Sept 2023#GameFi

What is Web3 Gaming - A Deep Dive into Decentralized Play

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Authors

Alisa Tkach

Editor

Oleg Kalugin

Senior Manager, Performance

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13 min

Web3 gaming is a new way to play video games using blockchain. It lets you truly own in-game items like cool weapons or rare characters. You can also use the loot and characters in different games that allow it, without being restricted to one game only. And here's the cool part: you can actually earn real money by playing these games, and there are quite a few ways to do so. 

In turn, Web3 gaming also benefits game creators by introducing innovative ways to make money. It encourages players to stay engaged in the game, builds strong player communities, and allows for global reach. Additionally, it offers the potential for recurring revenue and increased security, fostering trust among players. Our team is professionally engaged in just such crypto consulting and develop complex strategies for the promotion of web3 games

And the industry keeps evolving: by 2025, the Web3 gaming market is expected to grow at a CAGR of 61.5% as funds keep watching out for new promising projects. 

So what’s so special about it, and why might entering the space right now be a good idea?

History of Web3 gaming

The inception of Web3 gaming can be traced back to the emergence of blockchain tech, particularly Ethereum, in the early 2010s. One of the pioneering projects was CryptoKitties, introduced in 2017. This blockchain-based game allowed players to acquire, breed, and trade digital cats, each represented as a unique, tradable asset on the Ethereum blockchain. CryptoKitties demonstrated that in-game items could possess tangible real-world value, serving as a catalyst for the broader adoption of blockchain technology in gaming.

 

As the blockchain landscape evolved, more games adopted this technology, paving the way for the expansion of Web3 gaming. Axie Infinity, Decentraland, and Lost Relics emerged, each bringing their own unique features and innovations to the Web3 gaming universe.

How Web3 gaming differs from Web2 gaming

Web3 gaming differs significantly from its predecessor in several key ways.

Firstly, Web3 gaming introduces the concept of "true ownership." In Web2 gaming, the game developer effectively owns all in-game assets, and players have no physical rights to their digital possessions. Conversely, Web3 games employ Non-Fungible Tokens (NFTs) to represent in-game items, ensuring that players have legitimate ownership and control over their virtual assets. This transformation empowers players to buy, sell, and trade their items freely, both within and outside the game's ecosystem.

Secondly, Web3 gaming facilitates interoperability. In Web2 games, in-game items are typically locked to a specific platform, rendering them unusable in other games. In contrast, Web3 games break down these barriers, allowing players to use their assets across multiple games and virtual worlds. This interoperability enhances the overall gaming experience, offering a level of freedom and versatility previously unseen in the gaming industry.

Lastly, Web3 gaming embraces the "play-to-earn" model. In traditional Web2 gaming, game developers primarily profit from players through in-game purchases and advertising. In contrast, Web3 gaming redistributes the wealth, enabling players to monetize their gaming skills and time investments. Gamers can now earn cryptocurrencies and rare NFTs by participating in the game's ecosystem, effectively turning their passion for gaming into a viable source of income.

Types of Web3 games

Web3 games encompass various types and genres, each offering unique features and gameplay experiences. 

Play-to-Earn Games

One of the fastest-growing markets in the cryptocurrency industry is Play-to-Earn crypto games. DappRadar reports that from January to December, daily activity for all crypto games on PC, Android, and iOS climbed by 35%, reaching 718,000 users. Even more, market capitalization increased by 191%, reaching $173.5 million every day at the conclusion of the year.

Examples of Play-to-Earn games include Axie Infinity, where players can earn by breeding, battling, and trading Axie creatures, and games like Gala Games' TownStar, which offers rewards for tasks like city building and resource management.

NFT-Based Collectibles

These games focus on the collection, trading, and ownership of NFTs that represent unique digital assets. CryptoKitties was one of the pioneering games in this category, where players collect and breed digital cats, each with its own rarity and traits. CryptoPunks, God’s Unchained, and Illuvium are some of the NFT games that remain relatively popular. 

Blockchain-Based Virtual Worlds

Web3 gaming has given rise to virtual worlds built on blockchain technology. In these worlds, players can purchase, develop, and monetize virtual land and assets. Examples include Decentraland and The Sandbox, where users create and profit from their creations within a shared metaverse.

Blockchain-Enhanced MMOs

Massively Multiplayer Online (MMO) games have integrated blockchain features to offer true ownership of in-game assets and unique player-driven economies. Games like Lost Relics combine traditional MMO gameplay with blockchain-based asset ownership.

Blockchain Card Games

These games merge traditional card game mechanics with blockchain technology. Titles like Gods Unchained and Splinterlands use NFTs to represent unique cards, allowing players to buy, trade, and use them in strategic card battles.

