Introduction: What is On-Chain Gaming?#
Recently, the Pass card for the on-chain game Sky Strife reached 21,000 E (testnet), astonishing many players from non-on-chain games with the allure of this sector. Since the release of "Pong" in 1972, the gaming industry has surged, evolving from classic 8-bit games like "Super Mario" and "The Legend of Zelda" to today's highly complex and socially interactive online games like "Fortnite" and "League of Legends." Gaming has long transcended simple entertainment. The social, competitive, and immersive experiences these games provide have surpassed our past imaginations.
However, with the rise of blockchain technology and the development of cryptocurrencies, the gaming industry is reshaping our experiences in unprecedented ways. From innovative projects like Axie Infinity that tightly integrate gaming with the crypto economy to social and innovative game projects like Stepn, blockchain gaming is gradually being seen as a beacon of hope for Crypto Mass Adoption. People are exploring new ways to combine gaming and blockchain, questioning whether more elements can be brought on-chain beyond just assets, leading to the birth of on-chain gaming.
So, what exactly distinguishes on-chain gaming from traditional gaming?
In traditional gaming, all our game logic, data storage, digital assets, and game states are stored within centralized gaming companies. For instance, when we play games like Honor of Kings, Genshin Impact, or Dungeon & Fighter, all game content, including in-game assets, is owned by these centralized companies.
The emergence of asset-on-chain games (commonly referred to as Web2.5 games), such as Axie and Stepn, has allowed assets to be brought on-chain. On one hand, players can own their assets; on the other, liquidity for these assets can be improved. However, when faced with game shutdowns, game assets still risk losing their circulation value. The relationship between asset-on-chain games and traditional games is more complementary than substitutive, akin to the relationship between food delivery and dining establishments. Similarly, Web2.5 games also face competition from both Web2.5 peers and traditional Web2 games.
Recently, the much-discussed on-chain games have moved all game interactions and states on-chain, including the previously mentioned game logic, data storage, digital assets, and game states, all managed by blockchain, thus achieving truly decentralized gaming.
To facilitate understanding, I summarize the characteristics of on-chain gaming into the following four points:
- The authenticity of data sources is ensured by blockchain.
Blockchain is no longer merely an auxiliary storage for data but the true source of game data; it is not limited to just recording asset ownership but serves as the storage center for all key data. This approach fully utilizes the characteristics of programmable blockchains to achieve transparent data storage and permissionless interoperability. - Game logic and rules are implemented through smart contracts.
For example, various operations within the game can be executed on-chain, ensuring the traceability and security of game logic. - Game development follows the principles of an open ecosystem.
Game contracts and accessible game clients adopt an open-source model, providing ample creative space for third-party developers. They can create plugins, third-party clients, and interoperable smart contracts, even redeploying and customizing their gaming experiences, creatively producing content and sharing it with the entire community. - Games are independent of clients.
This is closely related to the previous three points because the key to truly crypto-native games lies in the fact that even if the core developer's client disappears, the game can continue. This depends on the permissionless storage of game data, the permissionless execution of logic, and the community's ability to interact independently with the core smart contracts without relying on interfaces provided by the core team, thus truly achieving decentralization.
Why Do Humans Need On-Chain Games?#
Before understanding why on-chain games are needed, let's briefly look at the current state and operational model of the traditional gaming industry.
On-chain games are essentially still games, and understanding the operational model of traditional games is crucial for analyzing the future of on-chain games.
Current State of the Traditional Gaming Industry#
With the development of the gaming industry, many excellent Web2 games have emerged during our growth. Whether it's FPS games like Counter-Strike and CrossFire, RPGs like Dungeon Fighter and Dragon Nest, MOBA games like League of Legends and Honor of Kings, or card games like Onmyoji and Hearthstone, gaming has occupied a significant part of the entertainment lives of our generation.
According to data from Fortune Business Insights, the global gaming market size was $249.55 billion in 2022, expected to exceed $280 billion in 2023 and surpass $600 billion by 2030. In comparison, the global market size for the film and entertainment industry was $94.4 billion in 2022, indicating that gaming occupies a very important position in economic development as a leisure industry, with much potential for commercialization depth and variety.
1) Why Do Humans Love Playing Games?
Data from Statista shows that the number of gamers worldwide has exceeded 2.5 billion, nearing 3 billion. So how does gaming attract over a third of the global population? The core reasons can be summarized as fulfilling various human needs and weaknesses:
- Escaping Reality and Restarting Life:
Games provide a space to escape the pressures and challenges of daily life. In games, people can shed the burdens of reality, immersing themselves in a virtual world and enjoying a second life. - Burden-Free Socializing:
For multiplayer online games, games offer a platform for social interaction that is friendly to those with social anxiety, allowing players to do what they want without worrying about others' opinions in real life, thus building relationships with others. - Receiving Timely Feedback and Rewards:
Unlike the struggles students and workers face in their daily lives, games are captivating because they offer rich reward systems and timely feedback mechanisms. After putting in effort, leveling up, or completing challenges, players quickly receive new skills, unlock new levels, or obtain new items, which motivates them to keep pushing forward. - Low-Cost Freedom to Explore:
Many games provide rich virtual worlds for players to explore unknown territories, interact with NPCs and other players, and advance the storyline, satisfying humanity's innate desire for adventure and exploration. In contrast, exploring the real world incurs significantly higher costs due to constraints of money, energy, time, and geography. - Pursuing Achievement and Self-Actualization:
By completing a series of tasks and goals, people can fulfill their desires for success and recognition. Whether through leaderboards or achievement points, players can more easily achieve self-challenges and character growth within games.
