In its simplest form, GameFi is the merging of gaming and finance. GameFi basically combines cryptocurrency, blockchain, NFTs, and game mechanics to create a virtual environment where players participate and earn money in the process.
GameFi projects are launched on the blockchain distributed ledger – all objects that players receive become their entire property. This mechanism allows users to fully own the game assets, not developers. Most popular GameFi platforms include Decentraland, Axie Infinity, The Sandbox, etc.
During the second half of 2021, GameFi overtook DeFi as the hottest sector in the crypto market and according to Newzoo’s 2021 Global Gaming Market Report, the number of global gamers grew by 5.3% from 2015 to 2021 and now exceeds 3 billion.
According to the crypto YouTube influencer – Jake Browatzke with Business Insider, he earned about 246 TOWN tokens (the currency for the Gala Games title Town Star) by playing around 30 minutes in a day. The token’s value was US$148 at that time. That translates to 75,000 naira, daily!
But away from the hype and buzz. In what ways can Africans earn from GameFi?
How to earn
Crypto games use a play-to-earn model, where players can earn crypto as a reward by dedicating time to level up, completing quests and challenges, and improving their characters. They also generate revenue on their land that other gamers pay to use or by matching against others in tournaments.
P2E games sell their game accessories as an NFT. They sell everything in-game, like land, houses, rooms, buildings, weapons, and characters like players, pets. To play the games, you need these characters, lands. If the game gets popular in the future, more people play with it and hence the NFT demand will increase, as will the price.
To make substantial returns in Gamefi, one has to be onboard in the game’s early stages. Usually, before the game launch they mint some NFTs at a very low price to people, for marketing, and for adoption. They are referred to as ‘mystery boxes’ and ‘IGO’ (Initial Game Offering). Some exchanges where IGOs take place include Binance, Bybit and KuCoin. When the game is launched, the NFTs boom crazily depending on the hype and popularity of the game.
Away from playing the crypto game, investing in the token of the platform is another way to make money. The price of the Axie Infinity token, which was launched in November 2020, began 2021 at $0.538 and peaked at an all-time high of $165.37 on November 6, 2021. A whopping 30637% increase.
How to start
A player has to set up a cryptocurrency wallet to start. This would enable them to store their digital assets like crypto and NFTs. They would also be able to receive and send digital assets to and from other players.
A player’s choice of wallet will be based on the blockchain used to build the game. For instance, games built on the Ethereum network require Metamask, an Ethereum based cryptocurrency wallet service.
The next step is to find a game to play. This might be a little bit tricky because what works for one might not work for the other. Players need to understand how the P2E game works, the game rules (many require you to buy tokens, the initial investment etc.), understand how the rewards are paid out, how to convert in-game coins into other cryptocurrencies, and lastly, what they intend to do with the experience.
All crypto games are free to download. However, some games like Axie Infinity(you need to buy at least 3 Axis to start playing) require players to buy characters, tokens, decks of cards, or upgrades before they can play but The Sandbox and Illuvium are completely free.
Pros and Cons
The essential benefit GameFi offers, especially to Africans, is money. Imagine being in the corner of your room in a distant village in Lagos and making thousands of naira from leisure activities. GameFi enables users earn money simply by having access to the Internet.
Blockchain-based games also offer a solution to one of the most gigantic problems of the continent, which is unemployment. It also offers increased investment potential. It has been discussed earlier how Axie Infinity and Decentraland (MANA) early investors made profits in thousand folds when the boom came.
On the flip side, GameFi has often been accused of adopting the same model as ‘Ponzi schemes’. Many P2E games are reliant on a continual stream of new users to remain profitable and suffer from players continually cashing out and taking value out of the game. Observers also say the P2E industry attracts a lot of scammers and opportunists who are looking for a way to make some quick cash and get out without adding any form of value to the ecosystem.
Another concern raised is the issue of decentralisation. GameFi is known to be built on the decentralisation principle but in the real sense, it might not be entirely true. The in-game tokens are NFTs that gamers fan trade and own but the game can for example, ultimately block one of these tokens, which makes it centralised.
However, GameFi gained significant attention in a short time span and the potentials are eye-catching. Many of them will only require an initial pecuniary investment and a process of learning to reap rewards.
While cryptocurrencies can be said to have become codified and accepted, the opportunities offered by rapid developments in the space are growing, and GameFi looks to be one frontier about to massively expand.
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