A Beginner’s Guide to Understanding the GameFi Ecosystem

The gaming sector is leveraging the power of Web3 and combines finance and gaming under GameFi. GameFi is a system in which creators and gamers can amass value in cryptocurrencies and nonfungible tokens (NFTs) via gameplay.

In a decentralized GameFi ecosystem, the platform enables creators and gamers to engage. In this case, creators can create immersive games and engagement mechanisms. 

GameFi Concept Explained

Play-to-earn (P2E) is a common model and term GameFi platforms utilise. Axie Infinity was the first company to deploy it at scale with some victory. 

Concerning the model’s working, a gamer should purchase an NFT to utilize the platform, play the game, and win gaming tokens. The tokens can be exchanged for stablecoins or Bitcoin fiat currency. 

NFTs utilized to play the games can be improved as the players nurture their capacity in the game. One can sell the tokens to others via NFT marketplaces for a greater price due to the upgrade. 

GameFi projects scale the gamers’ base by leveraging the P2E model, which establishes the tokens’ supply side. Additionally, they can generate the demand side for the tokens by unveiling ‘in-game’ marketplaces. The marketplace sells in-game assets such as vehicles, weapons, and props.

The platform attains network effects when the gaming token’s demand and supply scale sustainability. This initiates a self-reinforcing righteous cycle in motion and can be recognized as a functional GameFi ecosystem.

P2E was the initial Web3 economic model to acquire traction within GameFi. However, it has mainly focused on developing a gamers’ base, which is considered GameFi’s supply side. Besides, the demand side that maintains the economy’s balance has not scaled quickly enough, leading to the rise of other models within GameFi.

For instance, ‘play-and-earn’ platforms have begun placing gaming experience ahead of earnings. According to their hypothesis, the gaming experience would ensure high gamer retention. 

The models are still undergoing testing and adjustments for sustainability and scalability. GameFi platforms have illustrated some success, making the ecosystem see the emergence of new players as support systems. 

GameFi Stakeholders

GameFi enthusiasts must understand its landscape to ease navigation in the ecosystem.

Game Studios

Game studios are in the business of developing games. Technology, such as Unreal Engine or Unity, is utilized. Game studios have creative minds creating the user experience, and developers later unveil them on screen. 

Generally, GameFi protocols such as Axie Infinity and Sandbox possess this capability in-house. GameFi organizations prosper in developing gaming experiences, and their game development ability should be unmatched.

Gaming Marketplace

The rise of several GameFi platforms has led to gamers requiring curation and aggregation services to pick and select the most suitable gaming experiences. Gaming marketplaces evaluate the landscape, choose the best games after testing them, and unveil them on their platforms.

Gaming marketplaces attempt to close the gap between Web2 and Web3 gamers. For instance, some have embraced a holistic strategy by offering to be a nonfungible token marketplace together with a game marketplace and curation engine.

Game Launchpads

Launchpads back young GameFi platforms that are developing and flourishing in the ecosystem. Projects are picked based on specific criteria and offered an environment to create and implement their strategy and vision. 

Launchpads back GameFi startups in getting suitable investors and scaling from there. This resembles the accelerator and incubator models in the Web2 startup world.

Future of GameFi

Because of the speed at which the GameFi ecosystem evolves, new models or variations of the present models will be witnessed. Already, stakeholders are exploring some other use cases. 

Several platforms can recognize the most suitable price for a nonfungible token mint. Further, others originally began as guilds but have pivoted or modified their model to become a games marketplace. 

Gaming space is rapidly changing, and experiments are being implemented magnificently. Besides the mentioned stakeholders, influencers, investors, and market makers are also involved.