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GameFi: The Evolution of Gaming in Web3 

date_range November 11, 2022
person Vanessa MagicSquare
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The video gaming industry has experienced rapid and substantial growth, generating billions in revenue for gaming studios while attracting billions of players around the globe. It thrived on the Pay-to-Play model. Gaming communities have thus emerged and enabled gamers to connect with each other.

GameFi is a combination of “gaming” and “finance”, referring to a play-to-earn structured gaming environment that integrates blockchain technologies. Players are typically rewarded with unique in-game NFTs, such as virtual land, avatars, weapons, costumes, and cryptocurrency when they complete certain in-game tasks or attain certain levels. The in-game rewards can be exchanged into items or tokens with real value.

What is Play-to-Earn?

Most traditional video games do not generate any financial returns to players. In contrast, P2E games give players full control over their in-game assets while offering opportunities for them to generate profits.

Play-to-Earn (P2E) is the new gaming model that allows players to earn rewards in various forms while playing games. In-game rewards can be skins, avatars, weapons, tokens, etc. P2E gaming utilizes the power of decentralization to empower the economy in the games, in particular with NFTs. Furthermore, the P2E model allows players to monetize their gaming experience and trade their assets outside of the game.

Decentralization & Ownership in Gaming

Blockchain technology allows us to own digital assets. In other words, players can monetize their in-game assets in many different ways. Just as in traditional video games, GameFi players can own and earn in-game items such as avatars, lands and weapons. However, these items are issued in the form of NFTs, offering players full ownership over their assets, which are verifiable and tradable on the blockchain. 

Certain GameFi projects introduce the elements of decentralized finance and allow their community to participate in their decision-making process via decentralized autonomous organizations (DAOs).

Final Thoughts

The GameFi boom in 2021 brought us more than 1,000+ projects. In the first half of 2022, the total investment in the space hit an astonishing record of $3.7 billion. The play-to-earn economy could be the future of video gaming as it creates mutual benefits for both game players and gaming companies. GameFi’s potential for capitalizing on in-game assets and enabling money transfers between players is enormous as it appeals to both developers and players around the globe, particularly in developing countries.
Magic Square holds a curated list of GameFi projects on the Magic Store, allowing users to discover the latest and hottest games in the decentralized world and beyond! Explore the GameFi world here today.