In-Depth Analysis of Full On-Chain Games: A Bubble or a New Revolution?

Introduction: What Are Full On-Chain Games?

Recently, the gaming industry experienced a surge in interest with the Pass card of the full on-chain game Sky Strife reaching 21,000 ETH, astonishing players of non-full-chain games with its remarkable traction. Since the advent of "Pong" in 1972, the gaming industry has rapidly evolved, transitioning from classic 8-bit games like "Super Mario Bros" and "The Legend of Zelda," to complex social network games such as "Fortnite" and "League of Legends." Games have long transcended their original role as mere forms of entertainment.

However, with the advent of blockchain technology and the development of cryptocurrencies, the gaming industry is undergoing a transformation, reshaping our experiences in unprecedented ways. Innovative creations like Axie Infinity tightly integrate gaming with the crypto economy, while projects like Stepn combine social interaction with innovative gaming. Blockchain games are increasingly viewed as the vanguard of Crypto Mass Adoption. This shift prompts exploration into new integrations of gaming and blockchain, leading to the emergence of full on-chain games.

So, what exactly differentiates full on-chain games from traditional games?

In traditional games, all aspects like game logic, data storage, digital assets, and game statuses are controlled by centralized gaming companies. For instance, when playing games like Honor of Kings, Genshin Impact, or Dungeon Fighter Online (DNF), all game content, including in-game assets, are owned by these centralized entities.

Conversely, asset-on-chain games, often referred to as Web2.5 games, such as Axie and Stepn, have brought assets onto the blockchain. This shift allows players to own assets and enhances asset liquidity. However, these assets still risk losing value if the game shuts down. The relationship between asset-on-chain games and traditional games is complementary rather than a replacement, similar to how food delivery services relate to restaurants. Web2.5 games also face competition from both other Web2.5 and traditional Web2 games.

The emerging full on-chain games bring all game interactions and statuses onto the blockchain, including game logic, data storage, digital assets, and game states. This shift realizes truly decentralized gaming.

To provide a clear understanding, I have summarized the characteristics of full on-chain games into four key points:

Authenticity of Data Sources: The blockchain ensures the authenticity of data sources. It serves not just as auxiliary storage but as the primary source of game data. This approach fully leverages the characteristics of programmable blockchains, achieving transparent data storage and permissionless interoperability.

Game Logic and Rules through Smart Contracts: Operations within the game are executed on-chain, ensuring the traceability and security of game logic.

Open Ecosystem for Game Development: Game contracts and clients are open-sourced, providing a vast creative space for third-party developers. This openness allows for innovative content production and sharing through plugins, third-party clients, interoperable smart contracts, and even the redeployment and customization of game experiences.

Independence from the Client: This aspect is closely related to the first three points. The key to truly crypto-native games is that the game can continue even if the core developers' client is no longer available. This independence relies on the permissionless storage of game data and the execution of logic, empowering the community to interact with core smart contracts without relying on interfaces provided by the core team. This structure epitomizes decentralization.

Why Do Humans Need Full On-Chain Games?

Before understanding why full on-chain games are needed, let's first briefly look at the current state and operation mode of the traditional gaming industry.

Full on-chain games are essentially games as well, and understanding the operation mode of traditional games is very important and necessary for us to comprehend and analyze the future of full on-chain games.

Current State of the Traditional Gaming Industry

With the development of the gaming industry, many excellent Web2 games have emerged throughout our growth. Whether it's FPS games like Counter-Strike and CrossFire, RPGs like Dungeon Fighter Online and Dragon Nest, MOBAs like League of Legends and Honor of Kings, or card games like Onmyoji and Hearthstone, games have accompanied the growth of our generation and occupy a significant part of our entertainment life.

According to data from Fortune Business Insights, the global gaming market size in 2022 is $249.55 billion, expected to exceed $280 billion in 2023, and will surpass $600 billion by 2030. In a horizontal comparison with the film and entertainment industry, which has a global market size of $94 billion in 2022, it is evident that gaming, as an entertainment industry, occupies a very important position in economic development. Its depth of commercialization and breadth of types offer much to explore, making it the crown of the leisure industry.

1) Why Humans Love Playing Games
Data from Statista shows that the current number of gamers worldwide has exceeded 2.5 billion, approaching 3 billion. So, how do games manage to attract over a third of the global population? The core reason can be summarized as fulfilling various aspects of human nature's needs and weaknesses:

Escape from Reality and Restart Life: Games provide a space to escape the pressures and challenges of daily life. In games, people can break free from real-life troubles, immerse themselves in a virtual world, and have a second life.

Burden-Free Social Interaction: For multiplayer online games, gaming provides a platform for social interaction, which is friendly even to those with social anxiety. Players don't have to worry about others' eyes in real life, enabling them to do what they want and build relationships with others.

Immediate Feedback and Rewards: Unlike the daily struggles of students and workers in real life, the enchanting aspect of gaming lies in its rich reward system and immediate reward mechanism. After putting in effort, defeating monsters, and completing challenges, players quickly gain new skills, unlock new levels, or receive new items. This incentive mechanism can inspire people to keep moving forward.

