What Web3 Gaming Needs: Superior Gameplay, Stronger Tokenomics & Improved Liquidity
Blockchain games are often hailed as one of the most exciting Web3 use cases, transforming video game experiences with player ownership of in-game assets, decentralized governance and the prospect of crypto rewards.
Despite its early promise, the blockchain gaming sector has stumbled across a number of roadblocks. The 2021 crypto bull run sparked intense interest in play-to-earn games, with some players reportedly earning hundreds of dollars per month on games such as Axie Infinity, but the initial buzz wore off amid complaints of dull gameplay and weak economic models, which led to the devaluation of in-game assets.
Better Quality Games
However, the potential of blockchain games remains and there has been a renewed push over the last 18 months to get around these early teething problems. In particular, there has been a focus on delivering more exciting, action-packed games comparable to AAA titles in the traditional video games industry. For instance, the Cronos blockchain has positioned itself as an ideal platform for Web3 game developers with its native integration of the Unity and Unreal Engine video game engines, which make it easier to create more realistic gaming worlds with high-quality graphics.
Similarly, the Japanese gaming-focused blockchain project Oasys has forged a partnership with leading video game developers such as Ubisoft, the creator of hit titles such as Ghost Recon and Assassin’s Creed. Oasys has created a dedicated, dual-layer blockchain architecture that consists of an EVM-compatible base layer called The Hub, and a series of Layer-2 networks called The Verse, which host individual games built on Oasys and support rapid, low-cost transactions.
The Oasys architecture is one of the main reasons why Ubisoft has opted to partner with it for its first-ever blockchain-hosted game, called Champions Tactics Grimoria, a tactical role-playing game where users control NFT figurines and engage in player-vs-player battles. While it’s yet to launch, we’ve seen a few sneak peeks, and it has the polished feel that one has come to expect of Ubisoft, with cutting edge graphics and addictive gameplay in the same vein as the popular DOTA series.
Other big name developers to express an interest in blockchain gaming include Epic Games, creator of Fortnite. While it hasn’t yet developed any Web3 titles itself, the Epic Games digital store provides access to quite a few, including one of the most successful blockchain games of all, Gods Unchained.
There is still some resistance to blockchain gaming. For instance, the iconic games developer Sega recently announced it was abandoning its plans to get involved with Web3 gaming. Asked why, a senior Sega executive reportedly said such games are boring and unlikely to interest most gamers.
Improved Tokenomics & Liquidity
Play-to-earn economic models have improved significantly since the collapse in value of Axie Infinity’s Love Potion cryptocurrency that occurred in early 2022, highlighting a major design flaw in its underlying economic model.
The Axie token economy was destined to fail because it was essentially a kind of Ponzi scheme, reliant on new players joining the game to create demand for its cryptocurrency and NFTs. Such a model was, of course, unsustainable, but its failure has encouraged the industry to look at more sustainable models where value is recirculated throughout gaming ecosystems.
Solid tokenomics are one thing, but there’s also a need for greater liquidity in Web3 markets if blockchain games are to succeed. Liquidity is important because it’s what enables gamers to quickly cash out of an asset if they no longer need it. As long as the market is liquid, they’ll be able to sell their digital gaming assets quickly at a fair price.
Low liquidity is bad for blockchain gaming, because it means gamers struggle to convert their in-game assets into cash. It also results in more volatile asset prices, with huge price swings each day. This makes it difficult for players to exit a game when they want to. Although their digital assets might have value, nobody wants to buy it, forcing the gamer to wait or sell at a low price. This lack of liquidity deters players from investing in games.
One of the leading gaming-focused blockchains, Immutable X, is borrowing concepts from DeFi to solve the liquidity challenge. It has created the Immutable Global Orderbook, which allows in-game assets spanning numerous blockchains to be sold on any global marketplace. Already, the Immutable Global Orderbook is connected to more than 15 popular NFT marketplaces, and it claims that more than half of all trades are fulfilled by non-origin marketplaces, indicating that developers who build on its platform have twice as much liquidity at their disposal as those who don’t.
Meanwhile, in Japan, Oasys recently approached the governing Liberal Democratic Party's Digital Society Promotion Headquarters Web3 Project Team with a series of proposals that aim to increase liquidity in Web3 markets. Oasys noted that new regulations from Japan’s Financial Services Agency could make life more difficult for crypto buyers, hampering liquidity. Its proposed solutions, recently outlined in a whitepaper co-authored by Oasys, include an expedited approvals process for financial institutions that want to enter the Web3 space.
Oasys argues that regulations that provide incentives for users to invest in crypto and digital assets will result in an immediate growth in the liquidity available to blockchain games and help Japan reclaim its place as one of the leading video games developers in the world.
A Positive Outlook
The blockchain gaming industry has enormous potential to drive wider adoption of Web3, because it’s targeting a younger demographic that possesses the technical know-how needed to interact with digital assets. It’s important to remember that this is an incredibly nascent industry that only recently started getting any attention three years ago.
The first generation of blockchain games had their flaws, but the concept of in-game asset ownership and rewards for playing still has a lot of appeal. By focusing on player experiences with more exciting graphics and gameplay, and building more grounded tokenomics models with sufficient liquidity, blockchain gaming is now heading in a new direction, creating more enjoyable and rewarding gaming experiences for all.