Decentralized finance (DeFi) is a developing P2P assortment of financial tools built on Blockchain to decentralize all web3 financial services and products. In DeFi, banks and institutions have no control over money, financial products, and services. One of the most effective applications of decentralized finance is DeFi gaming. DeFi gaming is revolutionizing the decentralized finance space in terms of popularity, with new players joining in every day. This article explores how these DeFi play-to-earn games and Web3 gaming are causing a shift of users from traditional finance to decentralized finance.
This article explores the popularity of Web3-based play-to-earn games and how it is leading to a shift of users from traditional finance to decentralized finance.
What are Web3games, and how are they transforming the industry
Games like Decentraland and Axie Infinity have brought forth a new era in Blockchain-powered play-to-earn gaming, where players play games to earn real-world money. Play-to-earn games function on Blockchain and Non-Fungible Token (NFT) technology. An NFT is a blockchain-based immutable, digital asset with records permanently stored on the blockchain ledger. Users play these games to mint NFTs in the form of digital collectibles that hold real-world value when traded on Blockchain-powered NFT exchanges like Opensea.io.
Decentraland is a popular play-to-earn game where users play to collect in-game token currency called Mana. This token can further purchase in-game NFT collectibles and virtual land. Users can further convert these NFTs and in-game currency to real-world cash. Axie Infinity is another play-to-earn game with a large user base where players create marketable NFTs that have real-world interoperability for the value of their time spent in-game. The applications of NFTs in play-to-earn games are significant to the growth of DeFi and web3, with new players every day learning how to trade in decentralized exchanges.
In the simplest of terms, DeFi gaming is simplifying the complexities of decentralized finance for its players.
How play-to-earn Web3 games are resulting in DeFi adoption
The global economy plunged since the COVID-19 pandemic has caused many people to lose their jobs or work remotely. This unprecedented occurrence became one of the main contributing factors to a growing number of people using play-to-earn games as a stable revenue source. Subsequently, new players began identifying the benefits of decentralized finance through these games. Widespread adoption has continued even with the gradual improvement of global economic conditions. Even traditional leisure-based gamers have begun showing increased favorability toward DeFi gaming as a means to enjoy playing games with the bonus of earning money as they play. Thus, demonstrating that play-to-earn games are flourishing and will continue to drive new members toward the decentralized finance industry. Here are some of the ways web3 play-to-earn games lead to DeFi adoption:
Players entering the DeFi industry through digital wallets, crypto, and NFTs
The fundamental requirement for a player to benefit financially from play-to-earn games is to create a digital blockchain wallet, to store and trade in-game crypto tokens and NFT assets. Metamask is a popular online digital wallet that allows users to securely store their minted cryptocurrencies and acquired NFTs. Players can additionally use fiat currencies to purchase cryptocurrency to make in-game purchases of land, pets, and other digital assets and sell digital assets back to fiat currency. This trading familiarizes gamers with transacting on the decentralized web3 using blockchain crypto and NFTs.
The more players trade fiat currency and digital assets for DeFi games, the more they are practically exposed to decentralized finance’s transactional ease and security benefits. This consistent usage of DeFi for gaming has potentially made an entire generation of gamers into more DeFi-savvy power users that know how to set up blockchain savings accounts and have the potential to dive into other DeFi services at varying degrees. Another added advantage of DeFi gaming that could draw in potential DeFi adopters is the absence of infrastructure fees and merchant and credit card network fees when conducting blockchain asset transactions that are otherwise present in traditional finance and banking commerce.
Smart contracts – A significant element of DeFi
Smart contracts are pre-programmed blockchain programs programmed to execute upon meeting predefined conditions. In Web3 games, smart contracts are used between game developers, players, and other stakeholders with the latest release notes and game development plans. Smart contracts provide all DeFi gaming stakeholders transparency in information sharing, creating more trust in DeFi systems. Building the games themselves upon smart contracts is a more critical use of smart contracts in DeFi games. These innovative usages of smart contracts result in a growing familiarity with the technology amongst DeFi gamers of what they can achieve without the need for centralized third-party authorizations. Thus, DeFi gamers are becoming future DeFi power users through smart contracts and crypto-wallets.
Easing players into crypto staking through Web3 games
Crypto staking is the process in which users generate passive income by providing Proof of Stake (PoS) of their cryptocurrencies. Staking is where cryptocurrency holders provide their crypto tokens as collateral, which is then used to validate new blockchain transactions. Crypto staking is a big part of decentralized finance, preferred as an alternative to crypto mining due to its reduced carbon footprint. DeFi games such as Axie Infinity are integrating Crypto staking in their games. In Axie Infinity, players can stake or lock up the in-game native crypto token, Axie Infinity Shard (AXS), to earn higher-tier rewards. The reward quality is based upon the period players choose to lock up their AXS. Some games further reward players with direct cryptocurrencies for long-term staking. This is an example of how DeFi games are quickly training their players to use complex DeFi tools like cryptocurrency staking through their games.
With an increasing number of game titles integrated with a growing list of DeFi tools, it is an eventuality before all complexities of decentralized finance can be learned from play-to-earn games. DeFi games are constantly onboarding new users into the DeFi industry, signifying the massive potential of decentralized finance in the future. So, find yourself a suitable web3 DeFi expert who can help you find your place in the new decentralized world.
