How Does GameFi Work?


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GameFi is an example of how games are advancing more and more along with technology, and there are many games that are already adapting to the technologies that we have today.

Now let’s talk more about what GameFi is and how it works.

What Is GameFi?

GameFi is a game in which smart contracts are involved and their operations are registered in the blockchain. Also involves relevant aspects of decentralized finance (DeFi).

The blockchain ecosystem has been embracing new spaces with more energy. Since the start of the COVID-19 pandemic, lockdowns have only accelerated the adoption of this technology. All of this made a reduction of the timeframe from years to months.

One sector that has undoubtedly greatly increased the adoption of disruptive technology has been gaming, which has seen the birth of new concepts such as “play-to-earn” imposed by popular platforms such as Axie Infinity or The Sandbox.

With the emergence of decentralized finance and the benefits of blockchain technology, transparency gradually became the norm to create new financial structures that allow users to create new ways to produce money and increase investments.

In the specific case of gaming, the sector has now implemented a new concept called GameFi, which is nothing more than the union of the DeFi and Gaming sectors in one place, a decentralized finance video game, in its simplest essence.

By definition, GameFi is a game in which smart contracts are involved and its operations are recorded in the blockchain, in addition to involving relevant aspects of decentralized finance such as yield farming, mining, liquidity injection, and staking, among others.

GameFi refers to the game’s introduction of financial products and the gamification of DeFi rules, such as the use of NFT equipment to increase revenue and the introduction of battle mode.

Compared to traditional mobile mining, the GameFi project is more interactive with users and more interesting.

For many experts like Andre Cronje, “GameFi” will be the future direction of DeFi monetary policy.

According to this expert, this new trend lowers the threshold for new entrants who do not want to be complicated by the technical terminologies of finance applied to the DeFi sector.

In exchange, they want a fun way to apply these same principles without the need to understand the code, logic, or mechanics of the DeFi project.

A Growing Industry

How does GameFi work?

The gaming industry is presently valued at more than USD 162 billion and is predicted to rise to over USD 295 billion in the next five years.

Many platforms are aiming to promote themselves as creative gaming and decentralized finance (GameFi) schemes by offering play-to-win NFT RPGs. This was in response to the surge of blockchain gaming and venture capital interest in the area.

With GameFi, retail investors have more access and NFTs are no longer a pending item on decentralized markets like OpenSea waiting to be sold.

In return, GameFi platforms have found a way to turn these NFTs into a “fun” mining project that gives investors of all sizes the potential to make more money.

Relatable: TOP 5 best NFT games (or NTF earning games)

Add to the above a high interest in decentralized financial platforms, which has increased dramatically in recent months, reaching a TVL greater than USD 205 billion, according to figures from DeFi Llama.

If we combine both sectors in one place, the capacity of this sector within the industry is enormous, where the limits seem to be imposed by the players themselves as these GameFi platforms become popular.

We have seen these results in evidence in recent months with the GameFi space’s flagship platform “Axie Infinity“.

Not only gaining in popularity but also substantially increasing its daily transaction volumes on the blockchain, proving that GameFi attracts more users every day and that its potential is yet to be developed.

How To Get Started In GameFi?

You just need to have your non-custodial wallet ready to link your wallet address with each of these platforms. These platforms will have in-game assets ranging from collectibles to NFT upgrades.

How To Locate These Projects?

It’s essential to understand that there are two sorts of GameFi solutions:

  1. One where the project’s fundamental business model is gamification instruments in DeFi.
  2. And another is where DeFi-specific concepts are brought to the domain of decentralized gaming, generally through NFTs.

Due to its nascent adoption, some blockchain technology analysts and enthusiasts differ on which protocols and solutions should be classified as GameFi.

However, DeFi protocols powered by gamification tools are considered GameFi.

Similarly, when blockchain-based in-game assets are used in DeFi-like solutions it is also possible to classify them as GameFi. Based on the above, there are several platforms to start getting involved in the exciting GameFi world.

An example of this market can be seen in DappRadar, which places important references such as Splinterlands, Alien World, Farmers World’s, Upland, and Crazy Defense Heroes as the top 5 DApps in the sector by a number of users.

Related: The Illuvium Metaverse is the Biggest Contender for a GameFi Breakthrough in 2022

NFT: A Key Element In The Sector

Since 2020, NFTs have been an emerging trend in decentralized finance that has created its own branch of business in the blockchain industry.

Currently, projects promoting cross-industry DeFi applications combined with NFT have unleashed enormous potential.

Experts consider that NFTs introduce differentiated assets based on rarities to the DeFi sector, while DeFi, in turn, gives commercial value to NFTs through finance.

As a result, NFT trading volume has grown exponentially during the second quarter of 2021, with a trading volume of $750 million, +48% more than in the previous year, according to data from

This growth is now supported by the value of gaming NFTs being neatly incorporated into GameFi platforms while also blending into the game itself is a fun way through engaging character design, gear, pets, etc.

Integrating NFTs and DeFi into games provides an open platform of revenue-generating possibilities that combine a unique and new way to build a healthier initial market for GameFi projects.

Thus we can see how NFT mining, NFT Farming Pool, and NFT Market are now “common” practices within GameFi platforms, resulting in millions of dollars in daily trading volume related to these projects.

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Mufasa is the lead writer at CryptoMufasa who likes to share all the latest info on the crypto world with you! Mufasa Enjoys enjoys a good read and recommendations so don't forget to comment on the posts and let him know.


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