DeFi+GameFi: How Decentralized Finance Helps Blockchain Games Become More Profitable for Users by@serkhitrov

DeFi+GameFi: How Decentralized Finance Helps Blockchain Games Become More Profitable for Users

Investment in GameFi in the first half of 2022 broke another record of $4.5 billion and exceeded the total annual volume of the previous year. Even in a tough May for the crypto sphere, 1.23 million active user wallets were registered, 4,123% more than last year. This growth can be attributed to the release of new projects with good gameplay and the growing popularity of SocialFi concepts. This article will look at what DeFi services developers apply to make profitable games for users with a sustainable economy.
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Sergei Khitrov

Entrepreneur, Listing.Help Agency Founder and CEO


Blockchain games continue their exciting growth and development, despite the bear market that plunges crypto enthusiasts into the gloom. Investors continue to see potential in play-to-earn games. According to Dappradar, investment in GameFi in the first half of 2022 broke another record of $4.5 billion and exceeded the total annual volume of the previous year.


The mood of investors is understandable, more and more players are entering the games. Even in a tough May for the crypto sphere, 1.23 million active user wallets were registered, which is 4,123% more than last year. This growth can be attributed to the release of new projects with good gameplay, the growing popularity of SocialFi concepts, and the expansion of tools for earning. This article will look at what DeFi services developers apply to make profitable games for users with a sustainable economy.


What DeFi Tools Are Needed For Blockchain Games

GameFi changed the traditional gaming economy from pay-and-play to play-to-earn, which was a great achievement for the industry. The ability to not only play and buy in-game attributes but own them and earn money has become a breakthrough, especially during the pandemic years. This was noticeable in Asian countries, where the players of the super-popular project Axie Infinity were able to earn their usual monthly salary just by playing the game.


However, the new mechanics, in addition to the advantages, also revealed problems that prevented the long-term development of some projects. If we leave aside problems with the gameplay when the project could not hold the attention of users for a long time and take economic problems, one of the most global ones was the high cost of entry, as well as the dependence of projects on new players.


Deeper integration of DeFi services into the blockchain gaming economy can help rectify the situation. In a recent report on the gaming sector, experts at Cointelegraph mention the following elements that should be present in games: NFTs, fractionalization, staking, and liquidity mining. Let's consider this in more detail.

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Deeper Use Of NFTs

Perhaps the most understandable point, about which many excellent articles have been written. Non-fungible tokens are the main reliance on which blockchain games are based. NFTs can turn all the attributes of a game into an asset. And the value of an asset is that it can be sold, rented, multiplied, or held until better times.


Each game has its mechanics, and within one article, it is impossible to describe all the existing opportunities for earning money on non-fungible tokens. The user can not only enjoy the game but also develop a strategy for earning additional income from their NFTs. For example, sell tokens on the growth of their value, the stake for a reward, mint new NFTs for sale on the game’s marketplace, and others. All this is possible thanks to the integration of games with DeFi.


For example, in metaverses like Decentraland or The Sandbox, one of the popular strategies for profitability is land ownership. The game allows the user to become a landlord and earn money on rent, visitors, or brand advertising. And some DeFi protocols, such as MetaLend, allow users to receive loans secured by land and other NFT objects.


I wrote about other NFT-secured loan services in this article


Mint sneakers in the move-to-earn Stepn app allow you to receive additional income from the sale of a new asset or increase the earnings of an in-game token. Source/Stepn App

Mint sneakers in the move-to-earn Stepn app allow you to receive additional income from the sale of a new asset or increase the earnings of an in-game token. Source/Stepn App


Staking of in-game tokens and NFTs

In crypto, staking is the holding of coins to receive a reward. An analog of mining but without expensive equipment and is more eco-friendly. In GameFi, staking is becoming an important element that supports the economy of the game and works for retention and player loyalty. I wrote above that despite the popularity of p2e projects, they are not without problems. One of the main ones is user retention.


Many players who enter games on the blockchain primarily consider them in terms of financial gain, rather than the pleasure of the gameplay. Because of this, some games and applications have a rather short life cycle: with the arrival of users, the rate of in-game tokens grows, and as soon as the influx slows down, the rate of coins drops, as a result, most players drain assets and leave the game.