By cleverly addressing certain human weaknesses, games can meet diverse user needs and preferences, effectively engaging a broad audience while providing deep immersive experiences.
2) Current State and Development of Traditional Games
Next, let's briefly understand the current state of the traditional gaming industry.
Traditional games can be broadly categorized into genres such as Shooter, Adventure, Role Playing, Battle Royale, Strategy, Sports, Puzzle, Action, and Simulation.
According to data from Newzoo, role-playing and adventure games perform exceptionally well across PC, mobile, and console platforms, ranking in the top five. Additionally, shooter and battle royale games are very popular on PC and consoles. The mobile platform shows a slight difference, with puzzle and idle games also favored by users.
Dilemmas Facing the Traditional Gaming Industry#
However, the traditional gaming industry currently faces two major dilemmas: first, game distribution is restricted by licensing, and second, the high costs before game release lead to slow return cycles and potential sunk costs.
1) Game Distribution is Restricted by Licensing
Game licenses refer to the specific permits required to release games in certain countries or regions. This system aims to regulate game content, ensuring compliance with national or regional laws, culture, and values, protecting minors from inappropriate content, and maintaining social stability.
For example, Germany has strict content reviews for games, particularly focusing on content that may adversely affect youth; South Korea and Japan have game rating systems evaluated and issued by relevant national agencies.
In China, the impact of licensing is even more pronounced, as the country implements a strict game licensing system overseen by the National Radio and Television Administration. Games must obtain a license before being released in the Chinese market.
After the release of 87 licenses on July 22, 2021, there was a long period of stagnation, only gradually improving from April 2022. In April 2022, 45 licenses were issued, followed by another batch in September and December. However, during the licensing approval stagnation from 2021 to April 2022, only a few large companies survived, while many medium-sized gaming companies faced closure. According to data from Tianyancha App, over 14,000 small and medium-sized gaming companies (with registered capital below 10 million) were deregistered from July to December 2021.
As the world's largest gaming market, China has over 500 million people playing video games. Licensing has become a pain point for countless Chinese companies. Even with the resumption of license issuance, the contraction or constant adjustment of licenses has become a Damocles sword for every game project. In the days without license issuance, countless projects without funding faced closure.
2) High Pre-Release Costs Leading to Sunk Costs
In the development model of Web2 games, developers must bear upfront human resources and infrastructure costs during the game development phase, incurring idle time costs while waiting for licenses. Only after the license is issued, the game is released, and commercial revenue is generated can profit-sharing occur.
It is evident that a significant amount of costs are incurred in the upfront stages. If issues arise during the development phase, licensing phase, or user acquisition phase, all previous costs become sunk costs. For a medium-sized game, costs typically reach several million dollars. The long pre-release development and distribution cycles result in extended profit timelines, increasing the risk of not achieving expected returns.
Web2.5 Games' Attempts to Break the Dilemma#
In response to these two dilemmas, Web2.5 games have taken the lead in breaking through. On one hand, Web2.5 games bypass domestic licensing restrictions by targeting global users, allowing anyone to play; on the other hand, by issuing NFTs and tokens, they can generate revenue through market-making even in the early testing and startup phases, significantly lowering the financial barriers to game development.
In the attempts to break through Web2.5 games, standout titles like Axie and Stepn have emerged. Axie's popularity in Southeast Asia has led many to earn a living through it, with incomes surpassing the average work income in the Philippines. Stepn's move-to-earn model has attracted interest from many non-Web3 users, prompting questions like, "How do you play in those running shoes? I want to try running too." This sparked a trend of breaking into the gaming sector. However, as the Ponzi economic model collapsed, Web2.5 games have not sparked the same excitement as Axie and Stepn.
Builders have begun exploring different directions. Some have ventured into AAA titles, attempting to capture a share of Web2 users, but this has led to competition with both Web2.5 games and traditional Web2 games. Others have chosen a different path, deciding to explore new possibilities and value verification through on-chain gaming. In this emerging Web3 industry, there are always pioneers seeking to forge ahead on new paths.
Analysis of the Current State of the On-Chain Gaming Industry#
Currently, the entire on-chain gaming sector is in a very early stage, with both game projects and related infrastructure still developing. In the industrial landscape of on-chain gaming, it can be roughly divided into four categories: on-chain game projects, on-chain game engines, on-chain gaming chains, and on-chain game distribution platforms.
