In-depth Research Report on Blockchain Games Is the Use of Cryptonative Technology a Bubble or a Revolution?

Blockchain Games An In-Depth Research Report - Cryptonative Technology Bubble or Revolution?

This article is 13,000 words long and will take approximately 10-15 minutes to read.

Section 1: Introduction – What is Full-Chain Gaming?

Recently, the full-chain game Sky Strife’s LianGuaiss card Fomo reached 21,000 ETH (testnet), causing many non-full-chain gamers to marvel at the magic of this track. Since the release of “Pong” in 1972, the gaming industry has skyrocketed, from classic 8-bit games like “Super Mario” and “The Legend of Zelda” to complex, highly social network games like “Fortnite” and “League of Legends”. Gaming is no longer just simple entertainment. The social, competitive, and immersive experiences provided by these games have exceeded our 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, which tightly integrates gaming with the crypto economy, to games like Stepn, which focus on social interaction and innovation, blockchain games are gradually being seen as the key to Crypto Mass Adoption. People are now exploring new ways to combine gaming and blockchain. Apart from putting assets on the chain, can we put more elements on the chain? Hence, the birth of full-chain gaming.

So, what is the difference between full-chain gaming and traditional gaming?

In-depth Research Report on Full-Chain Gaming: Is It a Bubble or a Revolution with Cryptonative at its Core?

In traditional gaming, all game logic, data storage, digital assets, and game states are stored in centralized gaming companies. For example, when we play games like “Arena of Valor,” “Genshin Impact,” and “Dungeon Fighter Online,” all game content, including in-game assets, belongs to centralized companies.

In contrast, asset-on-chain games (commonly known as Web 2.5 games), such as Axie and Stepn, put assets on the blockchain. On one hand, players can own assets, and on the other hand, it enhances asset liquidity. However, when faced with game shutdowns, these game assets may still lose their circulation value. The relationship between asset-on-chain games and traditional games is more of a supplement rather than a replacement, similar to the relationship between food delivery and restaurants. Similarly, Web 2.5 games also face competition from other Web 2.5 games and traditional Web 2 games.

Recently, the attention-grabbing full-chain games put all interactive behaviors and states of the game on the blockchain, including the aforementioned game logic, data storage, digital assets, and game states. These aspects are all processed by the blockchain, achieving true decentralized gaming.

For easy understanding, I have summarized the characteristics of full-chain games into the following four points:

The authenticity of data sources is ensured by blockchain. Blockchain is no longer just a supplementary storage for data, but the genuine source of game data. It goes beyond recording ownership of assets and becomes the storage center for all critical data. This approach fully utilizes the programmable features of blockchain, achieving transparent data storage and permissionless interoperability.
The logic and rules of the game are implemented through smart contracts. For example, various game operations can be executed on the chain, ensuring traceability and security of the game logic.
Game development follows the principles of open ecosystems. Game contracts and accessible game clients adopt an open-source model, providing vast creative space for third-party developers. They can output content and share it with the entire community through plugins, third-party clients, and interoperable smart contracts, or even redeploy and customize their own gaming experiences.
The game is agnostic to clients. This is closely related to the previous three points, as the key to truly encrypting native games lies in the ability to continue the game even if the core developer’s client disappears. This depends on the permissionless storage of game data, permissionless execution of logic, and the community’s ability to independently interact with the core smart contracts without relying on interfaces provided by the core team. Thus, achieving true decentralization.

2. Why do humans need full-chain games?

Before understanding why we need full-chain games, let’s briefly understand the current status and operation mode of the traditional gaming industry.

Full-chain games are essentially games, and understanding the operational mode of traditional games is crucial and necessary for us to comprehend and analyze the future of full-chain games.

1. Current status of the traditional gaming industry

With the development of the gaming industry, many excellent Web 2.0 games have emerged in our growing process. Whether it’s FPS games like Counter-Strike or CrossFire, RPGs like Dungeon Fighter Online or Dragon Nest, MOBAs like League of Legends or Honor of Kings, or card games like Onmyoji or Hearthstone, games have accompanied our generation’s growth and become an essential part of our entertainment life.

According to Fortune Business Insights, the global gaming market size will reach $249.55 billion in 2022 and is projected to exceed $280 billion in 2023. By 2030, it will surpass $600 billion. Comparatively, the global market size of the film and entertainment industry is $94.4 billion in 2022. We can see that as an industry in the entertainment and leisure sector, games occupy a vital position in economic development. There are many aspects of its commercial depth and breadth worth exploring, making it the crown jewel of the leisure industry.

1) Why do humans love playing games?

According to data from Statista, the number of gamers worldwide has already exceeded 2.5 billion and is close to 3 billion. So how is it that games are able to attract more than one-third of the global population? The core reason can be summarized as meeting various aspects of human needs and weaknesses:

Full Chain Game In-depth Report: Is it a Bubble or a Revolution with Cryptonatives as the Core?

