Dialogue with the Founder of X World Games: In the new game economic relationship, the core is game assets

This article is an original piece by Chain Catcher, author: Loners Liu.

Metaverse, as one of the hottest concepts in the technology and gaming fields today, has attracted a lot of attention, including the two most talked-about games last year, "Cyberpunk 2077" and "Genshin Impact," both of which are marked by their open worlds. In the blockchain gaming sector, the goal of the X World Games team is to realize the next generation of decentralized virtual gaming metaverse, and they have recently secured investments from well-known institutions such as NGC, FBG, and SNZ. On the occasion of the launch of their game Dream Card, Chain Catcher chatted with Fernando Liu, the founder of X World Games, about the current competitive landscape of blockchain games and how NFTs and the Metaverse will integrate with blockchain gaming.

Blockchain Games vs. Traditional Games

Chain Catcher: You have experience with traditional mobile game companies. In your opinion, what is the difference between making blockchain games and traditional games? What problems does blockchain solve in gaming?

Fernando Liu: Since I come from a financial and economic background, my perspective on gaming is slightly different. I believe the biggest problem facing the traditional gaming industry is the issue of internal currency inflation within the game economy.

The main reason for internal currency inflation in gaming is that, in traditional game operations, game companies hold complete control over the game, and the game database is stored on private, centrally controlled servers, which are not open or transparent. The currency is developed by designers and controlled by programs, consisting of a string of code. Theoretically, valuable equipment can be produced infinitely, and in-game assets can be issued without limit. Due to the lack of a clear and healthy asset distribution mechanism, this inevitably leads to the devaluation of in-game currency.

Taking World of Warcraft as an example, in 2005, 500 gold could be exchanged for a 30 RMB game card, with an exchange rate of about 500:30. By the end of 2015, over 80,000 gold was needed to exchange for a 30 RMB game card. In just over ten years, the price of gold had depreciated by 160 times. The imbalance in the game currency mechanism directly led to a poor gaming experience, ultimately causing a large number of players to liquidate their assets and quit the game.

The emergence of blockchain has solved the problems of complete centralization and asset inflation in the traditional gaming industry. Future blockchain games, including the issuance of game skins and equipment, will be based on the blockchain, where every issued skin and piece of equipment can be queried on-chain, and the distribution mechanism will be completely transparent. Decentralized games allow players to participate deeply in game governance, better connect players, and thus form a healthy gaming ecosystem.

Chain Catcher: Although blockchain can solve the inflation problem in games, current blockchain games mainly focus on collection and idle games, lacking playability and offering a poor gaming experience. What motivates traditional gamers to participate in blockchain games?

Fernando Liu: In fact, the needs of blockchain game players are the same as those of traditional game players, whether it is to gain joy from the game, pass the time, escape dissatisfaction in real life, or make friends. In summary, they hope to satisfy their sense of superiority in the game and the psychological satisfaction that comes from game development, thus realizing their own value.

In addition to meeting the above needs, blockchain games can also satisfy players' desire to earn money. Players can participate in the construction of the game, share in the game's profits, and establish communities where they can vote in decentralized autonomous organizations (DAOs) and participate in game decision-making. For reference, last year's hit game Animal Crossing, a charming simulation game, allows players to build and decorate houses on their own islands, go fishing, and even place caught fish in a museum, fully participating in the island's development. The mechanics of blockchain games are very similar to those of Animal Crossing.

Of course, if Animal Crossing were a blockchain game, then the land, characters, and decorations within the game would be clearly recorded on the chain and fully owned by the players. If you were a player, would you be willing to play such a game?

Certainly, a brand new market will inevitably face user education issues, such as wallet integration, lack of understanding of digital wallets, insufficient blockchain knowledge, and not understanding the mechanisms of game staking, mining, and token trading. What we need to do is to overcome these issues and attract traditional gamers to truly participate in blockchain games.

Chain Catcher: Since blockchain games have so many advantages, why have there been few phenomenon-level games since the boom of CryptoKitties in 2017? What is the current competitive landscape of blockchain games?

Fernando Liu: Overall, blockchain games are still in the early stages and face issues such as unclear underlying ecosystem construction, lack of unified standards, insufficient talent, and a predominance of speculative users. The market is currently flooded with many games that are "said" to be blockchain games, but their development is incomplete, their game mechanics are simple, and the experience is unsatisfactory, leading to extremely short lifespans. Therefore, we hope more people who understand blockchain and gaming will join us to create valuable blockchain games.

Of course, it is undeniable that gaming has always been a sunrise industry, growing rapidly and favored by capital, maintaining a growth trend over the past two decades. The pandemic in 2020 even brought gaming companies' revenues to new heights. The combination of gaming and blockchain represents a blue ocean market, where good products are rare, and there is enormous room for development. Compared to the traditional gaming market, competition is not as fierce yet. Therefore, traditional gaming companies are likely to enter the blockchain gaming space, but whether they do so will depend on breakthroughs in technology and compliance.

Chain Catcher: Since last year, some DeFi protocols have been acquiring users through airdrops. What strategies can blockchain games use for better market promotion?

Fernando Liu: Compared to DeFi protocols, blockchain games have greater playability and creativity. Currently, we have about five points of consideration.

• Games have a natural social attribute. If players obtain a rare card, such as an SSR card, they will

• share it on their social platforms, attracting their friends to participate in the game.

• In airdrop campaigns, we might randomly airdrop cards with different attributes to make the event more interesting.

• Blind boxes can satisfy users' short-term stimulation and satisfaction. In 2019, Pop Mart's revenue reached 1.683 billion yuan. This consumption craze is not only popular domestically but has also "gone overseas" and become a hit abroad. Therefore, we will also design cards in the form of blind boxes and regularly plan interesting online and offline blind box card draw events.