On-Chain Game Projects#
Currently, on-chain game projects are in a very early stage. Next, I will analyze a few on-chain game projects to understand the current state of on-chain gaming.
In terms of game projects, there are early well-known titles like Dark Forest, as well as recent ones like Loot Survivor, Sky Strife, Imminent Solace, and Loot Royale. Most of the projects available for experience are still in the testing phase, with the number of playable on-chain games not exceeding two digits. Overall, the games are primarily SLG (strategy) focused, and many new project teams are attempting to explore simulation and management directions.
Since most games are still in development and unplayable, I will mainly introduce a few playable and distinctive on-chain games.
Dark Forest#
First, let's look at Dark Forest, a representative work of on-chain gaming. In simple terms, Dark Forest is a decentralized strategy game created on Ethereum using zkSNARKs.
Dark Forest was developed by MIT graduate Brian Gu under the pseudonym Gubsheep, with some inspiration from Liu Cixin's science fiction novel "The Dark Forest." Other team members include Alan, Ivan, and Moe. This game project has not received funding, but its related new project, Argus Labs, recently raised $10 million.
Dark Forest is one of the earliest incomplete information games built on decentralized systems. As a space conquest strategy game, players embark on journeys from their own planets to explore the infinite universe, discovering and occupying other planets and resources to develop their empires.
The three main highlights of Dark Forest: two of which were mentioned when introducing on-chain games, are that game logic, data, and states are all on-chain, meaning centralized individuals cannot singularly control the outcomes of their actions; and the free, open, and highly combinable game ecosystem: the open-source model of on-chain games grants Dark Forest permissionless interoperability, essentially making it an Ethereum smart contract that any address can interact with, thus fostering a thriving ecosystem of secondary creations (plugins) and generating more ecological communities.
For example, Project Sophon created a local library for Dark Forest, allowing users to start a game round either off-chain or on-chain; the Ukrainian gaming organization Orden_GG built a trading market for artifacts and added liquidity pools; the Chinese DAO MarrowDAO|GuildW @marrowdao developed a trading market for artifacts and numerous plugins, including GPU rendering tools, creating a very interesting UGC ecosystem.
(Source: MarrowDAO official Twitter)
Another significant highlight of Dark Forest is its use of zk-SNARKS technology for information concealment. In strategy games, if all information is transparent, opponents know your position, making it impossible to implement strategic countermeasures under full transparency. Dark Forest uses zk technology to hide most of the universe and opponents when players first enter the game. Only when players explore hidden areas do they become visible. Each time a player moves, a proof is sent to the blockchain to validate that the move is legitimate without revealing their coordinates in the universe.
Since the end of Round 5 of the official v0.6 version in February 2022, Dark Forest has not opened a new round of game versions. Currently, the entire game is in a nurturing state. If you want to experience the game, you can participate in rounds organized by community groups, such as creating a small universe in the Arena system developed by dfDAO.
(Source: Fred creating a new universe in the Arena system developed by dfDAO)
Overall, Dark Forest redefines the possibilities of Web3 gaming. Many praise "Dark Forest" as a perfect case at the intersection of gaming and cryptography, inspiring many subsequent on-chain game projects. According to previous reports, the historical cumulative number of players has exceeded 10,000+.
However, the significance of Dark Forest lies not only in the game itself but also as the first highly regarded on-chain game, serving as a spiritual totem for on-chain gaming, allowing industry builders to realize that there are so many freely combinable gameplay styles and a thriving secondary creation ecosystem that can emerge from on-chain gaming, instilling stronger confidence in the possibility of achieving "Autonomous Worlds."
After creating Dark Forest, the Dark Forest team, along with several other teams, formed 0xPARC. One of 0xPARC's sub-projects, Lattice, discovered that the existing development costs for on-chain games were extremely high. Therefore, in 2022, they initiated the MUD project, aiming to create a user-friendly on-chain game engine around the ECS framework to address issues like contract and client state synchronization, continuous content updates, and interoperability with other contracts, thereby lowering development barriers and significantly promoting the development of on-chain games. To some extent, Dark Forest symbolizes a significant milestone and development booster for the on-chain gaming industry.
Loot Survivor#
Next, let's take a look at Loot Survivor, a game developed by the BibliothecaDAO team, which is an important part of the Loot ecosystem.
Loot was released on August 28, 2021, by @Dom Hofmann. Unlike common PFP-type NFTs like BAYC and Crypto Punks, each Loot NFT consists of black text on a white background, with the interpretation of this text being very open and free. Its completely community co-created and autonomously grown characteristics have attracted a large number of ecological contributors and related derivative projects.
(Source: OpenSea)
Loot Realms has been dedicated to the development of Lootverse since its launch on September 1, 2021. Core contributors @lordOfAFew and @TimshelXYZ played significant roles in this project, constructing the underlying narrative of Loot and presenting gamified storytelling through the first project of Realms, Eternum.