Low-Cost Freedom to Explore: Many games offer rich virtual worlds for players to explore unknown territories, interact with NPCs and other players, and advance the plot, satisfying the human innate desire for adventure and exploration. In contrast, in the real world, the cost of exploration is significantly higher due to constraints of money, energy, time, and geographical location.

Pursuit of Achievement and Self-Actualization: By completing a series of tasks and goals, people can fulfill their desire for success and recognition. Whether it's leaderboards or achievement points, in games, people can more easily achieve self-challenges and character growth.

By cleverly addressing one or more human weaknesses, games can meet the diverse needs and preferences of different users, playing a significant role in both covering a broad audience and providing deep immersive experiences.

2) Current Status and Development of Traditional Gaming
Next, let's briefly understand the current state of the traditional gaming industry.

In traditional gaming, there are generally categories like Shooter, Adventure, Role-Playing, Battle Royale, Strategy, Sports, Puzzle, Action, Simulation, and other game types.

According to data from Newzoo, role-playing and adventure games perform well across PC, mobile, and console platforms, ranking in the top five. Additionally, genres like shooters and battle royales are very popular on PC and consoles. On mobile platforms, puzzle and idle games also enjoy considerable popularity among users.

Challenges in the Traditional Gaming Industry

However, the traditional gaming industry currently faces two major challenges: first, the game publishing is restricted by licensing, and second, the high costs involved in game development before release lead to a slow return on investment, often resulting in sunk costs.

1) Game Publishing Limited by Licensing
Game licensing refers to the requirement in some countries or regions to obtain a specific permit issued by the government to release a game. This system aims to regulate game content, ensuring that games comply with the laws, culture, and values of the country or region, to protect minors from inappropriate content and maintain social stability.

For example, Germany has strict content censorship for games, focusing on content that may negatively influence teenagers. Korea and Japan have game rating systems evaluated and issued by national agencies.

In China, the impact of game licensing is even more significant. China implements a strict game licensing system managed by the National Radio and Television Administration. Games must obtain a license before they can be released in the Chinese market.

After the release of 87 licenses on July 22, 2021, there was a long period of stagnation until April 2022, when the situation began to turn around. In April 2022, 45 licenses were issued, followed by more in September and December. However, during the license approval hiatus from mid-2021 to April 2022, only a few large companies survived, while many small and medium-sized game companies faced closure. According to data from Tianyancha App, over 14,000 small and medium-sized game companies (with registered capital below 10 million yuan) were deregistered from July to December 2021.

China, as the world's largest gaming market with over 500 million gamers, faces significant pain due to licensing issues. Even with the resumption of license issuance, the tightening or continuous adjustments of licenses remain a Damocles' sword for every game project. During the period without license issuance, numerous unfunded projects faced closure.

2) High Costs Before Publishing and Silent Costs
In the Web2 game development model, during the game development phase, upfront human resource and infrastructure costs are incurred, and there are idle time costs during the waiting period for licensing. Profit sharing only occurs once the license is issued, the game is published, and commercial revenue is generated.

It's evident that a large portion of the costs is incurred upfront. If issues arise during the development phase, licensing phase, or user acquisition stage, all preceding costs become sunk costs. For a medium-sized game, the cost is typically several million dollars. The lengthy initial development and publishing phases mean that the profit cycle is very long, resulting in higher risks of achieving expected returns.

The Breakthrough Attempts of Web2.5 Games

Facing these two dilemmas, Web2.5 games took the lead in breaking through. On one hand, Web2.5 games circumvented domestic licensing restrictions by targeting global users, making them accessible to citizens worldwide. On the other hand, by issuing NFTs and tokens, these games could generate revenue through market-making even in the early stages of internal testing and development, significantly lowering the financial entry barrier for game production.

In the breakthrough attempts of Web2.5 games, games like Axie and Stepn emerged, gaining significant popularity. Axie became so popular in Southeast Asia that many people earned a living through it, with incomes exceeding the average wage in the Philippines. Stepn's move-to-earn model attracted many non-Web3 users who began to ask, "How do you play with those running shoes? I want to give it a try too," sparking a trend of blockchain games breaking into the mainstream. However, as the Ponzi economic model of Web2.5 games collapsed, none could ignite the same spark as Axie and Stepn.

Builders began to explore in different directions. Some moved towards AAA titles, attempting to carve a niche among Web2 users, but this led to Web2.5 AAA titles having to compete with both Web2.5 and Web2 games. Another group decided to take a different path, turning towards full on-chain games to explore new possibilities and validate their value. In the emerging industry of Web3, there are always pioneers eager to forge ahead on newer paths.

Current State Analysis of the Full On-Chain Gaming Industry

Currently, the entire full on-chain gaming industry is in a very early stage, with both game projects and related infrastructure under development. In the industry landscape of full on-chain gaming, it can be broadly divided into four main categories: full on-chain game projects, full on-chain game engines, full on-chain gaming blockchains, and full on-chain game distribution platforms.