• In the early stages of game release, we will have high-yield mining activities to attract more initial players, allowing them to share more game profits.

• We will also establish deeper collaborations with esports players, well-known IPs, and advertisers in the industry.

Of course, I believe that good game operation and community management, centered around players to build a healthy gaming community, is the best way to promote.

NFTs and the New Battlefield of Blockchain Games

Chain Catcher: Binance announced the launch of its NFT platform on April 27. What does this mean for the industry? How can it help game development teams?

Fernando Liu: The launch of Binance's NFT platform means that Binance users can directly access the NFT platform and trade using their Binance accounts, lowering the entry barrier for new users on the NFT platform. They only need to register on Binance.com to create and trade, which is a positive signal for NFTs. Users will be able to directly engage in the NFT space, providing better liquidity and lower user fees for small value creators, supporting their creation, and thus promoting the free flow of global value and creating an inclusive ecosystem.

On the other hand, it will also allow more users from both the crypto and non-crypto worlds to understand NFTs, as the true ownership brought by NFTs allows game assets to be used across different games. For game development teams, there is currently a pressing need for a more open platform that allows more game manufacturers to join and create games, incentivizing more independent game designers to enter the blockchain gaming industry and create more playable games. They can also quickly obtain more substantial copyright fees and game revenue.

We hope to create a blockchain game creation platform belonging to Asia, similar to Dapper Labs, based on the mature ecosystem of the Binance Smart Chain, attracting more creators and gamers to showcase the charm of blockchain games and NFT creation.

Chain Catcher: You mentioned that the true ownership brought by NFTs allows game assets to be used across different games, but some argue that true ownership allows big players to easily gain advantages by purchasing anything. From the perspective of game design and game economics, how can we balance market economy and true ownership?

Fernando Liu: Games are independent worlds with their own economic markets. A good game designer will provide the game with an effective economic model, allowing players to recognize the importance of certain game resources, thus stimulating player demand and triggering their desire to consume. Factors such as supply and demand relationships, price discrimination, and the impact of event policies will all affect the entire game economic market.

The introduction of NFTs into games solves the following two problems: First, it clarifies the ownership of items, marking that equipment or skins on the chain clearly belong to the player. Second, if a player exits the game, their game assets can be transferred along with them, avoiding the issue of item devaluation.

For example, when there is a significant disagreement between game companies and players regarding game development and operation philosophies, players can use democratic voting in DAOs to decide on changes to game functions or the future direction of the game. They can also utilize publicly available game code resources to fork and modify the game, such as creating their own character skins or items.

Even in the case of a game company going bankrupt and unable to operate, players can still retain the game. This is the charm of decentralized games. Additionally, we need to establish an effective and reasonable token economic model that is more aligned with real-world economic conditions.

Chain Catcher: Currently, NFT consumption and production are mainly dominated by overseas markets. How do you balance different regional preferences during the game development process? What should blockchain games pay attention to for internationalization?

Fernando Liu: It is true that NFT consumption and production are currently more prevalent overseas, but this does not mean that markets in other regions will stagnate. In response to different regional cultures, religions, and preferences, we will establish relevant regulations on the blockchain gaming platform to inform game creators about the cultural and religious contexts of different countries and regions, aiming to avoid religious issues and politically sensitive topics. At the same time, we will also initiate decentralized autonomous organizations (DAOs) to review game content and help game creators avoid these issues.

Chain Catcher: Besides NFTs, what impact will the combination of DeFi and games, resulting in GameFi (gamified finance), have on blockchain games?

Fernando Liu: Blockchain-based game items are endowed with asset mechanisms and clear ownership. Whether it is items/characters or game rules, they can be transformed into NFTs on the chain. The buying, selling, renting, or trading of these NFTs will naturally give rise to a new digital game asset circulation market.

Overall, GameFi is reshaping the gaming industry and changing traditional production relationships. In the new gaming economic relationship, the core is game assets, with more diverse gameplay, allowing players to organize production more effectively. In the world of blockchain games, digital assets are created for players to manage autonomously, and game creators can reuse created assets to combine into more diverse game content. Compared to traditional games, blockchain games can generate better synergy and win-win effects.

Chain Catcher: The concept of the Metaverse has also been highly discussed recently, but given the complex sandbox calculations and hardware support, how do you think it will integrate with blockchain games in the future?

Fernando Liu: The concept of the Metaverse originally comes from Neal Stephenson's science fiction novel "Snow Crash," literally meaning "beyond the world." It is a persistent, shareable virtual space where people can attend school, entertain, socialize, shop, or even work, with the money earned in the virtual space convertible into real currency. People break the boundaries of space and exist in the "Metaverse" in a digital form.

It is somewhat similar to the "Oasis" in Ready Player One, which is born from the real world, parallels the real world, and is always online. It has a complete operating model, where its economy, data, digital items, and content can all interact.

In short, the Metaverse is a more immersive and participatory internet. With the application of AR and VR technologies, the realization of the "Oasis" has shifted from an imagined beautiful vision to a concept that is about to be realized. Roblox is a concrete example of this concept.

During the pandemic, we also saw many real-world scenarios being moved to the virtual world. For example, product launches, graduation ceremonies, concerts, and even press conferences can be held within games. A new consensus is emerging—virtual worlds can be more realistic and sometimes even surpass reality.

Sandbox calculations and hardware support such as AR and VR will also allow blockchain games to become virtual reality games, enabling players to break the limits of imagination and immerse themselves in an engaging game environment. However, the current market's hardware devices are relatively expensive, and hardware incompatibility can lead to players experiencing "motion sickness."

Additionally, developing blockchain games as virtual reality games incurs higher costs compared to traditional games. From a societal perspective, the realization of cloud universes and parallel worlds may also pose some social risks that the gaming industry needs to consider.