Escaping reality and starting a new life: Games provide a place where people can escape the pressures and challenges of everyday life. In games, people can free themselves from the troubles of reality and immerse themselves in a virtual world, having a second life.
Socializing without burdens: For multiplayer online games, games provide a platform for social interaction, which is friendly towards those with social anxiety. Players don’t have to worry about the judgment of others in real life, allowing them to do what they want and build relationships with others.
Rewards with timely feedback: Unlike the struggles of students and workers in their daily grind in real life, games are fascinating because they provide a rich reward system and timely reward mechanisms. After making an effort, leveling up, and completing challenges, players quickly receive new skills, unlock new levels, or obtain new items. This incentive mechanism can inspire people to keep moving forward.
Low-cost freedom of exploration: Many games provide rich virtual worlds where players can explore unknown territories, interact with NPCs and other players, and drive the development of the storyline. This satisfies the innate desire of humans for adventure and exploration. In the real world, due to constraints of money, energy, time, and location, the cost of exploration is significantly higher compared to the game world.
Pursuit of achievements and self-realization: By completing a series of tasks and goals, people can achieve their desire for success and recognition. Whether it’s the leaderboard or achievement points, in games, people can more easily challenge themselves and experience character growth.

Gaming cleverly satisfies the needs and preferences of different users by targeting one or even multiple weaknesses of human nature, allowing it to play a positive role in both breadth of coverage and depth of immersive experience.

2) Current Status and Development of Traditional Games

Next, let’s briefly understand the current status of the traditional gaming industry.

In traditional games, they can be broadly divided into Shooter, Adventure, Role Playing, Battle Royale, Strategy, Sports, Puzzle, Action, Simulation, and other game genres.

According to Newzoo’s data, Role Playing and Adventure games perform excellently on PC, mobile, and console platforms, ranking in the top five. Additionally, shooter and Battle Royale games are very popular on PC and console platforms. On the mobile platform, puzzle and placement games are also favored by users.

In-depth research report on blockchain games: Is it a bubble or a revolution with native encryption at its core?

2. Dilemmas in the Traditional Gaming Industry

However, the traditional gaming industry currently faces two major dilemmas: restrictions on game publishing and high pre-release costs, resulting in a slow return on investment and potential hidden costs.

1) Restrictions on Game Publishing

The game publishing license is required in some countries or regions to release games. This system aims to regulate game content to ensure compliance with national or regional regulations, culture, and values, protecting minors from inappropriate content and maintaining social stability.

For example, in Germany, there is strict scrutiny of game content, especially focusing on content that may have a negative impact on young people. South Korea and Japan have game rating systems, evaluated and issued by relevant national institutions.

In China, the influence of the game publishing license is even more significant. China implements a strict game publishing license system issued by the National Radio and Television Administration. Games need to 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 stagnation period until April 2022 when the situation gradually improved. In April 2022, 45 licenses were released, followed by a batch of licenses in September and December. However, during the stagnation period from 2021 to April 2022, only a few large companies survived, while a large number of small and medium-sized game companies faced closure. According to data from the Tianyancha App, more than 14,000 small and medium-sized game companies (with registered capital of less than 10 million) were dissolved from July to December 2021.

China, as the world’s largest game market, has more than 500 million people playing electronic games. The game licensing system has become a pain for countless Chinese companies. Even after the resumption of license issuance, the contraction or continuous adjustment of licenses has become a metaphorical sword of Damocles for every game project. In the days without the release of licenses, one can hear countless project parties without financial resources sighing at the brink of collapse.

2) The cost before issuance is too high and there is a high risk of sunk costs

In the development model of Web2 games, there are upfront costs in terms of manpower and infrastructure during the game development stage. During the waiting stage for the release number, there is idle time cost. Only when the release number is obtained, game publishing takes place, and commercial revenue is generated, can revenue sharing be conducted.

It is not difficult to see that a large amount of costs are incurred in the upfront stages. Once there are problems during the development stage, release number stage, or user acquisition stage, all the previous costs become sunk costs. For a medium-sized game, costs generally amount to millions of dollars. The long-cycle development and publishing process in the early stages results in a very long profit cycle, which also increases the risk of achieving the expected returns.

3. Attempts to break through with Web2.5 games

In the face of these two dilemmas, Web2.5 games are leading the way in breaking through. On one hand, Web2.5 games bypass the restrictions of domestic release numbers by targeting global users, allowing anyone to play. On the other hand, by issuing NFTs and tokens, they can generate income during the initial testing and early stages of the game, greatly lowering the financial entry barrier for game production.

In the attempts to break through with Web2.5 games, games like Axie and Stepn have emerged as very popular examples. Axie’s popularity among the people in Southeast Asia has led many to earn a living through Axie, with incomes surpassing the average working income in the Philippines. Stepn’s move to earn model has piqued the interest of many non-Web3 users, leading them to ask, “How do you play that running shoe game? I want to give it a try too.” This has sparked a trend of breaking through the boundaries of blockchain games. However, as the Ponzi economic model broke down, Web2.5 games have not been able to replicate the success of Axie and Stepn.

Builders are also starting to explore different directions. Some are aiming for AAA titles in Web2, trying to carve out a share of the market among Web2.5 games, as well as competing with Web2 games. Another wave of people is taking a different path, deciding to shift towards fully blockchain games to explore new possibilities and validate their value. In this emerging industry of Web3, there are always pioneers who want to forge ahead on a completely new path.

