Web3 Games in Evolution

Written by: Blue Fox Notes

The Inevitable Arrival of Web3 Games

Currently, games are one of the main forms of entertainment for people in the digital age, creating immense value. In 2021, there were 174 mobile games with annual revenues exceeding $100 million.

（Trend chart of mobile games with annual revenues exceeding $100 million, Messari data）

As games permeate people's lives, their perception of game assets deepens, and they become increasingly concerned about truly owning these assets.

These trends will inevitably draw attention to Web3 games.

The Openness of Web3 Games is Its Greatest Potential

When it comes to Web3 games, people often mention their economic mechanisms and personal ownership of game items. These are indeed important aspects. In addition, Web3 games have a very unique characteristic: they are fundamentally open. This is different from Web2 games.

Web2 games are generally controlled by companies, developed and operated by companies, which control users' game items, decide the direction of game iterations, and determine external cooperation methods. Almost everything requires company decision-making or permission. A recent example is Minecraft's announcement that it will not allow the integration of blockchain technology into its client and server applications, nor allow them to be used to create NFTs related to game content. Companies generate revenue by selling game items, and as long as the game development or operation company controls players' items and data, it cannot be considered a truly open form.

Web3 games, on the other hand, are entirely open. Characters, skins, equipment, and items in the game fully belong to the players, and these game assets cannot be arbitrarily issued. Additionally, other developers can build new applications based on the game without needing permission, enriching the overall gaming experience. This is akin to an open economic system.

These game NFTs can be used across different games. For example, TreasureDAO aims to build an open game ecosystem to connect different games and achieve interoperability between them. In addition to its internal games, external games can also participate in the overall network. For instance, the Realm game within its ecosystem attempts to collaborate with games like TheLostDonkeys and Toadstoolz, which may involve gameplay and asset interoperability, such as items from one game being used as materials to create new items in another game; or characters from different games exploring other games, similar to the concept of interoperable games. A new game developer can also enter the ecosystem without permission from the TreasureDAO team, bringing early users as long as the game is engaging enough to stand out in the entire ecosystem.

The interoperability between games within the same ecosystem may bring greater network effects and resilience to the entire ecosystem, providing positive interactions among them.

Of course, this innovation faces significant uncertainty in its early stages, especially during unfavorable market conditions, where the effects may not be very apparent, as the user base is still small, and ultimately, engaging games need to be created to retain users and achieve sustainability.

The Essence of Games is Fun

Whether Web2 or Web3 games, the experience is the fundamental reason for the existence of games. Without engaging games, no matter how cleverly designed the economic mechanisms are or how completely users own game assets, there will be no real utility.

The primary task of Web3 games is to develop truly fun games based on their characteristics. Only genuinely enjoyable games can lead to sustainable consumption.

Although Web3 games are a trend for the future, crossing the chasm requires real accumulation. Rather than spending too much effort on token economics and balance design, it is better to consider how to develop a game that users find enjoyable.

For an early project to cross the chasm, there are two main points:

• The revenue injected from outside the system can reach a certain scale, especially at the launch;
• The real consumption of users within the system reaches a certain scale (for example, game players are willing to pay for fun).

The scale of revenue needed largely depends on the scale of the asset-bearing objects, with at least a positive development expectation.

Web3 Native Games Still Need to Evolve

In essence, the Web3 field is not a simple continuation of Web2; it features different paradigm innovations. This has already been demonstrated in DeFi, where DEX and lending exhibit different characteristics, such as permissionless, immutable, transparent, and user-managed. This is fundamentally different from Web2 finance. During the recent downturn and liquidation period, CeFi institutions faced significant issues, while DeFi, due to its transparency, withstood certain tests.

Future Web3 games will also have different characteristics compared to existing Web2 games. Of course, they will share the commonality of being fun, just as CeFi and DeFi share fundamental attributes.

A crucial starting point for Web3 native games is to create enjoyable games centered around players. In addition to the common aspect of game assets being truly owned by users, Web3 native games need to have genuine and thorough openness. This requires a high degree of integration with blockchain, rather than just a combination.

Games are stored on the blockchain, not on company servers. Once a game is deployed, it is permissionless, transparent, interoperable, immutable, and community-driven.

Game iterations need to be governed by the community. If consensus cannot be reached, third-party developers can redeploy custom versions or fork the game to meet the needs of different user groups. The influence of core players on game development may be unprecedented.

If the logical rules of the game operate on-chain and the game data is stored on-chain, Web3 games will no longer rely solely on the client provided by core developers; any third-party developer can interact with the game's smart contracts. This is a truly open game, conducive to unleashing more creativity and possibilities.

Of course, Web3 native games running on-chain will also face throughput issues, which need to be balanced to some extent; this is a technical consideration that will not be elaborated on here.

What Web3 native games will look like is still unclear, as they have not truly evolved yet. This is constrained by the current infrastructure, and currently transforming games does not count as Web3 native games. Additionally, the openness and composability of Web3 games have not been fully explored.

Although we do not yet know what Web3 native games will look like, this trend is on the way. If you have insights into Web3 native games, feel free to discuss them together.

The Significant Impact of Web3 Games Clustering

From the current number of projects invested in by institutions, Web3 games are one of the most important directions. It can be expected that in 2-3 years, there will be a clustering phenomenon of Web3 games. The clustering of Web3 games will have several significant impacts:

*The Emergence of Most Repetitions and a Few Innovations

In the next cycle, there will be a large number of similar-looking Web3 games; however, among them, there will always be a few games that innovate and gain a larger user base, thereby elevating Web3 games to a higher level;

*The Entry of a Larger Scale of People

Currently, the user base in the entire Web3 field is still small, and competing within a small group is not very meaningful. With the introduction of more Web3 games, especially those that are truly playable, a larger scale of people will be drawn in.

*Intensified Competition for Block Space

Web3 games have a significant demand for scalability, and this demand will increase even more as games cluster. The emergence of so many games will greatly increase the demand for block space on public chains like Ethereum, and the demand for L2 and application chains will rise significantly. This, in turn, will greatly promote the construction of industry infrastructure.

*Frontier Exploration of Web3

People are talking about Web3, but as of now, the true form of Web3 has not been demonstrated. Games occupy a very important frontier position in the exploration of Web3. When the internet was first born, no one knew what it would look like. Initially, there were news, forums, emails, etc., and later, the exploration of games brought many innovations to the internet, including internet-based game rules, social interactions, and profit models. The exploration of games laid an important foundation for the development of the internet.

Compared to other areas of Web3, such as social and e-commerce, the exploratory potential of games may be stronger in the early stages, possibly providing insights into the overall direction of Web3 development, especially as native Web3 games bring new ideas to the entire Web3 field.