Blockchain Racing Games

Racing games have also embraced Web3 technology. Projects like Formula 1's F1 Delta Time use blockchain to create and trade rare virtual cars, drivers, and parts.

Blockchain-Based Sports and Collectible Games

Some Web3 games focus on sports and collectibles, enabling players to own and trade virtual sports memorabilia. NBA Top Shot, for instance, lets users buy and trade officially licensed NBA collectible highlights as NFTs.

Blockchain Art and Creativity Games

These games enable players to create and trade digital art and collectibles as NFTs. Projects like CryptoPunks and Art Blocks showcase the intersection of art and blockchain technology.

Blockchain-Based Puzzle and Adventure Games

Puzzle and adventure games have adopted blockchain to provide unique item ownership and trading. Examples include My Crypto Heroes and Chainmonsters.

These are just a few examples of the diverse range of Web3 games available. The Web3 gaming landscape continues to evolve, with new innovations and genres emerging as developers explore the full potential of blockchain technology and decentralized ecosystems in the gaming industry.

The most promising Web3 gaming projects

The Web3 gaming landscape is teeming with innovative projects, each vying to shape the future of gaming. Let’s take a look at some of the most interesting and promising projects of 2023. 

Axie Infinity

Sky Mavis released Axie Infinity in 2018. This NFTs game is the greatest Web3 game since it has a sizable community that will stick by it in the event of controversy. On the Ethereum and Ronin blockchains, the game has a play-to-earn business model.

It is somewhat reminiscent of the Pokemon video games, which feature Axies—creatures that must be trained before engaging in combat. Participants can earn incentives and turn them into actual crypto assets by winning these battles.

How can I profit?

The Smooth Love Potion, or SLP, needs to be put together by the players. Simply logging in daily, participating in daily adventures, and winning wars will earn you the SLP. You can trade these SLPs for cash or any other cryptocurrency of your choice.

The breeding and trade of Axies is another option to make money with Axie Infinity. On the Axie Marketplace, you can exchange Axies of this breed.

The Sandbox

The Sandbox is a Web3 game platform where developers can share and earn money from their voxel assets and gaming creations. It is a decentralized, community-driven gaming ecosystem. This is the appeal of Sandbox: it offers players a blank canvas on which to unleash their creativity and design fun places for other players to visit.

How can I profit?

Players can design unique stuff in the sandbox, which they can later sell as a component of a Web3 game platform.

As more players invest money in the game, driving up its value and allowing you to sell it for a profit, owning LAND has the potential to grow your fortune.

Additionally, Sandbox players will have the choice to lease their LAND to outside parties, including game developers that do not own LAND.

Another option to gain SAND is by participating in tournaments or playing platform games.

Ember Sword

Ember Sword is built on countries and a dystopian moon. The landowners are allowed to participate in alpha testing, and their website is used for land sales. You have the choice of playing the game for free or using the play-pay-earn option. 

The Ethereum blockchain makes it possible to track land ownership and collect NFTs. The in-game currency is Ember, an ERC-20 token that can be bought from within the game. As a result, you can use the token to purchase real estate and collectible in-game NFTs.

CryptoBlades

In order to participate in combat in the Binance Smart Chain (BSC) blockchain-based game CryptoBlades, you must create and outfit characters. It is currently one of the most well-known cryptocurrency game projects, paying participants more than $3 million every day. The decentralized application (d App) CryptoBlades has $99.65 million in monthly transaction volume.

How can I profit?

Rewards for winning battles, the sale of characters, and in-game products (NFT) all provide cash for players. You must have a connected Metamask wallet to participate. Prior to exchanging them for the internal CryptoBlades token, SKILL, the user first purchases BNB coins. You can buy people, weapons, and carry out all other in-game tasks with this cash.

Depending on the player's level, the prize for winning the combat is typically 0.05 SKILL, but it can be more or less. Tokens can be withdrawn, utilized in the game, or exchanged for cash. The 15% withdrawal commission goes down 1% daily. 

Alien Worlds

On the decentralized app market, the cryptocurrency game Alien Worlds has one of the fastest-growing and biggest user bases. Currently, there are over 2.7 million players, and every month, about 745,000 new users sign up for the Metaverse.

The only gaming project that operates simultaneously on three networks—Ethereum, Binance Smart Chain, and WAX—is Alien Worlds gaming. However, WAX, a quick and inexpensive blockchain, handles all settlement transactions and technical procedures. As of September 2021, there were $5.74 million large transactions every week in the game (transactions over $100,000). 

How can I profit?