III. Analysis of the Current State of the Blockchain Gaming Industry

Currently, the entire blockchain gaming industry is in a very early stage of development, both in terms of gaming projects and related infrastructure. In the industry landscape of blockchain gaming, it can be broadly categorized into four main types: blockchain gaming projects, blockchain gaming engines, blockchain gaming chains, and blockchain gaming distribution platforms.

In-depth research report on blockchain gaming: Is it a bubble or a revolution?

1. Whole Chain Gaming Projects

Currently, the whole chain gaming projects are still in the very early stages. Next, we will analyze several whole chain gaming projects to understand the current state of whole chain gaming.

In terms of gaming projects, there are well-known early-stage projects like Dark Forest, as well as recent ones like Loot Survivor, Sky Strife, Imminent Solace, and Loot Royale. Most of the playable projects are still in the testing phase, and the number of playable whole chain games on the market is not more than double digits. The overall focus of these games is on SLG (Strategy) genre, and currently, many new projects are also venturing into the direction of simulation and management.

Since most games are still in the development stage and not playable, here we will mainly introduce a few playable and distinctive whole chain games.

1) Dark Forest

First, let’s take a look at the representative work of whole chain gaming, Dark Forest. In simple terms, Dark Forest is a decentralized strategy game created on the Ethereum blockchain using zkSNARKs.

Dark Forest was developed by Brian Gu, a graduate of MIT with the pseudonym Gubsheep. It was partially inspired by Liu Cixin’s science fiction novel “The Dark Forest.” Other team members include Alan, Ivan, and Moe. This game project is unfunded, but its related project Argus Labs recently raised $10 million.

Dark Forest is one of the earliest incomplete information games built on a decentralized system. As a space conquest strategy game, players explore the infinite universe, discover and occupy other planets and resources to develop their own empires.

The three main highlights of Dark Forest: two of them were already mentioned when introducing whole chain games. Firstly, the game logic, data, and state are all on the blockchain, and centralized entities cannot control their behavioral outcomes. Secondly, it has a freely open and highly combinable game ecology. The open-source nature of whole chain games gives Dark Forest non-permissioned interoperability. It is essentially an Ethereum smart contract that any address can interact with, thus giving rise to a thriving secondary creation ecosystem (plugins) and generating more community ecosystems.

For example, Project Sophon wrote a Dark Forest local library that allows users to start a game offline or online themselves. Ukrainian gaming organization Orden_GG built a weapon trading market and added liquidity pools. Chinese DAO MarrowDAO|GuildW @marrowdao developed many plugins, including a weapon trading market and GPU mapping tools. The user-generated content ecosystem is very interesting.

In-depth Research Report on Whole Chain Gaming: Is it a Bubble or a Revolution?

(Source: MarrowDAO Official Twitter)

Another major highlight of Dark Forest is the use of zk-SNARKS technology for information hiding. Because for strategy games, if all information is transparent, opponents will know their position, and it will be impossible to implement strategic opposition under full transparency. However, Dark Forest uses zk technology to hide most of the universe and opponents when players first enter the game. They only become visible when players explore the hidden areas. Each time a player moves, they send a proof to the blockchain to prove that the movement is valid without revealing their coordinates in the universe.

After the official v0.6 version Round 5 ended in February 2022, Dark Forest did not open a new round of game versions. Currently, the entire game is in a free-range state. If you want to experience the game, you can participate in rounds organized by community organizations, such as creating a small universe in the Arena system developed by dfDAO.

In-depth Research Report on Full-Chain Games: Is it a Bubble or Revolution?

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

In summary, Dark Forest has redefined the possibilities of Web3 games. Many people praise “The Dark Forest” as a perfect case of intersection between games and cryptography, and it has inspired many full-chain game projects that came afterwards. According to previous reports, the cumulative number of players has exceeded 10,000+.

But the significance of Dark Forest is not only in its game itself. As the first highly regarded full-chain game, it is more like a spiritual totem of the full-chain game industry. It has made industry builders realize that there are so many freely open combinations of gameplay and a thriving secondary creation ecosystem based on full-chain games. This has greatly strengthened people’s confidence in the possibility of achieving “Autonomous Worlds.”

After creating Dark Forest, the Dark Forest team and several other teams formed 0xLianGuaiRC. 0xLianGuaiRC’s sub-project Lattice discovered that the existing development costs for full-chain games are extremely high. Therefore, they started the MUD project in 2022, hoping to create a user-friendly full-chain game engine around the ECS framework to solve problems such as state synchronization between contracts and clients, continuous content updates, and interoperability with other contracts. This has lowered the development threshold and greatly promoted the development of full-chain games. In a way, Dark Forest is a huge symbol and booster for the full-chain game industry.

2) Loot Survivor

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

Loot was released on August 28, 2021, by @Dom Hofmann. Unlike common PFP-type NFTs such as BAYC and Crypto Punks, each NFT in Loot consists of white text on a black background. The interpretation of these texts is very open and free, and the entire project is built and grown through community collaboration and autonomy. This has attracted a large number of ecosystem contributors and related derivative projects.

