GameFi Getting DeFi-ed: The Future Is Here

5 min readFeb 22, 2022


DeFi has become one of the most popular buzzwords in the cryptosphere. The term itself describes a variety of services that have taken the industry by storm — even leading to the CFO of Bitwise Asset Management stating, “DeFi is the story of 2021.”

Though, as quickly as it rose, so too has it lost its claim to the crypto throne. By the beginning of 2022, GameFi has quickly become the new frontrunner. As of Q4 2021, approximately 50% of active crypto wallets had connected to decentralized gaming apps. In the same period, active wallets connected to DeFi applications fell to 45%. While DeFi may be taking a backseat to GameFi’s dramatic rise, that surely does not mean that it will disappear. Not only does DeFi provide important services to the industry, but it also offers innovative methods for GameFi players to compound their gaming rewards.

The Dramatic Rise of GameFi

Led by popular play-to-earn titles like Axie Infinity, Cryptoblades, Thetan Arena, and more, GameFi has attracted widespread attention in the cryptosphere. Currently, there are upwards of 80–100 million daily gaming transactions that occur within the play-to-earn (“P2E”) gaming space, and this figure is set to increase quickly with over 1,200 blockchain games already launched and an average of 70 initial game offerings (“IGOs”) added every month.

The Future is GameFi-ed

Blockchain gaming has morphed into a hot-bed for innovation, with developers creating new games or inventing new features that leverage digital tokens for in-game purchases and rewards. Even more exciting, developments in GameFi are directly contributing to the advancement of other industry innovations, like web3 and the metaverse. While the breakneck pace of development is awe-inspiring, it’s ultimately the P2E economic model behind GameFi that has catapulted the industry above and beyond the popularity of DeFi.

Traditional gaming, by contrast, has advanced considerably over the last decades — look no further than the graphics of the latest and greatest titles versus the old school eat ’em all PacMan. Yet, despite all this development, the industry’s value proposition and economic model has remained stagnant. Gamers pay for games, development studios make money, and players have fun. At the end of the day, gaming has historically been limited to an outlet for entertainment and nothing more.

Yet, bringing the world of gaming to the blockchain — and the new economic model it unlocks — is set to be a game-changer. By allowing gamers to earn digital tokens or NFTs through gameplay, players are suddenly able to both enjoy the same level of entertainment while also earning novel income channels through digital assets and voting rights to dictate the direction of the games.

As of 2020, the global gaming market was valued at approximately $174 billion, but analysts predict this to hit at least $315 billion by 2026. While traditional games deepen the pockets of gaming agencies when in-game purchases are made, P2E enrichens all stakeholders — from gamers and investors to developers, everyone shares a piece of the pie. This is why traditional gaming giants like Ubisoft are racing to develop blockchain gaming offerings to stay ahead of the curve.

How Does DeFi Relate to GameFi?

GameFi offers a huge opportunity to profit. Investors can put together their ideal portfolio of GameFi tokens and hope for them to moon, while gamers can purchase digital assets to use in-game and earn additional tokens or NFTs that can be lent or sold. And, the most savvy crypto enthusiasts can do a bit of it all!

However, a key feature that makes GameFi earning opportunities exciting is the inclusion of DeFi technology. Innovative crypto developers have begun experimenting with merging the best of DeFi with the best of GameFi, and concepts like staking, liquidity mining, and yield farming have gained a strong presence in many games. We’ll give a few examples of the most popular, below.


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Aavegotchi is a popular collectibles game focused on staking NFTs. In the game, players can collect Aavegotchis, which are ghost-like characters that have unique collateral stakes, traits, and wearables.

The game is novel in the industry for its integration of staking and liquidity mining with GameFi. Players are able to stake their Aavegotchis with interest-generating tokens, and because the platform is powered by DeFi protocol giant Aave, staking will contribute to Aave’s LP and thereby generate returns for the players based upon borrowers’ interest payments.

DeFi Kingdoms

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DeFi Kingdoms is an increasingly popular play-to-earn game that was released in August 2021. As its name suggests, it includes integrates unique DeFi characteristics to its GameFi ecosystem.

In this medieval-style civilization building game, players can accrue $JEWEL, the game’s native token, alongside various types of in-game NFT assets. $JEWEL is multifunctional, and gamers can stake their tokens to support DeFi Kingdom’s decentralized exchange, or “DEX,” which goes by the same name as the game. By providing liquidity to the DEX, gamers are eligible to earn some sweet compounding gains from the fees that traders pay to the DEX.

Will GameFi Replace DeFi?

GameFi already created a buzz through its innovative play-to-earn model that rewards gamers with blockchain-based digital tokens or NFTs. The inclusion of DeFi into the GameFi ecosystem is taking P2E’s income generating potential to new heights by introducing novel income channels via the most cutting-edge solutions in DeFi.

Yet, for all the breakneck development taking place within GameFi’s new digital economy, DeFi is not going anywhere. While it has taken a backseat to GameFi in terms of user adoption, the link between the future of both of these industries is close and only growing tighter. As decentralized finance becomes more mature, developers are only too keen to introduce the latest and greatest into the GameFi ecosystem. As new opportunities to earn passive income through gaming attracts new players, the wealth generated bolsters liquidity within the DeFi industry and provides new opportunity for additional developments — and the cycle continues. So, while the cryptosphere runs abuzz preaching the P2E gospel, HODLers should continue looking to DeFi to foresee the future of GameFi.

About Kyoko

Kyoko.Finance is a DAO-to-DAO and cross-chain GameFi NFT lending market for guilds and players. Kyoko’s DAO-to-DAO lending offers liquidity to promote web3 development, while its guild-to-guild lending, P2P NFT lending, and cross-chain asset lending platforms aim to solve the most pressing issues challenging the GameFi market, including the rising cost of entry and siloed in-game assets across different blockchains. Kyoko’s metaverse will also allow Guilds to display their history, progress, and other accomplishments, while players can connect with others in a world that can be built in, developed, and sold off.

Follow Kyoko at the links below to stay up to date on upcoming events, releases, and news.

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The go-to P2P NFT lending platform and cross-chain GameFi NFT lending market for guilds and players.

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