Crypto gaming sucks — But devs can fix it

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What we have today in terms of Web3 gam­ing is not work­ing. Play-to-earn has not worked and nei­ther will play-to-earn or any X‑to/and-earn. On top of that, tra­di­tion­al gamers view non­fun­gi­ble tokens (NFTs) with sus­pi­cion. They dunk on expen­sive apes and are skep­ti­cal of large game pub­lish­ers apply­ing the lip­stick of NFTs for fur­ther monetization.

Nobody knows what a suc­cess­ful Web3 game will look like yet. To get there, we need more devel­op­ers to exper­i­ment with more mod­els. We need infra­struc­ture that will low­er the bar­ri­ers to Web3 game devel­op­ment and make it easy for devel­op­ers to exper­i­ment. That’s why it’s imper­a­tive to invest in devel­op­ing the under­ly­ing infra­struc­ture rather than get­ting car­ried away by the spec­u­la­tive hype.

The Web3 gam­ing infra­struc­ture can be bro­ken into two phases:

  • Pre-release: Infra­struc­ture for pre-game launch
  • Post-release: Infra­struc­ture for post-game launch.

Across both devel­op­ment phas­es, Web3 gam­ing needs tech­ni­cal infra­struc­ture (blockchains, ana­lyt­ics and tool­ings), finan­cial infra­struc­ture (mar­ket­places and launch­pads) and a third cat­e­go­ry that cuts across both types of infra­struc­ture, such as meta­verse plat­forms and guilds.

Navigating the mint in pre-release development

Game devel­op­ers have a wide range of options to choose from when decid­ing where and how to mint the game’s NFTs. Spe­cial­ized gam­ing blockchains such as ImmutableX and Klaytn offer low-to-no gas fees and high throughput.

Many games are also set­ting up their own blockchains to enjoy max­i­mum flex­i­bil­i­ty and scal­a­bil­i­ty. Axie Infin­i­ty launched the Ronin sidechain, and DeFi King­doms has an Avalanche sub­net called DFK Chain. How­ev­er, launch­ing an inde­pen­dent chain is not tech­ni­cal­ly simple.

Emerg­ing play­ers like Saga are try­ing to cap­ture this new demand by offer­ing a sim­pli­fied expe­ri­ence for devel­op­ers seek­ing to launch their own chains.

Unique active wal­lets con­nect­ed to DeFi and Game­Fi appli­ca­tions from Jan­u­ary 2022 through August 2022. Source: DappRadar

In the future, besides build­ing out their own chains, Web3 game devel­op­ers will opt for the eas­i­est expe­ri­ence with full-stack Web2.5 inte­gra­tors that sim­ply offer SDK and API toolk­its. Forte, Star­dust and Par­ti­cle Net­work are exam­ples of full-stack infra­struc­ture providers that cater to the devel­op­er experience.

Inflationary tokenomics are on the way out

Web3 games have the option to finance the ini­tial devel­op­ment by pre-sell­ing in-game tokens and game assets. We have wit­nessed the rise and fall of the infla­tion­ary token eco­nom­ic model. 

Mov­ing for­ward, sell­ing tokens and game assets, espe­cial­ly those with equi­ty-like gov­er­nance and own­er­ship fea­tures, will become more selec­tive. Projects will whitelist or pri­or­i­tize buy­ers who are play­ers or mean­ing­ful con­trib­u­tors such as con­tent cre­ators, infra­struc­ture providers and com­mu­ni­ty managers.

Social engagement mechanisms must increase

Infra­struc­ture for Web3 gam­ing growth and engage­ment is in a tricky chick­en-and-egg sit­u­a­tion because the trac­tion is still rel­a­tive­ly low, which is due to the lack of com­pelling games. 

But once a few Web3 games hit crit­i­cal mass, the net­work effects from iden­ti­ty data will enable these plat­forms to boot­strap and col­lec­tive­ly inno­vate faster.

Relat­ed: Game­Fi devel­op­ers could be fac­ing big fines and hard time

Aside from the lack of com­pelling games, famil­iar aspects such as reviews and social fea­tures are miss­ing from Web3 games. There is huge room for com­pe­ti­tion and inno­va­tion as users can eas­i­ly port to new entrants with­out los­ing their assets.

