Home Blockchain How GameFi is sparking a new wave of blockchain adoption

How GameFi is sparking a new wave of blockchain adoption

How GameFi is sparking a new wave of blockchain adoption
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Global blockchain technology market reaches $5.9 billion in 2021 and is expected to snowball at an annual growth rate of 85.9% through 2030.

Several factors can be attributed to this growth rate, including the growing interest in DeFi (decentralized finance) and non-fungible tokens (NFTs). Despite the positive forecasts, these verticals still have a lot to offer.

Creating real impact in the global blockchain ecosystem can be fun and that’s exactly what the play-to-earn (P2E) paradigm brings to gamers everywhere.

In reality, 18% of global NFT players aged 18 to 34 have experienced P2E gaming. Southeast Asian regions, alongside India and Brazil, have the highest participation rates.

The impacts of DeFi and NFTs on P2E

The emerging field fueled by DeFi and NFT technologies enhances attractive incentives for the GameFi ecosystem. For example, players can earn token rewards by completing missions in a game. In most cases, tokens earned can be exchanged for local currency or other digital assets.

DEXs, the pinnacle of DeFi’s core offerings, are a popular route used for token exchanges. NFT marketplaces have also grown in popularity as an integral pillar of GameFi.

However, as fun as it sounds, many P2E games have high entry barriers for newcomers. For example, many GameFi platforms require users to purchase NFTs before starting.

These can be characters, weapons or a treasure pack. In a popular game, players had to advance $1,100 just to start a hefty amount that far exceeds the expected budget of most gamers.

Reduce barriers to entry with NFT rental

Fortunately, innovations around the merger of DeFi and NFTs are introducing new ideas that can make P2E more accessible. For example, smart contract-based lending and borrowing protocols allow gamers to acquire the NFTs they need with an affordable budget.

Players can pay a nominal fee to borrow in-game assets, without providing risky collateral to lenders. Instead of pre-purchasing expensive NFTs, users now have the freedom to try out games by renting digital assets. If the player decides to stay, he can choose to buy the NFT he likes and continue having fun.

At the same time, players who lend their NFTs have the opportunity to earn passive income without any risk of default. This is made possible thanks to the concept of expirable NFTs. It eliminates the risk of borrower default since the leased NFT is actually an expiring version of the actual NFT.

After a specified period, the rented NFT is automatically returned to the lender via trustless smart contracts. This allows players to experience a new P2E game for, say, two weeks whereupon the borrowed NFT is transparently returned to the lender. This helps make P2E gaming much more attractive and perhaps economically sustainable.

Drive an inclusive P2E ecosystem with guilds

Besides the technology-driven approach with NFT leasing, the industry is exploring other models to help newcomers enter the P2E space. Concrete example community-focused gaming guilds provide resources to players, also known as scholars, who share their earnings with the guilds.

Similar to traditional scholarships, initial resources and support are provided to the player. Guilds often provide the game assets, tools, and training necessary for players to start making money. The distribution of rewards varies by specific guilds. Typical splits can be 70/30 where the player keeps the majority of the winnings.

Scholarships for new entrants to the P2E landscape can be a game-changer in many ways. For example, academics from any region or financial background can immediately start making money to level the competitive playing field. Earned tokens or NFTs can be directly exchanged for other digital assets on Web 3.0 marketplaces or even for fiat currency.

Guilds also give back by supporting various initiatives, such as developer fund programs. These initiatives allow manufacturers to create more innovative solutions, including games that do not require upfront expenditure. These developments led to several variations of GameFi, including play-and-win and free-play models.

Disruption through innovation

Such dynamics led to a boom among young middle-aged players. There are instances in which a player has reached three times more income compared to his normal daily work.

The foundations of DeFi and NFTs have demonstrated new growth potential for the blockchain gaming industry. New NFT rental capabilities, coupled with community guilds, encourage newcomers to participate with less friction. The ball is now in the industry’s court to further innovate and bring millions of new users into the GameFi space.

Hikaru Kasai is one of the co-hosts of The human and the machine.

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