In 2018, the two main ways video game players could earn a living were through e-sports and live streaming — or perhaps a successful YouTube channel. But, thanks to the rise of blockchain technology, the financial aspect has never been more interwoven with the gaming industry. While most users are acquainted with one or two facets of financialization in gaming such as earning and cashing out rewards from completing game quests a la Axie Infinity, there are several other methods that have yet to be explored by most users in the cryptocurrency market’s flourishing new vertical called GameFi.
CryptoKitties in 2017 was the first known game to use blockchain technology, introduce nonfungible tokens (NFTs) and enable players to have a verifiable claim on their virtual assets. Then, in 2019, the introduction of an in-game currency called Smooth Love Potion (SLP) boosted Axie Infinity’s popularity and paved the way for other decentralized finance (DeFi) components to penetrate blockchain gaming. Such parallels that GameFi has with DeFi include staking, liquidity mining, NFT trading and NFT fractionalization.