What is Web3 Gaming? An Introduction.

What is Web3 Gaming? An Introduction into Web3 and Crypto Gaming.

In this article I want to go over the world of blockchain gaming or web3 gaming. I will use web3 gaming as the corresponding word for this type of game. We will go over the basics as well as challenges which could become an issue. In the end I will give you my conclusion about web3 gaming, where it is and where it could possibly go.

First of all, I want to welcome you. My name is Paul and I am a Web3 developer. My focus as a developer lies in Solidity Smart Contracts. This means, for all of you new to web3, that I will mostly focus on the Ethereum ecosystem, as well as other EVM compatible chains. This is what I am most familiar with and therefore can give the most insight into. In my articles I want to provide you with information about the world of web3, blockchain and how these things work. As always feel free to contact me.

Now let´s jump right into the world of web3 gaming!

Basics

Before we jump into the details of web3 gaming we first need to define what we mean when we say “blockchain gaming” or “web3 gaming”.

Web3 gaming, also known as Blockchain gaming, utilizes blockchain technology to enhance transparency, security, democratization, and user control over in-game assets and operate on decentralized, peer-to-peer blockchains, incorporating cryptocurrencies and nonfungible tokens (NFTs). Players can own and trade in-game items, including NFTs and other digital assets, without third-party involvement, facilitated by smart contracts on decentralized marketplaces. This decentralized approach offers numerous benefits, such as increased transparency, security, and the emergence of play-to-earn (P2E) gaming, where players earn cryptocurrency by playing and advancing in games.[1]

To summarize, this means that certain aspects of traditional games could move away from centralized control towards a decentralized approach. As mentioned in the previous paragraph, this could mean, that items could not be taken away from you by a centralized entity. In theory, the main appeal would be, that you could earn an in-game item and be a verified owner. You could then sell the item and receive payments, for example in Ethereum which you in turn could use for something completely unrelated. Another option would be that you could display your items from multiple games. This would also mean the emergence of a completely new economy tied to web3 gaming, as it could likely be that items could be traded in a bigger volume and transfers could happen across games itself. Decentralized Autonomous Organizations, called DAOs could also put an end to centralized decision making by gaming studios as the nature of DAOs means, that the player base could decide the fate of a game, it´s features and much more.

From a technical standpoint, some of these things are already possible today. I myself have already coded a web3 game. In this, all be it, rather minimal version of a game, and more of an experiment than anything else, I created a simple game where a knight can be moved across a map to collect coins. After a certain amount of time the game is over and your coins you collected in-game will be given to you in the form of ERC20 Tokens. Those tokens could then be traded for booster items, which are ERC1155 tokens, which is a form of NFT. I went over this project in another article of mine which you can read here: Projects: Web3 gaming

Challenges

While we went over the basic idea of web3 gaming in the paragraph before this one, I want to go over challenges this industry might face. Keep in mind, some of these problems are just problems blockchains in general face right now. I am of course talking about the blockchain “trilemma”.

This trilemma revolves around three essential factors: decentralization, security, and scalability. Decentralization distributes power across a network, improving security by requiring validation from multiple nodes. However, introducing scalability to accommodate network growth can compromise security and decentralization, as increased data slows down transactions and exposes the network to potential attacks. Despite this issue, scalability is crucial for blockchain technology to achieve widespread adoption, enabling faster transactions and improved throughput. Therefore, striking a balance between scalability, security, and decentralization remains a key challenge for blockchain projects aiming for mass adoption in the ever-evolving digital landscape.[2]

But Web3 Gaming does not only face the problems blockchains in general face. While this trilemma is worked on and things like Sharding in Ethereum, as well as Rollups present a possible solution, there also other very important key improvement needed before wider adoption can take place.

At this point I would like to note, that some of the following points are of course only my personal opinion. If you disagree, I would love to hear from you what you think. I myself have not yet tried nay web3 game but I have seen demos of them. Another thing which must be noted here is that Web3 gaming is still very young and therefore has still much more potential than has been realized. With a market size reaching approximately $7.89 billion in 2023, analysts anticipate a remarkable compound annual growth rate (CAGR) of around 68%. This trajectory suggests that by 2030, the gaming industry could expand to a market size of $301 billion.[3]

So, as you can see there could be bright future for Web3 games. But to reach this goal, so I think, the games themselves would need to attract a lot more regular users, who at the end of the day value gameplay much more than all the things we in the blockchain and web3 space constantly talk about. They might think, that decentralization and owning your earned items might be cool, but if the gameplay does not live up to their expectations, the audience will simply not be interested.

I myself think, that blockchain and web3 holds still much untapped potential, but until then it is still a long way. Though as you might know, this space moves at lightning speed. And with the maturation of this technology as well as the crypto market itself we could see a lot more than was previously deemed possible.

Conclusion

In my opinion, Web3 Gaming has still a long way to go. There are many challenges, from gas fees, to fixing scalability in order achieve the necessary transaction volumes, to fixing up the issues we had in the last years with pump-and-dump schemes and similar negative actors of crypto, who gave the whole space a negative image. Al-in-all, if we would like this decentralized future to become reality, we need to look beyond our needs as web3 enthusiasts. As mentioned, people outside this space likely value different things when selecting a game. And if the barrier to entry is too high for their liking they will simply, move somewhere else. I, for one, am excited on what web3 gaming has to offer in the coming months and years and I am looking forward to experience it.

Citations

[1] Sasha Silina, What are Web3 games, and how do they work, In: Cointelegraph (Feb 28, 2023), Link: https://cointelegraph.com/explained/what-are-web3-games-how-do-they-work

[2] Mohammad Musharraf, What is the Blockchain Trilemma?, In: Ledger Academy (Nov 15, 2021; updated Jul 23, 2023), Link: https://www.ledger.com/academy/what-is-the-blockchain-trilemma

[3] Moralis.io, Web3 Gaming Explored – Full Web3 Games List (Jan 2, 2024), Link: https://moralis.io/web3-gaming-explored-full-web3-games-list/