Direct from the desk of Dane Williams.
I know it’s not rocket surgery when spelled out like this, but the term "GameFi" is simply an amalgamation of the words "Game" and "DeFi" (Decentralised Finance).
Going a bit deeper, GameFi refers to the merging of blockchain-based gaming and decentralised finance concepts to create whole new gaming experiences, token economies and financial incentives for players.
It combines elements of gaming, non-fungible tokens (NFTs), play-to-earn (P2E) mechanics and DeFi protocols into one application.
A real one stop shop if you will.
The key difference between GameFi and regular play-to-earn (P2E) crypto tokens lies in the integration of decentralised finance components.
While both GameFi and P2E tokens involve rewarding players with cryptocurrencies for their in-game activities, GameFi takes it a step further by incorporating elements of DeFi.
This includes features like liquidity mining, yield farming, staking and other financial mechanisms that enable players to earn additional rewards by participating in the GameFi ecosystem beyond their in-game achievements.
What’s an example of a GameFi token and dApp?
The best example of a GameFi token and dApp is Hive’s very own dCity.
dCity is a quintessential example of a blockchain-based game that combines elements of gameplay and decentralised finance (DeFi) mechanics.
In dCity, players build and manage their virtual cities using Hive blockchain-based NFTs and they can earn cryptocurrency rewards (SIM tokens) based on the performance and productivity of their cities.
On top of rewards for gameplay, the game includes features such as Hive Power delegations and liquidity pools, which are typical components of DeFi protocols.
Players can delegate their Hive Power to earn additional rewards in the form of SIM tokens and NFTs to earn more via gameplay.
They can also provide liquidity to what I’ve previously called the best Hive DeFi pool, the SWAP.HIVE:SIM LP.
Given the integration of DeFi mechanisms like delegation rewards and liquidity pools on top of general gameplay rewards, dCity can indeed be considered a GameFi dApp.
A damn good one at that!
dCity goes beyond traditional play-to-earn (P2E) games by offering players additional opportunities to earn rewards through DeFi-based activities, while still remaining within the game's ecosystem.
Should I treat dCity like a DeFi investment rather than a game?
Treating dCity as a semi-passive DeFi investment can be a viable option if you don't have the time to actively play the game.
On top of the passive rewards generated by non-fungible tokens (NFTs), the game offers various DeFi-like features such as delegations and liquidity pools.
If you don’t have the time or will to play, here's how you can approach dCity as a DeFi investment:
Delegations
With dCity, you can delegate your Hive Power to the main account and earn rewards.
Currently you earn 7% APR paid in SIM, receive the chance to be airdropped Influencer NFTs and contribute to the stability of the SIM token via funding buybacks.
Liquidity Pools
As mentioned above, the SWAP.HIVE:SIM LP, accessible via both the game and the BeeSwap front-end, is an excellent pool to be in.
Not only do you earn 20% APR in SIM, but you earn BXT and holding rewards as a cherry on top.
Passive Rewards from NFTs
On top of the previously mentioned DeFi elements, you can still earn SIM via passive gameplay strategies such as holding NFTs that offer a tax refund.
There is no right or wrong way to play dCity in this way and I’d encourage you to experiment using trial and error until you find a setup worth sticking with alongside your DeFi earners.
Best of probabilities to you.
PS. Just getting ahead of anyone who comments “what’s the best dCity setup in the comments…
My answer?
If you have to ask, then there isn’t one.
Just use your HIVE to buy SIM and add it to the SWAP.HIVE:SIM LP.
SIM is extremely stable so you won’t lose enough HIVE via impermanent loss to matter and will earn well over 20% in rewards.
Much higher than the 8ish% you would have earnt if you just powered up your HIVE and curated.