GameFi 101

What is GameFi?

We tackled DeFi in our most recent post, now let's dig into GameFi, which is one of the hottest topics in the cryptocurrency industry right now. GameFi refers to the financialization of video gaming, the name itself is a fusion of the words "game" and "finance". Since the launch of CryptoKitties in 2017, the decentralized gaming industry has exploded in growth and is now worth nearly $30 billion.

Known for its utility and financial incentives, GameFi allows players to earn passive income while playing the games. GameFi projects usually have their own unique tokens and build game economies around them; players can buy or earn within the game and tokens can be traded on marketplaces for cash. 

Generally, a one-token economy is used where the token functions as both a utility and governance token. Utility tokens are used for in-game activities, like purchasing characters, clothing, and other items. They are also used for distributing rewards. Governance token give voting rights to their holders.

A Common Practice: Initial DEX Offerings (IDOs)

GameFi projects usually launch Initial DEX Offerings (IDO) to raise funds. For instance, Sidus Heroes game raised $21M during one public and three private IDO rounds for their native tokens - SIDUS and SENATE. Prominent blockchain platforms such as SpaceSwap, Blokpad, Ignition, Trustpad, Seedify, GameFi, and Red Kite.

A certain percentage of the total token supply is usually allocated to private or public offerings. For example, Sipher, a role-playing game, allocated 4% of the 1,000,000,000 total suppl of the SIPHER token to public sales. 

Top Crypto Games

As of writing this blog, the ten most popular NFT games in the last 30 days are:

• Splinterlands (Hive blockchain)
• Alien Worlds (WAX-powered)
• Upland (EOS-powered)
• MOBOX: NFT Farmer (BSC-powered)
• Crazy Defense Heroes (Ethereum-backed)
• Farmers World (WAX-powered)
• Axie Infinity (runs on Ronin)
• DeFi Kingdoms (Avalanche)
• X World Games (BSC-powered)
• Pegaxy (Polygon blockchain)

Despite the ETH blockchain domination of the NFT art market, we see a combination of different chains when it comes to top GameFi projects. Due to Ethereum's scalability issue, most GameFi projects either develop their own sidechains or use layer 2 solutions.

Axie Infinity

As the largest and most fast-growing GameFi project, Axie Infinity top the chart with over $1.1 billion monthly volume. The game features a unique and expensive collection of of NFTs in which players can buy, breed, and pit Pokémon type characters, called Axies. More than 120,000 players battle against each other to win in-game cash known as Smooth Love Potions (SLP) daily.

To begin with, players must have at least three Axies, with the cheapest selling at $200. In 2020, the most valuable monster was sold for 300 ETH worth over $130,000 at the time. The AXS token will then be rewarded to those who win battles and tournaments, tend their plot of land, trade on the Axie Infinity marketplace, and/or breed Axies.

Final Thoughts

The emergence of DeFi, NFTs, and metaverse, has radically changed the virtual gaming landscape. Players can directly earn the financial benefits that are not offered in conventional games. According to a report by Morgan Stanley, NFT and metaverse gaming landscapes have a $56 billion revenue potential by 2030. The future for GameFi definitely looks promising.