Is there a new outlet from DeFi to GameFi?

The famous designer and founder of world-class luxury brands, Ms. Chanel, has a classic saying that captures the essence of fashion: trends are perishable and styles last forever Popular things will rise and fall with people’s preferences, but human aesthetics will not undergo major changes in a certain historical period. Popular elements that seem to be the same every day actually hide relatively fixed expressions of aesthetic values.

This principle also applies in the currency circle. I believe all of you will remember DeFi mining, which was a smash hit in the currency circle in 2020. The overall concept of DeFi mining is derived from decentralized finance (DeFi), where individual users who hold virtual currencies can earn tokens by participating in specific DeFi applications. Today, DeFi mining seems to have been quietly hidden into history, and it is rarely mentioned.

However, Sister Sa’s team has recently observed that a wave of GameFi is emerging overseas. Both the name and the core concept are very similar to those of DeFi mining last year. So, whether GameFi is old wine in new bottles, or old trees send new branches , today we will go to find out.

one. What is GameFi?

GameFi, the full name is Game Finance, we can call it “gamification finance” in literal translation. The rise of GameFi is very closely related to the decentralized finance (DeFi) that was born in 2019 and the non-homogeneous tokens (NFT) that went out of the circle in 2021. DeFi endows NFT with more financial attributes and enhances its commercial value to a certain extent; NFT makes P2E (play to earn) possible , which truly makes game props “scarce” and clarifies their ownership. For the first time in history, players can say that they “own” this game item.

The concept of GameFi is actually not complicated. It itself is just to transform the former transactional DeFi into P2E mode game DeFi with the help of NFT. It can be understood in the simplest way: GameFi = DeFi + NFT + Game.

The concept of GameFi is the CSO of MixMarvel, which Mary Ma proposed in 2019. It is its core idea to make money while playing games. But the GameFi wind really blows, and it will not be until October this year that the chain game Axie Infinity successfully completed the B round of financing, raising US$152 million as a landmark event. According to Block chain gamer statistics, as of November this year, GameFi investment has exceeded 2.5 billion US dollars. It can be said that when a new big cake is about to be formed, every family wants to be the first batch of cake dividers.

2. Introduction to representative Gamefi games

According to the BizHub team’s point of view, the existing GameFi games can be roughly divided into two types: (1) Agricultural, this type of GameFi gameplay is similar to mining, requiring players to participate in the game for a long time every day to accumulate materials, earn game props or NFT equipment. (2) Gold series. This type of GameFi usually requires players to purchase tokens or specific items before starting the game. This is essentially divided into play to earn or free play to earn . Below we use these two classifications to introduce to our partners GameFi, which is more typical and representative.

(1) Gold GameFi representative: Axie Infinity

Currently the most popular GameFi is Axie Infinity. This game is very similar to the Pokemon and NFT originator CryptoKitties we played in our childhood: this is also a game for cultivating pets to fight.

Axie Infinity became popular in July 2021. Players need to train their own Axie (pets) to play against. Players can get a GameFi token called “Small Love Potion” (Small Love Potion, referred to as slp) while playing the game, which can be used to make two Axies breed another Axie.

This gameplay is very similar to CryptoKitties, and Axie itself is an NFT. When players successfully cultivate Axie with different skills, they can sell to other players to earn tokens. Axie Infinity is set to defeat the 3 Axies of the opposing player if the player wants to win the match.

It is reported that Axie Infinity has more than 1 million daily active users. It is even said that in some Southeast Asian countries where the epidemic is severely affected, many people really rely on the money earned by playing Axie Infinity to support their families. Of course, as the representative of Krypton GameFi, you need to invest in 3 Axie (about 1500 USD) if you want to play Axie Infinity.

(2) Representative of Agricultural GameFi: My Master War

My Master War is a game that controls the battle of the game’s characters (its game style and settings are very similar to a certain domestic game, and there should be a certain relationship with it. Sister Sa’s team will not say much about it. Interested partners can do it by themselves. explore). In this game, combat power is determined by the genes of the game characters. Players must search for and perfect the genes of the most elite heroes in history while playing.

After that, the same gameplay as the crypto cat, through the method of reproduction, gave birth to new and more combative characters. The player is the king of the country. At present, this game has two maps, one is a medieval theme, and the other is a future theme that spans time and space.

Unlike many other GameFi games, My Master War does not require players to spend money to start playing. But it is not strictly free play to earn, because when players need to buy items and upgrade their VIP level, they still need to spend money.

According to the official website of the game, this part of the money is defined as “an investment that will generate profits in the future.” In short, if you want to make money in GameFi without spending a penny, it is not impossible, but it is likely that the pay is not proportional to the income, so it is better to go out to work.

