Why Blockchain Gaming, Not DeFi, Is Crypto’s “Killer App”

The “killer app” can be thought as an application of such great value that it assures the success of the technology that it is associated with. In short, a killer app is what allows its underlying technology to be widely understood for the very first time, opening the floodgates towards mainstream adoption.

As an example, emails are widely considered to be the internet’s first killer app, with the web browser as the second killer app. At the time, these two killer apps were the only reason why the general public would even want to dabble with the internet. The rest, as they say, is history.

Now, cryptocurrency suffers from the same conundrum as the internet in early 1990s: finding that elusive killer app. Just like the internet back then, cryptocurrency draws no parallel to preceding technologies, which only makes it harder for the average person to grasp its foundational concept since they have no relevant reference points to help them understand it.

Explaining Snapchat by referencing Facebook is easy. Explaining cloud storage by referencing local storage is doable as well. But explaining the true disruptive potential of cryptocurrencies is just a different story altogether.

DeFi: Crypto’s Ill-Fated Killer App

Without a doubt, DeFi is our answer to a more open and inclusive financial system. An internet-connected device is all you need — no gatekeepers, no intermediaries, no prejudice whatsoever towards nationality, race, gender, location, you name it. You and only you own your assets: nobody can freeze your assets nor censor your transactions.

While this premise is as clear as day for most of us, others simply can’t wrap their heads around the idea of “money without banks”. Bombarding them with explanations on consensus mechanisms won’t help either, it will just alienate them further from crypto. If even fully-fledged US Senators are not able to comprehend crypto, what are the chances for the average Joe down the street?

Imagine a scenario where a first-time crypto user wants to participate in Aave’s USDC lending pool. First, he needs to create a wallet. Then, he needs to buy ETH from a CEX and withdraw it to this wallet. Afterwards, he needs to buy USDC from a CEX and withdraw it to this same wallet. Once both his ETH and USDC arrive at his wallet, he goes to Aave’s website, selects the ETH network, connects his wallet, and finally deposits his USDC. To withdraw, he must do the above in reverse.

The above might be second nature for most of us, but the sheer number of steps required to make a simple deposit to a lending pool will undoubtedly overwhelm most people that are just starting out. Not to mention the absence of “customer service” or “support” to assist them, and that sending money to the wrong address means that the money will be lost forever — let alone understanding concepts like wrapped tokens, impermanent loss, or MEV (and the nuances that each of them brings to their deposited capital). Definitely not the most beginner-friendly and forgiving learning curve, is it?

Hence, it is perfectly understandable that most people would rather put their life savings in a well-established bank over some form of alien “decentralized internet money”. Hate to burst the bubble, but DeFi in its current form is just not viable enough to become crypto’s killer app.

Blockchain Gaming: Crypto’s True Killer App

Where DeFi lacks is where blockchain gaming excels: having low barriers-of-entry. If done right, the average Joe won’t even know that their in-game skins are actually NFTs, and that their in-game gold stash are actually cryptocurrencies tradable for fiat. This is in contrast to DeFi, in which anyone starting out must assume a certain level of monetary risk beforehand — inevitably deterring most of them before they even started!

Unfortunately, current blockchain games for the most part do not make it any easier in terms of onboarding non crypto-savvy users. Some of them are even worse than DeFi — mandating new players to purchase NFTs, sometimes going for thousands of dollars, just to play their “game”.

Axie Infinity is a good example of this “game”. Taking away its “play-to-earn” allure, Axie Infinity would just be another game on the market with low customer lifetime value — it is just not something that you would spend hours playing for fun.

Contrary to the approaches of current blockchain games, cryptocurrencies and NFTs are supposed to be a complement to an already great game instead of being its main defining feature. Players shouldn’t even realize that cryptocurrencies and NFTs are actually used to represent in-game assets!

As such, what we need right now is a breakthrough blockchain-based MMO game that can stand on its own even if you take away its blockchain component. Imagine a blockchain-complemented PUBG or League of Legends, where its in-game assets like character skins are represented on-chain. Once players are enlightened to the fact that they could “permissionless-ly” trade in-game assets with one another, voila: the purpose of cryptocurrencies and NFTs would immediately hit them like a truck!

The Long Road Ahead

Let’s face it, there is still a long way to go before cryptocurrencies and NFTs can be widely adopted. For better or worse, due to DeFi’s non-custodial nature, it will always carry an unforgiving learning curve for those who are just starting out.

By contrast, blockchain gaming (if done right) could take over where DeFi has failed: becoming crypto’s killer app. With time, blockchain games which do not have the player’s best interests at heart (prioritizing “play-to-earn” over actual playability) will inevitably die out. In its wake, expect first-generation AAA blockbuster blockchain games to emerge: no “play-to-earn” BS, just pure unadulterated fun.

In conclusion, the game itself should and must always be the core product — cryptocurrencies and NFTs are meant only to enrich the gaming experience.

Also published here.