The team proposed the core concept of "Play 2 Die" as early as February 2022, initially planning it as an expansion of the Realms series, titled "Realms: Adventurers." However, during the iterative development process, the team decided to quickly launch a smaller-scale single-player on-chain game, leading to the birth of Loot Survivor.
Loot Survivor is a text-based dungeon or Roguelike game that first debuted on May 25 of this year (also the author's birthday) at the on-chain gaming summit in Lisbon, garnering significant attention.
The overall gameplay is relatively simple, involving monster fighting through text interactions until death, and it encourages users to continuously challenge themselves through a leaderboard.
(Source: Fred's screenshots and performance rankings in Loot Survivor)
Overall, the game's scale and playability are relatively small, focusing more on inheriting the Loot ecosystem in game creation and enhancing the gamified narrative of the Loot ecosystem. Additionally, as one of the flagship projects of the Dojo ecosystem, it has provided a strong boost to both the Dojo and Starknet ecosystems.
Imminent Solace#
Imminent Solace is a recently launched treasure brawl-style battle royale game based on ZK fog of war, developed using the Mud engine. The project team, PTA DAO, is a Chinese team that pays great attention to on-chain gaming, integrating PVP looting, autonomous world exploration, and PoW resource mining. The gameplay is similar to Dark Forest, but with higher ease of use and user experience.
The project's ultimate goal is to create a war simulation game similar to EVE, where players face real losses in resources and assets while encountering strategic challenges during gameplay.
Imminent Solace is one of the more playable on-chain games recently released, with good interaction and experience.
(Source: Fred's screenshots and rankings in Imminent Solace)
Additionally, there are other games exploring the on-chain gaming path, such as Sky Strife developed by Lattice, OPCraft, SmallBrain's text game Word3, the Web3 version of Werewolf Framed, and battle royale-style Loot Royale, as well as nurturing management-style Genki Cats. Most of these are still in testing phases, with only a few playable games currently in development.
Research shows that current on-chain games are primarily web-based, with almost no PC or mobile versions.
- On one hand, this is related to the characteristic of on-chain games not requiring clients. Since on-chain games can have multiple front ends, it is crucial for project teams to quickly produce MVP versions for the community and users to play. Web-based development is faster and cheaper than PC and mobile development, making it the optimal or even sole choice.
- On the other hand, on-chain games are still in the concept validation stage, and how to quickly create playable games to validate their value is key.
On-Chain Game Engines#
Before understanding on-chain game engines, let's first grasp the core essence of engines:
In simple terms, it means seeing the world from the shoulders of giants. Game engines integrate commonly used functions for game creation into universal code, so that future creators do not need to reinvent the wheel.
For instance, in traditional game engines like Unity and Unreal Engine, game developers can directly use existing engines to implement motion laws after a cosmic explosion or the motion trajectories after character collisions, allowing them to focus their energy on developing unique game content.
Similarly, the goal of on-chain game engines is to achieve similar objectives. Compared to traditional game engines like Unity and Unreal Engine, which can handle tasks like graphical rendering, physics simulation, and network communication, on-chain game engines focus more on contract and client state synchronization, continuous content updates, and interoperability with other contracts due to the nature of their games.
Currently, on-chain game engines include Mud, Dojo, Argus, Curio, and Paima, among which Mud and Dojo are the two most mainstream on-chain game engines, creating a competitive landscape between EVM-compatible ecosystems and Starknet ecosystems. Here, I will mainly introduce these two game engines.
Mud
Mud is the first on-chain game engine officially released by Lattice in November 2022. The Mud team, Lattice, and the on-chain gaming pioneer Dark Forest all belong to the OxPARC team. As one of the earliest on-chain game engines, Mud currently has the most developers in its ecosystem. In addition to the early Dark Forest, it has also given rise to projects like OPCraft, Sky Strife, Word3, and the recent Imminent Solace, making it the on-chain game engine with the most developers.
Dojo
Dojo emerged from the Starknet ecosystem, initially developed around MUD using the Cairo language on Starknet, and was officially released in February 2023. Regarding why a Mud-like engine was created on Starknet, the core developer tarrence.eth expressed enthusiasm for the Cairo language, believing it has greater advantages in proof recursion and incremental proof compared to Solidity.
However, another core developer, Loaf, indicated that the reason for creating a Mud-like engine on Starknet is not that Mud is inadequate, but because Loaf wanted to build an ECS system on Starknet, thus choosing to fork MUD. Similarly, other Layer1/Layer2 projects aiming to develop their own on-chain gaming ecosystems, such as Move and Flow, have also begun forking their engines. Essentially, this is to enrich the on-chain ecosystem by choosing builder infrastructure for on-chain games.
The Dojo ecosystem projects are backed by the large IP of the Loot ecosystem, leading to many notable projects, including Loot Survivor and Loot Realms: Eternum. Additionally, there are other projects like Dope Wars and Influence that also perform well.