3. The legal nature of GmeFi

Before discussing the legal risks of GameFi, we must first clarify: What is the nature of GameFi? Is it a financial product or an online game? The team of Sister Sa is more inclined to regard GameFi as a special financial product. The reasons are as follows:

(1) p2e is the commonality and key core of all GameFi projects, which is equivalent to the behavior of promising income to the unspecified public in society, and the public’s investment based on this is for a specific purpose;

(2) At present, most of the GameFi products on the market belong to the Krypton Gold GameFi mentioned above. If there is no initial investment, the game cannot be played, so this is a money investment;

(3) After investing in GameFi tokens or NFTs and obtaining the right to play, players first look forward to how to recoup their costs, and then look forward to the generation of benefits;

(4) GameFi has greater investment risk, are its tokens valuable? How much is it worth? Much depends on the activity of the community and the freshness of the game.

To put it simply, we are participating in GameFi. Is it to make money or to play? At present, it seems that the main purpose is to make money. Needless to say, the people of Southeast Asian countries who rely on this to support their families can choose more interesting and real games if they are mainly for playing. There is not much playability, and the experience is not too good.

Fourth, GameFi may have legal risks

If GameFi is regarded as a financial product, there are two risks: it violates the provisions of the administrative law and the criminal law.

(1) Administrative violation

For Chinese players, most of the famous GameFi at present, if the domestic residents of our country want to play, they need to use a VPN to achieve it, which is commonly known as over the wall. According to Article 6 of the “Interim Regulations of the People’s Republic of China on the Administration of International Networking of Computer Information Networks”: Computer information networks must use the international access channels provided by the National Public Telecommunications Network of the Ministry of Posts and Telecommunications for direct international networking. No unit or individual may establish or use other channels for international networking. It is an administrative illegal act for Chinese citizens to use VPN to participate in GameFi .

Regarding GameFi games themselves, the prerequisite for playing GameFi games is to have a digital wallet and purchase a certain virtual currency before investing and gaining the right to play. Similarly, the acquisition and realization of game revenue also involves various virtual currency-related activities, in which GameFi needs to provide players with various virtual currency-related services. Therefore, according to the 924 notice: GameFi’s virtual currency-related business activities are illegal financial activities. If it is open to residents in China, it is a violation of the 9.24 notice.

In addition, in terms of virtual currency, since virtual currency is not legal tender, if GameFi is regarded as a financial product, the GameFi platform is an institution that provides financial services. First of all, the financial service does not belong to the financial activities stipulated in Article 4 of the Regulations on the Management of Financial Institutions; secondly, the GameFi platform does not belong to the financial institutions stipulated in Article 3 of the Regulations on the Management of Financial Institutions.

As the People’s Bank of China clearly stated in Article 27(2) of the “Guiding Opinions on Regulating Asset Management Business of Financial Institutions” that the asset management business should be subject to penetrating supervision, the GameFi platform is a violation of financial supervision related administration Regulations of behavior .

(2) Criminal risks

In terms of criminal risk, specific analysis needs to be conducted on the specific behavior of players. Sister Sa’s legal team observed in the course of practice that GameFi has the risk of illegally absorbing public deposits and fund-raising fraud in China .

Regarding the crime of illegally absorbing public deposits, if the perpetrator regards GameFi as an investment project and uses it to publicize and promise high returns to an unspecified majority of the society, absorbing funds into GameFi is a violation of the national financial management regulations stipulated in my country’s Criminal Law. , To carry out acts of illegally absorbing public deposits or absorbing public deposits in a disguised form, disrupting financial order.

Regarding the crime of fund-raising fraud, the perpetrator may use the newer concept of GameFi, most people are not familiar with it, and defraud others’ funds under the guise of GameFi. In addition, the subjective purpose of “illegal possession” constitutes a key element of the crime of fundraising fraud. According to Article 4 of the “Supreme People’s Court’s Interpretation on Several Issues Concerning the Specific Application of Law in the Trial of Criminal Cases of Illegal Fundraising”: the use of fraudulent methods of illegal fundraising has the following circumstances One of them can be determined as “for the purpose of illegal possession”: the raised funds are not used in production and business activities or are obviously out of proportion to the scale of the raised funds, so that the funds raised cannot be returned. Whether GameFi games can be recognized as “production and business activities” is also a very controversial issue.

Write at the end

Going back to the question we mentioned at the beginning, is GameFi old wine in new bottles, or old trees with new branches? I believe that all the friends who have finished reading it patiently have their own ideas. But sister Sa’s legal team still needs to remind once again that investment is risky, investment needs to be cautious, watch your wallet closely, and beware of scams under the banner of GameFi.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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