
## Introduction

During the last years of the crypto reign, the GameFi games managed to climb to the list of the top game genres, leaving behind the traditional games we were used to.

New users keep joining the constantly increasing number of GameFi game apps seeking the chance to earn rewards or even an income.

How does this new game type work? What does Play2Earn mean and what you should know before you start playing? In the following guide, you will find anything you need to know.

## What is GameFi and how does it work?

GameFi -or usually referred to as **Play2Earn(P2E)** - is a genre of blockchain games that keeps rising and aims to establish a new type of gaming experience. The advantage of GameFi compared to conventional games is the achievement of financial gains through gameplay entertainment.

As its name indicates -a portmanteau of “game” and “finance”, GameFi games offer players, the ability to earn crypto or [NFT](https://www.cyberscope.io/blog/what-is-an-nft-what-are-the-5-most-expensive-nfts-ever-sold) rewards by completing in-game tasks. The players can then trade their earnings on exchange platforms and NFT marketplaces accordingly to gain financial interest.

Players in GameFi can earn their rewards in a variety of forms depending on how the game is designed. Players will be called to succeed on missions, battle against each other or complete achievements, always in line with the content of each game.

The earnings can be either cryptocurrency -usually tokens created by the GameFi project-, NFTs or in-game assets like cosmetics, weapons, skill points and many more. In most cases, the assets are NFTs available on the blockchain and that gives the freedom to players to trade them directly via an NFT marketplace

The feature that GameFi logic is based on, are **\*Play 2 earn (P2E), Digital asset ownership **and **Defi apps.\***

## Play 2 earn (P2E)

The **Play-to-earn model (P2E)** is one of the key features of the GameFi projects which allows the player to earn crypto assets like tokens and NFTs by taking advantage of the in-game assets. In contrast with conventional games, in which the development company is the rightful owner of the game assets, P2E gives full control to players and the right to earn money by exploiting them.

Even there is a difference to Pay-to-play (P2P) -as P2E games usually do not require investment in order to start playing -some of them will require the user to buy crypto assets or NFTs before joining the game. In that case, the players have to evaluate the risks as there is the danger of investing more than the highest rewards they can ever earn from the game

![Play-to-earn model (P2E)](https://firebasestorage.googleapis.com/v0/b/cyberscope-90197.appspot.com/o/blog%2Fwhat-is-gamefi-and-how-can-you-earn-while-playing%2F1.png?alt=media)

## Digital assets

As mentioned before, players can own in-game digital assets that will enrich their gameplay experience. Types of these assets could be skins, weapons, times, skill points, virtual land properties and many other game components

Players can monetize the assets for financial exchanges or use them to build a passive income over time. For example, players can rent an in-game item to other players in exchange for money or charge the visits that take place on the land they own.

## DeFi apps

Other GameFi projects also offer features that are widely known to crypto holders and assist them to have passive incomes. Features like these, are Staking, Mining, Liquidity and Yield Farming.

Based on each game's mechanics, the more you engage with these features the more the game rewards you. A game may escalate your Staking APY when your in-game character level up or it may give you more privileges and access to exclusive content by locking a minimum amount of tokens.

![GameFi projects can reward you while playing](https://firebasestorage.googleapis.com/v0/b/cyberscope-90197.appspot.com/o/blog%2Fwhat-is-gamefi-and-how-can-you-earn-while-playing%2F2.png?alt=media)

## How to get started?

There are thousands of blockchain-based games in the market. Each one works differently, so be careful about scam projects or fake websites that can put you at risk. Be sure to do your own research and choose projects that have [Audit](https://www.cyberscope.io/#audit) and [KYC](https://www.cyberscope.io/#kyc) certifications from known crypto firms. Ideally, you should create a new crypto wallet specifically for this purpose and only use funds you can afford to lose.

If you are confident that a game is safe, here are some steps to get started.

1.  **Create a crypto wallet** The first thing to do is create a Cryptocurrency Wallet. As mentioned above, it would be better to create one specifically for GameFi games. Note that each game may require a different blockchain network so be sure to check before you create it.

2.  **Connect your wallet to the game**
    Next, you have to connect your wallet to the game in order to start playing. On the game’s official website, should be an option that by clicking, you can connect with your wallet. Be sure that this is the correct official website of the game and not a fake replica of the original one.

