GameFi aka Gaming Finance is all the rage now. Gaming Finance is the latest revolution in the blockchain world where Decentralized Finance intersects with Decentralized Gaming via the use of smart contracts, Cryptocurrencies and NFTs. Since the inception of the concept of Web3, there has been a lot of work in traditional industries on how to migrate their services to Web3 space.
Gaming is one industry aside from finance which has managed to see a certain level of mass adoption of decentralization and Web3 concepts. The idea of GameFi revolves around the concept of adding an investment layer on top of traditional gaming by merging games built on blockchain networks with Decentralized Finance. While this is achieved via a combination of games built on blockchain networks, DeFi and NFTs — the general idea that the gaming community associates with Web3 gaming mainly revolves around NFTs.
The general understanding towards Web3 games in today’s world is that the transition of gamers from Web2 to Web3 space will happen via NFTs. It is believed that NFTs will act as a gateway owing to their direct and simplistic nature as digital assets. Anything and everything in the Web3 gaming world, be it an in-game character, clothes, real estate, rare items, weapons etc., exist in the form of NFTs and provide players with assets that have value in the real world. These assets can be used to buy, sell and trade encouraging them to earn while they play.
But, there are gamers who argue that this structure which is focused and revolves around NFTs is taking away the real essence of gaming and changing gaming into something else. Are their worries and concerns real? Is NFT really taking away the essence of gaming and is the use of NFT as a digital tradable asset becoming the main focus of the gaming industry? With the increasing popularity of NFT-oriented use cases stemming from games like Axie Infinity and Splinterlands, even traditional gaming giants such as SEGA and Ubisoft showing interest in joining the NFT race.
Players believe games in Web3 and games that handle NFTs are designed in such a way that NFTs are designed as items whose main purpose is to be used as assets for trading. Hence, players in traditional gaming believe that this infrastructure drives gamers towards participating in an NFT gold rush instead of the usual environment where they focus on having a good time immersed in the story and gameplay of the games. One can neither say that this is true nor claim it is false as this sort of opinion comes from a result of tunnel vision created by a lack of proper awareness. Yes, the transition from Web2 to Web3 happens mainly via NFT at the end-user level and yes, NFTs are designed as digital assets that can be traded among players or elsewhere in a community where these NFTs hold some real-world value in exchange for other digital/fiat currencies.
But, it needs to be noted that NFTs from a creator’s perspective is just a tool to be used in Web3 space to add value to game world substance in Web3 space. Further, the unique nature of Web3 gaming space allows gamers to take their in-game character, clothes, rare items & weapons etc and use them across other games in the ecosystem instead of those items being limited to just a single game as commonly found in the traditional gaming world. Further, the concept of owning lands in games and trading assets in the Web3 gaming industry gets the participants (gamers) prepared and makes it easier for them to understand common practices in the Web3 world which can be used in other areas such as core DeFi & Metaverse based ecosystems. Aside from this, NFTs in Web3 space help combat piracy commonly found in the traditional gaming environment. This would mean end-users can make a safer in-game transaction without having to worry about phishing and duplicated items as each NFT can be verified using a unique signature attached to them. Further, NFTs encourage the creator economy as they are able to see value added to their creation and track the movement and sale of their creation while maintaining its authenticity and providing developers with another income source in form of sales royalties.
While gaming in Web3 when compared to gaming in Web2 provides players with more money-making opportunities, it still doesn’t mean that is its main purpose. Web3 games have the potential to provide an even better immersive gaming experience to players and there are numerous Free to Play games and Free to Play areas even in premium games without having to focus on the money-making part. The premium games have more opportunities that provide players with a play-and-earn scenario. Overall GameFi serves as a place where gamers would get to experience the next level of immersive gameplay via Web3 games and learn more about traditional finance.
When it comes to NFTs, they clearly aren’t game breakers but aren’t game changers either. They just provide better use case scenarios to NFTs in Web3 games rather than their normally popular and limited art form use case. Further, in the Web3 gaming area as mentioned above they are able to encourage a better creator economy owing to inherent advantages of NFTs such as the existence of one-of-a-kind unique items & improved identity authentication thereby helping improve upon existing player-driven economy scenarios. NFTs just contribute to a single part of the Web3 gaming experience. There is more to the Web3 gaming world such as Metaverse, better inter-network connectivity that can lead to a truly connected MMORPG scenario (like one envisioned by Kayaba Akihiko to you SAO fans/nerds) and more.
Web3 gaming space is just emerging and almost all aspects of the Web3 gaming area are currently still being explored and still remain in the early stages. The squabble surrounding NFTs is just a result of NFTs having more exposure than any other part of Web3 gaming-related technology. All pieces of technology and infrastructure relating to Web3 games and GameFi are currently still under development and will continue to evolve with each passing day as we address various challenges faced by the industry such as scalability, player migration and adoption, market saturation and environmental impact.
Here at Kana Labs, we are doing our bit to simplify the transition and onboarding process for players from Web2 to the Web3 environment via the use of a smart wallet that embodies some of the best ideas from the account abstraction proposal. We achieve this via partnerships with various Web3 gaming platforms such as XPLA and Open BLOX.