Full On-Chain Game Projects

Current full on-chain game projects are in their infancy. Let's analyze a few full on-chain game projects to understand the current state of full on-chain games.

In terms of game projects, there are early well-known ones like Dark Forest, and recent ones like Loot Survivor, Sky Strife, Imminent Solace, Loot Royale, etc. Most of the projects that can be experienced are still in the testing phase, and the number of playable full on-chain games on the market does not exceed double digits. The games are mainly SLG (strategy) types, and many new project teams are experimenting with the direction of simulation and management.

Since most games are still under development and unplayable, let's focus on a few playable and unique full on-chain games.

Dark Forest

Let's start with Dark Forest, a representative of full on-chain games. Simply put, Dark Forest is a decentralized strategy game created on Ethereum using zkSNARKs.

Developed by MIT graduate Brian Gu under the pseudonym Gubsheep, Dark Forest draws partial inspiration from Liu Cixin's sci-fi novel "The Dark Forest." Other team members include Alan, Ivan, and Moe. The game project didn't raise funds, but Argus Labs, a new project of the team, recently raised $10 million.

Dark Forest is one of the earliest established incomplete information games on a decentralized system. As a space conquest strategy game, players start their journey on their planet to explore the infinite universe, discovering and occupying other planets and resources to develop their empire.

Dark Forest's three main highlights: Two have already been mentioned in the introduction to full on-chain games. First, the game logic, data, and status are all on-chain, and centralized entities cannot single-handedly control their outcomes. Second, a free and highly combinatory game ecosystem: the open-source full on-chain game model gives Dark Forest permissionless interoperability. Essentially an Ethereum smart contract, any address can interact with it, thus fostering a thriving secondary creation ecosystem (plugins), leading to more ecological communities.

For example, Project Sophon wrote a Dark Forest local library allowing users to start a game round on or off-chain; the Ukrainian game organization Orden_GG built a trading market for artifacts and added liquidity pools; the Chinese DAO MarrowDAO|GuildW @marrowdao developed numerous plugins including an artifact trading market, GPU mapping tools, etc. The UGC ecosystem is fascinating.

Another significant highlight of Dark Forest is the use of zk-SNARKS technology for information concealment. In strategy games, if all information is transparent, opponents will know one's location, making it impossible to implement strategic opposition under full transparency. Dark Forest utilizes zk technology, so when a player first enters the game, most of the universe and opponents are hidden. Only when a player explores the hidden areas do they become visible. Each time a player moves, they send a proof to the blockchain, confirming that the move is valid, without revealing their coordinates in the universe.

Since the official v0.6 version Round 5 ended in February 2022, Dark Forest hasn't launched a new game version. Currently, the game is in a state of free operation. If you want to experience the game, you can participate in some community-organized rounds, such as creating a small universe in the Arena system developed by dfDAO to get a feel for it.

(Source: Fred creates a new universe in the Arena system developed by dfDAO)

In summary, Dark Forest has redefined the possibilities for Web3 games. Many praise "Dark Forest" as a perfect example of the intersection between gaming and cryptography, providing inspiration for many subsequent full on-chain game projects. According to previous reports, the game has accumulated over 10,000 players in its history.

However, the significance of Dark Forest extends beyond the game itself. As the first widely recognized full on-chain game, it serves more like a spiritual totem for the full on-chain gaming industry. It showed builders in the industry that based on full on-chain gaming, there are numerous free, open combinatory play methods and a thriving secondary creative ecosystem that can emerge, bolstering the confidence in the possibility of creating "Autonomous Worlds."

Following the creation of Dark Forest, the Dark Forest team and several others formed 0xPARC. One of the sub-projects of 0xPARC, Lattice, while developing full on-chain games, discovered the high cost of existing development. Therefore, in 2022, they started the MUD project, aiming to develop a user-friendly full on-chain game engine around the ECS framework. This project addresses issues like contract and client state synchronization, continuous content updates, and interoperability with other contracts, thereby lowering development barriers and significantly advancing the development of full on-chain games. In some ways, Dark Forest represents a significant symbol and catalyst for the advancement of the full on-chain gaming industry.

Loot Survivor

Next, let's take a look at Loot Survivor, a game developed by the BibliothecaDAO team and an important part of the Loot ecosystem.

Loot was launched on August 28, 2021, by @Dom Hofmann. Unlike common PFP-type NFTs such as BAYC and Crypto Punks, each Loot NFT consists of text with white letters on a black background. The interpretation of these texts is very open and free, and its characteristics of being entirely community-driven and autonomously grown attracted many ecosystem contributors and related derivative projects.

(Source: OpenSea)

Among them, Loot Realms, launched on September 1, 2021, has been dedicated to the development of the Lootverse. Core contributors @lordOfAFew and @TimshelXYZ played significant roles in this project, building the underlying narrative of Loot and presenting the narrative in a gamified way through Eternum, the first project of Realms.

