Hello, gamers, holders, family, friends!
Today, we are going to be looking at one of the most bleeding-edge uses of blockchain technology to date. This is still uncharted territory in a lot of respects, and the companies that are trailblazing these new paths truly are inventing something entirely new.
We speak, of course, of DeFi, short for Decentralised (or decentralized, if you’re more USA than UK) Finance.
So what is DeFi?
It’s not hard to understand. Think of traditional finance and financial instruments. What comes to mind immediately? Borrowing and lending money? Trading currencies? Maybe you’re a little more savvy and thought of speculating on the value of stock options and dealing with derivatives?
Well, surely all of these financial activities need to be mediated, and there must be some sort of central authority that ensures the fairness of these practices, so that no one gets tricked or swindled and everything goes according to plan. That’s why we have banks, exchanges, and brokerages.
Decentralised finance, or DeFi, is when you do all of these things without any need to have intermediaries and mediators holding our hands. We use the power of the blockchain and smart contracts to build a system where the rules are guaranteed by unfailing technology, instead of people and institutions that will charge fees and tariffs to allow us to do business that they aren’t even involved in.
Where did it come from?
People have been discussing it for about as long as there are digital currencies. It’s the logical next step. You have a currency that is effectively free from government control, meddling institutions, borders, etc so it follows that you would want to build a financial system around it.
The term was coined in 2018 in a Telegram chat (of all places!), and here’s a screenshot:
(writing about historical events is much easier in the printscreen age)
As you can see from the ideas exchanged, the building blocks of what would become DeFi were already there from the get-go. It’s not an organization, or an institution, or a method, even.
It’s everything finance is, but open.
And it’s experiencing extreme growth. The monthly volume of decentralized exchanges has exploded from a measly (:D) $39.5 million in January 2019 to a stunning $45.2 billion in January 2021
Do you need more details? We recommend this deep dive. Because in the meantime, we want to talk about GAMES.
Gaming is the real DeFi frontier
If DeFi feels a little geeky, and a little techy, it’s because it is. The real way that DeFi is going to enter our lives and become real is through real use cases. One of the absolute best use cases for DeFi is, of course, gaming.
Gaming is already populated by people who are quite adept at geeky and techy things, for starters. Our audience is one of people who are bold and like to experiment with new things. They aren’t afraid of bleeding-edge tech, especially if it’s clear how solid it is.
So what is happening with gaming and DeFi? Well, first there came the pandemic. When COVID19 hit, and a lot of the economy skidded to a halt, gaming was not only unaffected but heavily favoured. People were spending more time at home and gaming more, and the results showed it. Microsoft, for instance, reported a 51% YOY growth on its XBox business.
As gamers delve deeper into games, they develop economic ties. If we’re talking traditional finance, that means spending more money. If you’re talking DeFi, it can mean a number of things.
Here’s a summary from a Nasdaq.com article (highlights are ours):
“The mechanisms of DeFi enable blockchain games to provide players with different ways to make it worth their while and earn rewards. This growing proliferation of monetary benefits is a point of growing interest. Collectible and trading games are some of the most popular genres on blockchain, in part because they allow players to buy, sell, and trade unique tokens and assets. And with games increasingly creating and issuing their own native tokens, developers are essentially able to construct their own economies and ecosystems, and connect with each other through them, in many cases even across platforms.”
Is that not enough?
Let’s look at some real-world examples.
The Collateral Car
In traditional finance, it is customary to provide collateral when you request a loan. That’s something the loaner can keep in case you fail to pay them back. That can be anything, from your home to an important and valuable work of art…
And now DeFi is allowing us to do that with NFTs and digital collectibles.
One example that comes to mind is this one, where lending platforms are accepting NFTs from the F1 Delta Time game as collateral for loans. The cars are usable NFTs that you can actually play with if you own them.
The conditions for this loan are entirely ensured by a smart contract, so neither the loaner or the loanee can renege on the deal, and there’s no need for a bank or an intermediary of any kind. If the loanee pays back what he borrowed, the car returns to their hands. If they don’t, it doesn’t.
#Play2Earn borrowing economy
DeFi, and the total removal of financial actors and middlemen from between games and gamers will allow gamers to do a number of things that weren’t viable before. First and foremost, it will allow them to #Play2Earn. This is one of Exeedme’s cornerstones. Gamers must be allowed to earn money for their effort and talents, not pay.
But if you can use NFTs in games, and you actually own them, what’s stopping you from borrowing and lending them to other players so they can get in on the action?
Players and businesses who actually own NFTs are already experimenting with different solutions based on the freedom provided by a decentralised economy. If you want to participate in games that actually integrate NFTs into the gameplay, such as Axie Infinity, so you can earn some money… Why not borrow some NFTs for a percentage of your earnings?
You can do that now.
But that’s just the start.
The potential for DeFi in gaming is infinite
Since platforms like Exeedme now have access to their own forms of currency, and since blockchain allows for contracts to be enforced by this tech with perfect assurances, DeFi gives us the chance to create our own economies.
NFTs will be bought, sold, traded and displayed. Players will be able to bet on themselves and others. Assets won’t just live inside the games, subject to the whims of whoever owns the platforms. They will be actually owned by gamers, and they will be free to remove them from the platform and use them for whatever function they desire.
And the same for earnings.
Native tokens like our own $XED are actual money that you will be able to use for purchases in the world outside of the game or trade for any other currency you prefer, including fiat currencies. The products of DeFi gaming economies are real, not just in-game tokens.
This is the future.
Are you ready to walk it with us?