The crypto space is known to have a few trends that make things more prominent every year. Over the past few years, we have seen different trends that have taken the world by storm – from decentralized finance (DeFi) to non-fungible tokens (NFTs) and much more.
With the metaverse poised to be the latest trend to get more people excited, GameFi applications are also getting ready to make similarly big moves.
GameFi – A Quick Overview
2021 is already gone. This year saw growth in the DeFi market, with protocols locking up even more funds and providing financial services to more people. NFTs also had an incredible year, with the Collins Dictionary naming “NFT” as its Word of the Year. From artists and musicians to bands and companies, everyone is using NFTs for different applications.
For many who have understood the market, GameFi is looking like the next big thing. For those who might not know what it is, GameFi is a term used to allude to the combination of gaming and finance. GameFi describes the gamification of financial systems, allowing players to generate their profit from playing and earning.
GameFi projects run on blockchains, allowing players to enjoy verifiable ownership of in-game items. Unlike the traditional gaming model where players enter into the games to simply win, GameFi projects adopt the play-to-earn model. Thus, players don’t just have fun – they actually earn money via their efforts as well.
Different GameFi projects tend to work their own way. But, there are some common factors. These include the incorporation of in-game items – including new skins, land, avatars, weapons, and much more. Many of these items are represented as NFTs, with players vying for them and eventually getting digital ownership of them.
Players can get these items through their actions in the game, and they can eventually trade them on NFT marketplaces for profit. Or, they could exchange the items for other digital assets – which, in turn, can be exchanged for real cash. In some cases, GameFi projects could also have their in-house NFT marketplaces. This way, trades can happen seamlessly and players can earn their money more quickly.
Like many aspects of the crypto industry, GameFi started on the Bitcoin blockchain. Developers were building apps on the Bitcoin chain initially, but cost considerations for transactions – as well as issues with scalability and handling – led many of them to move to Ethereum. While Etheruem remains the top choice for most developers, scalability issues have also affected the chain. Several other competing blockchains have come up to take Etheruem’s crown, but Ethereum remains the top choice for most people.
What to Expect in 2022
For now, GameFi is still in its nascent stage. However, there is a great deal to be excited about when 2022 comes around. Cryptocurrencies themselves have been on the rise recently, with their prices doing pretty well. But, adoption will need to grow if GameFi is to really reach its potential.
The GameFi trend is attractive because of the possibility of earning money. Everyone wants to make money as they play games, and the opportunity to earn in crypto is even more attractive to those who understand the industry and its potential. With consistent growth, GameFi should be a big hit in 2022.
There is also the increased adoption of the metaverse. In the past few months, several top companies have moved into the metaverse. These include Facebook, which changed the name of its holding company to “Meta” and has thus far invested $50 million towards research into the project. Adidas and Nike are also taking their decades-long rivalry into the metaverse by building their custom versions of it.
GameFi is set to be a huge beneficiary of the metaverse. Several games are combining NFTs and metaverse action, allowing their players to get the best of both worlds. We already have Axes Metaverse, which was recently developed by the renowned Azur Games. Axes Metaverse empowers players through ownership of in-game assets, which can be traded and sold.
Games like these will be looking to capitalize on the popularity of the metaverse to grow their base and expand their markets. Again, the fact that people appreciate games and the opportunity to make money means that the GameFi projects themselves have a strong foundation to grow.
Growing Pains to Overcome
While there is a lot of potential for GameFi, it is worth noting that the industry won’t move without some significant upgrades. Like every growing aspect of the crypto space, GameFi will need to work through some challenges.
The first is the ability to establish a flourishing market for NFTs and other in-game assets. Most of these assets tend to go for good prices, as well as enjoy high liquidity, when the crypto market is looking strong. Once there’s a downturn, activity tends to slow down immediately. GameFi projects need to look for something that keeps people playing even when the broader crypto market isn’t looking as strong as it should be.
At the same time, simplicity needs to be a focus for GameFi projects. One of the aspects where DeFi has thus far failed has been with a proper user interface. Many projects are still clunky, and users have difficult times getting a hang of how they work. GameFi projects need to be more proactive with the way they design their platforms and interfaces, so players will feel more comfortable with them.