What is GameFi? An introduction to play-to-earn and blockchain games

With a total market cap of more than $19 billion, GameFi and blockchain gaming seems to be making a comeback in the crypto scene as it once again seeks to disrupt the $175 billion global video games market. Titles like Axie Infinity and its more than $1 billion in total in-game asset sales have piqued the traditional gaming industry’s interest. So much so, we’re now seeing giants like Ubisoft and Square Enix the GameFi sector.

While rooted in entertainment, GameFi also paves the way for educational opportunities. PiP World exemplifies this trend as a forward-thinking platform that converges with GameFi, Web3, and financial education. It's committed to simplifying and popularizing financial knowledge for a global audience, leveraging engaging gaming simulations to make the learning process more approachable and enjoyable.

In this article, we introduce the concept of GameFi to those not already familiar with it. We begin with a simple definition of what is GameFi before looking at the origins of blockchain gaming. Next, we consider some popular dynamics for gameplay monetization in existing GameFi titles, including play-to-earn features and asset ownership. We also introduce some of the most popular networks on which blockchain games are built and what possibly lies in store for the future of GameFi.

For those brand new to Web3 technology, we’ve included an explainer on how to get started in the world of GameFi. We conclude with a look into blockchain gaming’s future, exploring the concept of decentralized autonomous organizations (DAOs) and how they're already shaping today’s popular GameFi titles.

What is GameFi?

GameFi refers to the financialization of video gaming. Similar to the popular crypto term DeFi, or decentralized finance, GameFi is a fusion of the words “game” and “finance.”

GameFi is a rather broad term, and, as we’ll explain in this article, titles that are considered GameFi may have entirely different financial elements to one another. For example, some blockchain games reward players for completing in-game tasks while others may enable the generation of some form of gains thanks to the sale of the various assets a player owns.

It's important to note that GameFi isn't gambling. The games we consider part of this emerging sector require players to leverage a mix of skill and strategy to generate gains. Although luck may be a part of these games, it isn't the predominant factor in determining who wins or is eligible for financial reward.

History of GameFi

The origins of the term GameFi can be traced back to November 2019, when the founders of MixMarvel, a blockchain game publishing platform, delivered speeches at the Wuzhen World Blockchain Conference in China on how the technology underlying cryptocurrencies could revolutionize the video gaming industry.

Perhaps more famously, however — particularly for western readers — the term was evidently first used by Andre Cronje, the founder of Yearn, in a September 2020 tweet. Since then, “GameFi” has been used with increasing regularity to describe games with financial elements enabled by blockchain technology.

Despite the term only entering popular usage more recently, GameFi’s history goes back almost as far as Bitcoin itself. Early Minecraft servers with BTC integrations, the 2013 website Gambit.com, titles like Bombermine and peer-to-peer services enabling gamers to monetize mainstream titles with BTC represent some of the earliest efforts in the field that we now consider GameFi. Later, projects like Huntercoin used blockchain technology for more than just payments, enabling players to monetize their gameplay by mining cryptocurrencies.

Ethereum’s 2015 launch presented new opportunities for video game developers thanks to its programming language’s sophistication. It meant programs could be stored and executed on-chain for the first time, enabling the creation of applications. Among them were blockchain games like CryptoKitties, which leveraged the newly defined ERC-721 standard to represent in-game assets in the form of nonfungible tokens.

In the years since, interest in NFTs has grown and blockchains optimized for performance have been launched, inspiring tremendous innovation in the GameFi sector. Today, we’re starting to see the fruits of these innovators’ efforts, and blockchain gaming is growing at an exponential rate.

How do GameFi games work?

GameFi comes in many different forms today. As such, the mechanisms by which players can possibly generate gains through their gameplay vary. However, there are a few important themes worth mentioning. Many of the most popular blockchain games today use a combination of the following features to monetize the action.


In some blockchain games, players receive financial rewards for completing gameplay objectives. The funds awarded in these play-to-earn titles typically originate from a reserve of native tokens held within a smart contract.

For example, in the hugely popular Ethereum-based game Axie Infinity, a portion of the game’s AXS token is reserved to reward the following behaviors:

  • Winning battles and tournaments

  • Tending your plot of land

  • Trading on the Axie Infinity marketplace

  • Breeding Axies

Asset ownership

Numerous blockchain games hinge on the principle of digital asset ownership. Bitcoin first brought digital scarcity to the fore with blockchain, while Non-Fungible Tokens (NFTs) expanded it. NFTs can represent diverse digital and physical assets, including in-game items.

