What is GameFi? How to Make Real Money from Hot Blockchain Games

From Dream to Reality: GameFi Is Changing the Gaming Industry

Making money through entertainment is something we could only imagine before. But today, thanks to the combination of blockchain technology and the gaming industry, this has become a tangible reality. GameFi – a portmanteau of “Game” and “Finance” – represents a revolution in how players interact with and profit from their favorite games.

According to the latest report from DappRadar on the Blockchain Gaming sector, Web3 game and metaverse projects attracted an impressive investment of $2.9 billion in 2023. This demonstrates that GameFi is not just a temporary trend but a long-term shift in how users engage with electronic entertainment.

How Does GameFi Work? The Real Money Mechanism

Unlike traditional games like Call of Duty or Fortnite – where players spend money to buy virtual items with no outside value – GameFi offers a completely different ecosystem. Here, players can convert what they earn into assets of real-world value.

The GameFi ecosystem is built from three core components: cryptocurrency tokens, NFT (non-fungible tokens), and DeFi (decentralized finance) technology. Players complete missions, win battles, upgrade assets, and earn rewards in the form of tokens or NFTs. These digital assets can be traded on cryptocurrency exchanges or NFT marketplaces, providing real monetary value to players.

The biggest advantage of blockchain in GameFi is the immutability of ownership. All assets are stored on a public distributed ledger, meaning no one can dispute your ownership, and even if the game shuts down, your assets remain safe in your digital wallet.

Why Is the Play-to-Earn (P2E) Model Transforming the Industry?

Previously, earning money from games was a business aspect for game developers. But the Play-to-Earn (P2E) model flips this by sharing economic value directly with players. In this model, every action of the player – whether completing levels, battling opponents, or building custom assets – can generate profit.

Axie Infinity is a prime example. Players breed creatures called Axies, participate in battles, and earn Smooth Love Potion (SLP) – a tradable token. Professional players in countries with low living costs have even been able to earn a decent income from this activity.

Other Revenue Models Beyond Play-to-Earn

GameFi doesn’t stop at P2E. Other emerging monetization models include:

Move-to-Earn (M2E): Rewards users based on physical activity. StepN is a prominent example – players earn GMT tokens by walking, running, or jogging outdoors while wearing NFT shoes. It’s a great way to combine health with income.

Tap-to-Earn (T2E): An extremely simplified new model. Notcoin is an example – players just tap the screen to mine virtual coins. This simplicity allows anyone with a smartphone to participate.

Staking & DeFi Integration: Besides playing, players can stake their NFTs or tokens to earn annual yields. Groups like Yield Guild Games enable players to stake their assets for interest or even lend them out to earn commissions.

The Journey of GameFi: From Bitcoin to Its Current Peak

The story of GameFi started modestly when early adopters tried playing games on Bitcoin-related websites to earn coins based on their efforts. However, when Bitcoin blockchain was adopted, limitations quickly became apparent: limited block space, slow processing speeds, and high transaction fees made it unsuitable for gaming.

Ethereum then became the natural choice – a blockchain built on smart contracts, supporting DeFi and decentralized applications. Everything went smoothly until CryptoKitties exploded in 2017. This blockchain game caused network congestion, slowing Ethereum down and skyrocketing gas fees.

This prompted developers to seek other blockchains. Today, Solana, Polygon, BNB Chain, Avalanche, Harmony, and Polkadot are popular options with better scalability and lower costs.

Growth Evidence: The Numbers Behind GameFi

Q1 2024 data shows Web3 is experiencing an explosion. The number of Unique Active Wallets (UAW) daily reached 7.7 million, up 77% from the previous quarter. Notably, blockchain gaming accounts for 30% of total Web3 UAW, with 2.1 million UAW – a 59% increase quarter-over-quarter.

Polygon leads with a strong gaming ecosystem and initiatives like the Inevitable Games Fund. Ronin, Solana, BNB Chain also demonstrate resilience and significant innovation. Competition among blockchains to attract players is becoming increasingly fierce.

Why Is GameFi So Appealing to Players?

Earn Money from Passion: Instead of spending money to play, you can earn money from it. If gaming is your hobby, GameFi turns it into a primary or passive income source.

True Ownership: You fully own your digital assets – from virtual weapons, outfits, to special characters. These items have real value and can be traded anytime, anywhere.

User-Centric: Unlike traditional games, blockchain games are often operated by communities of players. Users have a say in governance and decision-making, ensuring the game’s development always benefits them.

Low Entry Barriers: Many GameFi projects are free or require very low fees to start, unlike traditional games where you need to spend money on gear. This broadens access for everyone.

Getting Started with GameFi: A Step-by-Step Guide

Step 1: Set Up a Digital Wallet

This is the foundation of everything. You need a digital wallet to store NFTs and cryptocurrencies, perform in-game transactions, and outside. The type of wallet depends on the blockchain the game runs on. For Ethereum, MetaMask is a popular choice. Tip: create a new wallet dedicated to gaming to protect your funds from scams.

Step 2: Prepare Capital

Although many GameFi projects are free, you might need to buy some starter items – like NFTs, avatars, weapons, or gear – to begin earning. Research which cryptocurrency the specific game uses and deposit it into your wallet.

Step 3: Choose a Game and Start Playing

There are countless GameFi options. Pick one that suits your interests, follow the in-game instructions, complete missions, and start earning.

The Future of GameFi: Massive Potential Ahead

The growth of GameFi has just begun. Forecasts for 2024 and beyond suggest this industry could capture up to 10% of the global gaming market, a sharp increase from the current 3%. This development is supported by technological advances like Layer-2 scaling solutions that reduce costs and speed up transactions, along with AI integration to enhance the experience.

It’s expected that GameFi will see a surge in active players reaching up to 50 million, driven by cross-platform accessibility and interoperability among different blockchains. Community-led development and sophisticated tokenomics (tokenomics) models will be key to building a sustainable and engaging GameFi ecosystem.

Challenges Ahead

However, the road ahead is not always smooth. GameFi still needs to prove that it’s not just a blockchain gimmick but truly great games with deep gameplay. Additionally, the long-term economic sustainability of tokenomics models remains an open question.

But one thing is certain: GameFi has changed the game – not just for players but for the entire gaming industry. With advancing blockchain technology, widespread acceptance of cryptocurrencies, and innovative new projects emerging constantly, the future of blockchain gaming looks promising.