GameFi’s Soaring Popularity and its working Mechanics
GameFi is the newest craze in the gaming industry nowadays, and many aren’t quite familiar with how it works and what exactly it means. GameFi offers the old thrill of winning prizes by playing games with an infusion of cryptocurrency and NFTs.
Game-Fi players have the liberty to rent, lend, or even trade their prizes for real money.
GameFi and its Basics
GameFi uses DeFi, a decentralized financial system used to record token-based transactions, lending, and borrowing. The transactions
are recorded on blockchain-based ledgers similar to how Bitcoin works. To make it more easily understandable, GameFi is a decentralized application having economic incentives.
GameFi Working Mechanics
Let’s take the example of Axie Infinity as it is the most successful GameFi around. The game’s economy depends on two tokens and NFT's; AXS, and SLP.
These are earned by winning battles and finishing quests. Moreover, the game also has the option to breed blob-like monsters and the offspring can be sold. In addition, the AXS token can also be staked to earn interest.
However, the upfront to start playing the game is $700. This is where gaming guilds and game scholarships come into play, which helps those players who can’t afford such an amount buy monsters.
Traditional Game Tokens and GameFi: the Difference
The tokens and in-game currencies exist in video games for quite some time like Robux and V-Bucks. However, the difference lies in the limitation of ownership and usage of the tokens.
Traditional gaming tokens can’t be sold easily or legally outside of the token’s game. Whereas, Game-Fi offers a lot more freedom and ownership as the tokens in Game-Fi act as crypto-currencies.
GameFi Studios Economic Incentives
The developers are given tokens for their work on the game, so the more players play and trade tokens in the game, the more the token’s price increases in the market.
Moreover, some games also charge commission on transactions.
GameFi promises a lot and shows massive potential in them, but many regard it as just another way of publishers to milk consumers for more money.
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