In the evolving crypto universe, Gamefi and DeFi are popular terms to come by and represent 2 factions within Web3. GameFi is coined from gaming and finance while DeFi is short for decentralized finance.

These entities thrive on blockchain technology while reshaping conventional gaming and finance services worldwide. Though mutually exclusive, GameFi and DeFi have begun to intersect in key aspects.

In this piece, we’ll explore both concepts while comparing GameFi and DeFi. Now let’s dive in!

Gaming Finance

Using Gamefi, video games incorporate blockchain technology, crypto tokens and NFTs. For context, gaming rewards that players earn are now cryptocurrencies or NFTs.

With these “finances”, they can cash out in local fiat currency or buy props and bonuses in the video games. Also, the earned rewards can be traded with other players in-game. With this technology, many Web3  games are surfacing, granting users the platform to earn crypto and NFTs.

Decentralized Finance

The concept of DeFi permits users to trade and make a profit on their funds without involving the conventional central authorities. DeFi is the one concept with the most potential to revolutionize the finance sphere.

DeFi is somewhat of a “rebellion” against conventional finance systems that have central control over intermediary organisations. It is more innovative.

However, it is not widespread due to a lack of adoption. Users have also lost assets worth millions of dollars to hacks and fraud. Nevertheless, it has prospects to transform the traditional banking framework.

Comparing GameFi and DeFi

Crypto investors must understand the key differences between both concepts to manage their portfolios effectively.

GameFi centres on video games while incorporating DeFi elements. DeFi points to a larger entity that could be applied in many instances besides GameFi. These include trading, lending, borrowing and custody services.

DeFi users access financial services on Decentralized Exchanges (DEXs) and control their assets with private keys. They can earn profits from staking on the blockchain. GameFi is an avenue for players to integrate blockchain technology with the gaming experience. There are also opportunities to earn and invest crypto assets and derivatives in the gaming ecosystem.

Where They Intersect

Many video games integrate DeFi protocols like staking to boost gaming trading and experience. Players earn crypto tokens or NFTs as rewards from games and use them for DeFi tasks like trading and staking.

Also, some DeFi initiatives are now integrating gaming features onto their platforms. Notably, this draws more users and drives more engagement and customer retention.

Both concepts also intersect in the Metaverse, a virtual reality built on the blockchain. In the Metaverse, video gaming, digital asset trading and social media converge. GameFi and DeFi blend into the very fabric of the Metaverse.

The Future of GameFi and DeFi

CoinMarketCap carried out research in 2022, and GameFi and DeFi record increasing investments from venture capitalists globally. Investments in 2020 totalled about $3 billion and multiplied to $25 billion the following year. By 2025, it is expected to have exceeded $100 billion.

As more people adopt DeFi services or enter the Metaverse, GameFi and DeFi will grow and continue to downplay the conventional financial system.