Just as traditional game engines play a crucial role in promoting the development of the gaming industry, the rise of on-chain gaming and the emergence of on-chain game engines are closely related. They enable developers to invest in creating game works at lower costs. The emergence of Mud and Dojo has propelled the entire on-chain gaming sector's development, with events like the ETH AW Hackathon, Pragma Cairo 1.0 Hackathon, and Lambda zkWeek Hackathon occurring in May, June, and July this year, continuously nurturing the development of on-chain gaming.
On-Chain Gaming Chains#
In the realm of dedicated gaming chains, compared to the previously popular dedicated gaming chains in Web2.5 games (not listed here), current on-chain game projects prefer to build on general Layer2 solutions like Arbitrum Nova, Optimism, and Starknet.
The fundamental reason is that the user profile of those who transitioned from gaming to blockchain previously consisted of players who enjoyed Web2.5 chain games and AAA titles. Such players are not very interested in the relatively simple and crude content of on-chain games. Thus, these so-called dedicated gaming chains do not hold much appeal for on-chain gaming.
Additionally, it is worth noting that CaptainZ previously mentioned a contradiction in having all games on-chain: the push-based nature of blockchains versus the loop-based nature of games.
Many blockchains are passively triggered by events, updating states only when new transactions or operations occur. In existing application layers, many sectors align closely with this framework. For example, in the DeFi sector, when a user wants to trade two tokens on Uniswap, the transaction is executed after submission, which is event-driven. Similarly, many social platforms are event-driven; for instance, when you post a tweet on Twitter, it gets published for others to see, mirroring the event-driven nature of blockchains.
However, many traditional game architectures are loop-based (except for some turn-based and asynchronous games). Game systems actively process user inputs, update game states, and render the game world. Each loop is referred to as a Game Loop or Tick, with many games needing to run dozens or even hundreds of ticks per second to ensure continuous gameplay.
This creates a natural contradiction between game logic and current blockchain logic. In response to this situation, some teams have begun building dedicated chains for on-chain games, which can also be referred to as Ticking chains.
For example, the Argus team is building a new Layer2 based on Polaris (an EVM module compatible with Cosmos SDK), which is a ticking chain with precompiled ticking functions called World Engine. Curio is also building a new Layer2 based on OPStack, which also features precompiled ticking functions.
Although still in the development stage, there is great anticipation for a new roll-up structure chain specifically designed for on-chain games, which is believed to further propel the development of on-chain gaming.
On-Chain Game Aggregators/Distribution Platforms#
Finally, I will introduce the still-nascent on-chain game aggregators/distribution platforms. Currently, due to the very early stage of on-chain gaming, the number of playable on-chain games is extremely limited. According to data from Composable Hub, the number of playable games, including alpha, beta, and fully launched games, does not exceed 30.
Thus, for players interested in on-chain gaming, finding these games largely relies on word-of-mouth and small community dissemination, lacking the many aggregators that help users explore and choose in mature sectors like DeFi and GameFi. Currently, there are two main platforms dedicated to on-chain game aggregation: Composable Hub and Cartridge.
Composable Hub
Composable Hub is an aggregation platform focused on on-chain games under Composable Labs, which also has a Gamefi aggregation platform, Klick, and NFT DEX, Lino Swap. Currently, Composable Hub aggregates 56 on-chain games, with 14 fully launched, 12 in testing phases, and the remaining 30 still in development.
(Source: Composable Hub)
Cartridge
Cartridge is an on-chain game aggregator in the Starkware ecosystem, aiming to create a Web3 Steam. It currently aggregates five games from the Starknet ecosystem: Dope Wars-Roll Your Own, Influence, Loot Survivor, Briq, and Frens Land. Additionally, the Cartridge team has been actively promoting the development of Dope Wars-Roll Your Own and is also a core contributor to the Dojo engine.
(Source: Cartridge)
Core Advantages of On-Chain Games#
Overall, on-chain games enhance fairness by bringing all game logic, states, data storage, and assets on-chain. Additionally, because game contracts and accessible game clients adopt an open-source model, they provide ample autonomy for third-party developers, allowing for more community and third-party-developed rules and gameplay.
This openness transforms the binary division of game companies as providers and players as consumers into a new model where every player can become a builder and creator of the game.
From PGR to UGR, Granting Everyone the Right to Be God#
In traditional games, all game content is provided by the official company. Whether playing Honor of Kings, Genshin Impact, Fortnite, or Overwatch, we exist in a PGC (Professional Generated Content) model as participants in the game. Of course, we also have the right to create, producing derivative content around game characters or writing novels, achieving a certain degree of UGC (User Generated Content).
However, this creation does not involve the core rules and gameplay; we can only be consumers of game rules rather than creators. We are powerless regarding the strengthening or weakening of game characters, the collision of game values, and environmental impacts, remaining within the constraints of PGR (Professional Generated Rules). For players eager to create, this can feel like a shackle. Humans, often disappointed in the real world, yearn for the right to be gods, desiring 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 make open attempts. However, we can find that some projects have begun to transition towards openness and PGR, using mods to allow other developers to create game content outside the official realm. One of the most well-known examples is Minecraft, which allows players to create and run their own game servers, enabling third-party developers to implement custom game modes, rules, and content, thus creating gameplay different from the original game, including Minecraft versions of battle royale and even online graduation ceremonies during the pandemic.
