces some obstacles:

• Immaturity of blockchain technology: For example, high gas fees, low capabilities and network capacity issues.
• Security issues: E.g. the widespread theft of numbers in the metaverse game Roblox, and the existence of other data privacy issues.
• Playability issues: The gameplay of many games is not very innovative and appears basic.
• Centralization: Players’ data are currently stored in the game servers in a centralized form, going against the premise of decentralization.

Conclusion

To overcome its challenges, GameFi needs to gradually move towards social R&D like traditional games, and combine this with the attributes of DAO, which necessitates in-game socialization. Combined with the capabilities of blockchain technology, it opens up the possibility of becoming a pivotal change in gaming and entertainment.

Disclaimer: The views and opinions expressed in this article are solely the author’s and do not necessarily reflect the views of CoinQuora. No information in this article should be interpreted as investment advice. CoinQuora encourages all users to do their own research before investing in cryptocurrencies.