In recent years, both the crypto space and the gaming industry have been slowly merging together with the steady development of game finance (GameFi) and play-to-earn (P2E) models.
The future of GameFi
Initially coined by Yearn.finance (YFI) founder Andre Conje, GameFi refers to decentralized finance (DeFi) protocols with gamified elements. However, the phrase has evolved to encompass the financial aspects of blockchain games due to their inherent connection to real-world economies.
In other words, GameFi allows gamers to play and earn cryptocurrency through various in-game activities such as battles, crafting and quests. By leveraging blockchain technology, GameFi can enable true ownership of in-game assets, allowing players to buy, sell and trade them as they would real-world assets.
However, recent industry reports have indicated a gradual decline in the growth and adoption of the GameFi industry. An analytics report released by Messari Crypto in February 2023 revealed that the number of active GameFi users steadily declined by 34% since October 2022, with average monthly signups decreasing month-on-month.
Source: Messari Crypto
As a result, these developments have led some experts and stakeholders to question the feasibility of GameFi’s potential to drive mass adoption of cryptocurrency as was once believed.
Despite this, there is still hope for GameFi’s revival as it slowly evolves and continues to leverage elements of traditional gaming to address some of the crucial challenges it is facing.
A significant challenge to the adoption of GameFi is the need for more emphasis on gameplay. To achieve mass adoption, GameFi developers should prioritize creating a project that not only provides real-world value and utility for in-game assets but also keeps players engaged continuously. Developing a sustainable blockchain game requires building a project that has the potential to maintain a recurring player base.
Accessibility matters more
Arguably, the most significant barrier to the adoption of GameFi is the lack of accessibility for mainstream users. This is due to a number of factors, including the complexities associated with cryptocurrencies, such as the use of wallet addresses and private keys.
For those new to the crypto world, the concept of wallet addresses and private keys can be complex and uninviting. Wallet addresses are long strings of alphanumeric characters that are unique to each user and are used to send and receive cryptocurrency. Using public keys as unique addresses can make them difficult for people to read, increasing the likelihood of errors. As a result, access to GameFi has been limited to those with prior knowledge and experience in the crypto world, rather than the general public.
The answer lies in identity
One potential solution to the complexity of wallet addresses is to implement a universal digital identifier such as a digital identity that can serve as both a wallet address and a username. In traditional gaming, players often use screen names or usernames to identify themselves within a gaming ecosystem.
Similarly, a universal identifier could serve as a gamer’s digital identity in GameFi. This would allow a gamer to not only use it as their public persona but also as a way to simplify the process of claiming rewards without the need for long and complicated strings of alphanumeric characters. This approach could make GameFi accessible to mainstream users unfamiliar with cryptocurrency intricacies.
In addition, the introduction of a universal identifier in GameFi can enable the creation of monetized reputation systems within gaming ecosystems that promote good behavior within communities. Reputation systems can incentivize positive contributions such as helping new players, contributing to game development and participating in governance, thereby promoting a healthy gaming culture.
Furthermore, this universal identifier could enable cross-game interoperability, allowing players to easily use their digital identity across games and platforms. This development can create a more connected and dynamic gaming ecosystem, leading to increased engagement and adoption of GameFi that will incentivize gamers to remain active users across multiple ecosystems.
A new era for GameFi?
While GameFi has shown promise since its inception, it still has a long way to go. The implementation of a universal digital identifier will not only help GameFi gain traction but also has the potential to bridge the gap between Web2 and Web3 gaming projects. Simplifying the complex process of claiming rewards in parallel with world-class gameplay and cross-game interoperability would undoubtedly open the floodgates of mass adoption. Thus, the key to unlocking mass adoption lies in the creation of a universal identifier that will propel GameFi to increasing prominence and success.
With the continued evolution of GameFi and the adoption of user-centric solutions such as universal digital identifiers, the gaming industry could see a significant shift in the coming years, paving the way for a new era of blockchain gaming, with the industry shedding its hype and emerging as a serious contender for mass adoption of crypto as a whole.
Kirthana Devaser is an economist turned financial writer and speaker in the Web3 space. She’s a strong believer in using technology for good and believes that Web3 will drive meaningful change and build a better tomorrow for all. Currently, Kirthana serves as the content and copy manager at XGo, where she oversees and champions all things content and brand identity across the company.
Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you with all important information that we could obtain in this sponsored article, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor can this article be considered as investment advice.