GameFi is a new crypto sector arising from the marriage of gaming and decentralized finance (DeFi). It uses the concepts of blockchain technology, cryptocurrencies, non-fungible tokens (NFTs), and game mechanics to create environments conducive to monetizing gameplay. GameFi utilizes a play-to-earn (P2E) model to reward players financially for competing and advancing within the games they participate in.
The GameFi mechanics are implemented in different ways, but they usually involve NFTs in the form of weapons, land, property, gold, tokens, animals, and avatars. The players own these NFTs and can trade them to other gamers to earn money. Authorities in the Philippines proposed a law that would see players of the popular title Axie Infinity paying income tax from the money they make playing the game.
Gamers need to create a wallet, add funds to it, and acquire basic digital assets to play the game. The in-game NFTs can fetch high prices. Fashion Street Estate, a virtual real estate plot in Decentraland, was sold for $2.4 million.
GameFi is changing the online gaming industry. Traditionally, game developers were the only ones who made money from their games. GameFi has opened avenues for gamers who can’t compete professionally or who don’t wish to livestream to finally monetize their gaming skills.