While Minecraft allows users to create multiple servers for gameplay, these new servers are isolated from each other and do not interconnect. These different servers must compete for players' attention and time. Data accumulated by players in one gameplay cannot circulate in new gameplay servers; this UGR is limited, representing a personal universe rather than a shared universe.
The creation of new gameplay in Minecraft requires setting up new servers, while the difference with on-chain games lies in sharing the same backend. Different mods and smart contracts interact only to affect the front end, allowing data to be shared and circulated across different clients.
Due to the on-chain nature of game logic and rules, which supports permissionless interoperability, players can freely construct and create various game functions and experiences without isolation. This potential for free creation greatly enriches the content and functionality of games, such as trading markets, embedded games, and custom clients, diversifying the gaming experience and achieving a transition from PGR to UGR.
This also reminds me of the virtual world of Jiuzhou collectively created by Chinese online writers like Jiangnan, Jin He Zai, and Da Jiao over a decade ago. They created a Jiuzhou universe through collective storytelling, transitioning from literary works to industries like film and gaming, forming a vast world.
In fact, comparing it to our lives, on-chain games are similar to playing cards. Playing cards have fixed suits and numbers, but people have developed various games, creating Dou Di Zhu, Texas Hold'em, Tractor, Upgrade, Heart Attack, and more, showcasing the diversity and flexibility of game rules. On-chain games are similar; by supporting open creation and interoperability, players can build various gaming experiences on foundational rules. In traditional games, everyone can only be consumers, but in on-chain games, people can become rule-makers.
In summary, the advantages of on-chain games lie in their openness and permissiveness, granting players greater creativity and freedom to participate in the creation of game rules and content, thus forming a diverse, personalized, and vibrant gaming ecosystem.
Fairness and Transparency: An Uncontrolled Gaming Environment#
Another major advantage of on-chain games is the transparency of game logic and rules after being brought on-chain.
This is especially crucial for games involving competition and gambling, where fairness and transparency are key.
Just like the popular movie "All In," where the gambling app used by players is controlled by centralized companies, the outcomes may not be random but predetermined. In gambling card games like Poker and Dou Di Zhu, the opacity of game processes and states can lead countless players to become victims, which is one of the reasons many Web2 gambling games are criticized.
The transparency of game logic and rules in on-chain games ensures that rules are open and transparent. Coupled with some cryptographic technologies (for example, games like Dark Forest and Imminent Solace utilize ZK-SNARK), game types that have a strong demand for fairness can achieve experiences in on-chain games that are difficult for Web2 and Web2.5 games to realize.
Challenges and Limitations of On-Chain Games#
As infrastructure continues to improve, the wind of on-chain gaming is beginning to blow. However, despite some unique highlights, on-chain games still face many limitations and challenges:
Poor User Experience#
Overall, players of on-chain games share a consensus that the playability of current on-chain games is generally much lower than that of Web2 and Web2.5 games. On one hand, most current on-chain games have relatively primitive or crude graphics; on the other hand, there are four main challenges in the interaction experience:
1) Difficult Beginnings: Hard to Match Players
For multiplayer PVP games, often four players are needed to play together. However, due to the generally low player numbers in current on-chain games, the number of players online often does not exceed single digits. Additionally, without a matching mechanism, many multiplayer games can only be played by creating rooms and inviting others, leading to a loss of interest in the game right from the start.
2) High Barriers: Some Games Have High Artificial Thresholds
In addition to the gaming experience, many games set numerous artificial barriers. For example, some games can only be played at fixed times, while others require an entry fee, such as purchasing certain tokens or NFTs before playing, thus increasing players' gaming costs.
Some game developers maintain the spirit of independent game developers, believing that paying for games is the most genuine belief. However, Web2 independent games at least have some innovative gameplay or high-quality content to attract players.
Faced with the low playability of most on-chain games, why would users be willing to pay to play a game they wouldn't even glance at in Web2? This, to some extent, reinforces the stereotype that some players and outsiders often view on-chain games as self-indulgent. Aside from a few individual projects and believers, how many people are genuinely willing to play? Many players are willing to play test versions of games simply for the love of gaming, and such behaviors from project teams can deter players.
3) Poor Gaming Experience: Frequent Bugs
For players, faith is the most crucial aspect of on-chain games, followed by patience.
From PC to mobile, the overall development of games is moving towards more convenient methods. However, in on-chain games, a common scenario is that several players agree to play together, only to find that they often encounter bugs, whether it's page refresh issues or various unexpected errors, making it difficult for those without patience to complete a full on-chain gaming experience.
