What is GameFi and how does it work?
- What is GameFi
- GameFi’s beginnings
- How do GameFi projects work?
- What is Tokenomics, and why it’s important in GameFi
- How GameFi continues to grow
- How to get started with GameFi
GameFi is a rising concept in the crypto universe and is disrupting the traditional gaming industry as we know it. Traditional gamers are becoming increasingly attracted to GameFi for the opportunities they present — in particular, the potential rewards they may receive for the time and effort they pour into GameFi.
But what is GameFi, exactly? And how do they work compared to the video games we all know and love? In this article, we cover everything you need to know.
What is GameFi?
In simplest terms, GameFi is defined as a combination of video games, and decentralized finance (DeFi) — hence the name. The core technology behind GameFi is blockchain technology, which stores all the GameFi’s data on the decentralized public blockchain, which keeps track of what everyone owns.
So how does this make GameFi different from traditional games? In traditional gaming models, developers use a “pay-to-win” model. This means players pay to play the game, and can also pay to gain an advantage in-game. This is usually done through upgrading mechanics, player boosts, or even rare and powerful in-game assets.
GameFi, on the other hand, uses a “play-to-earn” model. This means that players invest their money into the game to purchase assets, which they can then use to generate more income. Players, thanks to blockchain tech, are the sole and verified owners of the virtual elements of the game. Because they own these assets, they can use time and effort to regain their investment — and even earn more.
It’s important to know that GameFi players need more than just to invest to earn. Most GameFi will offer different mechanics and in-game rewards, but in general, they need some skill and strategy on the player’s part. Typically, these players can earn by completing tasks, battling other players, and progressing through the different game levels. They can also transfer their assets outside of the game to trade on crypto exchanges and marketplaces.
GameFi players get to keep any in-game asset they buy or earn. They allow this form of gaming to be an actual source of income for players — all while being entertaining and enjoyable. Some players, depending on their skill and investment, can use this tech to make a full-time income.
Early GameFi offerings first started on Bitcoin’s blockchain. But, the high transaction costs and slow transaction speeds made it difficult for these titles to scale — so many projects adopted the smart contract-enabled blockchain network, Ethereum.
Ethereum today is still popular with GameFi developers, but it has significant performance problems as well. Problems included limited block space, blockchain vulnerability, and high gas fees. These eventually lead to exorbitant fees for in-game transactions and assets, which puts strain on users’ pockets. Due to that, developers are looking to faster, more efficient blockchains — like Avalanche.
How Do GameFi Projects Work?
GameFi projects, to attract new players, will offer many different functions, features, and assets. But, GameFi projects have a few commonalities: avatars, land, costumes, weapons, in-game currency, and tokens. These are typically represented as NFTs, which are digital tokens that prove player ownership of unique digital assets.
GameFi players acquire or buy these items through gameplay, and can either use them to generate more income through gameplay or trade them on marketplaces for profit. Either way, both options generate the cryptocurrency associated with the GameFi project, which can be exchanged for fiat money.
At the core of all these features is the play-to-earn (P2E) model. As we mentioned, it’s different from the pay-to-play model adopted by traditional video games because it can generate financial returns for players. P2E allows players full control of their assets and presents many opportunities for players to earn money.
But, keep in mind that the financial opportunities each GameFi project presents depend on the game design and tokenomics of the project — not every GameFi are sustainable or lucrative. This is why you should always understand how the GameFi project works, and who’s behind its development before jumping into the game.
What Is Tokenomics, And Why It’s Important In GameFi
We mentioned tokenomics — but what is it? It’s a term for the tokens that GameFi projects issue and build their game economies around.
Generally, tokens are used for two purposes: utility and governance. This means that tokens can be used for in-game features, such as buying a new set of armor or a weapon. They can also be used as a reward for player achievements. Governance functions allow players to use their tokens to obtain voting rights — meaning they can actively participate in the future development of the game.
Some GameFi will use one token for both functions, while others use two separate ones. For example, Imperium Empires has IME tokens for staking and guild governance, and IMC as its in-game currency.
Tokenomics, to be sustainable, need deflationary economics — much like a real-life economy. Many older GameFi projects crash and burn because they forgo using deflationary mechanics. The problem this causes is that older players generate significant income at the start of the game, while newer players face increasing investment costs with little returns.
GameFi projects with improved tokenomics — like Imperium Empires — ensure that their tokens retain their value, and both new and old players have the same earning opportunities as the game develops.
How GameFi Continues To Grow
The constantly evolving world of crypto tech also advances GameFi development — nowadays, GameFi projects attract huge fan bases and have led to widespread adoption and use of blockchain technology.
With many more GameFi games in the works, newer innovations are highly expected. Projects like Imperium Empires, the first AAA real-time strategy MMO, and team-to-earn project on the crypto market unlock more opportunities for gamified profit and feature-rich gaming experiences.
Imperium Empires also is the herald of GameFi 2.0, as it integrates strict deflationary economics through burning mechanisms on top of DeFi functionalities such as staking and guild governance. This allows players to sustainably earn income through playing the game.
How To Get Started With GameFi
The particular starter requirements of each GameFi project are different, but most projects will need you to do the following to join in:
Get a crypto wallet
A wallet is needed to keep your in-game NFT assets and currency. It can’t just be any wallet, as they work within different crypto ecosystems. So, always check for compatibility with the GameFi project of your choice before setting one up. For Imperium Empires, we ask players to set up an Avalanche C-Chain Wallet on Metamask.
Fund your wallet
Players will also need to fund their wallets to participate in the game. The particular cryptocurrency you need to exchange for will depend on the project, as most GameFi will use their native token for in-game transactions.
For Imperium Empires, we ask our players to fund their Metamask wallets with AVAX and our native token IME. We recommend keeping at least 0.1 AVAX in your wallet for gas fees. For more information about funding your wallet for Imperium Empires, take a look at our FAQs.
Downloading GameFi projects is free of charge, but you won’t be able to play until you invest in the game with purchase. Typically, you have to buy a character or equipment to start. In Imperium Empires, we require our players to buy a spaceship NFT, which you can read more about here.
GameFi is the next step to online gaming. And, with their play-to-earn mechanisms, games like Imperium Empires are an attractive option for potential crypto investors and avid gamers to take part in the ever-growing world of crypto and DeFi. The development and adoption of such projects show no signs of slowing down, and prospects for this crypto industry are limitless!
Interested in being part of the GameFi world? Sign up for Imperium Empires today! As of April 1, we have just launched our Pre-Alpha game demo for our players to get a taste of our upcoming game. Find out how you can participate here!