📖
Web3 Encyclopedia
  • Welcome aboard!
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  • 😀Evolution from Web 1.0 to Web 3.0
    • Web 1.0 Web 2.0 Web 3.0
    • Key Features
    • Current Limitations
    • Future of Web 3.0
    • Learn: What Is Web3?
    • Learn: Will Every Brand Have a Web3 Strategy?
    • Learn: Big Ideas in 2023
    • Learn: The Web3 Paradox: Why Scaling Usage Alone Won't Lead to Mass Adoption?
    • Learn: Is Web3 A Marketing Buzz or Tech Revolution?
    • Learn: What is the relationship between blockchain and Web3?
    • Learn:Empowering Women in Web 3.0: The Role and Contributions of Women in Blockchain, DeFi, and dApp
    • Learn: Web 3.0 and the Future of E-Commerce
    • Learn: 12 ways ecosystem projects can attract more developers
    • Learn: How Web3 is Impacting Education?
    • Learn: Web3 And The Future Of Digital Advertising
    • Learn: Web3’s impact on personalization, trust and engagement
    • Learn: Web3-Powered Identity Management -- Unlocking the Benefits of Decentralization
    • Learn: Why Web2 companies fail in Web3 while others made it?
    • Learn: To Identify or Not in a Web3 World?
    • 🤫[Insider Series] McKinsey x Web3
    • TL;DR 👀
  • 💲Blockchain Fundamentals
    • Why is Blockchain So Popular?
    • Introduction to Blockchain
    • Blockchain Misconceptions
    • Blockchain vs Bitcoin, Database, Cloud
    • Consensus Mechanism
    • Public and Private Keys
    • Hash Functions and Cryptography
    • Sharding
    • Types of Blockchains: PoW, PoS and Private
    • Understanding Cryptocurrency
    • Coins vs Tokens
    • Blockchain Trilemma
    • Legality
    • Learn : Google’s Cloud Based Blockchain Node Service
    • Learn: How Blockchain, Digital assets, and Web3 Unlock Financial Inclusion Globally
    • Learn: Will Chinese-Made Crypto Soar Higher?
    • Learn: What Does MiCA Mean for Crypto in Europe?
    • Learn: Unraveling the Intricacies of Blockchain Forensics and Asset Tracking
    • Learn: Promising blockchain use cases in healthcare industry
    • Learn: The Role of Blockchain in Authenticating and Provenance Art
    • Learn: Blockchain-Based Digital Identity: Benefits, Risks, and Implementation Challenges
    • Learn: The Future of Energy Supply Chains
    • Learn: Revolutionizing smart contracts and cryptocurrency
    • Learn: Nigeria goes blockchain
    • Learn: A Game Changer for Online Gaming?
    • Learn: Is blockchain technology ready for high-storage applications?
    • Learn: Will Blockchain Technology Mark a Turning Point in Fraud Prevention?
    • Learn: Why ZK-rollups need data availability?
    • Learn: How will generative AI disrupt blockchain?
    • Learn: A New Blockchain for Generative AI?
    • TL;DR 👀
  • 🏟️Web3 Utilities
    • Decentralized Applications (dApps)
    • Cross-chain Bridges
    • DAO
    • Artificial Intelligence
    • Learn: Is Community-building Essential for Web3 Startups?
    • Learn: ‘Decentralization Theater’
    • Learn: Crypto and AI- A yay or nay combination?
    • Learn: Dissecting the DAO
    • Learn: What is motivating Lido DAO to rise?
    • Learn: How to Turn Your Community Into a DAO?
    • Learn: The Key to Decentralized Decision Making
    • Learn: How Web 3.0 can disrupt the supply chain industry?
    • TL;DR 👀
  • 🪙Bitcoin
    • What is Bitcoin
    • Bitcoin's Blockchain Technology
    • UTXO Model and Transaction Fees
    • Bitcoin Mining and Mempool
    • Learn: What is bitcoin mining?
    • What are Hard Forks and Soft Forks
    • What is SegWit and the Lightning Network
    • Bitcoin Ecosystem
    • Can Bitcoin be Destroyed? Game Theory and Network Attacks
    • Learn: Crypto token supplies explained
    • Learn: What is crypto tax-loss harvesting, and how does it work?
    • Learn: Can Crypto Go Green? How to Invest in Eco-Friendly Cryptocurrencies
    • Learn: Why Did FTX Collapse? Here’s What to Know.
    • Learn: How Sam Bankman-Fried swindled $8 billion in customer money?
    • Learn: How much is Bitcoin worth today?
    • Learn: The Costs of Running a Bitcoin Node In Nigeria
    • Learn: Has 2022 Left Any Crypto Positives?
    • Learn: How Crypto Exchanges Can Be Free of Risk?
    • Learn: Greed, Lies and FTX: Is Crypto a Force for Good or Evil?
    • Learn: Is Crypto a Cultural Movement?
    • Learn: What are the consequences of crypto’s ongoing regulatory process?
    • Learn: Beyond the Crash and Embracing NFTs?
    • Learn: Understanding crypto bag holders and their mindset