4) Big Promises, Low Playability:
Currently, most game projects have grand narratives but very low actual playability. Many games are harder to play than web games from over a decade ago. It is hoped that with improved infrastructure and more builders joining, the playability of on-chain games can continue to narrow the gap with Web2 games.
Limitations of Game Types#
Due to the current limitations of blockchain performance and infrastructure, not all game types are suitable for on-chain gaming.
From the types of current on-chain games, SLG (strategy) games are predominant, as they do not have high real-time requirements. In contrast, RPG, AVG, ACT, and MOBA games have high demands for continuous, real-time state updates. If data is stored on-chain, the current blockchain performance struggles to support timely updates, making these types of games less suitable for on-chain gaming at present.
Currently, on-chain games are primarily divided into two development directions: one is to pursue a small yet beautiful route, accumulating users through playable MVP versions, such as simulation management, pet raising, and tower defense games; the other is to pursue grand narratives and open worlds, creating imaginative ecosystems through expansive worldviews and cosmic storytelling. However, due to the limitations of game types, this largely confines the games to the aforementioned categories. How to create the next breakout game like Axie or Stepn remains a collective exploration.
Genuine Demand or Pseudo-Demand#
The biggest challenge and controversy surrounding on-chain games currently stems from whether the demand is genuine.
Taking the two core advantages of on-chain games as examples:
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Regarding the transition from PGR to UGR, on one hand, many Web2 open games can achieve this, such as Minecraft. On the other hand, whether the need for data to circulate across different game clients is necessary remains questionable. For instance, whether mounts, level 90, and flying wings in an RPG client need to circulate into a MOBA game requires further exploration.
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As for fairness and transparency, this is primarily reflected in gambling-type games. However, on one hand, the number of people participating in online gambling is far less than those participating in offline gambling (in 2023, 120 million participated in online gambling, while around 4.2 billion gamble globally each year), indicating a low ceiling. On the other hand, for true gamblers, the most important aspect is the convenience of depositing and withdrawing funds. Compared to fairness, those who love gambling care more about whether the exchange of funds and chips is quick and whether the experience is convenient. Given the significant gaps in the infrastructure of on-chain games, this is a major weakness of Web3 games.
Surrounding the two main characteristics of on-chain games, UGR and fairness, if some categories can effectively leverage these two features in the future, they may address the genuine needs of gamers and attract more participation. However, as it stands, the road ahead remains long and arduous.
Fully Decentralized Games May Not Be Fun and Could Lead to Chaos#
Like the two sides of a coin, the other side of openness is chaos. Due to human nature being lazy, for players who only want to consume and not create, those accustomed to the traditional PGR model care most about the playability of games.
It is challenging for those who truly design games to delegate game content to others. Each user's ability varies, and ordinary gamers may design games from their perspectives, making it difficult to maintain game playability and balance.
Should professional tasks be left to professional game developers, or should rights be granted to everyone? This is a very real issue worth exploring. Achieving a balance between democracy and elitism is a challenge.
Therefore, for the development teams of on-chain games, having interesting and stable core gameplay while leaving room for players to create and extend new gameplay is crucial. Achieving balance is important; otherwise, it may fall into the extremes of either overly centralized games or games that are too hollow to attract players to participate in creating new gameplay.
For on-chain game teams, it is essential to play the role of "initial gods," designing the core gameplay and using reasonable incentive mechanisms to attract more players to co-create and enrich this game world.
Thoughts on the Business Models of On-Chain Games#
Finally, let's discuss the business model considerations for on-chain games, a topic of great concern for both project teams and investors.
First, let's analyze the business models of traditional games. The evolution of traditional video game business models has gone through multiple stages, continuously changing with technological advancements, market shifts, and player demand evolution:
- 1970s: Coin-Operated Mechanism
The earliest consumer-facing video games trace back to the arcade games of the 70s and 80s. During this period, due to the hardware requirements for running video games, each game was placed in a separate physical device, including titles like Pac-Man and Galaga, where players inserted coins to gain game time or lives. - 1980s: One-Time Purchase
Early video games were primarily console games sold through retail channels, where players purchased physical game cartridges or discs. This was an era dominated by product sales, where players made a one-time purchase to play the game. - Mid-1990s: Subscription Renewal Mechanism
With the rise of the internet, multiplayer online games began to emerge. Some game companies introduced subscription services, requiring players to pay monthly fees to access game servers. A representative example is "World of Warcraft." - Mid-2000s: Advertising Model + Item Charges
The free-to-play model emerged, where the game itself was offered for free, but players could purchase virtual items or in-game currency for additional tools. Additionally, some games adopted advertising models, generating revenue by displaying ads within the game. - Early 2010s: Item Charge Model
With the proliferation of smartphones, mobile games became mainstream. In-app purchases became a primary revenue model, allowing players to buy various items within the app to unlock features or accelerate game progress. - 2020s: Cloud Gaming Subscription Model
Recently, cloud gaming has entered the public eye, allowing players to stream games via cloud servers without needing to download or install them. Additionally, some game subscription services like Xbox Game Pass and PlayStation Now have begun to emerge, allowing players to access a range of games through subscription services.
