What is GameFi? Challenges and Opportunities in GameFi

Gamefi is one of the ‘in-vogue’ trends in the gaming industry that has taken it by storm. Accompanied by in-game assets, NFTs, digital rewards, and blockchain technology, it won’t be wrong to say that the upcoming years will be the win for GameFi. 

 

A quite well-known genre of game is Play-to-Earn games also known as P2E games which work on the GameFi architecture and fulfill the idea of blockchain games. 

 

Despite its soaring popularity and a new gateway to the opportunities, there are challenges that come with it. In this article, we will be taking a deeper dive into the gameFi, its opportunities, challenges, and why one should go for it. 

 

What is GameFi? How does it work?

 

GameFi is the portmanteau of game and finance and it mainly refers to the play to earn games that work on cryptocurrencies and blockchain technology. 

 

In such games, the players can earn  NFTs during gameplay, completing different levels, achieving objectives, and overcoming challenges. GameFi enables players to earn digital awards which have real world value and even use them outside of the game for trading on NFT marketplaces. 

 

It must be noted that each GameFi gameplay varies from one another - based on different models. Some in-game assets work on the blockchain entailing that they can be traded on the NFTs marketplace whereas some of them require to be converted into NFTs before they are ready for the trade. 

 

Opportunities in GameFi 

 

As per the recent reports, GameFi is expected to cross $50 billion by 2025 which shows the potential of the industry. With the booming revenue generation and mass adoption, the opportunities become inevitable. Let’s take a brief look at opportunities in GameFi. 

 

Ownership of Assets

 

The biggest advantage of the GameFi to the players is that they can earn the digital assets with real-world value and trade (selling and buying). This reflects the authenticity of the in-game assets and gives the value of business investment to the players. Unlike traditional gaming, P2E games open a new arena of financial growth and investment for the players.

 

Game-Based Economic Model

 

The working model of GameFi models is based on NFTs, digital assets, cryptocurrencies and blockchain technology which had led a way for the economic changes. It creates virtual job openings for the players by providing them the opportunity to earn by playing. 

 

One of the most-known games is Axie Infinity, which lets players earn by playing the game (a P2E game) , and is developing virtual opportunities in the Philippines. Hence for a streamlined revenue generation and digital trading, GameFi proves to be an interesting and beneficial way. 

 

Increased Investment 

 

With the whooping rise in the GameFi industry, it has been able to pull potential investors towards it. From crypto, blockchain technology challanges, NFTs, to the digital in-game assets and players’ interest, GameFi is making its way to the bigger goals. 

 

 

A report shared by DappRadar unveils that metaverse and web3 games have been able to raise $750 million funds while many other investors plan to create different services and platforms for it.  Considering all of this, GameFi definitely brings potential opportunities from the business and investment point of view which is heralded as a good sign of progress. 

 

What are the Challenges in GameFi?

 

Recent reports share that by 2031, GameFi will be able to hit the market worth of total $72.4 billion which makes it stronger as compared to other game branches. Despite its growing number in recent years, analysts and players seem to face the challenges which can undermine the potential of the players. 

 

Here are the main challenges happening in GameFi: 

 

Security Challenges

 

Blockchain is known for its secure and decentralized nature. Nonetheless, it is exposed to different kinds of attacks that can harm the security and result in data breaches. 

 

There are multiple kinds of security challenges that come under the umbrella of GameFi such as on-chain and off-chain security issues, ERC-20 tokens vulnerabilities, NFTs vulnerabilities, Bridge vulnerabilities, and DAO governance vulnerabilities. 

 

The above listed challenges can result in the infinite minting of the tokens, inappropriate tokens allocation, and exploiting the logic loophole. As far as DAO is concerned, the attackers can find their way to the DAO treasury and attack them anytime. Hence, the data security seems to be at stake. 

 

As we know GameFi enables players to collect the in-game assets using NFTs or blockchain technology. For this, cross-chain bridges are used by the players for exchanging in-game assets across different networks and making sure that both parties would receive and burn the assets in the same quantity. However, due to the security breaches, attackers can create a large number of assets resulting in mishappening. 

 

Less Focus On User Experience 

 

GameFi focuses more on cryptocurrency. NFTs, digital assets, and other monetization factors and less on the game visuals including  storyline. The less focus on the video game graphics make players lose interest in the gameplay which would lead to the less mass adoption of GameFi. 

 

A game with mundane and bland user experience does not result in a good player retention which is definitely a loss in KPI and revenue degeneration. 

 

Managing GameFi Community 

 

It won’t be wrong to say that GameFi Development is still in the early stages and improving the overall gameplays that are in the development phase. 

 

The biggest community of any game is the players that give feedback to the developers encompassing user experience, reporting bugs, and other elements. 

 

Most game developers often overlook the players community and the feedback which lead to continuous bugs in the gameplay. 

 

How to Overcome the Challenges in the GameFi Industry?

 

To overcome the challenges in the GameFi, here are the quick solutions or cautionary steps that  should be introduced:

 

1- Penetration testing should be done to avoid the massive security attacks that can put data at stake by identifying the vulnerabilities. 

 

2- High-quality smart contract codes should be set as the foundation to the smart contracts for regular auditing and smart contract verification so that any outside party cannot access the data without having the rightful authority to it. 

 

3- While developing GameFi, user experience should always be given priority which can be done using community management and surveys to know the preferences of the players. 

 

Conclusion

 

In conclusion, GameFi presents exciting opportunities for the gaming and decentralized finance industries. It combines the fun and engagement of gaming with the financial incentives of DeFi, creating a new market for investors, gamers, and developers. However, with these opportunities come unique challenges that need to be addressed to ensure the success and sustainability of GameFi projects.