GameFi was initially created by Yearn Finance founder Andre Cronje. It began as a term to describe DeFi protocols with gamified elements, but it has since evolved to signify blockchain games.
Items, skins, and coins from established games can be sold for money in the real word, leading to specialized studios engaging in activities such as grinding, power leveling, and recharging within the games for profit. While such practices are prohibited by game developers, numerous gray platforms continue to facilitate such transactions. Additionally, actions like account banning may contribute to players' dissatisfaction with gaming platforms.
Blockchain games bring forth a significant surge in the value of in-game items. With their own uniqueness, scarcity, transferability, and ownership, these items belong entirely to the players. By considering these characteristics of in-game items, it becomes evident that they align with the features inherent in NFTs, which serve as the core components of GameFi.
1.1 Games with inherent economic mechanisms naturally involve transactions, and the majority of games have their own economic systems.
1.2 The diverse purposes of in-game unique assets (trading, speculation, and collecting) closely correspond to NFTs.
1.3 By revolutionizing the relationships within the game industry chain, business models built upon virtual game economies are set to become more vibrant and enriched.
In November 2017, CryptoKitties went live, triggering congestion on the Ethereum network. The game, which involved breeding virtual cats, accounted for nearly 30% of ETH's transactions at that time, leading to network congestion and skyrocketing gas fees. This directly led to the team's focus on Flow, a public blockchain dedicated to gaming.
During the summer of 2021, Axie Infinity gained immense popularity with its Play-to-Earn model and high returns, sparking a frenzy across the entire blockchain gaming market.
In the latter half of 2021, spurred by Axie Infinity, other blockchain gaming projects on various public chains quickly followed suit. Titles like Farmers World, RACA, CryptoMines, CyberDragon, Wolf Game, and Sunflower Farmers launched and injected vitality into the blockchain gaming craze.
In 2022, the cycle of blockchain games reaching their break-even point extended, gradually fading from users' focus.
In April 2022, STEPN was introduced as the first mobile Move-2-Earn NFT game. In the latter half of the year, STEPN gained immense popularity, leading to the emergence of more similar games. The concept of "X-to-Earn" gained traction.
3.1 Ownership of Assets: In GameFi, players have ownership of in-game assets, marking a significant departure from traditional gaming.
3.2 Open Market: GameFi allows for the free buying, selling, and trading of in-game assets on the market, providing the potential for profit.
3.3 Reward Incentives: Currently, the biggest driving force enticing players is the opportunity to participate in GameFi projects for profit generation.
4.1 Categorized by Game Type: This primarily includes five types: card games, lottery-style games, cultivation games, construction games, and competitive games.
4.2 Categorized by Token Type: Single-token, dual-token, and multi-token models.
4.3 Categorized by Industry Chain: Issuance platforms, gaming chains, decentralized computing, and profit-generating guilds.
5.1 Low Level of Independent Development: Many current GameFi types available on the market can be found in traditional gaming, with some even directly integrating economic models from traditional games. GameFi teams often lack experience compared to traditional game companies, leaving ample room for improvement.
5.2 Lack of Game Design and Operations Experience: Native crypto teams often lack experience in designing game mechanics and adjusting economic models. They are not well-versed in various means to maintain a stable game economy system, which is why many GameFi projects eventually spiral into decline.
5.3 Reliance on Traditional Distribution Channels: GameFi projects have not completely moved away from traditional distribution channels and still require promotion on platforms like App Store, Google Store, and Facebook.
From the perspective of blockchain enthusiasts, GameFi offers a more efficient and high-quality autonomous trading experience, breaking through the limitations of traditional gaming to create new value and experiences.
As players have full control over their game characters, assets, and items, token-driven governance in blockchain gaming allows players to optimize and upgrade the games through voting. It also comes with several operational advantages, including players' participation in running and maintaining decentralized blockchain games. As the number of subsequent player users increases, the benefits obtained by early players will also rise significantly.
Furthermore, in other blockchain industries, certain centralized banking aspects of GameFi continue to excel. With it, players can explore various financial tools found in traditional finance such as stocks, funds, and futures. Overall, GameFi projects are still in the early exploration phase within the blockchain gaming industry, but the outlook is promising.
Of course, it is undeniable that GameFi has its own shortcomings to overcome, such as its high latency issue, as many players hope for seamless gameplay in which they can directly click links or enter stores without downloading. However, current blockchain games are limited by the overall TPS speed of the blockchain, so players might not always enjoy a smooth gaming experience during on-chain interactions. Additionally, the cost of GameFi devices for players has not decreased significantly. For games like Axie Infinity, players may need to own three pets just to gain approval for entry. This means having a certain level of financial strength is a necessary condition to play the game. Moreover, players require a significant understanding of blockchain knowledge to smoothly engage in blockchain gaming, and whether this will change remains uncertain.