Web3 Game: The Revolution of Digital Property Ownership

What is Web3 Game?

Web3 games are video games built on the blockchain platform and use blockchain for many aspects of the game. This goes beyond just owning assets through NFTs, but also integrates many other features such as governance tokens, smart contracts, DeFi, and DAOs (Decentralized Autonomous Organizations).

There are many ways to call Games in Web3 such as Crypto Games, Web3 Gaming, Blockchain Games. However, in essence, they are games that apply blockchain technology developed in the Web3 environment.

The distinction between Web3 Games is most clearly shown when compared to game genres in the traditional market. This name is used for that distinction purpose.

Blockchain gaming is more than just a “financialized” version of traditional gaming. It brings a new ecosystem with many outstanding elements, including:

  • Blockchain
  • NFT
  • Tokenomics
  • DeFi
  • KNIFE
  • Metaverse
What is web3 game?
Web3 game items and gameplay are friendly to Web2 players

Why is Web3 Game compared to traditional games?

Web3 games are being compared to traditional games because they bring many breakthroughs thanks to the integration of blockchain. Blockchain provides the technical infrastructure to support transparency, security, decentralization and the ability to trade digital assets.

In Web3 games, tokens not only act as a means of payment, but can also participate in activities such as staking, yield farming and lending. All transactions are recorded on the blockchain, ensuring transparency and security.

One highlight is the ability to actually own digital assets. In games like Axie Infinity and The Sandbox, players can own and trade assets like items, characters, and lands as NFTs, which give them real-world value. These assets are no longer limited to the game, but can be transferred or sold on decentralized exchanges, creating a more open and free economy.

How does the “openness” in the economics of Web3 games affect players? 

Web3 games enable players to earn money through a variety of activities, from completing in-game quests to trading digital assets. This creates a decentralized economy where players control a portion of the economy, not just the developers. This is the bright spot that drives curiosity and encourages players to join Web3 games.

Axie Infinity is a prominent example of the growth and impact of blockchain gaming in 2021. As the COVID-19 pandemic broke out, many people lost their jobs and faced financial hardship, especially in developing countries like the Philippines.

Axie Infinity became a significant source of income, with people earning between $200 and $400 per month, and some even earning more, surpassing the average salary in many areas. This turned the game into not only a form of entertainment but also an economic tool at the time.

axie 300 eth
Extremely rare Axie image sells for 300 ETH

During its peak, the value of Axie NFTs soared, especially rare Axies. These digital assets can be traded for anywhere from a few hundred to thousands of dollars. Notably, in August 2021, an ultra-rare Axie sold for 300 ETH (equivalent to about $564,000 at the time). Axie Infinity’s total revenue for the year was over $1.3 billion, demonstrating the economic potential of the Play-to-Earn model .

Awareness and improvement in Web3 Game development

While Web3 games have strong economic potential, not all players are profitable. Axie Infinity in the example above has a Play-to-Earn (P2E) model that relies on attracting new players to maintain asset and token value, leading to an imbalance as demand decreases, causing token inflation and a drop in NFT value.

As the crypto market entered a downtrend in late 2021, the value of tokens plummeted, and many players were unable to recover their capital, making this model unsustainable.

As the market crashed, Axie Infinity and many other Play-to-Earn projects were forced to restructure their economic models and move towards developing new products.

However, one bright spot is that the blockchain gaming market is starting to attract a large number of users and investors, driving growth. Lessons from Axie Infinity show that, to ensure sustainability, Web3 games need tighter economic models and better resilience to fluctuations in the general market. To survive, they must continuously improve their products.

In 2022, despite the difficult crypto market, investment in Web3 gaming still increased, reaching $7.6 billion, up 59% compared to 2021. Games like Gods Unchained and Alien Worlds continue to attract hundreds of thousands of players daily, contributing to maintaining the growth momentum.

Investment in the space is still growing, with Polygon reporting a 340% increase to 97,000 daily users. Games like Benji Bananas and Crazy Defense Heroes also contributed significantly to this growth. Meanwhile, ImmutableX recorded $87 million in NFT transactions, up 250% year-over-year.

2024 marks the revival of many blockchain game projects. These projects not only continue to develop the Play-to-Earn model, but also combine social, financial and community interaction elements to expand the player experience. More and more game models are developed, they are called by many names such as free-to-play, click-to-earn, tap-to-earn, play-to-airdrop, etc.

However, to maintain sustainability, gaming models need to consider long-term sustainability, especially in developing markets where these models can become an important source of income for many players.

Overall, the Web3 gaming industry is on the rise, and investment and user figures show strong interest from both players and investors. From early P2E models to more complex games, the future of gaming in Web3 promises to continue to expand and revolutionize the global gaming experience.

Hybrid Web3 Game and the formation of new game deployment trends

In the early stages, these Web3 games primarily leverage blockchain technology for the purpose of owning and trading digital assets such as NFTs or tokens, allowing players to actually hold in-game items and exchange them on decentralized platforms.

However, most in-game tasks such as movement, combat, or player interactions are still handled off-chain, that is, on traditional centralized servers. This means that while blockchain ensures asset ownership and transactions, the gaming experience is still largely similar to traditional games, relying on centralized servers.

That is why we call them Hybrid Web3 Games. They still do not fully meet the characteristics and properties to become games in the crypto market.