The team proposed the core concept of "Play 2 Die" as early as February 2022, initially planned as an expansion of the Realms series, named "Realms: Adventurers." However, during the iterative development process, the team decided to quickly release a smaller-scale solo full on-chain game, leading to the birth of Loot Survivor.

Loot Survivor is a text-based dungeon or Roguelike game. It made its debut at the full on-chain gaming summit in Lisbon on May 25 this year (which is also the author's birthday) and garnered significant attention.

The overall gameplay is relatively simple, involving text-based interactions to fight monsters until death. The game also features a leaderboard, encouraging users to continually challenge themselves.

Overall, the game has a smaller scale and playability, inheriting more from the creative aspect of the Loot ecosystem and adding a gamified narrative to it. Additionally, as one of the flagship projects of the Dojo engine ecosystem, it has bolstered confidence in both the Dojo engine and Starknet ecosystems.

Imminent Solace

Imminent Solace is a recently launched battle royale game based on ZK fog of war mechanics, developed using the Mud engine. The project team, developed by PTA DAO, is a Chinese team highly focused on full on-chain games. It combines PvP plundering, autonomous world exploration, and PoW resource mining. The gameplay is similar to Dark Forest, but with simpler operations and a better user experience.

The ultimate goal of the project is to create a war simulation game akin to EVE, where players experience tangible losses in resources and assets during gameplay, posing strategic challenges.

Imminent Solace is one of the more playable full on-chain games released recently, with good game interaction and user experience.

(Source: Fred's gameplay screenshots and ranking in Imminent Solace)

Additionally, there are other games exploring the path of full on-chain gaming, such as Sky Strife and OPCraft developed by Lattice, the text-based game Word3 by SmallBrain, the Web3 version of Werewolf, Framed, and the battle royale game Loot Rayale, as well as the nurturing management game Genki Cats. Most of these games are still in the testing phase, and only a few are currently developed and playable.

**The research reveals that almost all current full on-chain games are web-based, with virtually no presence on PC or mobile platforms. **

On one hand, this aligns with the characteristic of full on-chain games not requiring a dedicated client. Since full on-chain games can have multiple front-ends, it's most important for project teams to quickly develop an MVP version for the community and users to play with. Web platforms, compared to PC and mobile, offer faster development speeds and lower costs, making them the optimal or even the only choice for many developers.

On the other hand, full on-chain games are still in the proof-of-concept stage. The key lies in how to quickly develop playable games to validate the value of the game.

Full On-Chain Game Engines

Before delving into full on-chain game engines, let's first understand the core essence of engines:

Simply put, it's about standing on the shoulders of giants to see the world. Game engines integrate commonly used game-making functionalities into general-purpose code, so subsequent creators don't have to reinvent the wheel.

For example, in traditional game engines like Unity and Unreal Engine, game developers can use existing engines to implement the laws of motion after a cosmic explosion or the trajectories of characters colliding, thus focusing their efforts on developing unique game content.

Similarly, full on-chain game engines aim to achieve similar objectives. Compared to traditional game engines like Unity and Unreal Engine that can handle tasks like graphic rendering, physical simulation, and network communication, full on-chain game engines, due to the characteristics of their games, focus more on contract-client state synchronization, continuous content updates, and interoperability among different contracts.

Currently, in the realm of full on-chain game engines, there are several, including Mud, Dojo, Argus, Curio, Paima, etc., among which Mud and Dojo are the two most mainstream full on-chain game engines. They have created a competitive landscape in the EVM-compatible ecosystem and Starknet ecosystem. Here, we will mainly introduce these two game engines.

Mud

Mud, officially released by Lattice in November 2022, is the first full on-chain game engine. The Mud team, Lattice, and the full on-chain game pioneer Dark Forest both belong to the OxPARC team. As the earliest full on-chain game engine, Mud currently has the most developers in its ecosystem. Besides the earliest Dark Forest, it has also given birth to OPCraft, Sky Strife, Word3, and the recent Imminent Solace, making it the most developer-rich full on-chain game engine.

Dojo

Dojo, born in the Starknet ecosystem, initially revolved around MUD development in Starknet's Cairo language and was officially released in February 2023. From the words of Dojo's core developer, tarrence.eth, it's evident that there is a passion for the Cairo language, which is considered to have greater advantages in proof recursion and step-by-step proof compared to Solidity.

However, from another core developer, Loaf's speech, it appears that the reason for creating another Mud-like engine on Starknet is not that Mud was insufficient, but because Loaf wanted to develop an ECS system on Starknet and thus chose to fork MUD. Similarly, other Layer1/Layer2 networks looking to develop their full on-chain game ecosystems, like Move and Flow, have also started forking their engines. Essentially, it's about enriching the on-chain ecosystem and choosing to build the infrastructure for full on-chain game builders.

Backed by the major IP of the Loot ecosystem, the Dojo ecosystem has also seen many notable projects, with Loot Survivor, just mentioned, being one of them, as well as Loot Realms: Eternum belonging to the Loot ecosystem. In addition, other projects like Dope Wars and Influence have also performed well.