Users can trade different items offered in the NFT format and mine TLM, the game's internal coin. With a WAX wallet needed, mining can proceed without the player's active involvement. You don't need to consider how to withdraw money in Alien Worlds because the mined tokens appear right away in the user's wallet.

The amount you invest initially determines how much money you can make in Alien Worlds. The player can earn tens to several thousand dollars per month by mining in Alien Worlds. The makers promise to introduce multiplayer fights, friend-team quests, and other possibilities, while the game's full functionality is not yet known.

TLM staking is a different approach for users to make money in the interim. Coins must be defrosted for 48 hours.   

Difficulties of Web3 gaming

Just like cryptocurrency, Web3 gaming faces several challenges on its journey to widespread adoption, and consequently, these challenges are interconnected. Here are the most common problems. 

Scalability

Web3 gaming often encounters scalability challenges because blockchain networks, like Ethereum, have limitations in handling a large number of transactions and users simultaneously. This can result in network congestion, slow transaction processing, and high fees, which impact the gaming experience. 

Developers are working on solutions such as Layer 2 scaling, blockchain upgrades (like Ethereum 2.0), sidechains, hybrid approaches, and cross-chain integration to enhance scalability and ensure smoother gameplay in Web3 games. These efforts aim to provide a seamless gaming experience even with a growing player base.

Adoption Hurdles

The adoption of Web3 gaming necessitates a certain level of technological literacy. Players must become familiar with crypto wallets, NFTs, and blockchain technology. Unfortunately, for many players used to Web2 gaming, the necessity to figure out the basics often acts as a barrier to entry. To drive the adoption of Web3 games, developers and stakeholders should focus on several key strategies.

Firstly, simplifying the onboarding process for new players is crucial. User-friendly guides and tutorials can help newcomers navigate the complexities of setting up wallets, purchasing cryptocurrencies, and diving into Web3 gaming.

Secondly, educating potential players about the advantages of Web3 gaming is vital. Highlighting the benefits, such as true ownership of in-game assets and the opportunity to earn rewards, can demystify blockchain technology and attract more users.

Ensuring cross-platform compatibility is another essential step. Enabling players to access Web3 games on various devices, including smartphones and PCs, expands the potential player base.

Building and nurturing active player communities on social media and forums can foster engagement and word-of-mouth marketing. Collaborating with other Web3 projects, blockchain platforms, and influencers can extend your game's reach and credibility within the Web3 ecosystem.

Regularly updating and improving the game based on player feedback demonstrates commitment to the player community. Ensuring regulatory compliance and effective marketing efforts can further enhance adoption.

Regulatory Uncertainty and Market Saturation

Governments around the world are still grappling with how to regulate blockchain assets and cryptocurrencies in gaming. The lack of clear regulatory frameworks can create uncertainty for both developers and players.

The Web3 gaming space is becoming increasingly crowded, making it challenging for new projects to gain attention and traction. Existing projects with large user bases may dominate the landscape.

The future of Web3 gaming

Web3 gaming is likely to continue growing in popularity as blockchain technology matures, scalability issues are addressed, and more players become familiar with the benefits of true ownership and play-to-earn models.

Here are just a few changes we expect to see in the years to come. 

Blockchain Scalability Solutions

The ongoing development of Layer 2 solutions and alternative blockchain platforms promises to alleviate scalability concerns. These solutions aim to provide faster, more cost-effective transactions, ensuring a smoother gaming experience for players.

User-Friendly Interfaces

The user experience of Web3 gaming is expected to improve significantly, with the development of more user-friendly wallets and interfaces. This will make it easier for players to navigate the complexities of blockchain technology.

Content Expansion

The Web3 gaming ecosystem will likely expand to encompass a broader range of genres and experiences. From traditional game genres to innovative metaverse projects, the possibilities are limitless.

Economic Empowerment

The "play-to-earn" model has the potential to empower gamers economically. As more players realize the financial opportunities offered by Web3 gaming, it could blur the line between work and play, with gaming becoming a legitimate source of income.

Conclusion

Web3 gaming is not just a technological advancement; it's a revolution in the gaming industry. It brings the concept of true ownership to in-game assets, enables interoperability between games, and introduces the play-to-earn model. But what's even more exciting is the impact it has on both players and game creators.

For players, Web3 gaming offers the chance to turn their passion into profit, with opportunities to earn real money while gaming. It breaks down barriers, making gaming more inclusive and versatile than ever before.

On the other side of the spectrum, Web3 gaming is a boon for game creators. It encourages player engagement, fosters strong communities, and opens up global markets. The potential for recurring revenue and enhanced security builds trust among players and investors alike.

As we look ahead, the future of Web3 gaming is incredibly promising. The industry continues to evolve, with new and innovative projects constantly emerging.


 

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