    • Learn: Inscriptions: Just A Fad, Or A Real Threat To Bitcoin Becoming Decentralized Money?
    • Learn: How Bitcoin Ordinals Can Change the Future Of Mining?
    • Learn: What is a supernet?
    • Learn: Bitcoin Miners Celebrate 10 Years Since First ASIC, What Changed Since Then?
    • Learn: Bill Vs. CBDC – Why This US Congressman Wants To Block The Fed From Issuing A Digital Dollar?
    • Learn: Why Bitcoin Will Blow People’s Minds In 2025?
    • Learn: How the Howey Test Sheds Light on Cryptocurrency's Regulatory Gray Area
    • Learn: Cryptocurrency vs AI: A Complex Debate
    • Learn: Where the U.S. Government Went Wrong in Regulating Crypto?
    • Learn: The Nostr Privacy Paradox
    • Learn: Do algorithmic stablecoins have a future as centralized coins are under scrutiny?
    • Learn: Is Bitcoin Set To Revolutionize The Financial World With Its Superior Purchasing Power?
    • Learn: What is Shibarium, and what does it mean for Shiba Inu?
    • Learn: What is a crypto dusting attack?
    • Learn: Is the Adoption of Central Bank Digital Currencies (CBDCs) the Future?
    • Learn: How Artificial Intelligence Could Revolutionize Crypto?
    • Learn: What’s next for EU’s crypto industry as European Parliament passes MiCA?
    • Learn: Why the EU Has MiCA and the U.S. Has Securities Law Confusion?
    • Learn: Six New Projects Looking to Mitigate Bitcoin Mining’s Energy Footprint
    • Learn: Who on Crypto Twitter chose not to pay for a blue checkmark?
    • Learn: What is the wash-sale rule in Crypto?
    • Learn: What is Pepecoin and can it flip memecoins Dogecoin and Shiba Inu?
    • Learn: Can you recover stolen Bitcoin from crypto scams?
    • Learn: What the ‘anti-mining bill’ means for the crypto industry in Texas?
    • Learn: Does the US have a crypto ‘tax loophole’ problem?
    • Learn: How users can stay protected?
    • Learn: How Crypto Revolutionize Cheaper and Faster Transactions?
    • Learn: Can NFTs and CFDs be BFFs?
    • Learn: A PR expert’s tips for memecoin projects
    • Learn: Why politicians aren't convinced about the Digital Euro?
    • Learn: How A 90-Year Old TA Theory Predicted The Sudden Bitcoin Boom?
    • Learn: Social Trading Platforms and CFDs: A New Paradigm in Investment
    • Learn: How could the Chinese economic crisis impact Bitcoin and crypto?
    • Learn: How do they compare: Bitcoin IRA vs. traditional IRA?
    • Learn: Why Tokenized Assets Are Safer During a Banking Crisis?
    • TL;DR 👀
  • 🛢️Ethereum
    • Bitcoin vs Ethereum
    • What can Ethereum do?
    • What is Ether (ETH)?
    • What's Unique About ETH?
    • What are Smart Contracts?
    • Energy Consumption?
    • Ethereum Virtual Machine (EVM)
    • Pros & Cons of Smart Contracts
    • Decentralized Applications (dApps)
    • Ethereum Token Standards (ERC-20, ERC-721 and ERC-1155)
    • Evolution of Ethereum
    • How to Get Your First Ethereum
    • Learn: Next Ethereum Upgrade — Shanghai Upgrade
    • Learn: Tipping Scale for Crypto Adoption: Usability vs. Accessibility
    • Learn: Major Publicly Traded U.S. Bitcoin Miner Files For Chapter 11 – Impact On The Market?
    • Learn: 5 altcoin projects that made a real difference in 2022
    • Learn: How Tether Can Be a More Stable Stablecoin?
    • Learn: Are the Ethereum Killers Still Deadly?
    • Learn: What Ethereum Tech Trends Are Weathering the Bear Market?
    • Learn: How Ethereum’s token burns are making it a deflationary cryptocurrency?
    • Learn: A few things to know about Ethereum's Shanghai Upgrade
    • Learn: The Role of Enterprise Ethereum
    • Learn: Understanding Layer 2 Scaling Solutions for the Ethereum Network
    • Learn: The Battle of Giants: Bitcoin vs Ethereum
    • Learn: Cryptography, Smart Contracts and Distributed Networks
    • Learn: The Memecoin Grift and How It Threatens Ethereum Culture
    • Learn: What Is Ethereum’s ‘Data Availability' Problem, and Why Does It Matter?
    • TL;DR 👀
  • 👛Wallet
    • What is a Blockchain Wallet?
    • Hardware / Software Wallet
    • How to Get Your First Cryptocurrency
    • Setting up Metamask Wallet
    • Learn: How to connect the Avalanche network to MetaMask?
    • Learn: How to pass on your crypto when you die?
    • Learn: What are hierarchical deterministic (HD) crypto wallets?
    • Learn: Pros and Cons of Digital Wallets
    • Learn : How Web 3.0 Wallets Are Redefining Digital Asset Security?
    • Learn: Open source: Buzzword or real security for crypto wallets?
    • TL;DR 👀
  • 🌕New & Rising Protocols
    • Binance
    • NEAR
    • Solana