Just as traditional game engines have played an important role in advancing the game industry, the rise of the full on-chain gaming trend is closely related to the emergence of full on-chain game engines. They enable developers to create games at lower costs. The advent of Mud and Dojo has propelled the development of the entire full on-chain gaming track, with events like the ETH AW Hackathon, Pragma Cario 1.0 Hackathon, and Lambda zkWeek Hackathon in May, June, and July of this year continuously nurturing the development of full on-chain gaming.

Full On-Chain Gaming Blockchains

In the domain of gaming-specific blockchains, compared to the gaming-specific chains that were popular in the Web2.5 gaming era (which I won't enumerate here), current full on-chain gaming projects prefer to build on general-purpose Layer 2 solutions like Arbitrum Nova, Optimism, Starknet, etc.

The fundamental reason is that these previous gaming-specific chains catered to users who enjoyed Web2.5 blockchain games and AAA-like titles. Such players are generally not very interested in full on-chain games, which tend to have simpler and less polished content. Consequently, these so-called gaming-specific chains don't attract much attention from full on-chain gaming projects.

Additionally, it's worth noting CaptainZ's mention of a contradiction that exists when a game is fully on-chain: the conflict between the push-based nature of blockchains and the loop-based nature of games.

Many blockchains are event-driven and passively trigger updates only when a new transaction or operation occurs. This framework fits well with many existing applications. For example, in the DeFi space, when users want to trade two tokens on Uniswap, the trade is executed after the transaction is submitted, in an event-driven process. Similarly, many social platforms are also event-driven. For instance, when you post a tweet on Twitter, it is published and seen by others, paralleling the event-driven nature of blockchains.

However, many traditional games are structured based on loops (except for some turn-based and card games), where the game system actively processes user inputs, updates the game state, and renders the game world. Each loop is called a Game Loop or Tick, and many games require dozens or even hundreds of Ticks per second to ensure continuous play.

This leads to a natural contradiction between game logic and current blockchain logic. Facing this situation, some teams are building proprietary chains specifically for full on-chain games, also known as Ticking chains.

For example, the Argus team is building a new Layer 2 based on Polaris (an EVM module compatible with the Cosmos SDK), which is a ticking chain with a precompiled ticking function, named World Engine. Curio is also building a new Layer 2 based on OPStack, which also has a precompiled ticking function.

Although still in the development stage, there is much anticipation for the emergence of a new roll-up constructed specifically for full on-chain gaming. It is believed that such chains will further propel the development of full on-chain gaming.

Full On-Chain Game Aggregators/Distribution Platforms

Lastly, let’s discuss the still-nascent aggregators/distribution platforms for full on-chain games. Currently, as full on-chain games are in their early stages, the number of playable full on-chain games available on the market is very limited. According to data from Composable Hub, including alpha, beta, and fully launched games, the number of playable games does not exceed 30.

Therefore, for players of full on-chain games, finding these games largely relies on word-of-mouth and circulation within small circles. There aren’t many aggregators like those in mature tracks such as DeFi and GameFi to help users explore and choose games.

Currently, there are two main platforms dedicated to aggregating full on-chain games: Composable Hub and Cartridge.

Composable Hub

Composable Hub is a full on-chain game aggregator platform under Composablelabs, which also owns Klick, a GameFi aggregator for Web2.5 games, and Lino Swap, an NFT DEX.

Currently, Composable Hub aggregates 56 full on-chain games, with 14 of them fully launched, 12 in the testing phase, and the remaining 30 still under development.

(Source: Composable Hub)

Cartridge

Cartridge is a full on-chain game aggregator in the Starkware ecosystem, committed to creating a Web3 version of Steam. Currently, it aggregates five games from the Starknet ecosystem: Dope Wars-Roll Your Own, Influence, Loot Survivor, Briq, and Frens Land. In addition, the Cartridge team has been continuously promoting the development of the Dope Wars-Roll Your Own game and is also a core contributor to the Dojo engine.

(Source: Cartridge)

Core Advantages of Full On-Chain Games

In summary, full on-chain games, by putting the game's logic, state, data storage, and assets entirely on the blockchain, make gaming more fair. Moreover, because both the game contracts and accessible game clients are open-sourced, they provide a broad autonomous space for third-party developers, allowing for more community and third-party developed rules and gameplay.

This openness transforms the traditional model where the game company is the provider and players are consumers, into a new model where every player can be a builder and creator of the game.

From PGR to UGR, Empowering Everyone to Play God

In traditional games, all our content is provided by the company, whether playing Honor of Kings, Genshin Impact, Fortnite, or Overwatch. We are participants in a PGC (Professional Generated Content) model. Of course, we have the right to create, engaging in secondary creations like character designs and writing fanfiction, thus achieving a degree of UGC (User Generated Content).

However, this kind of creation does not involve the core of rules and gameplay. We can only be consumers, not makers, of game rules; we are powerless to enhance or weaken game characters or to change game values and environments, still bound by PGR (Professional Generated Rules). For players yearning to create, this is somewhat restrictive. Humans, disillusioned in the real world, always yearn for the power to play God, aspiring to UGR (User Generated Rules), whether through novels, films, or games.

