Introduction: What is On-Chain Gaming?#
Recently, the Pass card for the on-chain game Sky Strife reached 21,000 E (testnet), causing many players from non-on-chain games to marvel at the allure of this sector. Since the release of "Pong" in 1972, the gaming industry has surged forward, evolving from classic 8-bit games like "Super Mario" and "The Legend of Zelda" to today's highly complex, socially interactive online games like "Fortnite" and "League of Legends." Gaming has long ceased to be a mere form of entertainment. The social, competitive, and immersive experiences these games offer 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 titles like "Axie Infinity," which tightly integrates gaming with the crypto economy, to projects like "Stepn," which focus on social interaction and innovation, blockchain gaming is gradually being seen as a beacon of hope for Crypto Mass Adoption. People are increasingly 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 "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 players to own their assets. On one hand, players can have ownership of their assets; on the other hand, it enhances asset liquidity. However, when a game shuts down, the game assets still face the dilemma of losing their circulating value. The relationship between asset-on-chain games and traditional games is more of a supplement than a replacement, 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 highly discussed on-chain games have moved all game interactions and states on-chain, including the aforementioned 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 just an auxiliary storage for data but the true source of game data; it is not limited to merely recording asset ownership but serves as the storage center for all critical 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 vast 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. - The game is independent of the client.
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 still 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 Gaming?#
Before understanding why on-chain gaming is needed, let's briefly look at the current state and operational model of the traditional gaming industry.
On-chain gaming is essentially still gaming, and understanding the operational model of traditional games is crucial for analyzing the future of on-chain gaming.
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 depth and variety worth exploring, making it the crown jewel of the leisure industry.
1) Why Do Humans Love Playing Games?
Data from Statista shows that the number of gamers worldwide has exceeded 2.5 billion, approaching 3 billion. So how can games attract over a third of the global population? The core reasons can be summarized as meeting 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 break free from real-world troubles and immerse themselves in a virtual world, enjoying a second life. - Burden-Free Socializing:
For multiplayer online games, games provide 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 Immediate Feedback and Rewards:
Unlike the struggles of students and workers in real life, games are captivating because they offer rich reward systems and timely reward mechanisms. After putting in effort, leveling up, or completing challenges, players quickly receive new skills, unlock new levels, or obtain new items, which can motivate people to keep moving forward. - Low-Cost Freedom to Explore:
Many games offer rich virtual worlds for players to explore unknown territories, interact with NPCs and other players, and drive the story forward, satisfying humanity's innate desire for adventure and exploration. In the real world, however, due to constraints of money, energy, time, and geography, exploration is significantly more costly than in the gaming world. - 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 in games.
By cleverly addressing certain human weaknesses, games can meet the diverse needs and preferences of different users, effectively playing a positive role in both broad coverage and providing deep immersive experiences.
2) Current Status and Development of Traditional Games
Next, let's briefly understand the current state of the traditional gaming industry.
Traditional games can be roughly categorized into Shooter, Adventure, Role Playing, Battle Royale, Strategy, Sports, Puzzle, Action, and Simulation genres.
According to data from Newzoo, role-playing and adventure games perform excellently across PC, mobile, and console platforms, both ranking in the top five. Additionally, shooter and battle royale games are very popular on PC and consoles. The mobile platform is slightly different, with puzzle and idle games also favored by users.
Dilemmas Facing the Traditional Gaming Industry#
However, traditional gaming currently faces two major dilemmas: first, game publishing is restricted by licensing, and second, the high costs before game release lead to slow recovery periods and potential sunk costs.
1) Game Publishing Restricted by Licensing
Game licenses refer to the specific permits required in some countries or regions to publish games. This system aims to regulate game content, ensuring that games comply with national or regional laws, culture, and values to protect minors from inappropriate content and maintain 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. China implements a strict game licensing system overseen by the National Radio and Television Administration. Games must obtain a license before they can be published in the Chinese market.