    • Fantom
    • Polygon
    • Cardano
    • Polkadot
    • Cosmos
    • Harmony
    • Cronos
    • Optimism
    • Terra
    • Who Will Win the L1 Wars?
    • Learn: New Layer 1 Blockchains Are Expanding the DeFi Ecosystem But No Eth Killers Yet
    • Learn: Is an Increased Focus on Layer-2 Scaling and ZK Technology Justified?
    • Learn: What Are the Stakes in the SEC vs. Ripple Case?
    • Learn: What is The Graph, and how does it work?
    • TL;DR 👀
  • 📈Decentralized Finance (DeFi)
    • CEX vs DEX
    • CeFi vs DeFi
    • Algorithmic Stablecoins
    • Airdrop
    • Liquidity Pool
    • Impermanent Loss
    • Swapping
    • Wrapped Token
    • Arbitrage Opportunities
    • Staking
    • Yield Farming
    • Total Value Locked (TVL)
    • Gas Fees
    • Lending & Borrowing
    • Useful Tools
    • Activity: Uniswap & Pancake Swap
    • Learn: Automated Market Makers (AMMs) in DeFi
    • Learn: Crypto Moving towards ESG: What Is Regenerative Finance (ReFi)
    • Learn: What Is dYdX? Understanding the Decentralized Crypto Exchange
    • Learn: It's A Wrap - DeFi in 2022
    • Learn: Why DeFi should expect more hacks this year?
    • Learn: The Security Challenges of DeFi
    • Learn: The Promising Future of Decentralized Social Media on Web 3.0
    • Learn: Can CBDCs, Tokenized Deposits, Stablecoins and DeFi Coexist?
    • Learn: The Increasing Popularity of DeFi and Its Potential to Disrupt Traditional Finance
    • Learn: The future of DeFi is ReFi
    • Learn: DeFi aggregation
    • TL;DR 👀
  • 🙈Non-Fungible Token (NFT)
    • What are NFTs?
    • Case Study
    • Storage
    • Who are the Players?
    • NFT Marketplace
    • NFT Useful Resources
    • Activity: Mint Your Own NFT
    • Learn: How You Can Prevent Hackers From Stealing Your NFTs?
    • Learn: What Is an NFT Floor Price?
    • Learn: Should Bored Ape buyers be legally entitled to refunds?
    • Learn: China’s view of NFTs different from rest of the world’s
    • Learn: NFTs IRL: How Digital Collectibles Are Forging Offline Experiences
    • Learn: How NFT Brands Can Cut Through The Noise
    • Learn: How Web3 disrupts the music sector?
    • Learn: Unlockable content in NFTs
    • Learn: Why Meta Matters in NFTs?
    • Learn: Should NFT Marketplaces Become Centralized?
    • Learn: Hermès vs. MetaBirkins: The NFT Case That Could Have Major Trademark and Artistic Consequence
    • Learn: What are phygital NFTs, and how do they work?
    • Learn: What is NFT ticketing and how does it work?
    • Learn: Why Solana NFT marketplace is seeing less active users?
    • Learn: NFTs and Intellectual Property
    • Learn: How AI Is Changing Artistic Creation and Challenging IP Laws?
    • Learn: The Future of NFTs: Exploring Dynamic NFTs and Their Versatile Use Cases
    • Learn: NFTs in the event and ticketing industry
    • Learn: What is NFT rarity, and how to calculate it?
    • Learn: What happens to your NFTs when you die?
    • Learn: Dogecoin-Like Spike in Milady NFTs After Elon Musk’s Tweet, But Will It Last?
    • Learn: What are NFT royalties, and how do they work?
    • Learn: How developers aim to store crypto inside NFTs?
    • Learn: Generative Art NFTs: What Are They & Why Are They So Popular?
    • TL;DR 👀
  • 💗Metaverse
    • What is the Metaverse?
    • Metaverse Economy
    • Metaverse Companies
    • GameFi
    • Learn: Are We in the Metaverse Yet?
    • Learn: Can the Metaverse exist without blockchain?
    • Learn: Can the Metaverse Facilitate Sustainable Growth of Defi Systems?
    • Learn: What is the role of biometrics in the metaverse?
    • Learn: Can metaverse be the future court?
    • Learn: Metaverse Fashion Is on the Rise, but for Whom?
    • Learn: Sustainability in the Metaverse: Challenges and Opportunities
    • Learn: How To Build A Responsible Metaverse?
    • Learn: What is a VTuber, and how do you become one?
    • Learn: How proof-of-identity provides human experiences?
    • Learn: The “Metaverse” Next Frontier for Business: Impact And Challenges
    • Learn: The 5 Biggest Misconceptions About The Metaverse
    • Learn: Why culture and ownership are critical to the metaverse?
    • TL;DR 👀
  • 👾Career in Web3 (coming soon)
    • Developers
    • Moderators
    • Community Managers
    • UI/ UX Designers
    • Digital Fashion Designers
  • 🌱Sustainability (Coming Soon)
    • Industry Effort
    • Co-author
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On this page
  • What is GameFi?
  • GameFi stakeholders
  • Future of GameFi
  1. Metaverse