Most traditional games, due to considerations of business models, security, and stability, are reluctant to experiment with openness. However, we can see in many games that some projects are starting to transition towards openness and PGR, allowing other developers to create game content beyond the official scope using mods. The most notable example is Minecraft, which allows players to create and run their own game servers. Third-party developers can implement custom game modes, rules, and content, creating gameplay different from the original game, including Minecraft versions of battle royale or even online graduation ceremonies during the pandemic.

Although Minecraft allows the creation of new game modes through the establishment of multiple servers, these servers are separate and not interconnected, competing for players' attention and time. The data accumulated by players in one gameplay cannot be circulated in a new gameplay server. This kind of UGR is truncated, forming their small universes, not a shared universe for everyone.

The creation of new gameplay in Minecraft requires setting up new servers, but the difference in full on-chain games is that they share the same backend. Different mods and smart contract interactions only affect the frontend, allowing data to be shared and circulated across different clients.

Due to their on-chain nature for game logic and rules, and support for permissionless interoperability, full on-chain games enable players to freely build and create various game functions and experiences. These creations are not isolated from each other, greatly enriching the game's content and features, such as trading markets, embedded games, custom clients, etc., making the gaming experience more diversified and realizing the transition from PGR to UGR.

This reminds me of the virtual world of Jiuzhou, collectively created more than a decade ago by Chinese online writers Jiangnan, Jin Hezai, and Da Jiao, among others. They formed a Jiuzhou universe through collective storytelling, extending from literary works to the film, television, and gaming industries, creating a vast world.

In fact, if we compare it to our lives, full on-chain games are somewhat similar to playing cards. Playing cards themselves only have fixed suits and numbers, but people have developed various ways to play, like Dou Dizhu, Texas Hold'em, Tractor, Upgrade, Panic, and Zhajinhua, showing the diversity and flexibility of game rules. Full on-chain games do the same; by supporting open creation and interoperability, players can build various different game experiences on basic rules. In traditional games, everyone is just a consumer, but in full on-chain games, people can become the creators of game rules.

In summary, the advantage of full on-chain games lies in their openness and permissiveness. They grant players greater creativity and freedom, allowing them to participate in the creation of game rules and content, thus forming a diverse, personalized, and vibrant gaming ecosystem.

Fairness and Transparency, Experiencing an Unmanipulated Gaming Environment

Another major advantage of full on-chain games is the transparency that comes with having all game logic and rules on the blockchain.

This transparency is particularly crucial for betting and gambling games.

As shown in the popular movie "Rounders," the outcomes of gambling apps used by players are often manipulated by centralized companies. The results might not be random but pre-determined. For card games like poker and Zhajinhua, which involve gambling, the opacity of the game process and status can lead to countless players being unfairly treated. This is one of the reasons why many Web2 gambling games involving money are often criticized.

The transparency of game logic and rules in full on-chain games ensures open and transparent rules. Combined with cryptographic technologies (for example, ZK-SNARK used in war fog-type games like Dark Forest and Imminent Solace), it allows game genres with a strong need for fairness to achieve an experience that is difficult to realize in Web2 and Web2.5 games.

Challenges and Limitations of Full On-Chain Games

As the infrastructure continues to improve, full on-chain games are gaining traction. However, despite their unique advantages, they face several limitations and challenges:

Poor User Experience

In general, players agree that the playability of current full on-chain games is much lower compared to Web2 and Web2.5 games. On one hand, most full on-chain games have rudimentary or rough graphics. On the other hand, they face four main challenges in terms of interactive experience:

Difficulty in Finding Players:

For multiplayer PvP games that often require at least four players, it’s hard to find enough participants due to the small number of players in full on-chain games. The absence of a matchmaking mechanism means many multiplayer games only have the option of inviting friends to play, which can quickly diminish interest.

High Entry Barrier:

Apart from the gaming experience, many full on-chain games set numerous artificial barriers, such as certain games only being playable at fixed times or requiring an entry fee, like purchasing specific tokens or NFTs to play. This restricts and increases the gaming cost for players.

Some game developers maintain the spirit of independent game development, believing that paying for games is the most authentic approach. However, independent games in the Web2 era at least offer some innovative gameplay or high-quality content to attract players.

Facing the current situation where the majority of full on-chain games have such low playability, why would users be willing to spend money on games that they wouldn't give a second glance in the Web2 world? This to some extent reinforces the stereotype that full on-chain games are often self-indulgent. Apart from a few project teams and true believers, how many people are really willing to play these games? Many players who are willing to try out beta versions of games do so out of passion, and the actions of some of these project teams can be off-putting to players.

Frequent Bugs:

Full on-chain gaming requires a lot of patience from players.

From PC to mobile, the overall trend in gaming has been towards greater convenience. In contrast, in full on-chain games, it's common to encounter bugs, whether in page refreshes or various unexpected errors, testing the patience of anyone trying to complete a full gaming session.

