A Deep Dive Into GameFi Models

GameFi isn’t a new concept, in fact, CryptoKitties was the first project to bring this concept to light in 2017. It is known for pioneering the play-to-earn gaming model, which is now the standard basis that all blockchain games follow. The model was a huge hit, bringing the game 1.5 million users and $40 million in transaction volume. The fact that this occurred during the early years of the crypto market was a significant achievement for the game.

Since then, the sector has evolved in response to increasing user demands. Today, there are around 1,498 GameFi projects, with numbers rising by 99% year on year. In 2022, for example, investment in GameFi reached $3.7 billion, exceeding the total of $780 million in 2021. And with these expanding numbers, game revenue models have also evolved. Projects are moving away from the original play-to-earn model and toward other models that guarantee long-term viability.

Let’s take a look at the different models and how they are benefitting users.

Play- to- Earn

Play-to-earn (P2E) games enable players to earn real-world monetary benefits for playing the game. The model employs crypto and NFTs to power and monetize the in-game economy. While NFTs represent in-game items (like avatars, outfits, etc), cryptocurrencies are used to incentivize the players. NFTs also provide players complete ownership of in-game assets, enabling them to benefit from that outside of the game. Even every game action, including quests and challenges, is rewarded with a native in-game cryptocurrency.

Further, P2E has various advantages, including the opportunity for users to earn money, own assets, and generate value for the community. There is no better game to describe this than Axie Infinity. Axie is a Pokémon-style monster-battling game in which players capture cartoon creatures known as Axies. Each Axie is an NFT with distinct skills and weaknesses, and players may adventure, combat, and breed their Axies as they go through the game. As a reward for their efforts, players receive Smooth Love Potion (SLP) crypto tokens.

Although P2E games overcome many traditional gaming problems, they nevertheless have limits. The first is the model’s emphasis on earning rather than gaming experience. This has led to inflationary tokenomics, causing games to collapse. Even the hefty entrance cost has caused gamers to forsake P2E games.

Play-And-Earn

Play-and-earn is more of a game progression as compared to the play-to-earn model. It is an…