3.  **Check the requirements to play** Before you decide to invest in GameFi, be sure to check what are the requirements to play. Usually, the game will ask you to buy their crypto tokens or their NFTs in order to initiate. Dedicate time to do your own research and estimate how long will it take to get your initial investment back plus profits

## Conclusion

The number of GameFi projects has exceeded any predictions in 2021 & 2022 and is expected to continue growing in the coming years as new ones keep deploying in all popular blockchains like BNB Smart Chain, Ethereum, Polygon, Harmony, Solana, and many more in regular basis

With the combination of gaming and financial earnings, it is no wonder that GameFi technology rapidly attracts gamers and crypto holders. The only logical conclusion we can come to is that the number of GameFi games and the members of the GameFi community will continue to rise side by side with the crypto market.


GameFi -or usually referred to as Play2Earn(P2E) - is a genre of blockchain games that keeps rising and aims to establish a new type of gaming experience. The advantage of GameFi compared to conventional games is the achievement of financial gains through gameplay entertainment.

What is GameFi and How Can You Earn While Playing?


### In this guide we’re exploring flash loans and how are they used in DeFi and crypto

When it comes to cryptocurrency and digital assets, there are a lot of choices. You can choose between different types of cryptocurrencies, use an exchange or a wallet service provider, and even look into other DeFi protocols like Aave and Compound. However, one thing that has been missing until recently is a way to borrow money against your crypto holdings. Sure you could go through your normal bank or credit card provider but that defeats the whole purpose of using the blockchain. Now, what if you could take a loan and repay it in just a few seconds? Sounds crazy, but flash loans allow you to do just that.

## What Is a Flash Loan?

Flash loans are short-term unsecured loans that are issued by a Defi (Decentralised Finance) organisation in the form of a smart contract. Flash loans allow you to borrow any available amount of assets without putting up any collateral, as long as the borrowed amount is returned to the DeFi within the same transaction.

Flash loans, or flash lending, were first introduced by the [Marble Protocol](https://medium.com/marbleorg/introducing-marble-a-smart-contract-bank-c9c438a12890) in 2019, on the Ethereum blockchain. The innovation was described as a “smart bank” that allows users to take out zero-risk loans through a smart contract. Flash loans became popular with [Aave protocol](https://docs.aave.com/developers/guides/flash-loans) that made it easy for developers to use flash loans in their smart contracts.

> By removing the need to hold any capital, we aim to democratize the liquidation market and enable faster and easier liquidations. The safety of the whole ecosystem will be better and the risk of “bad debts” much lower.<br />
> Marc Zeller from Aave.

![What Is a Flash Loan?](https://firebasestorage.googleapis.com/v0/b/cyberscope-90197.appspot.com/o/blog%2Fwhat-is-a-flash-loan-in-deFi%2F1.png?alt=media)

## Why Do We Need Flash Loans in DeFi?

You are probably wondering what is the point of flash loans if you have to repay your loan instantly and pay for all the gas transactions as well. One of the most popular uses for Flash Loans are for arbitrage.

[Arbitrage](https://online.hbs.edu/blog/post/what-is-arbitrage#:~:text=Arbitrage%20is%20an%20investment%20strategy,multiplied%20by%20a%20large%20volume.) is the practice of buying a product at a price that is lower than the seller’s cost, then selling it at a higher price. In trading, arbitrage involves taking advantage of differences in prices for the same asset between different markets. Arbitrage opportunities exist when an asset can be bought in one market and sold in another for a profit without any risk. In DeFi that means that you can buy a crypto asset on a Decentralised Exchange (DEX) like PancakeSwap and sell it on another DEX (like UniSwap) for a higher amount. Arbitrage with Flash Loans is (almost) a riskless trading strategy because all transactions are carried out simultaneously.

Another interesting use case of flash loans is reduced transaction fees. Since a flash loan combines several transactions into one within the same smart contract, the transaction fees are reduced. The cost of the transaction is then charged on the loan amount so the borrower suffers lower fees.

## How Do Flash Loans Work?

To help you understand how flash loans work even better, let’s look at a hypothetical arbitrage example. Let’s say a crypto asset (or token) trades for $0.50 on one exchange and for $1 on another. This presents a great opportunity for savvy traders, who can take out a flash loan of $50 worth of tokens on the first exchange and sell it for $100 on the second exchange, repay the loan, and be left with an extra $50 in profit minus all the gas fees used in the transaction. Now assuming you took a loan worth $50 million instead of $50, that would leave you with $50 million profit in the previous example.

As you can imagine if you find opportunity flash loans can present you with tremendous gains assuming you know what you are doing. However as with every new blockchain invention there are always malicious actors out there trying to exploit potential vulnerabilities. Flash loans have been the focus of hackers trying to exploit new exchanges often resulting in hundreds of millions in loses.