This is a frequent headache even for the most promising projects - for example, the super-popular project Axie Infinity also experienced difficult times. At the start, the game brought a good profit to users, which attracted new players. But the more players there were, the more actively they exchanged in-game currency for other crypto-assets, which in turn reduced the rate. The fall in profits naturally reduced the activity of old players and the influx of new ones, which at the moment had a bad effect on the economy of the entire game.

Graph of the influx of new users of Axie Infinity. Source/dune.com

Graph of the influx of new users of Axie Infinity. Source/dune.com


Staking in-game tokens is one opportunity that can solve this problem. In-game assets will circulate and maintain liquidity, thereby bringing additional benefits to loyal players and remaining useful for newcomers. Of course, staking alone will not solve all user retention problems - but it is good to support the economy of the game. Examples of projects where you can get profitability or reward for staking in-game tokens are Aavegochi, The Sandbox, and Alien Worlds.


Fractionalization Of Tokens Will Make Games More Accessible For Players Who Couldn’t Afford To Buy Their NFT

Sharing ownership of game assets is already known with other forms of NFTs, such as digital art objects like CryptoPunks or BAYC. Some collections have become so expensive that few investors can afford to buy a single token worth millions of dollars. Therefore, services that share ownership of tokens among several users have become popular.


With the growing popularity of blockchain games, there is a need for a similar service in the GameFi segment. Not all games are free-to-play and you need to buy an NFT to start playing. Sometimes, the entry price is high and out of reach for most users –– so applications have emerged that share the cost of NFT and make the game more accessible.


One of the popular NFT fractionalization services in play-to-earn projects is the Yield Guild service. It is a decentralized organization (DAO) that funds the purchase of gaming assets and allows its users to join established games, metaverses, and other web 3.0 applications. The player rents NFT and can use all the functionality of the game and earn money.


Fractionalization is a good opportunity for the GameFi industry to attract a new audience with a small income level. Some game developers began to include fractionalization tools in their projects, but implement them in different ways. For example, move-to-earn Stepn, a popular project in Asia and Australia, will open the possibility of renting NFT sneakers in the next updates of the application, so that all users have a chance to join the game for free.


Some games with the fractionalization opportunity from the YGG portfolio. Source/yieldguild.games

Some games with the fractionalization opportunity from the YGG portfolio. Source/yieldguild.games


Mining Liquidity In Trading Pools On The DEX

Liquidity mining is very similar to staking for a user – a certain amount of coins is blocked, for which he receives a reward. The difference is that the user blocks in the liquidity pool on the DEX not only the in-game token but also another crypto asset. In simple words, it helps the game team to provide liquidity on the exchange so that other players can exchange their tokens. For this, he receives a reward in the form of additional coins or NFTs.


Of course, this can be a risky strategy, because if the majority of players start to sell their game tokens, it is the liquidity providers who suffer. After all, the value of their assets will possibly decrease. The game founders are trying to mitigate these risks by offering a good percentage of profitability, or rare and expensive NFTs. This happened for example in The Sandbox, where users could get characters or limited edition cars for supplying liquidity in the SAND-ETH pool on Uniswap.


In the “DeFi Kingdoms” game, users will be able to explore many decentralized finance tools playfully. Source/dappradar.com

In the “DeFi Kingdoms” game, users will be able to explore many decentralized finance tools playfully. Source/dappradar.com


In Perspective: Blockchain Games Will Attract New Users To DeFi

The integration of DeFi with GameFi continues to be very promising and mutually beneficial for both areas. On the one hand, games receive ready-made tools for developing their economy and communication with the user. On the other hand, play-to-earn projects become a kind of advertising platform for DeFi services, that with a game example teaches beginners how to use them.


We saw this in the example of Stepn, which attracted a record number of users among an audience that had previously been as far as possible not only from DeFi but also from cryptocurrencies in general. The application in its native form taught the players of the move-to-earn project how to use crypto wallets, and work with DEX and web 3.0.


Another thing that GameFi teaches users is caution. It should be remembered that the play-to-earn concept does not guarantee earnings, but sometimes it can promise losses. Some projects enter the market unfinished and fade too quickly, so users should not invest their last money in them. Games are created for the pleasure of the process, and the opportunity to earn is a nice addition. When the majority of users understand this, it will be real dawn for the entire industry.

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