Overpromising and Underdelivering:

Most current games are big on narrative but offer very low playability, even less enjoyable than web games from a decade ago. Hopefully, as the infrastructure and more builders join, the gap in playability between full on-chain games and Web2 games will narrow.

Limitations in Game Genres

Due to the current performance of blockchains and the imperfect infrastructure, not all game genres are suitable for full on-chain implementation.

From the existing types of full on-chain games, it’s evident that strategy games (SLG) dominate. These games do not require high real-time responsiveness. In contrast, genres like RPG, AVG, ACT, and MOBA demand continuous, real-time updates, which current blockchain performance struggles to support.

Current full on-chain games are developing in two directions: one is to create small but refined games with playable MVP versions to accumulate users, such as simulation management, pet nurturing, tower defense, and other lightweight, playable game types. The other direction is to build grand narratives and open worlds, creating imaginative ecosystems through expansive worldviews and narratives. However, due to genre limitations, these games are largely confined to the aforementioned types. Creating a groundbreaking game like the next Axie or Stepn requires further exploration and collaboration.

Real Demand or False Demand

The biggest challenge and controversy for full on-chain games is whether there is a real demand for them.

Taking the two core advantages of full on-chain games as examples:

1) The transition from PGR to UGR: On one hand, many open games in Web2, like Minecraft, can achieve this. On the other hand, the necessity of server data circulating in different game clients needs questioning. For example, is it necessary for mounts, level 90 characters, and flying wings from an RPG client to circulate into a MOBA game? This needs further exploration.

2) Fairness and Transparency: This is mainly relevant in gambling games. However, the number of online gamblers is far less than offline gamblers (1.2 billion online in 2023 compared to approximately 4.2 billion gamblers globally each year), indicating a low ceiling. Moreover, for serious gamblers, the convenience of depositing and withdrawing money is more important than fairness. Gamblers care more about the speed and convenience of fund and chip transactions, which is a significant weakness of Web3 games given the current infrastructure.

Focusing on the two main features of full on-chain games, UGR and fairness, if some categories can utilize these features well in the future, they might address the real needs of gamers and attract more participants. However, as it stands, there's a long way to go.

Fully Decentralized Games May Not Necessarily Be Fun and Could Lead to Chaos

Like the two sides of a coin, the flip side of openness is chaos. Human nature is inherently lazy, and for players who prefer consumption over creation, the most important aspect remains the game's playability, especially for those accustomed to the PGR (Professional Generated Rules) model in traditional games.

It's challenging for genuine game designers to delegate the content creation of games to others. Every user has different abilities, and ordinary players might design games from their perspectives, making it difficult to maintain gameplay balance and playability.

The question of whether professional tasks should be left to professional game developers or whether rights should be given to everyone is a significant and real issue. Balancing democracy and elitism in game design is complex.

Therefore, it's crucial for full on-chain game development teams to not only have interesting and stable core gameplay but also to provide space for players to create and extend new gameplay. Striking this balance is essential. Otherwise, games risk becoming either too centralized or too open-ended, failing to attract players to participate in new gameplay creation.

For full on-chain game teams, it's necessary to play the role of the "initial god" well, designing the core gameplay and using appropriate incentive mechanisms to attract more players to collectively create and enrich the game world.

Reflections on the Business Model of Full On-Chain Games

Finally, let's discuss the business model of full on-chain games, a topic of keen interest to both project teams and investors.

Let's analyze the evolution of traditional gaming business models. The business models of electronic games have gone through several stages, changing with technological advancements, market shifts, and evolving player demands:

1970s: Coin-Operated Mechanism

The earliest consumer electronic games date back to the arcade games of the 70s and 80s. Due to hardware requirements to run electronic games, each game was housed in a standalone physical device, such as Pac-Man and Galaga, where players inserted coins to gain playtime or lives.

1980s: One-Time Purchase

Early electronic games were mainly console games sold through retail channels, where players purchased physical game cartridges or discs. This era was dominated by product sales, and players could play the game after a single purchase.

Mid-1990s: Subscription Model

With the spread of the internet, multiplayer online games began to rise. Some game companies introduced subscription services, requiring players to pay monthly fees to access game servers. A notable example is "World of Warcraft."

Mid-2000s: Ad-based Model + In-Game Purchases

The free-to-play game model emerged, offering games for free while allowing players to buy virtual items or in-game currency for additional benefits. Some games also adopted an advertising model, generating revenue by displaying ads within the game.

Early 2010s: In-Game Purchases

With the rise of smartphones, mobile gaming became mainstream. In-app purchases became a major profit model, allowing players to buy various items to unlock features or accelerate game progress.

2020s: Cloud Gaming Subscription Model

Recently, cloud gaming has entered the public eye, where players stream games from cloud servers without the need for downloads or installations. Additionally, game subscription services like Xbox Game Pass and PlayStation Now have started to gain prominence, offering a range of games through subscription.

