Blockchain and associated terminologies like DeFi, GameFi, and SocialFi are being discussed. However, many people are still perplexed by the above concepts. As a result, the following article will assist you in easily distinguishing these notions.
Similarities of DeFi, GameFi, and SocialFi
They are all applications of blockchain technology
The first point to notice is that DeFi, GameFi, and SocialFi are all blockchain-based applications. DeFi, GameFi, and SocialFi ventures and ideas were formed and inhabited the blockchain industry by using the strength of decentralization, immutability, transparency, and functioning on a PoW (proof of work) peer-to-peer network.
Every project DeFi, GameFi, or SocialFi owns at least one token
Any type of finance, whether decentralized or centralized, requires the economy. As a result, every project built on blockchain technology comes with at least one token. Tokens will be listed on cryptocurrency exchanges like Binance, Kucoin, and OKX after the ICO event. When deciding whether to buy or sell tokens, investors will evaluate a number of criteria.
Distinguish DeFi – GameFi – SocialFi
What is DeFi? Difference between DeFi and CeFi
DeFi (Decentralized Finance) is a type of decentralized finance (open finance) in which all participants are managed decentralized. This means that it can be used by anyone without the need for intermediaries like banks or financial organizations.
On the Ethereum blockchain, DeFi contains an overlapping network of dApps and smart contracts. This architecture is geared for financial applications like lending and cryptocurrency exchanges… DeFi allows you to keep track of your assets while also making borrowing, investing, and paying bills simple…
DeFi, in contrast to CeFi, goes completely against the grain. When performing a financial transaction in CeFi, such as paying money to the University, you will require the assistance of a third party, the bank, to help you move your funds to the University’s treasury using a variety of methods, including bank deposits, online transfers, and cash payments… However, DeFi does not operate in this manner. Financial transactions will be totally automated as a result of being built on the blockchain technology platform, and individuals will be able to do so without the use of intermediaries or human administration.
Don’t worry if you think this type of transaction is unreliable because there is no human observer; technology will take care of it. Smart contracts will assist the project in accomplishing this. It is in charge of developing and administering the blockchain operations that occur when users engage with one another. Furthermore, DeFi’s ability to customize means that it may offer a wide range of services and solutions.
DeFi projects are also full of similarities with CeFi. I will take a few examples for you to understand easily:
- Cryptocurrencies: Bitcoin, Petoverse, Gem Pad…
- Centralized banks (issuing stable coins): Sand Dollar, DCash, Digital Yuan…
- Cryptocurrency Exchanges: Serum Dex, Uniswap, KyberSwap…
- Broker: Bitpanda, Wellbull, TradeStation…
- Insurance companies: VouchForMe, Guardtime, Etherisc…
- E-wallets: MetaMask, Coinbase, Coin98…
What is GameFi?
To begin, we must clarify that GameFi is a blockchain application. The success of Axie Infinity, an internationally famous NFT game, spawned thousands of additional titles. So, what’s all the fuss about GameFi?
GameFi is a financial video game that can be thought of as a cross between Game and DeFi (Decentralized Finance). As a result, not only are participants entertained but they are also awarded tokens to sell for a profit.
A GameFi project will include the following elements:
The majority of the characters in the game are NFTs. NFTs are sailors (sailors) in Piratera, for example (swords, islands…) Players will assume the character of sailors and engage in battles with pirates in order to capture the ocean and return it to the players. huge benefits NFT, like tokens, is available for purchase and trading.
Most in an NFT game there will be two tokens
- Administration Token: This is the main token of the game, listed on exchanges so that players can buy, sell, and trade in limited quantities.
- Bonus Token: This is a token that is rewarded when a player completes a task in the game. For example, after you finish playing a game of Piratera game, you will receive a certain amount of BERI (BERI is the reward token of Piratera game). After accumulating a large amount of BERRI, players can completely change to PIRA to trade and make a profit.
Unlike DeFi initiatives, where investors must only evaluate the project and watch tokens to decide on profitable trading, GameFi and its participants have more options to profit by playing games and receiving prizes. Staking, liquidity mining, and yield mining are among the DeFi goods and features offered by GameFi. The addition of DeFi features decentralizes NFT gaming, as rights are no longer centralized on one side of the game publisher.
What is SocialFi?
SocialFi stands for Social Finance. It is a combination of social networking and finance on the blockchain. The SocialFi space allows users to earn extra income from creating content, communicating with other users, participating in entertainment, and playing games.
Decentralization, openness, and user empowerment are all goals of SocialFi. SocialFi is a Web 3.0 platform that promises to update traditional social networks. Power will be distributed to customers rather than concentrated in a middleman.
We can observe that companies like Google, Facebook, and Twitter are currently in charge of data and consumer usage procedures. As a result, SocialFi was created to aid the transparency of all data. additionally, improving user account security
Just like DeFi or GameFi projects, SocialFi will also issue tokens, then make these social tokens the core of the project.
There are 3 different types of social tokens:
- Personal token: You create your own social token in your own name, value it, and distribute it to your fans. Owning a personal token allows fans to access private groups or read exclusive content published by you.
- Community token: Same as above. If you join a certain smooth game guild, to connect you and other members, they will issue their own tokens.
- Social platform token: A token issued by social platforms. They can use it for collateral, locking, or even community governance.
To recap, both GameFi and SocialFi play a role in DeFi, which is the money component. Projects that deploy consumers, like traditional finance, must deliver revenues or benefits to the participants. Furthermore, DeFi, GameFi, and SocialFi all contribute to the creation of a massive Metaverse, promising to build a highly open connection environment where everyone can join while maintaining complete security.
The Defi – GameFi – SocialFi projects are still evolving to make Metaverse more accessible to everyone. Technology will never cease innovating to solve the problems that exist in today’s world. If people or businesses are experiencing unsolved issues with new technology, please call Arcanic Tech right away for detailed advice.
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