What’s NFT & GameFi? A Look Into How They Are Related (Part1)

NFT & GameFi are both new terms in the blockchain ecosystem. These are important innovations in technology, finance, fashion, sport and the arts. As expected, NFT and GameFi have experienced impressive growth since hitting the mainstream in 2021, which makes people interested and encourages them to invest. So how do they work? What are the advantages and disadvantages? To learn more, keep reading the article below!

Advantages and Limitations of NFT

Advantages

Anyone can invest in NFT – Asset ownership is tokenized into NFT, which can be easily and efficiently transferred between anyone, anywhere in the world.
NFT ownership is secured by a blockchain – Through blockchain technology, the product represents an independent and unique digital ownership.
Diversifying your portfolio with blockchain technology – Investors can improve their knowledge of blockchain technology while also diversifying their investment portfolios by allocating a small amount of money to NFT assets

Limitations

NFTs have high price volatility – Misinformation and hype about NFTs can cause the price of an asset to go up or down by a lot, making it easy to fluctuate.
Using a lot of energy – Most NFTs are powered by the Ethereum blockchain, which runs on a protocol called “proof-of-work” that uses a lot of energy. As the report says, it will take a lot of power to make a single NFT. It’s about how much electricity a house uses in 1 1/2 days.
Need to own Ether (ETH) – Most NFT sales happen on the Ethereum platform. Therefore, investors need to own the blockchain’s native coin Ether (ETH) to buy NFT.

What is GameFi?

GameFi Definition

GameFi is a mix of gaming and finance. It basically says games that are built on a blockchain platform and let users earn money by playing games. Besides, GameFi Ecosystem uses cryptocurrency, NFT, and blockchain technology to make a virtual game world.

In the game, players will get rewards when they successfully complete missions, beat other players, and level up their characters. In addition, gamers have the ability to trade their assets on crypto exchanges and NFT markets.

How to GameFi Works

In GameFi, rewards can come in many forms, such as virtual lands, avatars, weapons, and costumes that can be used in the game. What makes GameFi different is that each project will have its own unique model and game economy. In particular, most of the assets in the game are NFTs that run on the blockchain. So, users can trade NFTs freely on the market and make more real money.

Figure 6: Example illustrating how GameFi Axie Infinity works

Depending on the game, players can earn rewards by doing activities, fighting in battles, or building structures on their land that make money. In addition, some games also give users the chance to make money without actively playing the game. Accordingly, they can stake or rent back assets in the game to other players.

Great benefits of GameFi

Freelance players make money – With blockchain technology and NFT, players can make money while they play. From there, it brings in a large amount of money.
Get ownership of digital assets – Digital assets such as virtual costumes, weapons, characters, etc. are built on blockchain technology. Therefore, it has verifiable properties. Gamers can trade their properties easily and securely.
GameFi focuses on users – GameFi develops a community of players. In it, players have the right to take part in governance, vote, and make big and small changes to the game.
Join at a low cost – Most GameFi is completely free to download and play.

Famous GameFi Platforms

Axie Infinity

Axie Infinity is currently one of the most popular blockchain games in the entire globe. As of mid-April 2022, it had more than 100,000 monthly users. In the game, you can play to earn money by doing things like trading property and completing quests. Beyond that, players will need to train, collect, and engage in combat with NFT creatures known as Axies.

The Sandbox

Sandbox can boast an impressive 2 million members that have registered their accounts with them. It is well known that this is an Ethereum-based decentralized gaming community. It gives creators the ability to share and make money off of their ‘voxel’ assets. More than that, the platform gives players free software they can use to create content, experience it, and make passive income.

Alien Worlds

Alien Worlds is a GameFi project that lets you complete a variety of missions using unique digital assets in the form of NFTs. At a conservative estimate, it attracts 850.000 users every month.

Players compete against each other by completing tasks and earning Trillium tokens ($TLM). In addition, $TLM lets players take part in special missions and go to different planets in the Alien Worlds universe.

Individual players are free to organize their own groups and compete in a variety of challenges. The cross-chain feature is one of the aspects that sets Alien World apart from other games. As a result, players can move between different blockchain networks.

Conclusion

Undoubtedly, NFT was important in shaping GameFi into what it is today. The best thing about GameFi is that it lets users own NFT assets in the game and earn money from them. As a result, the NFT is regarded as a reward for gamers and serves as an economic stimulant to foster growth. So, if you’ve read the above article, you already know what NFT and GameFi are and how they work.

Disclaimer: The information in this article is not investment advice from CryptoChill. Cryptocurrency investment activities are not recognized and protected by the laws of some countries. Cryptocurrencies always carry many financial risks. Do your own research before making any investment decisions based on this website’s information.

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What’s NFT & GameFi? A Look Into How They Are Related (Part2)