GameFi

PreviousMetaverse CompaniesNextLearn: Are We in the Metaverse Yet?

Last updated 2 years ago

What is GameFi?

The gaming industry is tapping into and brings together gaming and finance under what is now coined as GameFi. GameFi is a system where gamers and creators can and .

In a decentralized GameFi ecosystem, the platform offers the ability for gamers and creators to engage directly. Creators have the liberty to develop immersive games and engagement mechanisms, and gamers oblige. The value created in the form of 'in-game tokens' and NFTs is distributed across stakeholders through robust economic models.

A common term and model used by GameFi platforms is play-to-earn (P2E). firm to deploy P2E at scale with some success. The model works in the following fashion:

A gamer buys an NFT to use the platform, plays the game and wins gaming tokens. These gaming tokens can be converted into Bitcoin (), Ethereum (), fiat currency or . NFTs used to play the games can be upgraded as the players get better at the game. These for a higher price as they are now upgraded.

GameFi projects scale their gamers’ base through the P2E model and that builds the supply side for the tokens. On the other side, they also develop the ) for the tokens by introducing 'in-game' marketplaces. These marketplaces sell in-game assets like weapons, vehicles and props.

As the supply and demand for the gaming token scale sustainably, the platform achieves network effects. This sets off a self-reinforcing virtuous cycle in motion and can be identified as a functional GameFi ecosystem.

While P2E was just the first Web3 economic model to have gained traction within GameFi, this model has been perhaps far too focused on building a gamers' base, which is considered the supply side of GameFi. However, the demand side that keeps the economy balanced hasn’t scaled fast enough, resulting in the emergence of other economic models within GameFi.

For instance, 'play-to-earn' platforms have started to put gaming experience ahead of earnings. They hypothesize that it is the gaming experience that would keep gamer retention high. Earnings from the gameplay should be perceived as a nice add-on by the gamers.

These models are still being tested and tweaked for scalability and sustainability. As GameFi platforms have shown some success, this ecosystem has started to see new players emerge as support systems. These players often focus on the specific functions needed to keep the GameFi ecosystem healthy.

GameFi stakeholders

These are some of the important players involved in upholding the GameFi model. Some of these players often have overlapping functions, yet identify themselves with primarily one function.

Game studios

What do we need for GameFi to get started? Games. Game studios are in the business of creating games. They use technologies such as Unity or Unreal Engine, have creative minds developing the user experience, and developers then bring them to life on screen.

() and Axie Infinity () generally have this capability in-house. GameFi organizations thrive on creating engaging gaming experiences and their game development capability must be second to none.