Digital ownership of unique assets creates economic opportunities that were not possible before. For example, in CryptoKitties or Axie Infinity, players can breed two creatures represented by NFTs to create a third creature. They can then leverage a title’s play-to-earn capabilities with this new asset, sell it, or lease it out for other gamers to use, splitting any gains generated between owners and borrowers.

Although they're not exactly games in the strictest sense, online virtual worlds — popularly known as metaverses — also enable their inhabitants to monetize their time via asset ownership. At the heart of spaces like Cryptovoxels, Upland, Big Time, The Sandbox, and Decentraland is the concept of land ownership, and these plots trade freely on secondary markets.

Owners can monetize their plots in much the same way they can in the physical world. In addition to outright selling owned land, they can develop an attraction that may generate gains in the form of tradeable tokens over time, or lease it out for someone else to monetize. Walk around one of these shared virtual spaces and you’ll see various efforts to monetize land. Examples include casinos, virtual shops, and concert venues.

Interestingly, these worlds are starting to see the beginnings of economies emerging. For example, in March 2021, the Tominoya Casino in Decentraland hired real people to greet punters on arrival and act as general support staff. This is a trend that many see continuing. Some even estimate that the 'metaverse economy' will eventually dwarf the real-world one as people take advantage of new opportunities presented by these virtual worlds.

DeFi features

Some GameFi projects introduce concepts from the DeFi sector to reward gamers. Concepts like yield farming, liquidity mining and staking will be familiar to anyone with DeFi experience and can provide a passive means to generate income from a blockchain game. If you’re new to DeFi, you can learn more about it and concepts that overlap with GameFi in our DeFi explainer.

Examples of blockchain games that leverage features more commonly found in DeFi include Axie Infinity, Aavegotchi, and Nine Chronicles.

Top GameFi protocols

Although the first GameFi titles used the Bitcoin blockchain, most modern blockchain games can be found on smart-contract-enabled networks. Of these, Ethereum was the first and remains the most popular for developers and gamers alike.

Yet, Ethereum is optimized for decentralization and security over performance. As Ethereum’s block space is limited, those requiring the fastest settlement times must incentivize miners to include their transaction via the included fee. When demand exceeds the amount of block space available, the cost to transact quickly rises, pricing some users out. This presents a problem for blockchain game developers. A game will simply never enjoy the user base of mainstream titles if many of the actions a player takes require an exorbitant transaction fee.

Hence, many developers are now shifting away from Ethereum’s base layer toward faster, higher-capacity networks. Examples include:

How to get started playing blockchain games

Each blockchain game is different. Therefore, we can only provide general guidance on how to get started with GameFi. For more advanced help, we recommend consulting the relevant game’s documentation.

1. Create a Web3 wallet

Unlike many of today’s most popular web applications, most blockchain games do not use a traditional username/password account system. Instead, a user identifies themselves to the game using a Web3 wallet.

The wallet required to play will depend on the network on which the game is hosted. For example, playing Axie Infinity will require an Ethereum-compatible Web3 wallet, like OKX Wallet or Metamask

2. Acquire any assets needed to play

Many blockchain games require ownership of one or more in-game assets before you can play. For example, to play Axie Infinity, you must have at least three Axies in your Web3 wallet.

Other titles may require the purchase of an in-game digital currency. In many cases, you can buy said currencies on an exchange like OKX or through the game itself.

3. Log in via your Web3 wallet

Most of today’s popular GameFi titles are played in your browser. Therefore, you’ll need to log in using the Web3 wallet you created earlier to join the action.

To do so, visit the relevant game’s website and look for the option to connect your wallet. Your wallet will ask you to confirm the action by signing a message from the site. The wallet itself creates the signature and you simply confirm it by clicking the Sign button.

As mentioned earlier, your Web3 wallet will act as your account, and any progress made will be saved via your wallet. It also serves as your item inventory and, depending on their interoperability, any assets held may be used to play the game.

Decentralizing GameFi with DAOs

Typically, video game development has been highly centralized. A studio will design, produce, and publish a title, taking sole responsibility for any future updates. However, many GameFi projects seek to extend decision-making to the players themselves.

The mechanism by which they achieve this is known as a decentralized autonomous organization. In a DAO, token holders can produce and vote on project update proposals. Often these proposals will have a direct impact on the title’s monetary features. For example, the DAO may vote to increase the reward for a certain action within the game as a means of promotion.

To join a GameFi DAO, you must first own a project’s governance token. Often, the number of tokens held is directly proportional to a member’s voting power. Essentially, the largest stakeholders have the loudest voices when it comes to steering a project’s direction.

Some games have their own native DAOs. A good example is the multichain title Alien Worlds, which has six DAOs, each representing a different planet in the science fiction massively multiplayer online role-playing game (aka MMORPG).

