On-chain Games: A New Frontier

From knucklebones and dice to balls and frisbees, from chess and Go to Minecraft and Fortnite, we humans have always been entertaining ourselves with various forms of games over the past thousands of years. With modern-day inventions such as computers and the Internet, video games have flourished into a multi-billion dollar industry with hundreds of genres and sub-genres.

But in this era where blockchain is seeking to shift the paradigm of almost every industry, the land video games seem relatively and unusually quiet.

Why bringing games on-chain?

In theory, blockchain has the potential to become the ultimate online game platform offering fair gameplay, unrivaled interoperability, and the potential to build a groundbreaking economy.

Transparency and fairness

As a public, distributed, and immutable ledger, blockchain records every operation and stores them permanently. Cheaters and scammers will have no place to hide. Rules will also be coded into smart contracts and millions of security enthusiasts will have the chance to scrutinize every line of code to improve its security.

Cross-game interoperability

The battle for one dominant game platform has been on for over a decade. Although Steam is the clear leader on computers for the time being, other giants like Epic Games, Ubisoft, and Rockstar are all trying to take a piece of the pie with their dedicated platforms, while Sony, Microsoft, and Nintendo are dueling it out in the console market. Needless to say, your PlayStation account details and assets can not be seen or interacted with on a Switch.

But it doesn’t have to be like this on blockchains. With cross-chain bridges, you can easily migrate your account from one chain to another. And since many Layer-1 and Layer-2 blockchains are all EVM-compatible, games (and other applications, of course) can be easily migrated across different blockchains with minimal changes.

Opportunities for blockchain-based economies

Even without the help of blockchains, online video games such as Fortnite, Counter-Strike: Global Offensive, and EVE have fostered their own in-game economy featuring items with jaw-dropping price tags.

Owner of this knife turned down a US$1.5 million offer and is asking for over US$2 million at the moment

Source: https://steamcommunity.com/id/LegendOfBlue/

With blockchain - the financial infrastructure with disruptive potentials - in-game economies will continue to flourish into even more complex, organic entities, with tokenized assets and complete financialized ecosystems.

Why not moving games on-chain?

At the time of writing, almost all the best-selling video games come with at least one of the following elements: ultra-realistic graphics and intense competitive gameplay. Moving graphics processing off-chain can easily solve the former but the latter may be somewhat difficult for on-chain games, given the state of blockchain technology.

Online video games like Call of Duty or FIFA often have to host hundreds of thousands - millions at their peak - of players and provide them with millisecond-level delay in their input. Most blockchains we see today are designed for asset transfers and smart contract interactions - none of which require extremely high throughput and low latency. Even the state-of-the-art Sei blockchain, capable of finalizing thousands of transactions in as low as 300ms, falls far behind this threshold.

That said, Sei is optimized for trading and order-matching engines and there’s nothing stopping blockchain developers from coming up with a blockchain dedicated for competitive gaming or even video games in general. With enough and capable infrastructures in place, on-chain games will surely thrive into a sizable industry like its Web2 counterpart.

The state of on-chain games

Like the blockchain industry as a whole, on-chain games are scattered on a spectrum with different levels of blockchain involvement.

Over the past few years, many established game developers and publishers have been trying to dip their toes in the NFT or metaverse market by tokenizing in-game items. You don’t need to own a crypto address because, technically, the ownership of these items is established through centralized servers. This is the easiest way to move (at least a part of) your games on-chain but also the least decentralized. Most of these attempts have also proved to be a hot mess - like Ubisoft’s disastrous Quartz platform.

On the other end of the spectrum lies dozens of games that are trying to bring the entire experience onto blockchains - Dark Forest, 0xMonaco, and Curio, to name a few. These games often feature simple graphics and turn-based gameplay due to some of the limitations mentioned in the previous section. As blockchain technology continues to grow and evolve, there will surely be infrastructures optimized for video games with fast-pace combat and stunning graphics.

At the time of writing, the most prevalent form of on-chain games is those with on-chain identities and assets but off-chain game processing. Popular on-chain games such as Gods Unchained, Axie Infinity, and Illuvium are all built in this fashion. Many of these games also have their own marketplaces for asset trading and even DAOs for governance. These assets are not merely cosmetic add-ons but financialized as assets with market value and yield earning potential.

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