🪐Basic Concepts Of Blockchain

1. What is DeFi?

DeFi, also known as Decentralized Finance, is a financial application built on the blockchain.

A quick guide to understanding in one minute:

In the traditional financial industry, there are many financial institutions, such as banks, which generate money with money through financial behaviors such as lending, gaining profit, and returning interest to customers.

In DeFi (decentralized finance), financial institutions and their behaviors are replaced by smart contracts on the blockchain. The advantages are: 1. Reducing the operating costs of banking institutions, more profits will be returned to users; 2. The contract is transparent and all operations can be checked, reducing the risk of centralization.

2. What is NFT?

An NFT, which is a non-fungible token, has the characteristics of indivisibility, irreplaceability, and uniqueness. Due to its non-fungibility and indivisibility, NFT can be bound to some commodities in real life, such as game props, digital artwork, tickets, etc.

With its natural collection properties and ease of trading, NFT can be used in games to make virtual props have a longer lifetime, higher development space, stronger playability, and wider circulation.

A quick guide to understanding in one minute:

If NFT is understood as a game item, let's see how it differs from traditional game items:

In traditional games, the items you purchase may be lost due to account bans, service stops, etc.; and the price may also be reduced as the game publisher lowers the acquisition threshold.

In blockchain games, each NFT is permanent and unique, and no one can change its information and ownership; its price is more affected by the market than the game publisher or game operator.

3. What is GameFi?

GameFi, also known as "gamification of finance", refers to a completely new gamified business under the integration of DeFi+NFT, which presents financial products in the form of games and gamifies the rules of DeFi.

Some analysts believe that NFT has led asset differentiation to DeFi based on the standard of scarcity, and DeFi also endows NFT with the value of commercialization through financial means. Some DeFi cross-border applications that are currently being promoted, especially projects combined with NFT, have shown great potential.

A quick guide to understanding in one minute:

From a financial point of view:

In traditional finance, on the one hand, users need to spend a lot of time learning the relevant issues; on the other hand, they need to invest a certain amount in advance. With a complex operating process, users' perception of risks and profits is easily lured and influenced by financial institutions.

The advantage of GameFi is that it integrates financial properties into the game on the blockchain, while using blockchain games as a medium. It not only effectively reduces users’ learning costs and improves users’ willingness to engage, but the characteristics of blockchain can also make risks and profit that are difficult to assess public and transparent.

From a game point of view:

The use of NFT's own features in GameFi can improve interconnection between games and solve the traditional game industry's problems of rapidly declining lifetime and loss of game players.

For example, in a traditional game, a player spends 5,000 RMB to buy an item. As the life of the game comes to an end, the item will become worthless or the player will even lose ownership of the item once the game is stopped. It is not difficult to find that whether the interests of traditional game players can be guaranteed basically depends on the decisions and attitudes of game developers and operators.

In GameFi, NFTs (a type of game item) purchased by players can be used in all games at the same time, such as skins in MOBA games or mining machines in farm games. When this game item has use value in hundreds of games and can be used at the same time, its value preservation ability will be greatly improved.