GameFi is the integration of gaming with decentralized finance (DeFi), where players earn incentives, exchange assets and participate in financial activities inside blockchain games. NFTs and fungible tokens are used by GameFi to build a play-to-earn system where users can own and monetize in game items, giving tangible value and ownership to virtual gaming experiences. In game items are usually exclusive to the game world and held by the game producers in traditional gaming, examples being skins, weaponry and trinkets.
GameFi turns this paradigm on its head by using blockchain technology to create tokenized assets that players fully own. NFTs often represent unique objects or characters, which have verifiable ownership, cross market trading capabilities, and the possibility to be used in other blockchain based games, is one of the most common features of GameFi. One way that players can receive prises is in the form of fungible tokens that can be used in the game, traded for other cryptocurrencies or converted into fiat money.
These tokens are frequently connected to the game’s economy, and users can stake, yield farm and govern with them. Players can earn tokens, for instance, by completing objectives, winning fights, or contributing to the GameFi ecosystem, for example, by staking assets or providing liquidity and through Cross-Chain Technology, GameFi promotes interoperability by allowing for the usage of tokens and assets in other games or platforms. This provides a more comprehensive, connected gaming experience to gamers, and makes in game commodities more useful.