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Blockchain Community is unleashing the power of GameFi

GameFi is one of the new multi-billion dollar trends that started in 2021 and is now spilling over into the new year. According to the market intelligence firm, Mordor Intelligence, the global gaming industry was valued at $173 billion in 2021 and is expected to grow to $314 billion by 2027. Due to the worldwide pandemic, many have opted for playing video games to pass the time which has dramatically increased the player base over the last two years, with players spending an estimated $11 billion a month on mobile apps and games. People who couldn’t go out of their homes rather played games on their phones and computers, but some wondered if it would be possible to monetise the time they spent playing games.

NFTs Gain Even More Traction in 2022

Enter GameFi, a combination of gaming and DeFi (decentralized finance), where new blockchain-based technologies enabled certain aspects of games to be monetised. So while games were becoming more of a past time a new trend was developing in the gaming industry where a novel type of technology allowed people to own the items used in-game. These could then be sold for the native cryptocurrency and exchanged for a stablecoin. Players also get compensated in tokens for playing the game and reaching goals, thus spawning the Play-to-Earn (P2E) model. According to DappRadar NFT gaming trading volumes exceeded $1 billion in November 2021, almost doubling that of October. In January 2022 alone, NFT trading volume on Ethereum reached $6 billion, a testament to the growth of the NFT industry, some of which are in-game NFTs.

Besides just owning your in-game items and monetising your gaming time, blockchain grants other opportunities for small publishers out there. Publishers can hold an ICO and preemptively create in-game assets like NFTs which prospective customers can buy to fund the production of the actual game. In this industry, most of the time marketplaces are up and running before the game is even made. 

GameFi Starts Using Up a few Blocks

In a report from the Blockchain Gaming Alliance (BGA) in late December, they found that “49% of the blockchain industry’s usage comes from games. More than 1.4 million unique active wallets (UAW) connect daily to blockchain games, making it the most used category ahead of DeFi and other verticals.”

GamFi now seems to be looking more attractive to major investors as Gala Games together with C2 Ventures launched their venture fund for GameFi for $100 million, as well as Solana Ventures, Forte, and Griffin Gaming Partners also creating a $150 million fund. In 2021 alone the growing interest in blockchain games and infrastructure attracted over $4 billion in VC funding. The target market for this industry is still in its infancy with mobile, PC, and console only totalling 1.49 billion monthly activities.

Play-to-Earn Bringing in Millions

At this stage, Axie Infinity is leading the play-to-earn trend with more than 2.5 million daily users; also, it became the most traded collection with over $3.8 billion in historical trading volume. Players earn rewards in cryptocurrencies that can be converted to real money by completing daily quests, winning in the arena, or selling Axies in the marketplace among other things.

Since projects like Axie Infinity have heralded so much success many other projects have joined the bandwagon. RoamDAO a self-proclaimed “APYRPG” has also used NFT and GameFi mechanics to get to a $40 million valuation with a good $24 million sitting in their treasury. Players can stake their ROAM to participate in campaigns that give players a high APY for adding liquidity and by the end of the campaign, players receive an NFT which has specific bonuses for the holder. Mechanics like these are also used in smaller games like mini-games or a lottery. 

In the case of RealBig, a lottery game where users can purchase a minimal subscription to participate in the draw, users then stand a chance to win a payout if they are selected. In their virtual NFT league, each player represents an NFT asset, users who join a pool need to guess the winner that’s selected by a smart contract. Winners are randomly selected by a smart contract with the winnings split between the pool winners and the NFT holder.

Even full-on game studios have joined the race to create the first triple-A game title. Star Atlas is among these projects attempting to make a universe where people will own land, mine minerals, and go on missions to get in-game assets that they can sell on the marketplace. According to CEO Michael Wagner, the aim is not just to create a game, but an entire ecosystem comprising of gamers, entrepreneurs, and people who want to earn money all empowering each other. This would in essence be a metaverse with a self-sustaining economy of fun – or despair if you end up on the receiving end.

Mainstream Isn’t too Amped about NFTs in Their Games

GameFi is definitely on the rise and it’s powered by the ethos of ‘Why can’t I just play games to make a living?’ GameFi seems to be stirring the pot in the gaming industry but it remains to be seen how this emerging industry will fare. Currently, the uptake of NFTs to mainstream games has not been received well at all. When Ubisoft launched Digits – basically NFTs for items and skins for the new Ghost Recon game – the community was in an uproar calling it “exploitative”. The same happened with SEGA when they announced that they were experimenting with NFTs as well, even Steam the largest gaming platform out there has completely banned NFTs. It seems many gamers believe that NFTs are just another money grab scheme from the suits to make more, a new iteration of microtransactions to make games more profitable. 

Robbie Ferguson, CEO of Immutable X, said it best “The best thing to do is to create truly player-first gaming experiences that embrace the benefits, rather than the hype, of NFTs. Most importantly, the games have to be good – it’s play-and-earn, not play-to-earn.”

Robert Drage
About the author

Robert Drage

Robert has been working as a crypto news journalist for over a year, with a background in research and a passion for technology he continues to fall into the rabbit hole that is blockchain technology.

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