Metaverse

Games can be published as standalone apps or as parts of a metaverse, in an effort to ensure user retention.

The relationship between the metaverse and GameFi must be well established for the GameFi economic model to work. GameFi draws in the gaming crowd for the experience, and the metaverse makes them spend using the gaming/ecosystem tokens.

Metaverse
GameFi

Role of NFTs

Identity management, Digital ownership

Enhances identity, value performance, gamer retention and loyalty

Type of Experience

Ancillary experience

Core experience

Applications

Ecommerce, art, real estate, events, work

Play (Entertainment)

Audience

Those who seek virtual experience

Mostly gamers

Imagine playing a racing game with your adrenaline pumping. You win the game and as a result, a big pot of tokens. You come out of the game and see a Formula 1 brand’s merchandise or a Formula 1 superstar’s merchandise. The experience would make you click 'buy'. You have earned the tokens and spent part of it on the economy.

Gaming Guilds

Most consumer business models need a distribution network of some sort. Gaming guilds are platforms that act as the distribution network for GameFi platforms. Why are they needed for P2E to function and what is their role?

Guilds buy NFTs from the GameFi platforms and rent them out to the gamers (scholars). Scholars play the P2E games and share the spoils with the guilds as rent. Guilds make their return on investment (ROI) over time by renting the NFTs they bought.

Guilds started emerging in the GameFi ecosystem less than a year ago. They have improved their ROIs by being selective about the gamers to whom they rent NFTs. Guilds run scholarship programs to onboard scholars. These programs generate better ROIs for the guilds as trained scholars generally earn higher from efficient gameplay. Yield Guild Games, Merit Circle and Avocado DAO are a few well-known guilds.

NFT renting platforms

Guilds accumulate NFTs and rent them out to scholars. However, this renting process, itself, can be automated and provided as a software-as-a-service (SaaS) for games that, in turn, can offer to rent to their NFT holders. Some firms are focusing on building this SaaS capability.

Providing a renting function is an add-on benefit for NFT holders of GameFi platforms for the passive income generated. Yet, the NFT holder has the risk that their NFT will not be rented out. This demand risk is a business opportunity. Platforms now provide a fixed return for NFT holders and assume the risk of renting it out (or not).

In this model, however, the NFT holder will receive less income through the platform than through renting it out themselves. Yet, the risk of not having any rental income for a period of time is mitigated by a fixed return offered. These models are also evolving into DeFi value propositions for NFT holders.

Gaming marketplaces

Due to the emergence of many GameFi platforms over the past year, gamers have needed aggregation and curation services to pick and choose the best gaming experiences. Gaming marketplaces scan the landscape, pick the best games after testing them and feature them on their platform.

Their role is to try and bridge the gap between Web2 and Web3 gamers by providing a helping hand. Some of them have taken a holistic approach by offering to be an NFT marketplace alongside a game marketplace and curation engine. Rainmaker Games is an example of a GameFi marketplace.

Game launchpads

Launchpads support young GameFi platforms in growing and thriving in the ecosystem. GameFi projects are chosen based on certain criteria, and they are provided an environment in which to create and execute their vision and strategy.

Launchpads also support GameFi startups in finding good investors and scaling from there. This is similar to the incubator and accelerator models in the Web2 startup world.

Future of GameFi

We have discussed several stakeholders and their roles in the GameFi ecosystem. Due to the pace at which this space evolves, we will inevitably see new models or variations of the current models emerge soon. GameFi stakeholders are already exploring a few other use cases.

This space is fast evolving and experiments are being run on a grand scale. This article has described the key players who make up the GameFi ecosystem. Apart from these players, there are investors, influencers, exchanges and market makers. These stakeholders add value across the broader Web3 landscape.

Source

If games attract and acquire users, the metaverse helps generate revenues from them through various experiences. Sandbox and Bullieverse are examples of metaverses that offer games. Decentraland () is a metaverse that allows users to but does not offer games to its metaverse participants.

As P2E platforms started to scale, the NFTs that gamers needed to play the game became expensive. For a , which are key markets for P2E, $200 spent on a NFT to play a game is a big investment. Gaming guilds solve this affordability issue through a scholar and NFT renting model.

1)

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the power of Web3
accrue value in cryptocurrencies
non-fungible tokens (NFTs) for themselves through gameplay
Axie Infinity was the first
BTC
ETH
stablecoins
NFTs can be sold on NFT marketplaces
demand side (burning mechanisms
GameFi platforms like Sandbox
SAND
AXS
MANA
explore several real estate features and events
player in Indonesia or the Philippines
Cointelegraph.