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What Is GameFi & How to Earn Crypto Playing Games Online – A Complete Guide
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What Is GameFi & How to Earn Crypto Playing Games Online – A Complete Guide

You are hearing all about earning whilst playing games. News of games with returns in cryptocurrencies and NFTs grows every day, such as Axie Infinity. You want to try your hand at it, who doesn’t want to earn whilst playing games right? Or better, diversify their income.  

Then you stumble upon the world of GameFi. Even the name itself doesn’t mean anything to you. What does GameFi mean? At that point you are halted in your tracks, the only thing that could stop you, well, is your lack of knowledge.

We are here to show you the ropes, whether you are a beginner or an advanced blockchain gaming enthusiast. Here is a little guide for you to get into the world of GameFi or refresh your knowledge on the subject. Learn what the name means, how GameFi works and how you can get the most out of it.

What is the meaning of GameFi?

GameFi refers to blockchain games that let users make money by playing or in other words with real financial benefits. The GameFi ecosystem creates a virtual gaming environment by utilising cryptocurrencies, non-fungible tokens (NFTs), and blockchain technology. 

You can read about what an NFT is and how it is used in gaming in our blog post here.

Unlike traditional video games, in blockchain gaming, servers are not physically owned by a company somewhere, instead, they are decentralised, meaning they run in blockchain, decentralisation refers to the transfer of control and decision-making from a centralised entity (individual, organisation, or group thereof) to a distributed network. This means that anyone can see what happens on the network, such as transactions with 100% transparency and there are no gateholders or overseeing organisations that run the process.

In-game awards are often earned by performing tasks, completing quests, defeating other players, and progressing through the various game levels.

They may also trade their assets on crypto exchanges and NFT markets not just inside the game but also outside of the game unlike traditional video games. This is where the term DeFi comes into play, which we will touch on in a second. The worth of their assets and currencies are highly variable and depend on the game’s popularity usually, just like in a real market scenario your assets can fluctuate in value depending on the market economy. 

In short, GameFi is a new term coined by merging gaming and finance. GameFi refers to blockchain games that allow players to earn money by playing.

How does GameFi work?

Consider the prospect of making money only by playing video games. Not in-game money, but real money that can be used to pay bills and buy meals, and get your loved one the present they deserve. 

The possibility to trade or sell all elements in a game such as characters, skins, and weapons in digital marketplaces outside the game. This is the promise of GameFi, the latest phase of Web3. 

How do you earn money in GameFi?

“Can I earn crypto in GameFi?” is the first question that comes to mind when new users start their online research. Yes, you can: In GameFi, the reward can take many forms, various forms of cryptocurrencies such as Bitcoin, or in-game assets such as virtual land, avatars, weapons, and costumes. Each GameFi project will have its model and game economy. 

Most in-game assets are NFTs that run on the blockchain and may be exchanged on NFT marketplaces. However, in other circumstances, in-game assets must be turned into an NFT before players can trade or sell them.

If you want a deep dive into how to sell NFTs, also read our blog post here.

These NFTs, or In-game assets, typically provide various benefits to players, allowing them to earn greater rewards. Some games provide avatars and cosmetics that are just decorative and have no effect on gameplay or earnings and some have direct impact on the way you play and earn in-game rewards. Players can earn rewards by doing activities, battling other players, or building commercialised constructions on their piece of land, depending on the game. 

Some games also allow users to earn passive revenue without actively participating in the game, either by staking, liquidity farming or by lending their gaming assets to other players. Introducing abilities like these not only decentralises the game, even more, some GameFi projects allow the community to participate in their decision-making process. They can propose and vote for future updates via decentralised autonomous organisations (DAOs).

In short, to earn money & cryptocurrency in GameFi, you will have to work on your inventory, find interesting items, and then trade them on an NFT marketplace. Or earn passive revenue with methods such as staking, liquidity farming, lending their gaming assets to other players. Many games also directly reward players with cryptocurrencies as well, which in turn can be traded for fiat money on an exchange.

What's the difference between GameFi and DeFi?

First, we have to explain what DeFi is so you can differentiate between the terms. What does DeFi mean? Decentralised Finance, abbreviated as DeFi, is a financial technology built on secure distributed ledgers similar to those used by cryptocurrencies. 

The system eliminates banks and institutions of control over money, financial products, and financial services. It is not under the control of any corporation, government, or other entity. As the name implies, it does not have centralised administration with complete control over financial activities. It is a field in which token-based transactions like lending and borrowing take place on blockchains, decentralised digital ledgers similar to that first used with Bitcoin

Now, don’t let the header above confuse you, there is more in common between GameFi and DeFi than there are differences between them. They go hand in hand and cannot be thought of separately. Here’s why:

GameFi is similar to DeFi in many respects, but the most notable difference is that it all takes place within a game. GameFi essentially includes all games with an economy. Because blockchain technology allows players to hold digital assets, it also allows them to monetise their in-game assets. Many of these games are built on networks such as Ethereum, Solana and Polygon, making them GameFi. So you can liquidate your earnings from GameFi games on DeFi, such as crypto exchanges and NFT marketplaces, or in other words digital marketplaces.

However, the difficulty with GameFi without blockchain has been that if you don't own it, you can't sell it (according to the game makers). Markets based on the sale of in-game objects have likewise proven exceedingly untrustworthy. All of this has altered with the advent of crypto and NFTs. Beginning with what Axie Infinity has done and the amount of popularity it has earned, it is clear that the GameFi model is here to stay.