The hybrid model has the advantage of reducing the load on the blockchain, optimizing costs and providing a smoother experience. This is especially important when blockchains like Ethereum face high transaction fees and slow processing times if every small operation is performed on-chain. If every move or battle in the game is required to be an on-chain transaction, players will face the problem of high costs and not feasible in the current experience.

However, since most of the tasks are handled off-chain, this reduces the decentralization of the game. Reliance on centralized servers leads to issues such as security, risk of attacks (such as DDoS ), and the possibility of third-party interference, making it impossible for players to transparently verify the results of the game. This also raises doubts about the fairness of the system.

It can be seen that the concept of Web3 game is still just a name. For games in Web3 to truly be Web3 games, their infrastructure needs to “evolve” further.

To address the limitations of hybrid games, some projects have started implementing games in a fully on-chain direction, where all in-game tasks are processed on the blockchain. And these are called fully on-chain games.

Although the concept has been introduced since 2022, it is still being researched and not many games have achieved the level of being fully on-chain. Technical challenges, infrastructure and security are the top priorities. Some fully on-chain games are Dark Forest, Dope Wars.

Hybrid Web3 gaming is still a popular choice due to its cost and processing speed advantages. However, with the development of Layer 2 technologies and more scalable blockchains, the fully on-chain model is becoming feasible. This could usher in a new era for Web3 gaming, where all games can operate completely decentralized and transparently on the blockchain.

Some prominent game trends in the future

In the future, Web3 gaming will continue to develop with many new trends, based on the combination of blockchain technology, digital assets and AR, VR technologies. Below are the game genres that are attracting a lot of attention:

Play-to-Airdrop – The Transformation of Play-to-Earn (P2E)

This new model is emerging as an evolution of Play-to-Earn (P2E). Instead of focusing solely on monetizing in-game activities, this model encourages players to interact socially and promote the game to earn tokens through airdrops.

Games like Nyan Heroes and MixMob on Solana have proven the effectiveness of this model with impressive numbers. During its testing phase, Nyan Heroes reached 200,000 downloads and attracted 45,000 daily active players.

AI-Driven Games – The Future of Dynamic and Personalized Gaming

Games use artificial intelligence (AI) to personalize the experience. Players will train AI characters, which they can then engage in PvP (Player vs. Player) battles or other activities. AI can be used to generate automated dialogue and interactions in the game, making players feel like they are participating in a living, breathing world.

AI Arena is a prime example of the combination of AI and blockchain. In this genre, players will train and develop their own AIs to participate in PvP battles, where the AI ​​automatically fights based on the tactics that the players have trained.

web3 game ai
The combination of Web3 Game and AI brings great development potential

Hybrid Social Games

The Social Gaming trend is growing, where players not only play games with friends but also engage in deep social experiences in virtual worlds. These spaces are not only places to play games but also places to attend events, create content and engage in non-traditional economic activities, similar to social networks.

This trend blurs the lines between gaming and online social activities, encouraging players to share, interact, and build communities while playing games.

Like xPet.tech, where players not only take care of virtual pets but also get rewards through interactions on social media platforms.

Cross-Platform Metaverse Games and Privacy Protection

Metaverse games are evolving to become cross-platform, where digital assets like NFTs and tokens can be transferred between different games and even between different blockchain platforms.

Besides, Zero-Knowledge Proof (ZKP) is becoming an important technology, helping to protect the privacy of players when participating in transactions without disclosing personal information.

These trends are creating a new future for the Web3 gaming industry, where players are not only engaged in games but also become part of a potential digital economy.

Top Web3 Gaming Companies in Crypto

Sky Mavis (Axie Infinity)

  • Head office : Vietnam
  • Sky Mavis is the company behind Axie Infinity, one of the most successful play-to-earn games. Players can breed, battle, and trade Axies, valuable virtual creatures.  Axie Infinity has attracted more than 2 million daily active players and generated more than $1 billion in revenue from the sale of Axies and in-game items.

Animoca Brands

  • Head office : Hong Kong
  • Animoca Brands – a blockchain gaming company known for developing and investing in many Web3 gaming projects. Notable projects include The Sandbox, a decentralized metaverse world where players can buy, sell, and build on in-game land. The Sandbox has partnered with many major brands and organized events in the metaverse world, attracting great attention from the gaming community.

Dapper Labs

  • Headquarters : Canada
  • Dapper Labs, the company behind the popular CryptoKitties game and the NBA Top Shot platform, is where players can collect and trade NBA video moments as NFTs.  NBA Top Shot has generated hundreds of millions of dollars in revenue and become one of the most popular NFT projects.

Immutable

  • Head office : Australia
  • Immutable is the company behind Gods Unchained, a blockchain card game. Immutable also developed Immutable X , a layer 2 scaling solution for Ethereum. Gods Unchained has become one of the most popular blockchain card games, with thousands of players and cards trading on the secondary market.

Gala Games

  • Headquarters : USA
  • The Gala Games platform offers a variety of games ranging from RPGs to strategy. Gala Games allows players to own in-game assets in the form of NFTs.  Gala Games has raised millions of dollars from investors and built a loyal community of players.

Enjin

  • Head office : Singapore
  • Enjin is a blockchain platform that allows game developers to integrate digital assets into their games. Enjin provides tools to create, manage, and trade NFTs.

Mythical Games

  • Headquarters : USA
  • Mythical Games is the developer of Blankos Block Party, a multiplayer online game that allows you to collect, play, and sell Blankos characters as NFTs.