Exploring Crypto Gaming

Many years have passed since Vitalik Buterin started Ethereum after crying himself to sleep over lost items in World of Warcraft. What started as an attempt to create an ecosystem where centralized games wouldn’t have such powers has turned into a vibrant ecosystem of all sorts of applications. 

What seems to be missing, though, is the games that are so often touted as “Trojan horses” for mass adoption. 

It’s surprising if you think about all the promises of Web3 gaming. Is it game over for that sector or are we just experiencing initial pains before we’ll see a game that makes it beyond the usual suspects consisting of web3 game addicts and airdrop hunters? 

To discuss this, we went live with builders combining blockchain and games. 

You can listen to the conversation here or read on for an overview of the most important points. 

A bit of background on the speakers. 

This time, our guests were joined by Marcel, co-founder of SQD and avid gamer himself. 

“I started my gaming journey with Age of Empires, then WoW. I still play a lot, but I remain skeptical toward web3 games. So far, most of them seem to be about farming.” 

Yuri, CTO of RMRK, now building Skybreach, a game universe, shares that sentiment and mentioned that their game was one of those targeting people who are really into dungeon crawlers and not primarily there for the money. It is about playing a lot and improving, not gambling. 

On the opposite side of the spectrum is Fantasy.top, a social betting game that allows users to leverage their understanding of crypto influencers to win. Mikado, one of their founders, explained that the rise of friend.tech gave them the idea to try combining the betting element with social media. 

State of Web3 Games 

First off, there’s a need to define what one means by web3 games. Yuri highlights that there is a spectrum that ranges from fully onchain games to something that only uses blockchains in menial ways. 

Fully onchain games have the benefit that even if the team decides to shut down, the community can step up and rebuild a client to maintain it. However, such fully onchain games are difficult to monetize and remain fairly rare. Plus, they’re also hard to manage on the data side. 

Marcel related to this, as he once experienced the shutdown of Wildstar, an animal RPG. Even ten years later, he mentioned, people are still trying to reverse-engineer it. Still, he concedes that this might not be a problem we need web3 to solve. 

Instead of ownership of game state and inventory, what he’d be more interested in as a gamer is an ability to curate game identity and bring it to a new game. 

“Games aren’t compatible when it comes to identity. So when I start a new one, there’s no way to prove to others that I’m already a hardcore RPG gamer. That would be interesting if solved.” 

For Mikado, it’s also important to acknowledge the different kinds of games, such as console games, and the growing suite of casual games. People who play Candy Crush might not consider themselves gamers, but they are a potential audience. 

“I see there is a lot of value in mobile consumer apps. Adding a Web3 layer allows us to add speculation, which facilitates trustless payment rails without locking anyone out based on the country they’re in.” 

Did Gaming get the incentives wrong? 

Remember the days when Goldman bankers quit their jobs because they thought they’d make better money playing Axie Infinity? Those were the days of Play-to-Earn. As any sane person could foresee, the scheme eventually collapsed as new joiners dried up. 

But it isn’t just web3 games that have unsustainable business models. Marcel explains that even traditional game studios milk their player base. There’s a whole set of games where the best way to advance is by paying to win. 

If that sounds outrageous, it is how you become president in the US. Jokes aside, the deeper problem in crypto is that most projects finance themselves via token sales, often to VCs. 

This creates a situation where they need to create “exit opportunities” for those investors, ideally by a well-performing token. Of course, this can lead to bad outcomes; there are entire books about how shareholder value maximization is terrible for anyone but the shareholders. 

Mikado adds that this issue isn’t limited to gaming but applies more broadly to an industry so heavily dependent on attention and speculation. He’s hopeful: “Things are changing as people realize we need to stop funding all the infra, and we need to transition to consumer apps. In the end, we need to build things people want, and I’m seeing a mindset shift.”

Yuri echoes that sentiment: “Build something fun without making crazy promises. Gaming is hard to bootstrap, so for most, it’ll be difficult to build a complex game without investment. How to best manage these opposing forces of VCs looking for exits and game studios just wanting to build fun games is an open question.” 

How Fantasy.Top and Skybreach use Web3 

Fantasy.top simply took the crypto twitter influencers, tokenized them, turned them into cards (NFTs) that allow people to play in tournaments. At the beginning of each tournament, players create their decks, and based on the performance of their decks, they win or lose. 

“It requires quite comprehensive knowledge of the KOLs and has become pretty competitive.” 

For the people who don’t want to spend as much time and crypto, there is a light version where players buy a $20 ticket, enter into a pool, make a deck, and then can win up to $2k. 

“It’s sustainable when doing the pool and ever since the speculation on blast has waned, people are playing just because they like it. Of course, it’s pretty niche but we think social influencers are the ultimate celebrities, and we can always expand from that current niche.” 

In the case of Skybreach, much of the game is stored onchain, including the game state every once in a while. While Yuri believes earning is a nice bonus, it shouldn’t be the main focus of their games. Each minigame comes with its own leaderboard, and winners can earn rewards - for now, paid by the team, but there’ll be changes to this eventually toward an entry price system. 

On promising games

The only other game that’s prominently mentioned is evefrontier, built by a team that has mastered the web2 game development - and done its homework in regards to web3 development. 

Apart from that, speakers recommend trying the games that feature guest logins and are openly available. Anything built on Lattice’s L3 might be worth a look, too, since they have sponsored transactions. 

You can also read more about how both games on the space are using SQD for their onchain data needs here: Fantasy.Top & Skybreach.