After the release of 87 licenses on July 22, 2021, there was a long period of stagnation until a gradual turnaround began in April 2022. In April 2022, 45 licenses were released, followed by another batch in September and December. However, during the 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 licenses, countless projects without funding faced the sighs of impending closure.
2) High Pre-Release Costs Leading to Many Sunk Costs
In the development model of Web2 games, developers must bear upfront human resource and infrastructure costs during the game development phase, with idle time costs during the waiting for licensing phase. Only after the license is issued, the game is published, and commercial revenue is generated can profit-sharing begin.
It is evident that a large portion of costs is incurred in the upfront phase. If issues arise during the development, licensing, or user acquisition phases, all previous costs become sunk costs. For a medium-sized game, costs generally amount to several million dollars. The long development and release cycles lead to a very lengthy profit cycle, increasing the risk of not achieving expected returns.
Attempts to Break the Deadlock with Web2.5 Games#
In response to these two dilemmas, Web2.5 games have taken the lead in breaking the deadlock. 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 production.
In the attempts to break the deadlock with Web2.5 games, standout titles like "Axie" and "Stepn" have emerged. The popularity of "Axie" in Southeast Asia has led many to earn a living through it, with incomes surpassing the average working income in the Philippines. The "move to earn" model of "Stepn" has attracted many non-Web3 users, prompting questions like, "How do you play with those running shoes? I want to try running too." This has sparked a wave of interest in breaking into the blockchain gaming space. However, as the Ponzi economic model collapsed, Web2.5 games have not been able to ignite the same spark as "Axie" and "Stepn."
Builders have begun exploring different directions. Some have ventured into AAA titles, attempting to capture a share of the Web2 user base, 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 validation through on-chain gaming. In this emerging Web3 industry, there are always those who wish to be pioneers, forging 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. The industrial map of on-chain gaming can be roughly divided into four categories: on-chain game projects, on-chain game engines, on-chain game 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 projects that can be experienced are still in the testing phase, with the number of playable on-chain games in the market 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 drawn 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 a journey 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" are: two of which were mentioned when introducing on-chain games. First, all game logic, data, and states are on-chain, preventing centralized individuals from singularly controlling the outcomes of their actions. Second, it features a free and open high-combinability 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 community ecology.
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 an artifact trading market and GPU rendering tools, among other plugins, creating a very interesting UGC ecology.
(Source: MarrowDAO Official Twitter)
Additionally, a significant highlight of "Dark Forest" is its use of zk-SNARKS technology for information concealment. In strategy games, if all information is transparent, opponents would know your position, making it impossible to implement strategic countermeasures under full transparency. "Dark Forest" utilizes 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 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.
(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 of the intersection between 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. It has allowed industry builders to realize that based on on-chain gaming, there are so many freely open combinatorial gameplay and a flourishing secondary creation ecology that can emerge, strengthening confidence in the possibility of achieving "Autonomous Worlds."
After creating "Dark Forest," the team, along with several others, formed 0xPARC. One of the sub-projects of 0xPARC, Lattice, discovered that existing development costs were extremely high while developing on-chain games. Thus, in 2022, they initiated the MUD project, aiming to create a user-friendly on-chain game engine around the ECS framework to solve issues such as contract and client state synchronization, continuous content updates, and interoperability with other contracts, thereby lowering the development threshold and significantly promoting the development of on-chain gaming. In a sense, "Dark Forest" is a huge symbol and development booster for the on-chain gaming industry.
Loot Survivor#
Next, let's 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 white text on a black background, with the interpretation of this text being very freely open. Its characteristic of being co-created and autonomously grown by the community has attracted a large number of ecological contributors and related derivative projects.
(Source: OpenSea)
Among them, Loot Realms has been dedicated to the development of Lootverse since its launch on September 1, 2021. Core contributors @lordOfAFew and @TimshelXYZ have played important roles in this project, constructing the underlying narrative of Loot and presenting a gamified narrative through the first project of Realms, Eternum.
