The term comes from the words "game" and "finance". GameFi is built with blockchain technology, including NFTs, cryptocurrencies and decentralization.
In a GameFi economy, game items such as weapons, land, character equipment, clothing, etc. will be owned by players instead of the game developer.
Players can earn a financial reward for participating in a GameFi economy that can be exchanged for real-world currency.
In Axie Infinity, players can breed Axies which can then be sold for crypto in a marketplace like OpenSea. Later, the crypto can then be converted to fiat currency at an exchange.
To have digital asset ownership and possibility for a financial reward, GameFi has to be built on a blockchain. The most popular ones for GameFi games are being created on Ethereum, Polygon, Immutable, Tezos, and more.
GameFi is a broader term for games that incorporates a financial component for the players. This could be game items as NFTs, or incentivizing players to play with token rewards.
Build unstoppable teams of Axies and conquer your enemies
Fantasy sports but with NFTs.
Hearthstone-like collectible card game but with NFTs.
Virtual pet companion but with NFTs.