## Flash Loans Attacks

The biggest flash loan attack recorded (at the time of this writing) was at the stablecoin protocol known as Beanstalk Farms. The hack resulted in $182 millions in total loses. The Beanstalk attacker managed to get away with $80 million in illicit crypto funds in this way and the BEAN token plummeted from $1 to 11 cents in value overnight. The attacker took a flash loan on the liquidity protocol Aeve and acquired a large enough amount of the Stalk native governance token to have the power to pass a malicious proposal. This attack gave the ability to the hacker to pass a proposal (by exploiting Beanstalk’s majority vote governance system) that allowed the attacker to siphon money directly from the protocol’s wallet.

![Flash Loans Attacks](https://firebasestorage.googleapis.com/v0/b/cyberscope-90197.appspot.com/o/blog%2Fwhat-is-a-flash-loan-in-deFi%2F2.png?alt=media)

## Conclusion

Flash loans are a relatively new innovation in a highly experimental field like DeFi. When there are millions at stake and no regulations that means that these new innovations can be exploited by hackers or scammers. On the other hand, flash loans can also give opportunities for professional traders to make extra profit at a lesser risk.

To make sure your funds are safe if you are using a DEX always make sure that all the smart contracts are properly audited by a reputable company like Cyberscope.


One thing that has been missing until recently is a way to borrow money against your crypto holdings. Now, what if you could take a loan and repay it in just a few seconds? Sounds crazy, but flash loans allow you to do just that.

What Is A Flash Loan in DeFi?


A Decentralized Autonomous Organization is an organization that functions and operates with the help of smart contracts. These smart contracts are self-executing, and therefore reduce the risk of being hacked by eliminating the need for human cooperation. DAOs are open and transparent, allowing any user to participate in decision-making and take part in shaping the future of the organization.

## Introduction

Decentralized Autonomous Organizations (DAOs) are gaining popularity as a governance model in the blockchain space. With a bit of technical knowledge and some tools, you can get a DAO up and running quickly. Don’t forget though that without planning, your DAO won’t work properly.

The DAO’s rules and transaction records are stored transparently on the blockchain. Rules are generally decided on by stakeholders’ votes, and their proposals can then be implemented if they are voted on by a majority of stakeholders (or fulfill some other rule set in the network consensus rules).

A DAO is a type of digital organization where the management and decision-making are decentralized and autonomous. Unlike traditional organizations or corporations, the rules, regulations, and functions that govern the activities of the business are transparently distributed among its stakeholders.

## What do you need for your DAO?

1.  If you are thinking of creating a DAO think about what your project will be. If the underlying reason for your DAO is not clear, others in the space won’t know why they should invest in it.
2.  One of the most important decisions you need to make when creating a Decentralized Autonomous Organization (DAO) is the voting mechanism. This is the primary way people interact with the DAO and make changes. There are multiple ways to do this. You could create your own voting mechanism or use a third-party provider, as we discuss later. Your DAO may even vote to change the mechanism later, but you need to start with something. Once you decide on your initial voting mechanism, write up a proposal for how it will work and send it out to your stakeholders so they can weigh in.
3.  A governance token or share system is the most popular way for users to prove their right to an opinion in the DAO. A governance token is often a utility token, used to represent rights (voting or transaction) within the DAO, or as fundraising collateral. Shares are also common in funds where token holders deposit cryptocurrencies with the fund to be invested.
4.  Stakeholders can engage in the governance of your DAO by voting on proposals, delegating their tokens to other delegates, or being elected as officials. There are no hard thresholds for how many people need to participate in order for a proposal to be valid. Decentralization strengthens as more people join and vote on issues.
5.  A multi-signature wallet is a way to manage its funds. Most DAOs will have treasury or access to some crowdfunding. This is usually held in a multi-signature wallet, which can only be used if all key participants agree. A smart contract can then execute a transaction once it receives the required signatures from all key holders.

## How to create one?

The technical side of your DAO will involve setting up a place to store your tokens. Tokens are the basic unit of value in the system and these must be somewhere safe and secure. You’ll need an easy way for users to submit proposals using their tokens, and also some element of voting on those proposals. There is a selection of open-source solutions available to use, such as:

- [Aragon](https://documentation.aragon.org/products/aragon-client/how-to-create-a-dao-using-aragon-client)
- [Snapshot](https://docs.snapshot.org/spaces)
- [DAOstack Alchemy](https://alchemy.daostack.io/daos/create).

## Succesful DAOs

Some run incredibly detailed and open organizations that operate like large businesses. A few examples to look at include Dash and Cardano — which both have similar general rules on governance that include having masternode operators vote on proposals.

