Not just gaming: How does GameFi enable players to earn while playing?

Have you ever thought about earning money by playing games? It sounds like science fiction, but with the support of blockchain technology, this has become a reality. This article will delve into this emerging field that combines gaming and finance.

The Great Era of Game Monetization: The Explosion of GameFi

Honestly, what is GameFi? The answer to this question is rewriting the rules of the entire gaming industry. According to DappRadar’s Q3 2023 report, GameFi remains the most active sector within the dApps ecosystem. Even more astonishing, in 2023, the financing for Web3 games and metaverse projects reached as high as $2.9 billion.

By Q1 2024, the average daily active wallets in the Web3 ecosystem reached 7.7 million, a 77% increase quarter-over-quarter. Among these, gaming applications accounted for 30%, with daily active wallets surpassing 2.1 million, a 59% increase quarter-over-quarter. These data indicate a phenomenon: more and more people are no longer just viewing games as entertainment but as a source of income.

What exactly is GameFi?

Simply put, GameFi is a combination of “Game” and “Finance.” It leverages blockchain technology to allow players to earn real value digital assets during gameplay.

Unlike traditional games, where virtual items only exist within the game and can be deleted at the developer’s discretion, assets in GameFi—whether tokens, NFTs, virtual land, or character equipment—are truly owned by players. These assets can be traded on open markets for real money.

This shift is made possible by the distributed ledger nature of blockchain. Every transaction and ownership record is permanently stored on the chain and cannot be tampered with. Even if the gaming platform encounters issues, players’ assets are securely stored on the blockchain.

From Bitcoin to Ethereum: The Evolution of GameFi

The earliest attempts at gamified earning appeared within the Bitcoin ecosystem. Some people built websites where users could earn BTC by playing mini-games. However, this idea quickly hit a wall—Bitcoin’s blockchain has limited block space, slow processing speeds, and high transaction fees. These issues led developers to turn to Ethereum.

Ethereum is a platform supporting smart contracts, enabling complex applications. It once ran smoothly until 2017, when CryptoKitties, a blockchain game, suddenly exploded in popularity. A flood of users caused severe network congestion and skyrocketing Gas fees. This lesson told developers: a more efficient underlying public chain was needed.

As a result, public chains like Solana, Harmony, Polkadot, WAX, BNB Chain, and Avalanche began to emerge. These chains, with higher throughput and lower costs, became new battlegrounds for GameFi.

Data shows that Polygon led the market in Q1 2024, thanks to a solid gaming ecosystem and initiatives like the “Inevitable Games Fund.” Ronin and Solana also demonstrated strong competitiveness, while BNB Chain’s technological updates and SKALE’s partnership programs drew attention.

The Three Core Operational Mechanisms of GameFi

1. Play-to-Earn (P2E)

This is the most classic GameFi model. Players earn game tokens or NFTs by completing tasks, participating in battles, upgrading characters, and other activities. These assets can be sold directly on exchanges or used within the game.

Axie Infinity exemplifies this model. Players collect, breed, and battle virtual creatures called “Axies.” The in-game token SLP (Smooth Love Potion) can be used for upgrades or exchanged for cash on exchanges.

2. Move-to-Earn (M2E)

This model encourages physical activity in the real world. Stepn is a representative: users wear NFT sneakers and earn GMT tokens by running, walking, or jogging. It not only allows players to make money but also promotes a healthy lifestyle—two birds with one stone.

3. Tap-to-Earn (T2E)

This is the newest and lowest-threshold model. Notcoin is a representative: players only need to tap on the screen to accumulate virtual currency. This minimalist design allows anyone with a smartphone to participate.

Traditional Games vs. GameFi Games: The Fundamental Difference

On the surface, Call of Duty, Fortnite, and Axie Infinity are all games. But their core logic is completely different.

Traditional games adopt a “win” model—using skills to defeat opponents and earn virtual rewards. These rewards are only valuable within the game, and developers hold absolute control over them.

GameFi games, on the other hand, adopt a “play-to-earn” model—participating in game activities to acquire assets with real economic value. More importantly, players own these assets and have the right to trade them.

Why is GameFi becoming increasingly attractive?

True Asset Ownership

In GameFi, anything you acquire through the game—swords, armor, virtual land, character skins—is truly yours. No one can delete them from your account. This immutable ownership does not exist in traditional games.

Multi-layered Income Streams

Players can earn through multiple channels. The direct method is earning tokens and NFTs via game activities and selling them. The indirect method involves staking assets through DeFi mechanisms to generate interest. Some gaming guilds even allow players to rent out their assets to others and earn commissions.

Community-Driven Governance

Unlike traditional games where decisions are made solely by developers, many GameFi projects involve community governance. Major updates and economic parameter adjustments are decided through token holder voting. This means players’ voices are genuinely heard.

Low Entry Barriers

While some high-level games require initial investments to purchase NFTs, many GameFi projects are completely free for newcomers. This breaks the traditional gaming consumption barrier, allowing anyone worldwide to participate.

Starting Your GameFi Journey: Three Steps

Step 1: Prepare a Digital Wallet

Choose a wallet compatible with the game. If the game runs on Ethereum, MetaMask is the standard choice. A wallet is like your vault—storing NFTs, tokens, and handling transactions both inside and outside the game. It is recommended to create a dedicated wallet for GameFi to reduce security risks.

Step 2: Fund Your Wallet

Some games are free to play, while others require purchasing initial assets. You need to understand which token economy the game uses and fund accordingly.

Step 3: Play and Earn

Participate according to the game rules—complete tasks, join competitions, and accumulate assets. The earned tokens and NFTs can be sold on the market or staked for passive income.

DeFi Integration: The Secret Weapon for Passive Income

The true strength of GameFi lies in its integration with DeFi (Decentralized Finance). What does this mean? The assets you earn in the game can not only be sold but also generate yields.

Through staking mechanisms, players can lock NFTs or tokens to earn annual yields. Some gaming guilds go further: they collect assets from players who cannot afford expensive NFTs and rent them out, earning commissions. This creates a multi-layered economic ecosystem.

The Future of GameFi: 2024 and Beyond

The market outlook is extremely optimistic. Predictions indicate that GameFi will grow from the current 3% to 10% of the global gaming market. Several factors contribute to this growth:

Technological Advancements

Layer 2 solutions like Polygon significantly reduce transaction costs and delays. The integration of AI is also improving game quality, making them not just earning tools but genuinely engaging experiences.

Scale Expansion

Industry estimates suggest that by the end of 2024, active gamers will reach 50 million. This scale will attract more developers and investors.

Ecosystem Maturation

Community-driven development and sophisticated tokenomics are creating sustainable gaming environments. This means not all projects will fade away—those with real value will remain.

Summary

What is GameFi is no longer an unfamiliar question. It is a revolution in the gaming industry—a new era where players truly own assets, participate in governance, and earn income. From P2E to M2E and T2E, various models are attracting players worldwide.

As blockchain technology matures, cryptocurrency applications expand, and new GameFi projects emerge, this field’s growth is irreversible. Whether you are a seasoned gamer or an investor, GameFi is worth paying attention to. Because here, your gaming time can have real economic returns.