These shifts in business models reflect the electronic gaming industry's continuous adaptation and innovation in response to technology, market trends, and player needs. Similarly, the evolution of business models has also influenced game design, development, and player experience to some extent.

With the advent of GameFi, from Axie to Stepn, the business models primarily include the following types:

In-Game Economic Systems: Most GameFi games have established their own economic systems, using tokens, NFTs, and in-game assets as mediums of value. Players can acquire virtual assets through in-game activities, which hold value within the game and can be exchanged for real-world currency. For instance, in the well-known game Axie Infinity, players raise virtual creatures (Axies) that are NFTs, which can be traded, sold, and used to earn cryptocurrency rewards in the game.

Play-to-Earn Model: Players earn profits by participating in games, which can be in the form of in-game currency, tokens, or other tangible rewards. For example, players joining gaming guilds like YGG can earn profits by playing games such as Axie Infinity and receive incentives and loans from YGG.

Integration of DeFi and Financial Products: Some GameFi projects integrate DeFi elements, offering services like loans, liquidity mining, and trading. Players can earn profits or invest using DeFi products within the game. In Decentraland, for instance, players can purchase virtual land plots and build on them. These plots can be used for investment or trading, and some may appreciate in value within the virtual world.

For full on-chain games that are still in their early stages, choosing the right business model is an ongoing exploration. However, given the characteristics of full on-chain games, the future will likely focus more on playability rather than DeFi aspects. Simple Ponzi schemes are unlikely to be effective anymore, especially with users who are experienced with such schemes in the gaming space.

The business model for full on-chain games should ideally leverage their unique features to enhance playability. Depending on the type of game, future business models can be broadly categorized into three directions:

For lightweight games like simulation management and pet nurturing:

Consider adopting a token-based model with NFTs and Tokens, following a "free-to-play but pay-to-advance" approach.

For open-world narrative games with grand storytelling:

If the game has high playability, consider setting up a payment barrier similar to independent games, along with related subscription and membership models. However, given the generally low playability in the early stages, it might be more practical to initially adopt a business model similar to lightweight games, to first attract users to start playing.

For board and card games:

The business model could emulate the traditional/offline approach of taking a commission.

Currently, the full on-chain gaming sector is still in a phase of exploration and value validation. It's anticipated that more innovative and engaging models will emerge, potentially leading to the next mass adoption in gaming.

Conclusion

In summary, the gaming industry has evolved over decades, from its inception to its integration with blockchain technology. Humans, not satisfied with merely being consumers of PGR (Professional Generated Rules) games, have developed a desire to become creators in UGR (User Generated Rules) scenarios.

Just like the origin of Dota, which emerged from the custom map community of "Warcraft III: Reign of Chaos." The map editor allowed players to create their maps, one of which was "Dota." From Eul's initial creation of Dota, followed by Guinsoo taking over the game development, adding new heroes, items, and mechanics, to IceFrog introducing a series of updates and improvements, enhancing the game's balance and depth and incorporating more heroes, skills, and tactical elements, leading to widespread recognition and success for Dota, and eventually the release of DOTA 2 by Valve Corporation in collaboration with IceFrog, achieving global success.

The developers of the Warcraft map editor might not have envisioned the global fame of a game like Dota and the craze of MOBA games. On the path of user creation, it often takes time and opportunity to birth new hit products.

The same applies to full on-chain games. In today's pioneering era, they still have many drawbacks, such as poor user experience and low playability. To become a mass adoption, they face the challenge of attracting new users. Attracting more Web2 players involves overcoming the threshold of entering Web3 – registering wallets, learning to buy NFTs, purchasing tokens, etc., all of which have a steep learning curve and are obstacles for all Dapps. Even if account abstraction and built-in exchanges in Web3 projects simplify game entry and funding, the biggest question remains: What need of game players does full on-chain gaming actually solve?

Narrating for the sake of narrative or being on-chain for its own sake is ultimately a case of a hammer looking for a nail. How to effectively use UGR and the fairness characteristic of full on-chain gaming is a question every builder in this space must address. The unique features of full on-chain games can provide fairness (for instance, the recent non-full on-chain game Fren Pet's daily spin feature, if executed on-chain, would achieve greater fairness, reducing the impression of it being a "money game") and also pave the way for the transformation from PGR to UGR, giving every user the potential to play God.

The development of Web3 cannot be separated from the wealth-creation effect, and the essence of games lies in their playability. How to combine wealth creation with playability still needs more exploration. It's hoped that continuous exploration in the full on-chain gaming track will genuinely bring forth projects that leverage full on-chain features and address real needs. I also look forward to seeing new universes emerging in the ocean of openness on the path of full on-chain gaming.

Lastly, a huge thanks to Phyrex Ni, Constance, Joven, Karvin, Yolo, Xiao Hu, Manda, Xiao Ran, Norman, Alex, Carl, Justin, frost, Haiyu, Nico, Golem, yafon, Gink, Robinn, and other partners for their help, as well as everyone who was willing to share and patient during our discussions. I sincerely hope that all builders in this track continue to thrive!