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Things To Note Before Exploring GameFi (Including Tips That Can Help You Avoid Scams)

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Traditionally, we play games just for fun and sometimes we even pay to play these games. Blockchain technology is changing every aspect of our human society and is not leaving the gaming industry behind. Now with the advent of GameFi, you can play to earn. This invention is fast taking over the gaming industry since the inception of Bitcoin and blockchain technology. It entices gamers by offering them an opportunity to make money while having fun.

What Is GameFi (Game and Finance)

GameFi refers to play-to-earn games built on top of Blockchain. It allows players to earn economic incentives such as cryptocurrency and NFTs when they complete some tasks. The GameFi ecosystem uses cryptocurrencies, non-fungible tokens (NFTs), and blockchain technology to create a virtual gaming environment.

As of March 2022, there are more than 1,400 blockchain games listed in DappRadar. Popular games exist across multiple blockchains, such as Ethereum, BNB Smart Chain (BSC), Polygon, Harmony, Solana, and many more.

Popular P2E games include; Gods Unchained, Axie Infinity, StepN, DeFi Kingdoms, Aavegotchi, Splinterlands, Genopets, Benji Bananas, Illuvium, Mirandus, Step App, etc.

Common features in GameFi.

Play-to-earn model (P2E): At the heart of GameFi projects, we have play-to-earn (P2E). It’s quite different from the pay-to-play model adopted by traditional video games. Pay-to-play requires gamers to invest before they can start playing. But GameFi attracts gamers by combining entertainment with financial incentives.

Digital asset ownership: Similar to video games, players can own pets, houses, weapons, tools, avatars, and much more. But in GameFi, these assets can be issued or created as NFTs in the blockchain (also known as NFT minting). This allows players to have full control over their assets, with authenticity and verifiable ownership.

DeFi and GameFi: Some GameFi projects also offer DeFi products and features, such as staking, liquidity mining, and yield farming. Typically, players can stake their in-game tokens to earn rewards, unlock exclusive items, or access new gaming levels.

How does GameFi work?

Each GameFi project will adopt a unique model and game economy. While some P2E(play-to-earn) games can be free-to-play and still generate financial rewards for players, some GameFi projects require you to purchase NFTs or crypto assets before you can play them. Other characteristics of GameFi include;

  • Players can earn rewards by different tasks specified by the game.
  • Some GameFi games also allow players to generate passive income through staking or by lending their gaming assets to other players.
  • GameFi rewards come in form of economic incentives, such as cryptocurrencies or in-game assets like virtual land, avatars, weapons, costumes, etc.
  • While some of these in-game assets are NFTs running on the blockchain, meaning they can be traded on the NFT marketplace. Others need to be converted into an NFT before players can trade or sell them.

Requirements to play

  • Unlike traditional online games that require you to set up a username and password, most blockchain games use your crypto wallet as a gaming account.
  • Most GameFi projects will require you to purchase their cryptocurrency token or in-game NFTs to get started.
  • You need a compatible cryptocurrency wallet, such as Trust Wallet or MetaMask. Check the game’s official website to find out the ones they support. Make sure you are connecting to their official website and not a fake site.

Tips to avoid risks in GameFi?

There are thousands of blockchain games in the market, and they each work differently. As such, it’s always important to DYOR (Do Your Own Research) and analyzes the risks. Be careful with scam projects and fake websites.

  • Connecting your wallet or downloading games from random websites can be dangerous. Always create a new crypto wallet specifically for gaming purposes.
  • Always use funds you can afford to lose.
  • Always consider the earning potential and overall risks. Make sure to estimate how long it might take to get your initial investment back and start making profits.
  • Make sure you are connecting to their official website and not a fake site.

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