Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
What Does The Financialization of Games Mean? GameFi
Messari | Jerry Sun | Nov 26, 2021
Explain it like I'm 5: GameFi.
What if you could keep what you built? And not only keep what you earned, but also sell it to others, loan it out, or showcase it off? While that sounds like a dream, this is the promise of GameFi, and it’s why leaders like Wilson are excited about what’s next. GameFi sits under a new genre where digital economies don’t just end when the game is shut off, thus blurring the boundary between in-game resources and real-world assets. For yourself and billions around the world, it represents a paradigm shift, a chance to take back time and ownership into the average gamer’s own hands.
See: Fintech and the Gaming Industry
GameFi, a portmanteau of “game” and “finance,” runs on blockchain networks designed to merge the fun of games with the financialization of in-game economies. Distributed ledger technology is important not only to help players provide verifiable ownership of assets, but also to structure marketplaces for trading both inside and outside the game. In this new type of game, all objects are represented as tokens on blockchain networks. So each sword, armor, or plot of land can be owned by you or anyone else on the blockchain-based game. In other words, every gamer within a blockchain-based game becomes both a participant and an owner.
While game types differ in narrative, a recurring objective is the accumulation of resources. Playing the game well allows you to accumulate more in-game currency (often represented as a fungbile token) or in-game assets (clothes, land, items) represented as non-fungible tokens (NFTs). What’s key here is once assets are earned, you can trade them on marketplaces for other cryptocurrencies – or fiat money like U.S. Dollars – for disposable income.
The World of GameFi
Player Guilds: As the community pushes to include new gamers, one challenge is the upfront investment needed to get started. Axie Infinity creatures, for example, cost upwards of hundreds of dollars to purchase. That cost is unaffordable for many players.
GameFi Aggregators: GameFi aggregators function as platforms for game-related content. Gamers can explore existing and upcoming games across multiple blockchain networks. Aggregators will also allow them to manage their in-game NFTs, tracking earnings, and demo mini-games. The idea is to create a one-stop shop for all tokens, game releases, promotions, and more.
See: Ep27-Mar 1: Blockchain Gaming and Esports with Shidan Gouran
Initial Game Offering (IGO) Launchpads: Launchpads are platforms designed to help facilitate the IGOs, which are fundraising events carried out via crowd sale. IGOs tend to happen when a project team needs funding to kickstart the game’s release. Investors provide funding to finance a game’s development in return for discounts or access to special features before the game’s launch. Participation in launchpads requires accreditation under US regulations.
NFT Blockchains: The pioneers of blockchain gaming, CryptoKitties, found out how congested activity can get on the network when transactions for the game’s NFTs began to account for more than 20% of all traffic on Ethereum in 2017. Competitors took that lesson to heart. Today, multiple blockchains support NFTs, bringing the so-called blockchain wars to GameFi. Games exist or plan to exist on the default network, Ethereum, as well as a variety of other general and NFT-purposed blockchains.
Developer Tools: Automating away parts of the development process helps game studios get to market faster. Astute entrepreneurs realized this need and now supply developers with the tools to succeed. These include application programming interfaces (APIs), software development kits (SDKs), payment platforms, and general infrastructure services. Most of the parties working on developer tools are centralized startups with venture capital investment.
See: Liquid Avatar Integrates with Disrupted Logic Interactive to Reach 60 Million+ Gamers
Game Studios: Game studios are the final piece in the GameFi ecosystem. In a recent study completed in the US and UK, 58% of the 197 video game developers surveyed declared plans to use blockchain in future games. 47% of the same group have already begun incorporating NFTs in their projects. Early trendsetters set the tone for blockchain games but the community is only getting started on full development efforts. That’s something to watch out for over the next few years.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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