In-depth research report on blockchain games: Is it a bubble or a revolution at the core of native crypto?

(Source: OpenSea)

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

The team proposed the core concept of “Play 2 Die” as early as February 2022, originally planned as an expansion of the Realms series called “Realms: Adventurers”. However, during the iterative development process, the team decided to quickly release a smaller-scale single-player blockchain game, and thus Loot Survivor was born.

Loot Survivor is a text-based dungeon or Roguelike game, which made its first appearance at the Lisbon blockchain game summit on May 25th (also the author’s birthday) and received a lot of attention.

The overall gameplay of the game is relatively simple, with monster fighting done through text interaction until death, and the hope that users will continuously challenge themselves through the leaderboard.

In-depth research report on blockchain games: Is it a bubble or a revolution at the core of native crypto?

(Source: Screenshots and performance rankings of Fred on Loot Survivor)

Overall, the game has a small scale and playability, with a focus on inheriting the Loot ecosystem and adding gamified storytelling.

3) Imminent Solace

Imminent Solace is a recently released chicken dinner game based on the ZK War Mist. It is developed using the Mud engine. The project team is developed by PTA DAO and is a Chinese team that focuses on the entire chain of games. It combines PVP plunder, autonomous world exploration, and PoW resource mining. The gameplay is similar to the Dark Forest, but with higher ease of operation and user experience.

The ultimate goal of the project is to create a war simulation game similar to EVE, where players will suffer real losses in terms of resources and assets and face strategic challenges during gameplay.

Imminent Solace is one of the more playable games among the recently released entire chain games, with good game interaction and experience.

In-depth research report on entire chain games: Is it a bubble or a revolution with native encryption at its core?

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

In addition, there are other games exploring the path of entire chain games, such as Lattice’s self-developed Sky Strife, OPCraft, SmallBrain’s text game Word3, Web3 version of Werewolf Framed, and the battle royale game Loot Rayale and character cultivation game Genki Cats. Most of them are still in the testing phase, and currently, there are only a few playable games in development.

Through research, it is discovered that current entire chain games are basically web-based games, with almost no PC and mobile versions.

On the one hand, this is due to the fact that entire chain games do not require client software. Since entire chain games can have multiple front-ends, the most important thing for the project is to quickly develop an MVP version for the community and users to play. Compared to PC and mobile development, web development is faster and has lower costs, making it the optimal or even the only choice.
On the other hand, entire chain games are still in the concept verification stage. The key is how to quickly develop playable games to verify the value of the game.

2. Entire Chain Game Engine

Before understanding the entire chain game engine, let’s first understand the core essence of an engine:

In simple terms, it means standing on the shoulders of giants to see the world. A game engine integrates commonly used game development functionalities into generic code, so that future developers do not have to reinvent the wheel when creating games.

For example, in traditional game engines like Unity and Unreal Engine, game developers can directly use the existing engines to implement the motion laws after a universe explosion or the movement trajectory after collisions between characters. This allows them to focus their energy on developing differentiated game content.

Similarly, the goal of a blockchain-based game engine is also similar. Compared to traditional game engines like Unity and Unreal Engine, which can handle tasks such as graphics rendering, physics simulation, and network communication, blockchain-based game engines focus more on contract and client state synchronization, continuous content updates, and interoperability with other contracts.

Currently, some of the blockchain-based game engines include Mud, Dojo, Argus, Curio, LianGuaiima, etc. Among them, Mud and Dojo are the most popular ones, creating a situation where they dominate the EVM-compatible ecosystem and the Starknet ecosystem. Here, let’s mainly introduce these two game engines.

Mud

Mud is the first blockchain-based game engine officially released by Lattice in November 2022. The Mud team, Lattice, and the blockchain game pioneer Dark Forest both belong to the OxLianGuaiRC team. Being the earliest blockchain-based game engine, Mud currently has the most developers in its ecosystem. In addition to the early Dark Forest, it has also given birth to projects like OPCraft, Sky Strife, Word3, and the recent Imminent Solace, making it the game engine with the most developers at present.

Dojo

Dojo is born in the Starknet ecosystem and was initially developed around MUD in the Cairo language of Starknet. It was officially released in February 2023. From the remarks of Dojo’s core developer tarrence.eth, we can see his enthusiasm for the Cairo language. He believes that compared to the Solidity language, Cairo has greater advantages in proof of recursion, step-by-step proof, and other aspects.

However, from the remarks of another core developer Loaf, we can see that the reason why a MUD-like engine is being developed on Starknet is not because MUD is not good enough, but because Loaf wants to build an ECS system on Starknet and chose to fork MUD for that purpose. Similarly, some other Layer1/Layer2 networks that want to develop their own blockchain game ecosystem, such as Move and Flow, have also started to fork their own engines. Essentially, it is to promote the prosperity of the on-chain ecosystem by choosing the infrastructure of building a blockchain game.

The Dojo ecosystem projects leverage the prominent IP of Loot and have produced many remarkable projects. One example is Loot Survivor mentioned earlier, and there are also projects like Loot Realms: Eternum that are part of the Loot ecosystem. In addition, there are other projects such as Dope Wars and Influence that have performed well.

