The world of crypto is not static, and it’s constantly changing and evolving into new forms and entities. It redefines many markets and businesses, and gaming was not left aside: earning money while playing, who would’ve imagined that? And yet, here we are, and today we will dissect this phenomenon and try to understand whether you should spend your time and money on it.

What is GameFi?

The phenomenon of GameFi represents a symbiosis of two concepts: “gaming” and “finance”. In a broader sense, GameFi stands for a play-to-earn model, which allows people to make a profit by using a variety of in-game mechanics and sometimes game-related mechanics, such as staking. Users can generate revenue by doing a wide range of tasks that differ from one project to another and may include PvP (player vs. player) battles, nurturing in-game creatures, finishing quests, owning “lands” and so on.
The play-to-earn concept is still very new to the crypto world. However, it is already considered to be a “game-changer” not only for the world of digital assets, but also for the multi-billion dollar video game industry as well. .
The types of games can vary from RPGs (role-playing games) to card games, and usually it is required of the player to make some sort of investment before they are allowed to play: buying NFT characters or the game’s crypto are the most popular ones. Let’s take a closer look at how a typical GameFi project is structured.

Screenshot from crypto game Cryptoblades
Cryptoblades, Riveted Games LLC; Source:


Common traits of crypto games


When talking about “traditional” gaming, the players were receiving entertainment value only, and the developers and publishers were the ones making money. However, nowadays, with the implementation of cryptocurrencies and NFT in the gaming sphere, both players and developers can earn money. So the whole system has faced an ownership shift.
In GameFi projects, most of the in-game assets and sometimes the entire ecosystem are maintained by players, not by developers, like in almost every “traditional” video game, where the players usually only consume, but rarely create. Certainly, in the play-to-earn games, there are still core mechanics and gameplay elements that are already implemented in the code, but a large part of the content is created and distributed by the players themselves.
You can find many different types of GameFi projects. They can differ in design, gameplay mechanics, lore, and so on. However, there are a number of certain traits that all these games usually share:

Blockchain technology

GameFi apps can be built on different platforms, however, just like with other kinds of dApps, the most usable platform is Ethereum. Still, because of its occasional congestion and thus extremely high fees, blockchains like Binance Smart Chain or Polygon are also very popular among game developers. 

Game tokens

Game’s native tokens are used for distributing rewards and maintaining project’s value. It is also worth mentioning that investors can buy these tokens on the exchanges, thus without even playing the game. However, you can still earn them while playing, thus making them technically free if we don’t count the time and effort that are being invested while playing. 

NFT (Non-fungible tokens)

NFT trading is a second way of earning while playing. Many projects use NFTs as assets or characters that can be traded or recycled into more rare NFTs. It is a usual practice for most NFT games to have a paywall — a requirement that oblige newcomers to buy some in-game assets before you are allowed to start playing (e.g. Axie Infinity). However, there are some free-to-play games that do not require any upfront cost (e.g. Gods Unchained).

Passive income

Even though NFT and game tokens are two most popular methods of earning money while playing, some of the GameFi projects offer ways of making passive income: yield farming, liquidity mining and staking.


How can you earn in GameFi?


These are the ways of earning that can be traced to almost every GameFi project: crypto farming, NFT trading, and passive income that includes yield farming, staking, and liquidity mining. Surely, these methods can vary in details, but the core mechanics are identical. Let’s take a closer look at one of the most common ways of earning while playing—NFT trading.
The brief description of how it works is that players take part in the in-game economy. Both the developers and users maintain the ecosystem and sustain the overall interest for other players to stay in the game for as long as possible. In return, players can obtain rewards in the form of NFTs and cryptocurrencies, which can be traded for money.
However, this is only a brief description of barebone mechanics. When in game, things get a little more complicated and filled with details.

For instance, let’s take the most common way of earning via trading NFT on the example of The Sandbox game. It sounds pretty simple: you play the game and receive NFTs during the gameplay and then you trade them on the marketplace for cryptocurrency. 

