Short for “Gamified Finance”, GameFi typically refers to blockchain games with the “play-to-earn” model which offers economic incentives to players. Participants can earn rewards in the form of cryptocurrency tokens or Non-Fungible Tokens (NFTs) by completing designated tasks or actions, progressing through levels, competing with others and more.
Unlike traditional games, players can encash their in-game rewards to be used in the physical world, via trading on NFT marketplaces and off-ramping the cryptocurrency tokens through exchanges. Players also retain ownership of their in-game assets and characters represented by the NFTs and make decisions to progress them or sell them for profit in future, which adds a unique dimension when players complete or no longer wish to play the game.
Games like Axie Infinity are generally considered the flagship representation of blockchain games, garnering attention as a career prospect for emerging economies. However, the blockchain gaming category is still relatively nascent and needs to address issues with sustainability, tokenomics, security, composability and accessibility for ease of usage and mainstream adoption.