Just as traditional game engines have played an important role in promoting the development of the gaming industry, the rise of blockchain-based games and the emergence of blockchain game engines are closely related. They allow developers to create game works with lower costs. The appearance of Mud and Dojo has driven the development of the entire blockchain game landscape, with events like ETHGlobal Hackathon, Pragma Cario 1.0 Hackathon, and Lambda zkWeek Hackathon in May, June, and July this year, continuously nurturing the development of blockchain games.

3. Full Chain Game Chain

In the field of dedicated game chains, compared to the previously popular game chains in Web 2.5 games (not listed one by one), current full chain game projects prefer to build on some general Layer2 solutions such as Arbitrum Nova, Optimism, Starknet, etc.

The main reason is that the user profiles of these previous game-specific chains are players who love to play Web 2.5 chain games and AAA games. Such players are not very interested in the relatively simple and rough content of full chain games. Therefore, these so-called game-specific chains do not have much attraction for full chain games.

In addition, it is worth noting that CaptainZ mentioned a contradiction in the current integration of games on the blockchain: the contradiction between blockchain’s push-based approach and game’s loop-based approach.

Many blockchains are event-driven and passively trigger updates. Only when new transactions or operations occur, the state will be updated. In existing application layers, many applications align well with this framework. For example, in the DeFi space, when a user wants to trade two tokens on Uniswap, the trade is executed after the transaction is submitted, and this process is event-driven. Similarly, many social media platforms are event-driven. For example, when you tweet on Twitter, the tweet is published and visible to others, similar to event-driven behavior in blockchain.

However, many traditional game architectures are loop-based (except for some turn-based and asynchronous games like chess), where the game system actively handles user input, updates game state, and renders game worlds in each loop called a Game Loop or Tick. Many games require dozens or even hundreds of Ticks per second to ensure continuous gameplay.

This creates a natural contradiction between game logic and current blockchain logic. Faced with this situation, some teams have started building dedicated chains for full chain games, also known as Ticking chains.

For example, the Argus team is building a new Layer2 based on Polaris (an EVM module compatible with the Cosmos SDK) that has a pre-compiled ticking function, called World Engine. Curio is also building a new Layer2 based on OPStack that has a pre-compiled ticking function.

Although these are still in the development stage, I am looking forward to the emergence of new roll-up constructions for full chain games, which I believe will further drive the development of full chain games.

4. Full Chain Game Aggregator/Publishing Platform

Lastly, let’s introduce the emerging full chain game aggregators/publishing platforms. Currently, due to the very early stage of full chain games, there are very few playable full chain games available on the market. According to data from Composable Hub, the number of playable games, including alpha, beta, and fully launched games, does not exceed 30.

Therefore, for players of full chain games, finding them is mostly reliant on word-of-mouth and the spread within small communities. There are not many aggregators available to help users explore and choose games, like in mature sectors such as DeFi and GameFi.

Currently, there are two main platforms specializing in the aggregation of full-chain games, Composable Hub and Cartridge.

Composable Hub

Composable Hub is a aggregation platform focused on full-chain games under Composablelabs. Composablelabs also has a Web2.5 Gamefi aggregation platform called Klick and an NFT DEX called Lino Swap.

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

In-depth Research Report on Full-Chain Games: Bubble or Revolution?

(Source: Composable Hub)

Cartridge

Cartridge is a full-chain game aggregator within the Starkware ecosystem, aiming to create a Web3 Steam. Currently, it aggregates 5 games from the Starknet ecosystem: Dope Wars-Roll Your Own, Influence, Loot survivor, Briq, and Frens Land.

In addition, the Cartridge team has been promoting the development of the Dope Wars-Roll Your Own game and is also the core contributing team to the Dojo engine.

In-depth Research Report on Full-Chain Games: Bubble or Revolution?

(Source: Cartridge)

IV. Core advantages of full-chain games

In general, full-chain games make games fairer by putting the logic, state, data storage, and assets of the game on the blockchain. Moreover, as the game contracts and accessible game clients are both open-source, it provides a broad autonomous space for third-party developers, allowing the game to have more community and third-party developed rules and gameplay.

This openness transforms the traditional binary relationship between game companies as providers and players as consumers into a new model where every player can become a builder and creator of the game.

1. From PGC to UGC, giving everyone the power to become a god

In traditional games, all game content is provided by the official company. Whether you play games like “King of Glory,” “Genshin Impact,” “Fortnite,” or “Overwatch,” you are participating in the PGC (Professional Generated Content) model as a player. Of course, we also have the right to create content and engage in some secondary creations, such as character role-playing or novel writing, to achieve a certain 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 of game rules, not creators. We have no control over strengthening or weakening game characters, or the collision of game values and environments. We are still limited by the specifications of PGR (Professional Generated Rules). For players who crave creation, this is to some extent a shackle. In the real world, humans who are dissatisfied always desire the right to become gods, yearn for UGR (User Generated Rules), whether it’s through novels, movies, or games.

