How GameFi is driving a new wave of blockchain adoption
HodlX guest post Submit your post
The global blockchain technology market reached $5.9 billion in 2021 and is projected to snowball at a CAGR of 85.9% until 2030.
Several factors can be attributed to this growth rate, including the growing interest in DeFi (decentralized finance) and non-fungible tokens (NFT). Despite the positive forecast, these verticals still have a lot to deliver.
Making a real impact in the global blockchain ecosystem can be fun and that is exactly what the play-to-earn (P2E) paradigm brings to players worldwide.
In fact, 18% of global NFT players aged between 18 and 34 have experienced P2E gaming. Southeast Asian regions, along with India and Brazil, have the highest participation rates.
The impacts of DeFi and NFT on P2E
The new field powered 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, the 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 exchange. NFT marketplaces have also grown in popularity as an integrated GameFi pillar.
But as fun as it may sound, many P2E games pose high barriers to entry for newcomers. For example, many GameFi platforms require users to purchase NFTs before getting started.
This could be characters, weapons or a treasure pack. In one popular game, players had to prepay $1,100 just to start a hefty amount that is way beyond the expected budget of most players.
Reduce entry barriers with NFT rental
Fortunately, innovations around the fusion of DeFi and NFT are introducing new ideas that can make P2E more accessible. For example, lending and borrowing protocols based on smart contracts allow players to obtain the NFTs they need on a reasonable budget.
Players are able to pay nominal fees to borrow in-game assets, without providing risky collateral to lenders. Instead of buying expensive NFTs up front, users now have the freedom to try out games by renting digital assets. If the player decides to stick around, they can choose to buy the NFT they value and continue to have fun.
At the same time, players who lend their NFTs open up the opportunity to earn passive income without the risk of default. This is made possible through the concept of expiring 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 leased NFT is automatically returned to the lender via trustless smart contracts. This allows players to experiment with a new P2E game for, say, two weeks whereupon the borrowed NFT is seamlessly returned to the lender. This helps make P2E gaming much more attractive and perhaps financially sustainable.
Running an inclusive P2E ecosystem with guilds
In addition to the technology-driven approach of NFT rentals, the industry is exploring other models to help onboard newcomers to the P2E space. Case in point Community-centric gaming guilds provide resources to players, also known as scholars, who share the revenue with the guilds.
Like traditional scholarships, the initial resources and support are given to the player. Guilds often provide the game assets, tools, and training required for players to begin earning. Reward sharing varies between specific guilds. Typical splits might be 70/30 with the player keeping most of the earnings.
Scholarships for new entrants to the P2E landscape can be a game-changer in many ways. For example, researchers from any region or economic background can immediately start serving to level the playing field. Earned tokens or NFTs can be exchanged directly for other digital assets on Web 3.0 marketplaces or even for fiat currency.
The guilds also give back by supporting various initiatives, such as developer fund programs. These initiatives allow developers to create more innovative solutions, including games that do not require upfront costs. Such developments have led to several GameFi variants, including play-and-earn and free-to-play models.
Disruption through innovation
Such dynamics have led to a boom among young to middle-aged players. There are cases where a player earned three times the amount of income compared to his regular day job.
The foundation of DeFi and NFTs has shown a new growth potential for the blockchain gaming industry. New NFT rental opportunities, combined with community guilds, encourage newcomers to participate with less friction. The ball is now in the industry’s court to further innovate and drive millions of new users into the GameFi space.
Hikaru Kasai is one of the co-hosts from The Human & Machine.
Follow us on Twitter Facebook Telegram
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making high-risk investments in Bitcoin, cryptocurrency or digital assets. Please note that your transfers and trades are at your own risk and any losses you incur are your responsibility. The Daily Hodl does not recommend the purchase or sale of cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured image: Pixabay/ArtTower