The team proposed the core concept of "Play 2 Die" as an expansion of the Realms series back in February 2022, initially planning to create a project named "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 made its debut 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 of the game is relatively simple, involving monster fighting through text interactions until death, and it hopes to encourage users to continuously challenge themselves through a leaderboard.
(Source: Fred's game screenshots and performance rankings on 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 war fog, developed on 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, with gameplay similar to "Dark Forest," but with higher ease of use and user experience.
The ultimate goal of the project is to create a war simulation game similar to EVE, where players will incur real losses in resources and assets during gameplay, facing strategic challenges.
"Imminent Solace" is one of the more playable on-chain games recently released, with good game interaction and experience.
(Source: Fred's game screenshots and rankings on Imminent Solace)
In addition, there are other games exploring the on-chain gaming path, such as Sky Strife developed by Lattice, the text game Word3 by SmallBrain, the Web3 version of Werewolf Framed, and battle royale-type Loot Royale, as well as nurturing and management-type Genki Cats. Most of these are still in the testing phase, and currently, the number of playable games remains limited.
Research shows that most 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, the most important thing for project teams is to quickly create MVP versions for the community and users to play. Compared to PC and mobile development, web development is faster and cheaper, making it the optimal or even only choice for everyone.
- 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 is about seeing the world from the shoulders of giants. Game engines integrate commonly used functions for game development into general code, so that future creators do not need to reinvent the wheel.
For example, 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 collisions between characters, allowing them to focus their energy on developing distinctive game content.
Similarly, on-chain game engines aim to achieve similar objectives. Compared to traditional game engines like Unity and Unreal Engine, which can handle tasks such as graphical rendering, physical simulation, and network communication, on-chain game engines focus more on issues like 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 the earliest on-chain game engine, Mud currently has the most developers in its ecosystem. In addition to the earliest "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 was born in the Starknet ecosystem, initially developed around MUD using the Cairo language in Starknet, and was officially released in February 2023. Regarding why a Mud-like engine was created on Starknet, the core developer Tarrence.eth expressed his enthusiasm for the Cairo language, believing it has greater advantages in proof recursion and incremental proofs compared to Solidity.
However, from the perspective of another core developer, Loaf, the reason for creating a Mud-like engine on Starknet is not that Mud is insufficiently good, but because Loaf wants to build an ECS system on Starknet, thus choosing to fork MUD. Similarly, some other Layer1/Layer2 projects aiming to develop their own on-chain gaming ecosystems, like Move and Flow, have also begun forking their engines. Essentially, this is to promote the prosperity of the on-chain ecosystem by choosing to build foundational infrastructure for on-chain gaming.
The Dojo ecosystem projects, backed by the Loot ecosystem's large IP, have also seen many excellent projects emerge, including "Loot Survivor" mentioned earlier, as well as "Loot Realms: Eternum." Additionally, other projects like "Dope Wars" and "Influence" have also performed well.
Just as traditional game engines play a crucial role in promoting the development of the gaming industry, the rise of on-chain gaming is closely related to the emergence of on-chain game engines, enabling developers to create game works with lower investment costs. The emergence of Mud and Dojo has propelled the entire on-chain gaming track's development. In May, June, and July of this year, events like the ETH AW Hackathon, Pragma Cairo 1.0 Hackathon, and Lambda zkWeek Hackathon have continuously nurtured the development of on-chain gaming.
On-Chain Game Chains#
In the realm of dedicated game chains, compared to the previously popular dedicated game chains in Web2.5 games (not listed one by one), current on-chain game project teams prefer to build on general Layer2 solutions like Arbitrum Nova, Optimism, and Starknet.
The fundamental reason is that the user profile of those who previously transitioned games to chains are players who enjoy Web2.5 chain games and AAA titles. Such players are generally not very interested in the relatively simple and crude content of on-chain games, leading to these so-called dedicated game chains lacking appeal for on-chain gaming.
Additionally, it is worth noting that CaptainZ has 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 to update states, only triggering updates when new transactions or operations occur. In existing application layers, many sectors align well 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, which is also similar to the event-driven nature of blockchains.
