Disclaimer: Cryptocurrency speculation carries risk, and any financial information in this article should not be taken as financial advice.
From the early days of the video game industry, developers have sought to create worlds as compelling as real life. While technological advances in graphics, computation, and more have certainly helped bridge the gap, games still lack many of life’s fundamental incentives, like the ability to earn a living for the vast majority of players. But GameFi, an emerging crypto-gaming category, may have the potential to make playing a full-time profession for the masses. This blog will guide you on what GameFi is, trends, and some advice for anyone stepping into this field for the first time.
What is GameFi?
GameFi refers to blockchain-based games that allow players to receive real-world financial benefits. It’s a confluence of gamification, decentralized finance(DeFi), non-fungible tokens (NFT), and play-to-earn models (P2E), which generally involve tokens granted as rewards for performing game-related tasks such as winning battles, mining precious resources, or growing digital crops.
What Comes Next?
Blockchain gaming may be in its infancy, but it’s already dominating its conversation. Throughout the history of traditional mobile games development, we see that we are in the transition from GameFi 1.0 to GameFi 2.0 in which triple-A titles are constantly emerging, followed by GameFi 3.0 which is led by AR/VR technology.
In GameFi 1.0, most of the blockchain games, whether with single/double token or token standards are belong to mining games that have less fun of gamification. However, its own economic model is the most important. With that said, many players or investors are likely to encounter (fraud) projects which have a short life span at this stage. From another perspective, we truly believe that projects with full-fledged gamification and DeFi/NFT will make their debuts in the near future.
Therefore, it’s hardly surprising, that the convergence of blockchain and gaming is now attracting significant investment. As more and more traditional game players and investors have expressed interest in blockchain gaming, they will definitely need a more rational perspective to invest in GameFi projects. Here is my advice to those first time GameFi players/investors:
1. Maintain a balanced mentality when evaluating your personal investments.
As we all know, when making investments, you must often screen many projects. If you choose a good one, you will get considerable benefits. If you choose a bad one, you may suffer heavy losses. Investment is like a marathon, not how fast you start, but whether you are running on the right track.
In the mirrored world of investment, the choice is more important than effort, and the height of cognition determines the wealth you can have.
2. Look at the development team behind the scene: if they have the strength to create potential DeFi Games.
The current GameFi projects can be roughly divided into two categories. One is to further expand the game based on the traditional mining model, and the other is to make the mining process into a game directly.
The former usually require staking tokens or LP and then supplemented by NFT to provide gains, or directly staking the project’s NFT; the latter allows users to play a game on the ground, just like people’s daily games but gains Game props can be sold for profit.
We can also take the past successful experience of the project party and the team as an essential observation point.
3. Look at the investors behind the project: if they are reliable and reputable.
The lead investor is significant. A good lead investor can bring traffic and heat to the project and even participate in the design and iteration of the project's economic model.
If a well-known venture capital participates in the investment, it will also add a lot of visibility and credibility to the project.
4. Analyze community influence.
Suppose the project has strong community influence on socials such as Twitter, Facebook, Reddit, etc. It can be considered that the early launch of this project will be relatively smooth.
Join the community such as Telegram or discord to see if the project consistently provides values and updates.
5. Study the mechanics of the game economy to see if this project is planned for the long run.
A look at the issuance of tokens
First of all, the distribution situation refers to the official plan of how to distribute tokens in the white paper. The most critical points for ordinary players are the ratio of the official to early investors and themselves and the number of tokens to be distributed to players.
Second, the lock-up situation refers to how long the official plan is to distribute tokens. The core concern is the token lock-up that the official reserves for itself and investors.
A second look at the deflation mechanism
The deflation mechanism refers to whether the official will burn and repurchase so that the entire game economic model will be deflationary in the long run, which is very important for the ecology of the game. The first crucial deflationary method is to have a fixed combustion mechanism in the game to keep the entire game economy deflation for a long time. The second method is the repurchase mechanism which means the official tokens will be obtained in a certain way. They will be distributed twice or directly destroyed by specific means.
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