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How to participate in the rise of GameFi

17 Feb 2022

As play-to-earn games such as Axie Infinity gain in popularity, we offer some pointers for those looking to hop onto the next game!

How to participate in the rise of GameFi

TL;DR

  • GameFi has risen in popularity with the increasing adoption of blockchain in the gaming industry.
  • Players can earn digital assets by playing the game and generate an additional source of income
  • GameFi has clear differences from traditional games, and is tightly coupled with Metaverse and NFTs
  • Before you hop onto a P2E game, take a look at the roadmap and community reviews. Most importantly, enjoy playing the game!

Introduction

GameFi refers to the financialization of video gaming where players are paid with monetary rewards from playing the game. It is a fusion of the two words ‘Game’ and ‘Finance’, and has grown with the increasing adoption of blockchain technology in the gaming industry.

Aspects of GameFi include

  • Ability to earn digital assets (coins/tokens/NFTs) through in-game efforts (farming, quests, PVP, trading, etc).
  • These assets are stored on the blockchain, allowing ease of transfer and removes the risk of such assets ‘disappearing’ if the game is shut down.
  • Players stake their assets to generate passive income or breed/mix their assets to create new assets (dependent on each game and their features).
  • Linkage of the in-game economy to real money, where users are able to sell their tokens/NFT and convert to USD with ease.
  • Ability to participate in game updates / roadmaps decisions through DAO (Decentralized Autonomous Organisation)

Axie Infinity, perhaps the most well-known P2E game to date, gained tremendous popularity in 2021, where many players in countries such as Philippines, Indonesia & Venezuela turned to playing this game as their full-time job. Many had either lost their jobs and/or income sources due to COVID, and the earnings from Axie Infinity were able to make up, if not exceed, their usual income.

Other popular existing and upcoming games include Sandbox, Alien Worlds, Splinterlands, Star Atlas, Cryptoblades, Gods Unchained, Illuvium and Gala Games.

Traditional games VS P2E games

There are some clear differences between traditional games vs P2E games. However we would slowly see a merging of the two in the coming few years, as traditional gaming companies venture into this space. Traditional gaming companies such as Ubisoft, Electronics Arts (EA), Zygna are moving / considering to move towards blockchain and Web3 technologies. 

How much can you earn from playing P2E games and how sustainable is it?

Keep in mind that earnings can be very subjective, as it is highly dependent on the following:

  • Time of entry into the game
  • How many hours spent on the game
  • How much initial investment spent on the game (to get a head start)
  • Investing into assets such as NFTs and trading them instead of only playing the game
  • Leaderboard ranking rewards and key updates to the game that might change the rewards structure

Based on a survey by CoinGecko done in 2Q21, players of Axie Infinity earn on average 151-200 SLP per day. This would allow them to earn close to US$55.50 per day or US$1,665 per month with SLP worth above US$0.30 back then. However, at the current price of USD 0.03 per SLP, a player would only earn around US$6 for four hours of gameplay. Thus, it is difficult to rely on such games to fully replace a job. Treat it as a part-time hobby / side income, and it will be less stressful and more fun.

Most games will offer good earning potential when they first launched, in order to attract new players. However, as they mature over time, the earnings will decline due to a reduction in rewards.

What would Beansprout do?

Some general pointers to consider prior to investing your time and money into a P2E game:

  • View the roadmap and whitepaper to understand the goals and potential big changes within the next few months: Look out for timeline on earnings increase/reduction, launch of certain features which will potentially increase user base / utility of tokens
  • Review the general community review and sentiment on Discord, Twitter, Reddit and Youtube: Important to understand how many players there are in the game if it is new (gauge if there is huge initial hype and interest or simply a short-term play)
  • Factor in the time and initial investment that you are able to spend on the game: Some games also require an upfront investment first (can range from a few dollars to a few hundred/thousand dollars)
  • Hold the gaming token/coin/NFTs while playing the game: If you are bullish on the future of the game and/or want to gain exposure to this GameFi trend, holding and staking the asset(s) could help to supplement earnings from playing the game.
  • Enjoy playing the game! You must at least have an interest in the game / game genre, before deciding to spend your valuable time on this, otherwise it will be a chore to play and earn