Most traditional games, due to considerations such as business models, security, and stability, are reluctant to make open attempts. However, in many games, we can see that some projects are beginning to transition towards openness and PGR, using modding to allow other developers to create official content outside the game. The most well-known 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 that is different from the original game, including Minecraft version of “battle royale” and even online graduation ceremonies during the pandemic.

Although Minecraft allows users to create multiple game modes through the creation of different servers, these new servers are separate and not interconnected. These different servers compete for the attention and time of players. The data accumulated by players in one gameplay cannot circulate in the servers of a different gameplay. This UGR is castrated, it is their own little universe, not a shared universe for everyone.

The creation of new gameplay in Minecraft requires building new servers. The difference in a full-chain game is that it shares the same backend, while different modding and smart contract interactions only affect the frontend, allowing data to be shared and circulated among different clients.

Full-chain Game In-Depth Report: Is it a bubble or a revolution, with native encryption at its core?

Due to its characteristics of game logic and rules on the chain, as well as support for permissionless interoperability, a full-chain game allows players to freely build and create various game functions and experiences. Furthermore, these are not isolated from each other. The immense potential for creative freedom greatly enriches the content and functionality of games, such as trading markets, embedded games, custom clients, etc., making the gaming experience more diverse and achieving the transition from PGR to UGR.

This also reminds me of the virtual world called Jiuzhou created collectively by Chinese online writers Jiangnan, Jin He Zai, Da Jiao, and others more than a decade ago. Through a collective relay approach, they created a Jiuzhou universe, which expanded from literary works to the film, gaming, and other industries, forming a vast world.

In fact, if we compare it to our daily lives, blockchain games are very similar to playing cards. Playing cards themselves only have fixed suits and numbers, but people have developed various gameplay styles, such as Landlords, Texas Hold’em, Tractor, Upgrading, Panic, and Golden Flower, showcasing the diversity and flexibility of game rules. The same goes for blockchain games, where players can build various game experiences on top of the basic rules through support for open-ended creation and interoperability. In traditional games, everyone can only be a consumer, but in blockchain games, people can become the creators of game rules.

To sum up, the advantages of blockchain games lie in their openness and permissiveness, giving players greater creativity and freedom to participate in the creation of game rules and content, thus forming a diverse, personalized, and vibrant game ecosystem.

2. Fairness and transparency, experiencing an unmanipulated gaming environment

Another major advantage of blockchain games is the transparency of game logic and rules once they are all recorded on the blockchain.

This is especially crucial for gambling games, where fairness and transparency are paramount.

Just like in the popular movie “21,” the gambling apps used by players are controlled by centralized companies, and all outcomes may not be random but predetermined. For gambling card games like Texas Hold’em and Golden Flower, the lack of transparency in game processes and states can lead to countless players being cheated. This is also one of the main reasons why many Web 2 money gambling games have been criticized.

The transparency of game logic and rules on the blockchain ensures the openness and transparency of rules. Combined with encryption techniques (such as games like Dark Forest and Imminent Solace, which incorporate ZK-SNARK), it allows game types that require fairness to be experienced on the blockchain, something that is difficult to achieve in Web 2 and Web 2.5 games.

5. Challenges and limitations of blockchain games

With the continuous improvement of infrastructure, the wind of blockchain games has started to blow. However, although blockchain games have some unique selling points, there are still many limitations and challenges to face:

1. Poor user experience

Overall, players of blockchain games generally agree that the current gameplay of blockchain games is generally inferior to Web 2 and Web 2.5 games. On the one hand, most current blockchain games have primitive or rough graphics, and on the other hand, they face the following 4 difficulties in terms of interactive experience:

1) Difficult Start: Hard to match with other players

For multiplayer PvP games, it often requires 4 players to play together. However, due to the current limited number of players in blockchain games and the low number of players online at the same time, it is difficult to find enough players to match with. Without a matching mechanism, many multiplayer games can only be played by creating private rooms and inviting others to play, which easily leads to losing interest in the game at the beginning stages.

2) Halal or Non-Halal: High artificial barriers in some games

In addition to the game experience, many games also set up artificial barriers. For example, some games can only be played at specific times, some games require an entry fee before playing, such as buying certain tokens or NFTs. These barriers increase the cost for players to engage in the game.

Some game developers believe that paying for games is the most legitimate way to support independent game developers. However, in Web2 games, there are at least some innovative gameplay or high-quality content to attract players.

But facing the low playability of most blockchain games, why would users be willing to spend money on a game that they wouldn’t even spare a glance at in Web2? To some extent, it reinforces the stereotype that blockchain games are often self-indulgent. Apart from a few individual projects and believers, how many people are really willing to play? Many players who are willing to play beta versions of games are doing it out of love for the games, and the behavior of these project teams can discourage players.

3) Poor Game Experience: Frequent Bugs

For players, what they need most in blockchain games is faith, followed by patience.

From PC to mobile, the development of games is generally heading towards more convenient ways to play.

However, in blockchain games, it is a common occurrence to encounter bugs when a group of players gather to play. Whether it’s page reloading or sudden error messages, it’s difficult for impatient people to complete a full playthrough of a blockchain game.