In short, DeFi stands for decentralised finance, a field in which token-based transactions like lending and borrowing take place on blockchains. In its most common usage, GameFi refers to decentralised applications (“dapps”) with economic incentives. For example: In many GameFi apps, such as Alien Worlds, users can also earn money passively by letting others mine their virtual lands. They can also earn interest by using techniques developed by DeFi platforms to lend assets like digital characters or deposit them in what’s known as staking.

Is GameFi free and What is the Play-to-earn model (P2E)?

GameFi projects are almost always free to download or play on web browsers, and use play-to-earn (P2E) as an innovative gaming mode at the heart of GameFi projects with new trends such as play and earn popping up, but the model concept is pretty straightforward.

It differs significantly from the pay-to-play approach used by traditional video games. Pay-to-play demands gamers to make an initial investment before they can begin playing. Call of Duty, for example, requires players to acquire an ownership for the game by paying upfront and seasonal battle pass subscriptions to earn in-game rewards.

Most of the GameFi projects are free and require no initial investment. Another thing to keep in mind is that P2E games can be free-to-play while still providing financial rewards to players, however, some GameFi projects require you to buy NFTs or crypto assets before you can play. Some require you to buy or rent playable NFT characters to participate and start earning crypto. Such as Axie Infinity requires you to own or rent up to three NFT playable characters to start playing and earning. So do your research before hopping on into a GameFi project.

Read more about play-to-earn games in our blog post here.

In short, GameFi apps or dapps (decentralised apps) are mostly free to play, some may require an initial NFT investment which the user can either buy themselves or rent from other owners.

Let’s quickly touch on the subject of NFT renting whilst we are at it.

What is NFT renting?

Renting models in these games is also known as scholarship. It allows scholars to use the borrowed NFTs to play and earn rewards. In other words, NFT owners can make a passive income while scholars can play the game without making any investment. The earned rewards are then split between scholars and NFT owners. 

This action of renting can be performed from in-game or related domains on the web, which the user can access after a quick search or find more about from the game’s site or whitepaper.

How do you invest in GameFi?

Now there are a handful of ways to invest in GameFi projects. The most straightforward way is to simply buy the utility token of the project itself over a crypto exchange. 

For example: You can check out each cryptocurrency a GameFi project uses in our Gamepedia, track their values over time by tapping on the button labelled “Trader View”. 

Some GameFi projects also offer DeFi products and features, such as staking, liquidity mining, and yield farming. Typically, players can stake their in-game tokens to earn rewards, unlock exclusive items, or access new gaming levels. Benefitting both sides. 

Players can also invest in projects in an earlier phase through IGOs (In Game Offerings), buying the native token of the GameFi project and sometimes NFTs at a cheaper price, and can sell them at a later date to a higher value and profit.

CoinMarketCap also provides a list of purchasing options (also known as market pairs). Go to CoinMarketCap and search for GameFi.Tap on the button labelled “Market” near the price chart. In this view, you will see a complete list of places you can purchase GameFi as well as the currencies you can use to obtain it.

How to start playing crypto games?

There are thousands of blockchain games on the market, each with its own set of rules. Be wary of fake projects and scam websites.

  • Create a cryptocurrency wallet: This will allow users to store their virtual currency and NFTs as well as make in-game transactions. Which wallet you require will be determined by the blockchain on which the game was developed. MetaMask, an Ethereum-based crypto wallet service, for example, functions with any GameFi game created on Ethereum. You can also add other networks such as Polygon. Then, on their official website, connect your crypto wallet to the game. However, always be wary of fake websites. 
  • Purchase starter items: All GameFi games can be downloaded for free. Many, on the other hand, require players to first purchase characters, native cryptocurrency, decks of cards, or upgrades before they can begin playing. Don't forget to check the requirements for playing.
  • Pre-funded crypto wallet: To purchase initial items and progress, you must first pre-fund your crypto wallet with a specific cryptocurrency. For example, downloading MetaMask, buying Binance coin (BNB), and then swapping it for the game's native cryptocurrency to start playing.

If you want to learn more about one of the most popular crypto wallets, read our blog post here.

What will GameFi’s future look like?

Because of the novel concepts of DeFi, NFTs, and the metaverse, a new type of virtual game space known as GameFi has emerged. DappRadar now lists over 1,400 blockchain games as of March 2022.  

Players can earn monetary incentives that traditional games cannot supply right away. Metaverse NFTs generated over $402 million in trade volume in Q4 2021, up 615 per cent from Q3 2021, according to yahoo's financial report.

In addition, about 50,000 new NFT investors joined in Q4 2021. Investor firm Morgan Stanley estimates that the NFT and metaverse GameFi settings will have a $56 billion economic potential in the luxury industry by 2030.

Grayscale, a cryptocurrency investment business, forecasts that metaverse game worlds will be valued at $400 billion by 2025, up from $179 billion today.

Even with the fluctuations in the crypto market, it is safe to say that GameFi is here to stay and falling prices in crypto will only serve to raise the quality bar of the GameFi projects that are around. It's the last frontier in the world of web3 and the beginning of a truly cyberpunk future with its decentralised nature, virtual reality projects and much more. 

How do I join GameFi projects & which GameFi projects are the best?

To answer this we have built Spintop's Gamepedia for you. It’s the most comprehensive web3 game library on the internet, with a dedicated staff to handpick the most promising GameFi projects; you can find detailed information about hundreds of blockchain-based games, tokenomics, guides, reviews, and much more on Gamepedia!

Make sure to check out our Academy for more GameFi guides, and keep yourself updated on our news page. And don’t forget to connect your wallet and start trading and earning on Spindex

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What Is GameFi & How to Earn Crypto Playing Games Online – A Complete Guide

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