## Conclusion

DAOs have the potential to become an innovative new business structure. This article shows how complete beginners can create a DAO using open-source software and Ether. Creating your own DAO is easy to do technically, but running one successfully is difficult. As you’ve seen, many simple tools exist to get you running quickly. However, the key to creating your DAO will be your project and community.


Decentralized Autonomous Organizations (DAOs) are gaining popularity as a governance model in the blockchain space. With a bit of technical knowledge and some tools, you can get a DAO up and running quickly. Don’t forget though that without planning, your DAO won’t work properly.

What is a DAO and How to create one?


As the internet has increasingly become the primary source for financial exchange, more and more hackers are trying to exploit vulnerabilities in the technology in order to get some quick profit. Recent [blockchain analysis](https://blog.chainalysis.com/reports/2022-defi-hacks/) shows that more and more cyber attacks are happening on the DeFi space, stealing away millions of investor funds. Today, we take a look at the most common patterns and methods of DeFi attacks that continue to threaten web3 security.

## FLASH LOANS

Flash loans have been the preferred method of hackers. A flash loan is basically an uncollateralized loan available for trades by programmers on some DeFi protocols. The hacker will take a loan, exploit a bug by interacting with the DeFi’s smart contracts, pay back the loan and keep the stolen funds are profits. To protect against Flash loans you need to make sure that the dapp that you are investing your money has [audited their smart contracts,](https://www.cyberscope.io/##audit) penetration testing on the end product is also a common counter-measure.

## RUGPULLS

Rugpulls have been disrupting the crypto market for the past year in an exponential way. The action of Rugpull is most of the time committed by the project owners, hence protecting against it requires the combination of contract security, checking the locker of the Liquidity pool tokens, and trusting the team, that's why [KYC’ed](https://www.cyberscope.io/##kyc) projects tend to perform better and have more security.

## STAKING POOLS

Staking is a feature that boosts a project’s roadmap and gives value to its token. History has shown that staking contracts have been the target of hackers as they usually store tokens in the contract, and hackers have been trying to exploit the vulnerabilities of the smart contract. It can be a simple missing check or a permissions modifier that can be exploited into draining the whole balance of all stakers by a hacker. This is why it's so important to [Audit your smart contracts.](https://www.cyberscope.io/##audit)

## Cross-Chain Bridges

Cross-chain bridges allow users to transfer cryptocurrency between blockchains. However, they are vulnerable to external attacks. Similarly like the staking contracts, a simple exploit in the code can be detrimental for the security of the project. Millions of dollars can be stolen, just like the Ronin and Wormhole bridge popular hacks.

## Phishing attacks

Phishing attacks are on the rise. This fraud is not limited to just DeFi, however, as it can happen in any field of activity. The targets remain the same and that is users. Hackers usually target groups of users on a particular platform. By obtaining users’ personal data or access details, hackers gain access to their finances. This happens not only in DeFi, but in other areas as well. These attacks are very popular, however, protection from them lies solely on users’ shoulders. You can check one of [our guides](https://medium.com/@cyberscope/what-is-phishing-in-crypto-and-how-you-can-avoid-it-c1eb091d06c8) about how to avoid it.

![Total funds lost in 2021 from DeFi hacks](https://firebasestorage.googleapis.com/v0/b/cyberscope-90197.appspot.com/o/blog%2Fthe-most-common-defi-hacks-and-how-to-protect-against-them%2F1.png?alt=media)

Total funds lost in 2021 from DeFi hacks

## How to protect against hacks

Protecting against all of that might seem impossible, but there are some actions you can do. Like you will fasten your seatbelt when you are driving, you need to take all the necessary steps to maximize your chances of not being a victim of a cyber hack. A few actions that you can do is invest in audited DeFi dapps. Ask to read the audit report to better comprehend the vulnerabilities of the smart contract. A common strategy is to also diversify your investments into multiple sources, this way you minimize risk for your capital.

At [Cyberscope](https://www.cyberscope.io/), it’s our mission to protect retail investors and traders from scammers and fraudsters, so if you ever are in doubt about someone trying to scam you, feel free to send us a message!


As the internet has increasingly become the primary source for financial exchange, more and more hackers are trying to exploit vulnerabilities in the technology in order to get some quick profit.

Resources

What is GameFi and How Can You Earn While Playing?

What Is A Flash Loan in DeFi?

What is a DAO and How to create one?

The Most Common DeFi Hacks and How to Protect Against Them

Recent Posts

What is GameFi and How Can You Earn While Playing?

What Is A Flash Loan in DeFi?

What is a DAO and How to create one?

The Most Common DeFi Hacks and How to Protect Against Them

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