4) Loud Thunder, Little Rain: Grand narrative, low playability

Currently, most game projects have a grand narrative but low actual playability. Many games are harder to play than web games from over a decade ago. With the improvement of infrastructure and more developers joining, it is hoped that the playability of blockchain games can gradually catch up to that of Web2 games.

2. Limitations in Game Genres

Due to the current performance limitations and incomplete infrastructure of blockchain, not all game genres are suitable for blockchain games.

From the current types of blockchain games, it can be seen that the majority are SLG (strategy) games. These games do not have high requirements for real-time gameplay. On the other hand, RPG, AVG, ACT, and MOBA games require continuous, real-time updates. If all the data is stored on the blockchain, the current blockchain performance is still unable to support real-time gameplay. Therefore, these types of games are not yet suitable for fully blockchain gaming.

Currently, there are two main directions for the development of blockchain games. One is to take the “small and beautiful” route by accumulating users through playable MVP versions of games such as simulation, pet development, and tower defense. The other direction is to create an imaginative ecosystem through grand storytelling and open-world concepts. However, due to the limitations of game types, it is mainly restricted to the aforementioned game types. How to create a game that breaks through like the next Axie or Stepn requires our collective exploration.

3. Real Demand or Fake Demand

The biggest challenge and controversy in blockchain gaming currently come from whether the demand is real or fake.

Let’s take the two core advantages of blockchain gaming as an example:

1. From PGR (Pay to Gameplay to Revenue) to UGR (Usage to Gameplay to Revenue). On the one hand, many open games in the Web 2.0 era can achieve this, such as Minecraft. On the other hand, there is a question about whether it is necessary for data related to mounts, level 90 characters, and flying wings in RPG games to be circulated to MOBA games or other types of games.

2. Fairness and transparency. Currently, this aspect is mainly reflected in gambling games. However, on the one hand, the number of online gamblers is much smaller than the number of offline gamblers (in 2023, the number of people participating in online gambling is 120 million, while the number of people participating in gambling worldwide is approximately 4.2 billion per year). Therefore, the ceiling is not high. On the other hand, for true gambling enthusiasts, their main concern is the convenience of depositing and withdrawing funds. Compared to fairness, gamblers care more about the speed of fund and chip exchanges and whether the process is convenient. This is a significant disadvantage for Web3 games due to the significant differences in infrastructure between blockchain games and traditional games.

Based on the two main characteristics of blockchain gaming, UGR and fairness, if there are some categories of games in the future that can make good use of these two characteristics, it may be possible to meet the true demands of gamers and attract more people to participate. However, currently, the road ahead is still long and challenging.

4. Completely Decentralized Games Are Not Necessarily Fun, but May Cause Chaos

Like the two sides of a coin, the other side of openness is chaos. Due to human nature, laziness is prevalent, and for players who only want to consume without creating, the most crucial aspect is the gameplay experience, as they are accustomed to the traditional PGR model of games.

It is difficult for the true game designers to hand over the content of the game to others. Because each user has different abilities, ordinary gamers may design games from their own perspective, making it difficult to grasp the playability and balance of the game.

Whether professional matters should be left to professional game developers or rights should be given to everyone is a very important real-life issue worth exploring. How to achieve a balance between democracy and elitism is a challenge.

Therefore, for the development team of a blockchain game, it is crucial to have interesting and stable core gameplay while leaving space for players to create and extend new gameplay. Achieving balance is important. Otherwise, the game may become too centralized or too hollow to attract players to participate in the creation of new gameplay.

For the team of a blockchain game, it is important to play the role of this “initial God”, design the core gameplay of the game, and attract more players to create and enrich this game world through reasonable incentives.

Six. Further thoughts on the business model of blockchain games

Lastly, let’s discuss together the business model of blockchain games, which is a topic that both project parties and investors are very concerned about.

First, let’s analyze the business model of traditional games. The evolution of the business model of traditional electronic games has gone through several stages, constantly changing with the development of technology, market changes, and player needs:

1970s: Coin-operated mechanism

The earliest electronic games for consumers can be traced back to arcade games in the 1970s and 1980s. During this period, due to the hardware requirements of running electronic games, each game was placed in a separate physical device, including Pac-Man, Galaga, etc., and players inserted coins in exchange for game time or lives.

1980s: One-time purchase

Early electronic games were mainly console games, sold through retail channels, and players bought physical game cartridges or CDs. This was an era dominated by product sales, where players could play the game after purchasing it once.

Mid-1990s: Subscription renewal mechanism

With the popularity of the Internet, massively multiplayer online games began to rise. Some game companies introduced subscription services, where players needed to pay monthly fees to access game servers. An iconic example is “World of Warcraft”.

Mid-2000s: Advertising model + item charges

Free game models appeared, where the games themselves were provided for free, but players could obtain additional items by purchasing virtual items or in-game currency. At the same time, some games adopted an advertising model, earning revenue by displaying ads in the game.

