The advent of Web3 gaming is a paradigm shift in the gaming industry, driven by the confluence of blockchain technology, decentralized finance, and non-fungible tokens (NFTs). The combination of gaming and finance ushers in a new era of player empowerment, in which users gain genuine ownership of in-game assets, monetize their gaming abilities, and participate in DeFi finance.
At the meeting point of banking, gaming, and technology, a new game genre is emerging: defi games. This transformational trend presents both possibilities and problems for the gaming business.Evolution may be strange to many, but it is quickly altering the game business. In this post, we will look at DeFi and Web3 games, how they function, and why they are becoming popular.
Understanding Decentralized Finance (DeFi)
Before delving into the subject, it’s significant to grasp the idea of decentralized finance. Decentralized finance, or DeFi, symbolizes a transformation in how we perceive and engage with financial institutions. Unlike traditional finance, which is based on centralized organizations like banks and governments, DeFi operates on a decentralized network, usually using blockchain technology. This developing financial technology challenges the traditional, centralized banking system by providing a more open, accessible, and transparent alternative.
The core concept of DeFi is to build a financial system accessible to everybody while minimizing the need for trust and intermediaries. In traditional finance, banks function as guarantors of transactions, which may be sluggish and costly. DeFi, on the other hand, employs technology to promote direct transactions between parties, which may be faster, more efficient, and frequently less expensive.
How do Play-to-earn Web3 games relate to DeFi adoption?
The worldwide economy has suffered since the COVID-19 outbreak, which has forced many individuals to lose their employment or work remotely. This uncommon event is one of the primary reasons why an increasing number of individuals are turning to play-to-earn games as a reliable source of income. As a result, new players began to recognize the advantages of decentralized money through these games. Even as global economic conditions gradually improved, widespread adoption persisted.
Even conventional leisure-based gamers are increasingly favoring DeFi gaming as a way to enjoy games while also making money. This demonstrates that play-to-earn games are thriving and will continue to attract new participants to the decentralized financial sector.
Here are some of the methods by which Web3 play-to-earn games promote DeFi adoption:
Players Access the DeFi Firm through Digital Wallets, Crypto, and NFTs
To gain financially from play-to-earn platforms, players must first build a digital blockchain wallet in which they may store and exchange in-game crypto tokens and NFT assets. Metamask is a popular online digital wallet that allows users to store their newly created coins safely and buy NFTs. Players may also utilize fiat money to buy cryptocurrencies for in-game purchases of land, pets, and other digital assets, as well as sell digital assets for fiat cash. This trading introduces players to transacting on the decentralized Web3 using blockchain currency and NFTs.
The more players exchange real cash and digital assets for DeFi games, the more they become familiar with the transactional simplicity and security benefits of decentralized finance. This constant use of DeFi for gaming can transform an entire generation of gamers into more DeFi-savvy power users who understand how to set up blockchain savings accounts and have the capacity to explore other DeFi services to varied degrees.
Another feature of DeFi gaming that may entice potential DeFi users is the absence of infrastructure and merchant and credit card network costs while executing blockchain asset transactions, which are often present in traditional finance and banking commerce.
Smart Contracts are a Crucial Component of DeFi
Smart contracts are blockchain programs that have been pre-programmed to run when certain criteria are met. Smart contracts are used in Web3 gaming platforms to exchange information between game producers, players, and other stakeholders, including the most recent release notes and development plans. Smart contracts allow openness in information exchange for all DeFi gaming stakeholders, hence increasing confidence in DeFi networks.
Building the games themselves on smart contracts is a more important application of smart contracts in DeFi gaming. These unique smart contract applications increase DeFi players’ knowledge of the technology and what they can do without the need for centralized third-party authorizations. Smart contracts and crypto-wallets are transforming DeFi players into future DeFi power users.
Connecting Gamers to Cryptocurrency Staking Using Web3 Games
Crypto staking is a technique in which users earn passive revenue by providing Proof of Stake (PoS) for their cryptocurrencies. Staking occurs when cryptocurrency holders submit their crypto tokens as collateral, which is subsequently used to authenticate new blockchain transactions. Crypto staking is an important aspect of decentralized finance and is preferred over crypto mining owing to its lower carbon impact.
DeFi games, such as The Sandbox, now include DeFi staking. The Sandbox allows players to gain higher-tier rewards by staking or locking up the in-game native cryptocurrency, SAND. The reward value is determined by the period in which players opt to lock up their SAND.
This is an example of how DeFi games swiftly guide their players to use complicated DeFi technologies, such as cryptocurrency staking, within their games.
How do Players Make Money from DeFi in Web3 Games?
Leveraging Web3 games can include a variety of ways for players to generate money, resulting in a “play-to-earn” model that differs from the standard “pay-to-play” approach is used in most video games. Here are various methods for players to gain from DeFi adoption in Web3 games:
In-game rewards
Many free play-to-earn games provide players with in-game cryptocurrency for accomplishing specific objectives or milestones. These tokens may frequently be swapped for other cryptocurrencies or real money on various DeFi exchanges.
Trading in-game assets
In Web3 p2e games, in-game assets such as characters, goods, and territory are frequently tokenized with NFTs (Non-Fungible Tokens). These NFTs may be purchased, sold, or traded on numerous marketplaces, allowing players to profit by selling valuable or desired goods they’ve acquired or created in the game.
Staking
Some DeFi games have the best DeFi staking platform, which allow players to ‘ stake‘ their in-game tokens in a smart contract to generate interest or dividends over time. This is analogous to putting money into a savings account and receiving interest.
Yield Farming
In certain circumstances, Web3 gaming platforms may allow participants to engage in yield farming or liquidity mining. This entails supplying liquidity to the game’s decentralized exchange or marketplace while collecting fees or rewards in return.
Guilds or DAO
In certain games, users can form guilds or decentralized autonomous organizations (DAOs) to share resources and earnings. For example, a group of players may pool their funds to invest in high-level characters or valuable in-game land, and then split the profits.
DeFi and Web3 Gaming Topped the Blockchain Operation in Q1
Decentralized finance (DeFi) has emerged as a dominant force in the blockchain industry, overtaking stablecoins in daily transactions and finishing the first quarter with around 7 million daily transactions, according to QuickNode and Artemis’ “OnChain Report Q1 2024″.
In parallel, Web3 gaming has not only eclipsed stablecoins in transaction volume, but it is also the fastest-growing sector year after year. The sector’s active addresses have increased by 155% quarter over quarter, suggesting a huge increase in player involvement and demonstrating Web3’s ability to recruit and keep players.
Closing Thoughts
DeFi games have the potential to transform the gaming and finance sectors. By tokenizing in-game economies, they can provide new financial opportunities for players, particularly in areas where traditional financial services are unavailable or prohibitively costly. DeFi in Web3 games is an exciting new area in the gaming industry. As the industry grows, it will be intriguing to observe how DeFi’s play-to-earn gaming platforms evolve and what new opportunities they create for gamers worldwide.