Unlocking asset (NFT) utility

Web3 games gen­er­al­ly share val­ue cap­ture with their play­ers and com­mu­ni­ty. Instead of buy­ing every­thing from the game cre­ators, play­ers can earn or pur­chase in-game assets and cur­ren­cy from one anoth­er, cre­at­ing a play­er economy.

For mature Web3 gam­ing economies, pro­duc­tive dig­i­tal assets become an attrac­tive source of yield through rental, loans or stak­ing. In fact, suc­cess­ful games may even decide to cap­ture their own finan­cial lay­er by cre­at­ing in-house sub­sti­tutes, giv­en how lucra­tive it can be, as in the case of Axie Infinity’s mar­ket­place or StepN’s new decen­tral­ized exchange. 

Guilds and metaverse platforms

Last­ly, there are guilds and meta­verse plat­forms that offer the games fund­ing, inte­gra­tions and part­ner­ships. They are in a good posi­tion to become focal points for Web3 gam­ing, like major pub­lish­ers and dis­trib­u­tors in tra­di­tion­al gam­ing. The cru­cial dif­fer­ence is that the play­ers and cre­ators can own sig­nif­i­cant stakes and con­tribute via gov­er­nance through decen­tral­ized autonomous organizations.

The Sand­box and Decen­tra­land are the lead­ing meta­verse plat­forms. But both of them require cre­ators to pur­chase land upfront, so a lot of land was sold to spec­u­la­tors who do not con­tribute any­thing mean­ing­ful to the ecosys­tem. Tak­ing a dif­fer­ent approach is Mona, which is free for cre­ators upfront until a space is mint­ed and sold.

Relat­ed: Get ready for the feds to start indict­ing NFT traders

Mean­while, Web3 gam­ing guilds such as Yield Guild Games and Mer­it Cir­cle have on-board­ed thou­sands of play­ers to help sup­port upcom­ing games, most notably, Axie Infinity.

The guilds are com­pelled to dif­fer­en­ti­ate them­selves amid grow­ing com­pe­ti­tion. Snack Club, for exam­ple, taps into Brazil’s largest esports and gam­ing lifestyle group Loud, with 300 mil­lion fol­low­ers. Jam­bo is build­ing an African super-app that includes tel­co ser­vices and decen­tral­ized finance along­side gaming.

Games play an essen­tial role in our lives and have long been a fron­tier of human exper­i­men­ta­tion. What we’ve wit­nessed in Web3 gam­ing so far is part of that exper­i­men­ta­tion. Undoubt­ed­ly, the pit­falls are many. 

Most iter­a­tions of Web3 game eco­nom­ics today are prob­lem­at­ic because every­body assumes they will make mon­ey play­ing games. That is not how economies work. So, let’s not con­fuse spec­u­la­tive hype, which is volatile and fick­le, with actu­al adop­tion and retention.

Shi Khai Wei is the gen­er­al part­ner and chief oper­a­tions offi­cer of Long­Hash Ven­tures, a Web3-focused ven­ture fund and accel­er­a­tor. In 2021, Shi Khai was award­ed Forbes 30 Under 30 in recog­ni­tion of his achieve­ments. He was pre­vi­ous­ly a man­age­ment con­sul­tant at McK­in­sey & Com­pa­ny, with a focus on dig­i­tal trans­for­ma­tion and ana­lyt­ics across the finan­cial and telecom­mu­ni­ca­tions sec­tor in South­east Asia.

Saga, Par­ti­cle Net­work, Mona, and Jum­bo — men­tioned in this piece — are Long­Hash port­fo­lio com­pa­nies. This arti­cle is for gen­er­al infor­ma­tion pur­pos­es and is not intend­ed to be and should not be tak­en as legal or invest­ment advice. The views, thoughts, and opin­ions expressed here are the author’s alone and do not nec­es­sar­i­ly reflect or rep­re­sent the views and opin­ions of Cointelegraph.

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