However, many traditional games are based on loops (aside from some turn-based and asynchronous games). Game systems actively process user inputs, update game states, and render the game world, with each loop referred to as a Game Loop or Tick. Many games need to run dozens or even hundreds of ticks per second to ensure continuous gameplay.
This creates a natural conflict between the logic of games and the current blockchain logic. In response to this situation, some teams have begun building dedicated chains for on-chain gaming, 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 has precompiled ticking functions.
Although these are still in development, there is great anticipation for a new roll-up constructed chain specifically for on-chain gaming, which is believed to further propel the development of on-chain gaming.
On-Chain Game Aggregators/Distribution Platforms#
Finally, I would like to introduce the on-chain game aggregators/distribution platforms that are still in their infancy. Currently, since on-chain gaming is still in a very early stage, the number of playable on-chain games is extremely limited. According to data from Composable Hub, including alpha, beta, and fully launched games, the number of playable games does not exceed 30.
Thus, for players of on-chain games, 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 aggregating on-chain games: 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 for Web2.5 called Klick and an NFT DEX called Lino Swap. Currently, Composable Hub aggregates 56 on-chain games, with 14 fully launched, 12 in testing, 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 the Dope Wars-Roll Your Own game and is also a core contributing team for the Dojo engine.
(Source: Cartridge)
Core Advantages of On-Chain Gaming#
Overall, on-chain gaming enhances fairness by putting all game logic, states, data storage, and assets on-chain. At the same time, because game contracts and accessible game clients adopt an open-source model, they provide vast autonomy for third-party developers, allowing for more community and third-party developed rules and gameplay.
This openness transforms the traditional dichotomy 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, Empowering Everyone with the Right to Be God#
In traditional games, all game content is provided by the official company. Whether playing "Honor of Kings," "Genshin Impact," or "Fortnite," 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 the game, such as character roles or novels, achieving a certain degree of UGC (User Generated Content).
However, this creation does not involve the core of rules and gameplay; we can only be consumers of game rules rather than creators. We are powerless regarding the strengthening and weakening of game characters, the collision of game values, and the environment, remaining within the confines of PGR (Professional Generated Rules). For players eager to create, this is somewhat of a shackle. Humans, who often feel disappointed in the real world, long to possess the right to be God, yearning for UGR (User Generated Rules), whether through novels, films, or games.
Most traditional games, due to considerations of business models, safety, and stability, are reluctant to make open attempts. However, we can find that some projects among many games are beginning to transition towards openness and PGR, using mods to allow other developers to create game content outside of the official offerings. The most well-known example 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" creates new gameplay by allowing users to establish multiple servers, these new servers are isolated and unconnected. These different servers compete for players' attention and time. The data accumulated by players in one gameplay cannot circulate in the servers of new gameplay; this UGR is castrated, representing one's small universe rather than a shared universe.
The creation of new gameplay in "Minecraft" requires building new servers, while the difference with on-chain gaming lies in sharing the same backend. Different mods and smart contracts interact only to affect the frontend, allowing data to be shared and circulated across different clients.
Due to the characteristics of on-chain gaming, where game logic and rules are on-chain and support 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 reminds me of the virtual world "Nine Provinces," collectively created by Chinese online writers like Jiangnan, Jin He Zai, and Da Jiao over a decade ago, which was formed through a collective relay method, creating a universe of "Nine Provinces" that spans literature, film, and gaming industries, forming a vast world.
In fact, comparing it to our lives, on-chain gaming is similar to playing cards. Playing cards have fixed suits and numbers, but people have developed various gameplay styles, creating games like Dou Di Zhu, Texas Hold'em, Tractor, Upgrading, and others, showcasing the diversity and flexibility of game rules. On-chain gaming is similar; by supporting open creation and interoperability, players can build various gaming experiences on the foundational rules. In traditional games, everyone can only be consumers, but in on-chain gaming, people can become rule-makers.