Early 2010s: Prop Fee Model

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

2020s: Cloud Gaming Subscription Model

Recently, cloud gaming has also entered people’s field of vision. Players can stream games through cloud servers without the need to download or install them. At the same time, some game subscription services such as Xbox Game Pass, PlayStation Now, etc., have also started to rise, allowing players to access a series of games through subscription services.

These changes in business models reflect the continuous adaptation and innovation of the electronic gaming industry to technology, market, and player demands. Similarly, the evolution of business models has also influenced game design, development, and player experience to some extent.

With the emergence of Gamefi, from Axie to Stepn, the main types of business models include:

In-game economy system: Most GameFi games have their own economic systems, using tokens, NFTs, and in-game assets as value mediators. Players can acquire virtual assets through in-game activities, which have value within the game and can be exchanged for real-world currencies. For example, a well-known game like Axie Infinity allows players to engage in gameplay by nurturing virtual creatures (Axies), which are NFTs. Players can trade, sell, and earn cryptocurrency rewards within the game.

Play-to-Earn model: Players earn income by participating in games, which can be in-game currencies, tokens, or other rewards with actual value. For example, when players join game guilds like YGG, they can earn profits 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, providing financial services such as loans, liquidity mining, and trading. Players can use DeFi products within the game to earn income or make investments. For example, in Decentraland, players can purchase virtual land and create their own buildings. These lands can be used for investment or trading, and the value of some lands may appreciate in the virtual world.

For early-stage blockchain games, the choice of business model is still under exploration for project developers. However, based on the characteristics of blockchain games, the future of blockchain games will undoubtedly prioritize playability rather than being solely focused on DeFi. Simple Ponzi schemes are unlikely to attract experienced users in the long run.

The business model of blockchain games should better integrate with their own characteristics to enhance playability. Based on the type of game, the future business models can be roughly divided into three directions:

For lightweight games like simulation and pet raising games: consider using NFT+Token as a token charging method, Free-to-play but getting stronger requires leveling up.

For open-ended narrative games: if the gameplay is high, consider setting up payment thresholds and related subscription and membership models, similar to indie games; but in cases with generally low gameplay in the early stages, consider adopting a business model similar to lightweight games, to first attract players.

For chess and card games: the business model can refer to the commission method used in traditional/offline models.

However, currently the entire blockchain gaming industry is still in the stage of exploration and value validation, and we look forward to more interesting models emerging and becoming the next mass adoption.

7. Summary

Overall, the gaming industry has been evolving and combining with blockchain for several decades. Humans are not satisfied with just being consumers of PGR games; they also have the desire to become creators of UGR games.

Just like the birth of Dota originated from the custom map community of Warcraft III: The Frozen Throne. This map editor allows players to create their own maps, one of which is Dota. From the earliest creation of Dota by Eul, to Guinsoo taking over the game’s development and adding new heroes, items, and mechanics, to IceFrog introducing a series of updates and improvements, improving the game’s balance and depth, while also adding more heroes, skills, and tactical elements, bringing Dota widespread recognition and success, and ultimately Valve Corporation’s collaboration with IceFrog to release DOTA 2, which achieved tremendous success worldwide.

The map editor developers of Warcraft probably didn’t imagine that Dota, such a globally renowned game, and the frenzy of moba games would follow. On the path of user creation, it often takes time and opportunities to birth new hit products.

The same goes for blockchain gaming. In the current era of exploration, there are still many drawbacks such as poor user experience and low gameplay. If you want to achieve mass adoption, you need to address the challenge of attracting new users. To attract more Web2 players, we cannot avoid the threshold of users entering Web3, which includes registering wallets, learning to buy NFTs and tokens, and so on, all of which have high learning costs and have become a roadblock for all Dapps. Even though the difficulty of entering the game and depositing funds has been simplified through account abstraction and Web3’s built-in exchange, the biggest problem still remains: what needs of game players does blockchain gaming actually solve?

Narrating for the sake of narrating, going on the blockchain for the sake of going on the blockchain, ultimately is like using a hammer to find a nail. How to make good use of the unique characteristics of UGR and fairness in blockchain gaming is a problem that every builder of blockchain games cannot avoid. The unique characteristics of blockchain gaming not only provide fairness (for example, if the recently launched non-blockchain game Fren Pet’s daily roulette function is executed on the blockchain, it will achieve more fairness, to some extent reducing users’ impression of it being a “fund pool”), but also give the game a new journey of transforming from PGR to UGR, allowing every user to have the possibility of becoming a god.

The development of Web3 cannot avoid the effect of wealth creation, and the essence of games cannot avoid playability. How to combine wealth creation and playability still requires further exploration. Looking forward to continuous exploration in the full-chain gaming track, hoping that game projects that really leverage the characteristics of the blockchain and solve real needs can emerge. Also, looking forward to the emergence of new universes on the open sea of the full-chain gaming path.

Lastly, thank you very much to partners such as Mr. Ni, Constance, Joven, Karvin, Yolo, Xiaohu, Amanda, Xiaoran, Norman, Alex, Carl, Justin, Frost, Haiyu, Nico, Golem, Yafon, Robinn, and others for their assistance, as well as everyone who has been willing to share and patiently communicate. Sincerely hope that builders in this track will continue to improve!

Author: Fred