These changes in business models reflect the video game industry's continuous adaptation and innovation in response to technology, market, and player demand. 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 primary business models include the following categories:
In-Game Economic Systems: Most GameFi games establish their own economic systems, using tokens, NFTs, and in-game assets as value mediums. Players can earn virtual assets through game activities, which hold value within the game and can be exchanged for real-world currency. For example, in the well-known game Axie Infinity, players raise virtual creatures (Axies) to play the game, and these Axies are NFTs that players can trade, sell, and earn cryptocurrency rewards within the game.
Play-to-Earn Model: Players earn rewards by participating in games, which can be in-game currency, tokens, or other rewards of actual value. For instance, players who join gaming guilds like YGG can earn rewards by participating in games like Axie Infinity and receive incentives and loans from YGG.
Integration of DeFi and Financial Products: Some GameFi projects integrate DeFi elements, offering loans, liquidity mining, trading, and other financial services. Players can use DeFi products within the game to earn profits or invest. For example, in Decentraland, players can purchase virtual land and create their own buildings, which can be used for investment or trading, with some plots appreciating in value within the virtual world.
For on-chain games, which are still in a very early stage, choosing which business model to adopt remains an exploration for project teams. However, based on the characteristics of on-chain games, the future will likely emphasize playability rather than DeFi aspects. Pure Ponzi schemes are unlikely to attract seasoned users.
The business model of on-chain games should better integrate their unique characteristics to enhance playability. Future business models can be roughly divided into three directions based on game types:
- For lightweight games like simulation management and pet raising: Consider adopting an NFT + Token charging model, free-to-play but requiring payment to strengthen.
- For grand narrative open-world games: If playability is high, consider setting a paid threshold and related subscription and membership models like independent games. However, given the generally low playability in the early stages, it may be wise to initially adopt a business model similar to lightweight games to attract users.
- For card games: The business model can reference the traditional/physical model of commission-based revenue.
However, the entire on-chain gaming sector remains in a phase of exploration and value verification. We look forward to more interesting models emerging to become the next mass adoption.
Conclusion#
In summary, the gaming industry has evolved over decades from its inception to its integration with blockchain. Humanity is not satisfied with merely being PGR game consumers; there is a growing desire to become UGR creators.
Just as the birth of Dota originated from the custom map community of "Warcraft III: Reign of Chaos," where the map editor allowed players to create their own maps, one of which became Dota. From the early creation by Eul to Guinsoo taking over the game's development, adding new heroes, items, and mechanics, and then IceFrog introducing a series of updates and improvements to enhance game balance and depth while adding more heroes, skills, and tactical elements, Dota gained widespread recognition and success, culminating in Valve Corporation's collaboration with IceFrog to launch DOTA 2, achieving immense global success.
The developers of the Warcraft map editor may not have anticipated the subsequent emergence of Dota, a game celebrated worldwide, and the fervent popularity of MOBA games. The path of user creation often requires time and opportunity to yield new hit products.
On-chain games are similar; in this pioneering era, they still face numerous shortcomings, such as poor user experience and low playability. To achieve mass adoption, they must confront the challenge of attracting new users. To draw more Web2 players, the barriers to entering Web3—such as registering wallets, learning to purchase NFTs, and buying tokens—pose significant learning costs, becoming roadblocks for all DApps. Even with account abstraction and built-in exchanges in Web3 projects simplifying the entry and funding processes, the fundamental question remains: what genuine needs do on-chain games address for players?
Creating narratives for the sake of narratives and bringing everything on-chain for the sake of it ultimately leads to hammering nails without a purpose. How to effectively leverage the characteristics of UGR and fairness in on-chain games is a question that every builder in this space cannot evade. The unique features of on-chain games not only provide fairness (for example, the recently launched non-on-chain game Fren Pet, where the daily spin function could achieve greater fairness if executed on-chain, somewhat reducing users' impressions of it as a "funding scheme") but also embark on a new journey of transforming from PGR to UGR, granting every user the potential to become a god.
The development of Web3 cannot be separated from wealth generation effects, while the essence of gaming cannot overlook playability. How to combine wealth generation effects with playability still requires long-term exploration. We look forward to continuous exploration in the on-chain gaming sector, genuinely yielding projects that leverage the characteristics of on-chain gaming and address genuine needs. We also eagerly anticipate the emergence of new universes in the open seas of on-chain gaming.
Lastly, I would like to express my heartfelt gratitude to partners such as Teacher Ni, Constance, Joven, Karvin, Yolo, Xiao Hu, Manda, Xiao Ran, Norman, Alex, Carl, Justin, Frost, Haiyu, Nico, Golem, Yafon, Robinn, and many others for their assistance, as well as everyone who has been patient and willing to share during our discussions. I sincerely hope that the builders in this sector continue to thrive!
Author: Fred
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