Interestingly, some GameFi DAOs are not specific to a particular title. Projects like Yield Guild Games seek to harness value from various play-to-earn blockchain games for their members. YGG’s main DAO and its title-specific sub-DAOs pool in-game assets, enabling gamers to take them into games to generate income for the collective.

The state of GameFi today

While many believe that the broader crypto market has yet to achieve its full bull market rally potential, GameFi has already gotten off to a fantastic start in late 2023. Despite the downturn in recent months due to fears of another large-scale crash, GameFi developers are continuing to refine their projects and showcase their best works with attractive gameplay trailers and innovative game mechanics. This allows these projects to draw interest from players seeking to own in-game assets, earn crypto, and join decentralized communities. With exciting GameFi projects like Shrapnel and Illuvium on the horizon, we might see a huge surge in GameFi interest and unique active wallet numbers once these games go live and become available to the masses.

GameFi obstacles and roadblocks

The road to GameFi's mainstream adoption certainly seems promising as we see GameFi projects become increasingly polished and big-name game developers enter the GameFi scene. However, there are a few obstacles that GameFi has to overcome in order to win over the Web2 gaming audience.

Fun and engaging gameplay

Ultimately, GameFi titles have to be dedicated to making fun gameplay a number one priority if they want Web2 gamers to make the switch. The key concern for GameFi projects is that while they do offer the opportunity for players to earn a tidy sum over time, they just aren't as objectively fun as their Web2 counterparts. Let's look at two games that are in the same genre but have vastly different receptions. Hearthstone is a popular collectible card game developed by gaming giants Activision Blizzard and is widely considered to be one of the most successful card games of all time. From elaborate and strategic deckbuilding to whimsical graphical effects that ooze polish, Hearthstone has won over audiences worldwide because of its pick-up-and-play nature and noteworthy tactical depth.

Compare this with Gods Unchained — a digital card game that draws clear inspiration from titles like Hearthstone and Magic: The Gathering by featuring similar gameplay mechanics and fantasy themes. Although the aspects of card ownership and there being a monetary value to each card may draw in players, it noticeably lacks the strategic depth and graphical polish needed to compete with the heavy hitters in the card game genre. Without an active playerbase to support the game, we might not see many content updates in the long haul as projects aren't financially incentivized to keep the game going with updates and bug fixes.

The stigma of shady NFTs

Time Magazine's article on how Axie Infinity left many Filipino players in debt has left a sour taste in the mouths of mainstream audiences and players with regards to how NFTs are treated and valued in GameFi titles. For GameFi to make new highs as an industry and boost its overall adoption in the gaming community, it has to shake off this negativity of being associated with the pump-and-dump nature of shady NFT projects. Rather than imitate what came before, GameFi titles today need to create a transparent and fair NFT ecosystem that outshines the early model showcased by Axie Infinity. This can range from incorporating a redemption system for in-game NFTs so they have an intrinsic value associated with them to providing clarity as to what utility these NFTs will offer upon purchase.

The future of GameFi

Despite having roots that trace to the very beginnings of cryptocurrency, GameFi is just starting to attract mainstream appeal. Demonstrating the niche’s growth neatly is the success of one of its flagship titles, Axie Infinity. In August 2021, Axie Infinity became the first blockchain game to surpass $1 billion in total token sales — one-fifth of which occurred in a single week — and has hosted more than a million daily active players.

While previous blockchain games struggled to attract mainstream appeal, the technology backing them and the understanding of it has developed to the point where new GameFi titles are finding large fan bases. For some industry commentators, gaming represents the most likely route to widespread blockchain adoption.

The more than 2.7 billion video gamers worldwide are already very familiar with the notion of scarce digital items, tokenization, and in-game currencies. Meanwhile, blockchain technology empowers these gamers in a way that has clear benefits — both financially and in terms of a title’s development. Therefore, it is not difficult to imagine GameFi taking increasingly bigger bites out of the global video games market worth $175 billion.

Indeed, the Blockchain Game Alliance, an organization aiming to raise awareness about GameFi, already has impressive members, including mainstream game studio Ubisoft and chip manufacturer AMD. In fact, Ubisoft announced in May 2021 that the focus of its sixth Entrepreneurs Lab event would be GameFi.

Given the success of Axie Infinity and the number of blockchain games currently under development on various blockchain protocols, it is clear that GameFi has a bright future ahead. Yet, just how this future will unfold is difficult to predict. While the features discussed in this article will surely remain prominent in many GameFi titles, the pace at which blockchain technology is evolving today means new innovations are not uncommon. Many of these breakthroughs will surely make it into video games and bring with them new and exciting ways to monetize new experiences.