Screenshot from The Sandbox, GameFi project with its own metaverse
The Sandbox; Source:

In reality, The Sandbox game is one of the GameFi projects in which the entire game universe and in-game content is created and maintained by the players.
First, the user has to buy himself or herself a “land” first, which is an in-game asset that is bought in the form of NFT. Then, the user should develop it, increase its value by creating housing, build a multiplayer experience by hosting contests and events, and, on top of that, create assets and games on this land.
The more time and energy you put into it and the more other players endorse your land, the more expensive it will cost in the marketplace when you decide to sell it there. The main idea stays the same across every GameFi project: the more you play and evolve within the game’s universe, the bigger the prize you can get for your effort.
So, even though it sounds easy at first, in reality it’s much more complicated and there are too many variables you have to consider.

The process of earning from the Axie Infinity example


Some of the GameFi projects can be very profitable. Some of them try to implement unique gameplay or economics. There are more than a thousand blockchain games out there already, and it’s not possible to cover all of them. Still, to make things more clear-cut, let’s take a closer look at Axie Infinity, one of the most popular representatives of the play-to-earn games, where players can train, battle and trade their “pets”. If you ever heard about the Pokemon franchise, then this game will be easy for you to comprehend.
In the Philippines this game became a major success amid the COVID-19 pandemic, since many people lost their jobs. It’s popularity there has reached such an incredible level that around 40% of all people that are playing Axie Infinity are from the island nation, and now the Philippine government plans to tax the player’s income.
According to Luis Buenaventura, the head for Yield Guild Games, one the largest Axie Infinity guilds in the Philippines, an average Axie Infinity player makes around $400 per month. Still, these are not the final numbers, and players can find step-by-step guides on how to maximise their profit, so they could earn more than $1000 per month.
It is also worth noting that Axie Infinity is one of those games that require you to invest first — in their case, a player first must buy a starter team of three in-game creatures called Axies. The cheapest Axie can cost around $100-120 or 0.024-0.029 ETH (as of 27.11.21), so the player must be prepared to spend around $400-500. Keep in mind that Axie with better stats will cost more, and the most expensive ones can be bought for ridiculously high prices, sometimes up to millions of dollars. 

Axie Infinity marketplace, where players can buy Axies for ETH
Axie Infinity marketplace; Source:

There is another side to this: the more a player nurtures and upgrades his or her Axie(s), the higher it will cost in the marketplace, in case the player would like to sell it. So with a certain amount of time investment, this business model works on both sides — the user can spend AND earn a lot.

One of the main ways of making money is that players can farm in-game tokens called Smooth Love Potion (SLP), which has unlimited overall supply, but has a limited amount of how much per day the player can earn them. These potions can be sold as tokens for a price of $0.059 (as of 27.11.2021) or they can be used to breed their Axies to create new offsprings, which can be used by players in battles or can be sold on the marketplace.
According to CoinGecko’s survey that was conducted earlier this year, the majority of players (41%) earned between 151-200 SLP per day, or around $33-$44, which leads to the conclusion that their monthly income was equal to $1,027-$1362. However, at the time the study was conducted, the price for SLP was around $0.223, so nowadays the earnings based solely on SLP farming are lower than they were several months ago.

Gameplay of Axie Infinity crypto game
Axie Infinity; Source:

Competing in PvP (Player vs. Player) and PvE (Player vs. Environment) battles, collecting rare Axies and harvesting resources are both not only ways of earning but also a backbone part of the game’s mechanics and ecosystem. By completing these tasks, players achieve different prizes, resources and pets that come in the form of NFTs that can be also sold on the marketplace, or be used to increase the stats of player’s Axies. 
Finally, a player can also become a sponsor. What that means is that he or she can lease out Axies to other players. In the end, all the SLP that’ve been earned are split in 50% or more, depending on the agreement between the players. 
There is another way of making money, and that is staking. Even though it’s not fully related to any kind of playing, this method is still part of the Axie Infinity ecosystem. The rules look pretty much the same in case you’ve ever tried staking: stake for a long period of time, start when the price is low and withdraw when the price is high. Most experienced investors usually take only their earnings, leaving their initials untouched.

