Here’s How DeFi Is Enabling Passive Income for Gaming Enthusiasts

There’s no denying that the decentralized finance (DeFi) sector has continued to garner an increasing amount of mainstream traction in recent years, as is highlighted by the fact that the total value locked (TVL) within this space has risen from a little over $40 billion to $75+ billion over the course of the last 12 months alone.

GameFi, in particular, is a niche operating within this rapidly evolving market that has continued to catch the eyes of many — that too on a global level. As the name seems to allude to, GameFi brings together the thrill of playing video games within the context of a passive income setup (ala via the use of DeFi services).

To simplify things even further, GameFi refers to the use of decentralized gaming applications in order to accrue monetary incentives. For example, individuals playing these titles can earn tokens as rewards for carrying out in-game tasks that can range from winning battles and mining precious resources to growing digital crops depending on the nature of the game being explored.

Why the play-to-earn model is revolutionary

While the traditional gaming market relies largely on the use of a microtransaction-centric framework, wherein users are required to shell out money for unlocking each and every peripheral aspect of a game, GameFi completely flips this model on its head by making use of a “play-to-earn” (P2E) system, which as the name suggests, allows users to obtain tangible financial incentives for simply playing their favorite titles.

To showcase the immense growth of this space, a research study released by the Blockchain Game Alliance (BGA) showed that over a three-month stretch between July and September last year, blockchain-based games were able to accrue a combined revenue of a whopping $2.3 billion. Furthermore, the number of wallet addresses linked to these titles saw a 24x jump in overall numbers. Lastly, between January and September 2021, the number of individuals reported to actively engage with these games surged from around 30k to 750k users.

This radical shift in the market has revolutionized the way in which video games are viewed and perceived amongst a younger, more crypto literate audience, thereby paving the way for consumers to be able to earn sizable revenue, much like how video games publishing houses/creators/manufacturers are.

A look at how different GameFi titles work

As part of most GameFi apps, users have the option of accruing rewards in a variety of novel ways. For example, in Attack Wagon, touted to be one of the fastest-growing blockchain-based games in the market today, players can acquire digital plots of land which act as ‘fee generation devices’ for investors, allowing them to reap a fixed sum of the system’s natively generated fees.

However, what truly sets the game apart from its contemporaries — such as Alien Worlds, which also allows players to own/trade land in lieu of different incentives — is that they can earn fees/incentives not from just a single title but also via every future iteration of Attack Wagon that will be released over the coming few years. On a technical note, the project features a total of three buyable land offerings, namely Common Plots, Grand Plots and Iconic Plots, each of which offers varying degrees of financial benefits.

For example, Common Plots and Grand Plots are designed to facilitate a 40% split of their generated marketplace fees, while Iconic Plots allow users to gather around 20% of their associated marketplace fees. However, the latter also affords their users a host of other benefits within the Attack Wagon ecosystem such as protocol voting rights, custom in-game NFTs, etc.

On the other hand, NFT-based games like Axie Infinity and Spliterlands allow users to earn rewards via the completion of various in-game activities such as PVP battles, breeding, etc. Furthermore, as NFTs have continued to gain more notoriety within the financial mainstream, many of these tokens have seen their values surge quite massively. For example, a whole host of Axies have sold for millions of dollars over the last couple of years, with the most expensive one (referred to as ‘Angel’) recently being auctioned for a whopping sum of 300 ETH. Similarly, the most sought-after Splinterlands NFT — referred to as Poseidon — is currently touted to be worth 1,000 ETH (approx. US $2.5 mln).

The future of the GameFi market looks extremely bright

From a purely numbers perspective, the GameFi market looks to be rolling ahead with a full head of steam. Within the last few years, several reports have emerged revealing video gamers living in lesser developed nations have been able to generate substantial income streams for themselves by simply participating in their daily gaming activities. In this regard, a number of high-caliber players living in the Philippines have been able to accrue up to $50 per day — a figure that is well above the country’s net median income — thereby allowing them to transform their bedroom hobby into a full-fledged profession.

Lastly, with many experts predicting the metaverse will continue to evolve at a monumental rate over the coming decade, it seems as though there will be no stopping the rise of blockchain gaming in the near term. To this point, over the course of the past year alone, a growing list of mainstream brands (such as Facebook, Disney, Coca-Cola, McDonald’s, Adidas, amongst many others) have made their way into the expanding Web3 ecosystem. In fact, studies have noted that GameFi titles available in the market today are already worth more than $14 billion, with this yet nascent industry all set to disrupt the $175 billion global video games industry. So it will be interesting to see how this space continues to evolve from here on out.