In summary, the advantages of on-chain gaming lie in its openness and permissiveness, granting players greater creativity and freedom, allowing them to participate in the creation of game rules and content, thus forming a diverse, personalized, and vibrant gaming ecosystem.
Fairness and Transparency: An Uncontrolled Gaming Environment#
Another major advantage of on-chain gaming is the transparency of game logic and rules once they are all on-chain.
This is especially crucial for games involving gambling and competition, where fairness and transparency are key.
Just like in the popular movie "All In," the gambling apps used by players are controlled by centralized companies, where all outcomes may not be random but predetermined. In card games like poker and Dou Di Zhu, the lack of transparency in game processes and states can lead to countless players being taken advantage of, which is one of the reasons many Web2 gambling games are criticized.
The transparency of game logic and rules in on-chain gaming can ensure the public and transparent nature of rules. Combined with some cryptographic technologies (for example, the war fog games "Dark Forest" and "Imminent Solace" utilize ZK-SNARK), types of games that have a strong demand for fairness can achieve experiences that are difficult for Web2 and Web2.5 games to realize.
Challenges and Limitations of On-Chain Gaming#
As infrastructure continues to improve, the wind of on-chain gaming is beginning to blow. However, despite some unique highlights, on-chain gaming still faces 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 terms of interaction experience:
1) Difficult Start: Hard to Match with Other Players
For multiplayer PVP games, often four people are needed to play together. However, due to the generally low number of players in on-chain games, the number of concurrent players 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 Human-Made Thresholds
In addition to game experience, many games also 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 the cost for players.
Some game developers maintain the spirit of independent game developers, believing that paying for games is the truest belief. However, Web2 independent games at least offer some innovative gameplay or high-quality content to attract players.
Faced with the current low playability of most on-chain games, why would users be willing to spend money on a game they wouldn't even glance at in Web2? To some extent, this reinforces the stereotype that some players and outsiders often see on-chain gaming as self-indulgent. Aside from a few individual project teams and believers, how many people are genuinely willing to play? Many players willing to play beta versions of games do so out of passion, and such behaviors from project teams can be discouraging for players.
3) Poor Game Experience: Frequent Bugs
For players, the most crucial need in on-chain gaming is faith, followed by patience.
From PC to mobile, the overall development of games is moving towards more convenient methods. However, in on-chain gaming, a common scenario is that several players agree to play an on-chain game, only to find that they frequently encounter bugs, whether it's page refresh issues or various unexpected error messages. It can be challenging for those without patience to complete the entire experience of an on-chain game.
4) Big Promises, Low Playability: Grand Narratives, Low Engagement
Currently, most game projects have grand narratives but low actual playability. Many games are less enjoyable 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 require 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.
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 an imaginative ecology through expansive worldviews and cosmic narratives. However, due to limitations in game types, this is largely confined to the aforementioned genres. How to create the next breakout game like "Axie" or "Stepn" still requires our collective exploration.
Genuine Demand or Pseudo-Demand#
The biggest challenge and controversy facing on-chain gaming currently stems from whether the demand is genuine.
Taking the two core advantages of on-chain gaming as examples:
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The transition from PGR to UGR can be achieved by many open Web2 games, such as "Minecraft." On the other hand, the necessity of data circulation across different game clients needs to be questioned. For instance, whether mounts, level 90, and flying wings from an RPG client need to circulate into a MOBA game remains to be explored.
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Fairness and transparency are 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 factor is the convenience of depositing and withdrawing funds. Compared to fairness, gamblers 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 gaming, this is a major weakness of Web3 games.
Surrounding the two main characteristics of on-chain gaming, UGR and fairness, if some categories can effectively leverage these two characteristics 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 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 abilities vary, and ordinary players may design games from their perspectives, making it difficult to maintain 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. How to achieve a balance between democracy and elitism is a challenge.
Therefore, for on-chain game development teams, 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 player participation in new gameplay creation.
For on-chain game teams, it is essential to play the role of "initial God," designing the core gameplay well and using reasonable incentive mechanisms to attract more players to co-create and enrich this game world.