To sum up, we can see from the example of Axie Infinity how users can earn while playing: farming crypto, NFT trading, staking and leasing.
However, since we are talking about crypto, everything is a matter of volatility. Thus, in-game tokens and NFTs have a fluctuating price, and there is no possible way to predict the accurate sum of money the player can earn while playing the game. 


What projects are worth looking at?


There are hundreds of GameFi projects out there, but we will look at three most prominent ones which have the largest market capitalization: Axie Infinity, Decentraland and The Sandbox.
We’ve already discussed Axie Infinity: it’s a battling and trading game in which players can collect, raise, breed and trade “Axies”, or creatures that are based on axolotl. This is one of the most well-known and popular NFT games within the crypto community. It is worth noting that Axie Infinity is still a game in its classical meaning: it has core mechanics and follows most of the traits that can be found in non-NFT PvP and PvE online RPG games.
Decentraland, just like The Sandbox, differs from Axie Infinity. Instead of classical gameplay, these two projects represent metaverse, where players own lands and other in-game assets, create their own housings, maintain the whole ecosystem and so on. Certainly, players can also create their own games within these metaverses so other players could visit their lands and entertain themselves, however this mechanic is not like in “traditional” games.

In conventional games, be that NFT representative of GameFi or single-player that’s not related to blockchain anyhow, the core gameplay is developed and structured by the developers and they are the only ones who manage the rules of the game. The Sandbox and Decentraland allow the users to be both developers and players.
Certainly, there are other projects that are worth looking at, however the rule of DYOR must be also followed when dealing with GameFi, just like before investing in “traditional” crypto projects.  

Top gaming tokens by market capitalization
Top gaming tokens by market cap; Source: CoinMarketCap


Is GameFi the future? What do game developers think about it?


For now, it seems that GameFi is on the rise and its popularity continues to grow. So for how long will this trend continue?

This business model is still young and the number of GameFi projects increase on a daily basis. It is safe to say that apart from the crypto world, GameFi can also easily get its chunk of attention and money from traditional mainstream video game entertainment sphere as well.
There are still many sectors and technologies that remain uncovered for GameFi, such as VR (virtual reality) or AI (artificial intelligence) — extremely promising technologies that were barely even touched by the conventional gaming industry, not to mention play-to-earn games. In case it continues to expand and evolve, we can expect this model to prosper and continue to grow in popularity as well. And we are not the only ones who think that way.
According to one of the biggest video game publishers Electronic Arts (EA), NFT’s are “an important part of the future of the gaming industry”. Since EA owns the rights for publishing games based on the Fifa football series, which uses a “card packs” system for collecting players in their games, they believe creating digital experience in the form of NFT cards of football players is something the football fans would love to see, and the sooner that will happen the better. 
There is still no precise info of when will that can happen, but EA has already listed job offers that include references to blockchain and NFTs.

Fifa's Ultimate Team
Fifa’s Ultimate Team mode; Source: Rockpapershotgun

Another major video game developer and publisher Ubisoft has also declared that they have serious intentions to develop “play-to-earn” NFT and blockchain games. Moreover, they’ve been investigating blockchain games for several years already.
In addition to that, Ubisoft has recently invested 65 million dollars into crypto gaming company Animoca Brands. According to Ubisoft CEO Yves Guillemont, video game industry is “changing regularly with lots of revolutions, and blockchain is one of those revolutions which is going to grow the video game industry quite a lot.”

Incomplete GameFi projects and crypto games from Animoca Brands
Animoca Brands projects; Source:

GameFi is still young and it surely hasn’t reached its potential yet. The fact that major video game publishers plan to implement these core mechanics into traditional video gaming proves that it has support even beyond the crypto representatives and enthusiasts.
However, it’s not that simple and there are many prepositions to this idea of “play games and earn money” model, since in most cases the player needs to invest first, and in addition to money there is always time investment as well. So it is important to keep in mind that you can spend hours farming and grinding (completing repetitive tasks) before you’ll be able to see your first earnings. In case you can afford both, then NFT games might be an interesting choice of investment.