How GameFi Contributes To The Growth Of Crypto And NFTs – Cointelegraph
The crypto industry has grown tremendously over the past couple of years, and one of its biggest drivers is the GameFi industry.
GameFi — a portmanteau of gaming and finance — enables gamers to earn rewards while playing.
The market has been growing steadily and presently has a token market cap of approximately $9.2 billion. Notably, GameFi networks have continued to thrive despite the crypto winter. Indeed, the industry is forecasted to reach a $74.2 billion valuation by 2031.
How GameFi networks work
GameFi ecosystems are based on blockchain technology and use different in-game economic setups to reward players. The rewards are usually in the form of nonfungible tokens (NFTs) that are tradable on major marketplaces. The items are typically in the form of virtual lands, costumes and weapons and are instrumental in diversifying user experiences.
The difference in gaming strategies and economic setups is what makes each game unique.
One of the most popular GameFi economic setups is the play-to-earn (P2E) model. The model is designed to keep users engaged while enabling them to earn rewards.
It allows players to indulge in the games without spending any money. However, progress can be curtailed due to the lack of assets needed to compete successfully. As such, gamers are sometimes compelled to purchase in-game items in order to advance to top levels where they can obtain bigger rewards.
Popular blockchain gaming networks utilizing the P2E GameFi model include Decentraland, The Sandbox, Axie Infinity and Gala.
Why GameFi is popular
The GameFi world has attracted millions of users over the past couple of years. This is impressive considering that the industry was practically non-existent before 2015.
Today, the industry attracts over 800,000 daily players. Many of them are drawn to GameFi due to the medley of benefits it provides.
One of them is the ease of trading digital assets. A recent market report published by CoinMarketCap found that about 75% of gamers are willing to trade in their in-game assets for some form of currency. This advantage is one of the main reasons why GameFi is so attractive to players.
Some virtual assets, such as land, can also be rented out to other gamers. Users who wish to generate passive income without playing games can also indulge in liquidity mining by staking assets. This is a huge incentive for retail investors and people who wish to monetize their gaming time.
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Another merit that many GameFi players appreciate is the low transaction costs. GameFi environments usually utilize cryptocurrencies, and this makes fund transfers relatively easy to execute and cheap.
This is a major bonus when compared to conventional money transfer modes, which are expensive, especially when it comes to making cross-border payments. This aspect was highlighted in the 2021 Blockchain Game Alliance (BGA) survey report, in which 17% of participants named lower transaction costs as a major GameFi benefit.
Another innovative element that captivates GameFi players is the support for user-generated content. This capability not only allows GameFi platforms to engage users with different tastes but also encourages creativity among players while propagating an autonomous environment in which assets can be created, listed and traded publicly. In the 2021 BGA survey, 47% of respondents ranked creativity and gameplay among the top reasons why they liked GameFi.
These distinctive advantages, as well as other auxiliary factors, contribute to the consistent growth of GameFi.
How GameFi boosts growth
GameFi projects rely on cryptocurrencies to settle transactions, and this has contributed greatly to the increased adoption of digital currencies in recent years.
According to a recent report published by DappRadar — a platform that tracks activities on decentralized applications (DApps) — the number of unique active wallets (UAW) wallets tied to the blockchain gaming sector rose sharply in the third quarter of 2021, accounting for approximately 49% of the 1.54 million daily UAWs registered during that period. The data confirms the disruptive potential of GameFi and the increased use of cryptocurrencies in the sector, subsequently promoting their use and adoption.
Another related survey report released by Chainplay — an NFT game aggregation platform — recently revealed that 75% of GameFi investors got into the crypto market through their involvement in GameFi, showcasing GameFi’s growing impact on crypto adoption.
Besides advancing the use of cryptocurrencies, GameFi has also contributed immensely to the rise of the NFT industry. GameFi relies heavily on NFTs for in-game assets, and this increases their use on the blockchain. Not surprisingly, the rise of the GameFi mar