Thoughts on the Commercial Models of On-Chain Gaming#
Finally, let's discuss the commercial models of on-chain gaming, a topic of great concern for both project teams and investors.
First, let's analyze the commercial models of traditional games. The evolution of commercial models in traditional video games has gone through multiple stages, continuously changing with technological advancements, market changes, and evolving player demands:
- 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 "Pac-Man," "Galaga," etc., where players inserted coins to exchange for 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 + In-Game Purchases
The free-to-play model emerged, where the game itself was provided for free, but players could purchase virtual items or in-game currency to obtain additional items. Some games also adopted an advertising model, generating revenue by displaying ads within the game. - Early 2010s: In-Game Purchase Model
With the rise 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 downloading or installing them. Additionally, some game subscription services like Xbox Game Pass and PlayStation Now have begun to emerge, allowing players to access a series of games through subscription services.
These changes in commercial models reflect the video game industry's continuous adaptation and innovation in response to technology, market, and player demands. Similarly, the evolution of commercial models has also influenced game design, development, and player experience to some extent.
With the advent of GameFi, from "Axie" to "Stepn," the primary commercial 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, "Axie Infinity," a well-known game, allows players to raise virtual creatures (Axies) to play the game. 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," receiving 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 games 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 land values appreciating in the virtual world.
For on-chain games, which are still in a very early stage, the choice of commercial model remains exploratory for project teams. However, based on the characteristics of on-chain gaming, its future will certainly emphasize playability rather than DeFi aspects. Pure Ponzi schemes are unlikely to attract seasoned users.
The commercial model of on-chain games should better combine their unique characteristics to enhance playability. Future commercial 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 fee model, free-to-play but requiring payment to strengthen.
- For open-world games with grand narratives: 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 commercial model similar to lightweight games to attract users to play.
- For card games: The commercial model can refer to the commission-based methods seen in traditional/physical models.
However, the entire on-chain gaming sector is still in the exploration and value validation phase, and we look forward to more interesting models emerging that can lead to 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 consumers of PGR games; there is a growing desire to become creators of UGR.
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 earliest creation by Eul to the development taken over by Guinsoo, who added new heroes, items, and mechanics, and then to IceFrog, who introduced a series of updates and improvements, enhancing 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 massive success globally.
The developers of the Warcraft map editor may not have anticipated the emergence of a globally renowned game like Dota and the fervent popularity of MOBA games. The path of user creation often requires time and opportunity to give birth to new blockbuster products.
On-chain gaming is similar; in this pioneering era, it still faces numerous shortcomings, such as poor user experience and low playability. To achieve mass adoption, it must confront the challenge of attracting new users. To draw more Web2 players in, the barriers to entering Web3—registering wallets, learning to purchase NFTs, buying tokens, and so on—pose significant learning costs, becoming roadblocks for all DApps. Even with account abstraction and built-in exchanges in Web3 projects simplifying the difficulty of entering games and depositing funds, the biggest question remains: what genuine needs do on-chain games address for players?
Creating narratives for the sake of narratives and putting things on-chain for the sake of being on-chain ultimately amounts to searching for nails with a hammer. How to effectively leverage the characteristics of UGR and fairness in on-chain gaming is a question that every builder in the on-chain gaming space cannot escape. The unique features of on-chain gaming not only provide fairness (for example, the recently launched non-on-chain game "Fren Pet," where the daily spin function could gain more fairness if executed on-chain, somewhat reducing users' impressions of it as a "money game") but also embark on a new journey of transforming from PGR to UGR, allowing every user the potential to become a God.
The development of Web3 cannot be separated from the wealth creation effect, while the essence of gaming cannot overlook playability. How to combine the wealth creation effect with playability still requires long-term exploration. We look forward to continuous exploration in the on-chain gaming space, leading to the emergence of game projects that truly leverage the characteristics of on-chain gaming to address genuine needs. We also eagerly anticipate the growth of new universes in the open ocean of on-chain gaming.
Finally, 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 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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