Web3 Gaming: Take stock and look to the future

Gaming has changed a lot over the years, and now blockchain technology is revolutionizing how we view video games. Web3 games feature distributed ledgers, non-flippable tokens (NFTs), and decentralization to give players more control over their favorite franchises. The gaming sector continues to dominate blockchain activity, surpassing DeFi, NFTs and social to account for 26% of all daily blockchain activity.

In this article we will dive into web3 gaming and its benefits, use cases and future.

Understanding Web3 Games

Web2 games are generally stored on central corporate-owned servers, which control access to information related to the game and to the status of players. Using distributed ledger technology (DLT), web3 games can improve transparency and security, reward players with crypto-assets, and democratize the development process. These game in-game items as NFTs, give gamers full ownership of their in-game digital assets.

It is important to note that web3 games are not stored on the blockchain. Instead, these games usually use traditional online games and web2 technology for the game environment. However, in web3 games, players link their crypto wallets to games so that in-game purchases and rewards can be settled with cryptocurrency. Developers use smart contracts and dApps to bridge the gap between the web2 gaming platforms and the web3 components.

Smart contracts play an integral role in the web3 gaming space. When players earn digital assets such as in-game NFTs or fungible tokens, smart contracts are used to send them to the players’ wallets. If developers set up a gaming DAO, smart contracts are used to count votes as the members of that gaming community make group decisions.

Theoretically, any web2 game can be converted into a web3 game. In fact, developers like Ubisoft and Square Enix have included web3 elements in some of their games, including popular franchises like “Tom Clancy Ghost Recon.”

Decentralization is one of the fundamental features of blockchain-based games. Many developers use game dApps to support in-game transactions and blockchain interactions. These dApps rely on a series of interconnected nodes rather than a centralized server.

Advantages of web3 games

The benefits of the web3 gaming ecosystem include improved transparency, security and privacy. In this section, we’ll take a deeper look at the many reasons why web3 games are thriving.

Increased transparency

The web2 gaming industry has come under scrutiny for a lack of transparency. Many publishers force their game developers to sign NDAs and only show in-game footage after creating a polished demo. Many blockchain game developers share their games’ progress as they create them and even let players vote on development decisions.

In web3 games, transactions and item mining are stored in publicly distributed ledgers, giving players insight into how many copies of each item will exist.

Ownership of in-game assets

Web3 projects create new game economies by letting players buy and sell their in-game items. For example, “Gods Unchained” allows players to trade their cards on the secondary market. Many web2 trading card games, such as “Hearthstone” and “Magic the Gathering Arena,” reward players with cards, but they cannot be sold to others.

It is true that the Steam Community Market allows players to buy and sell in-game items. In addition, some web2 games, such as “Magic the Gathering Online,” let you buy and sell in-game items. However, these items are stored on a centralized server; if the developer shuts down the server, the items disappear.

A player can pay a large amount of real money over time to purchase in-game items such as skins – cosmetic items, such as a mask, that change the appearance of a player. If a web2 player gets tired of a skin or the game itself, the money invested in it generally cannot be recovered.

In web3 games, a player can earn in-game money, use it to buy skins, and then later sell the skins to other players for digital assets in peer-to-peer transactions.

Security and privacy

Web3 games store many elements in the chain, including items, achievements and cryptocurrency rewards. These games can use distributed ledgers to store player data on-chain, providing enhanced account security through cryptography. Decentralized, on-chain account data storage makes these games less susceptible to hacking because there is no single point of failure.

No single organization or malicious player has the power to crash or corrupt a game, nor change or delete any player’s digital ownership of assets.

Interoperability and cross-platform play

NFT-based skins, characters and items can be used between different games. This innovation may not materialize anytime soon, but companies like Sony are interested in making it a reality.

Game interoperability will be difficult to pull off, as developers must account for items carried over from other franchises into their games. As you can imagine, making hundreds of items for an “Elder Scrolls” game that look identical to items earned in “The Legend of Zelda” would be a significant development burden.

However, we may soon see video games that provide players with comparable game assets based on the quality of a player’s wallet contents. For example, if you earned a rare armor in “The Legend of Zelda”, you will receive a rare armor in “Elder Scrolls” after linking your crypto wallet.

Web3 Game Use Cases

Play-to-earn games. These games allow people to make profit while playing. Often NFTs are awarded to players for completing missions or ranking on daily, weekly or monthly leaderboards. These NFTs can be used in the gaming economy or sold to others on the secondary market. In some cases, play-to-earn games reward players with cryptocurrency tokens.

Metaverse and virtual worlds. Parcels of virtual land can be represented as NFTs, allowing players to buy and sell on the secondary market in these interactive environments. Many web3 metaverse projects let players buy items in their game worlds using digital currencies.

Gaming DAOs. DAOs affect web3 games in different ways. For one, investment DAOs collectively invest in web3 game projects. Video game publishing companies can be structured as DAOs, allowing their employees to vote on important business decisions and share in company profits. Web3 game projects, such as Decentraland, use governance credentials to let players make decisions about game design, growth, and development.

The future of web3 games

In October 2024, Ubisoft, one of the world’s leading video game developers, launched its first web3 game, “Champions Tactics: Grimoria Chronicles” on the specialist game blockchain Oasys.

In November, Web3 gaming and venture capital firm Animoca Brands launched a new venture with luxury car maker Lamborghini. Players can drive, buy and sell Lamborghinis in games that are part of Animoco’s Motoverse ecosystem.

Shortly after hosting the GEN3 Playground event in Hong Kong, Animoca Brands announced that it has raised $10 million more for its platform for building its open metaverse – Mocaverse. Yat Siu, founder and executive chairman of Animoca Brands, said in a news release that the Telegram and TON ecosystem and high-quality Web3 games will be major game changers for progress in the open metaverse. He also expects stablecoins to act as a bridge between web2 and web3 by converting traditional assets into Web3 assets and driving mainstream adoption.

Web3 games have yet to be accepted by the mainstream gaming ecosystem, and the ever-changing regulatory landscape is sure to present challenges. Some players also say that the tokenomics of web3 – the NFTs and other economic underpinnings – often dominate the user experience. The game mechanics get bogged down in earning rewards and the games just aren’t fun.

For web3 games to achieve widespread adoption, developers and publishers must use DLTs with a track record of fast, secure transactions. The Hedera network is an excellent choice for game development, thanks to its lightning-fast hashgraph consensus mechanism.

A decentralized game using Hedera to issue NFTs allows for secure ownership and control. Assets can even be configured to share across multiple platforms and games. Low predictable fees enable NFT issuance for a fee less than $1 USD and transfer of $0.001 USD.

Hedera provides trust and transparency in player rankings and leaderboards. With its unique ability to create immutable, high-throughput and publicly auditable logs, Hedera ensures that a single player, a minority group of players, or central authority cannot change or falsely display a status or rank of any player or team.

Virtual native currencies created on Hedera can be earned, stored and traded across different web3 platforms and games, or even liquidated for another currency. Low and consistent fees that do not vary based on network activity enable predictable development costs.

In high-stakes environments such as games, Hedera provides scalability and low cost for recording and validating player interactions, while removing the possibility of fraud or cheating. Trust is achieved in ways never before possible.

Hedera also works with industry leaders in the gaming industry, such as Ubisoft and Animoco.