Yearly, my firm Emfarsis companions with the Blockchain Recreation Alliance (BGA) to conduct an industry-wide survey of blockchain gaming professionals. And yearly, the overwhelming majority of respondents agree that digital asset possession is the only largest profit that blockchain can deliver to video games; this 12 months was no completely different, with 71.1% rating it primary. Even with extra individuals becoming a member of the {industry} — in 2024 we had thrice as many respondents as in comparison with the inaugural survey in 2021 — it’s all the time digital asset possession that comes out because the {industry}’s undisputed North Star.
However whereas we hail digital asset possession as blockchain gaming’s defining function, most blockchain video games right this moment are free-to-play and don’t require asset possession in any respect. On high of that, much-hyped guarantees that relaxation on the premise of digital asset possession stay largely unrealized. Apparently, blockchain gaming professionals have discovered themselves in a curious bind the place the very best proposition they’ve for avid gamers is identical factor they’re making excuses for.
Digital asset possession has all the time been central to blockchain gaming, providing gamers true digital property rights to personal, commerce, and monetize in-game belongings within the type of tokens and NFTs. Going again to play-to-earn’s heyday of 2020-21, digital asset possession was how you may inform the distinction between a blockchain sport and a conventional sport. Early video games required gamers to purchase a number of NFTs upfront. However this created a barrier to onboarding, as many couldn’t afford the NFT(s) or just weren’t enthused about having to purchase an asset in a sport they didn’t even know they preferred but.
After all, these NFTs weren’t simply any outdated sport belongings, they had been yield producing. Shopping for an NFT in a blockchain sport was extra like investing in a software that you could do a job — a job that paid in crypto. A number of the extra entrepreneurially-minded NFT homeowners began renting out their belongings to would-be gamers, in return for a minimize of their earnings. It was an incredible demonstration of the form of decentralized, permissionless innovation that’s made potential by blockchain — a community-led workaround that was developed by the gamers, not the sport builders.
Superb because it was, the rental system which was well-liked in early blockchain video games like Axie Infinity, Pegaxy, CyBall, and others, did not truly remedy the onboarding downside. The restricted availability of belongings and excessive entry prices created a bottleneck, so the rental demand couldn’t be met, thus perpetuating the friction with top-of-the-funnel person acquisition.
By 2022, in an effort to decrease boundaries and entice a broader viewers, blockchain video games had began to embrace the free-to-play mannequin as a substitute. With this, blockchain-based options of the sport had been handled as optionally available enhancements fairly than a prerequisite to play. Gamers might buy belongings later, or commit effort and time to earn them, however provided that they desired. There was no specific requirement to take action.
The transfer got here at a time when blockchain video games had been being pressured to focus much less on financialization and extra on enjoyable. And it was seen as obligatory in the event that they needed to nab a share of the massive, juicy $220B conventional gaming market, made up of billions of avid gamers that had been unlikely to put in a crypto pockets not to mention put up money for an NFT.
This contradiction — the place digital asset possession is each a defining function and a major barrier — displays the complexities of blockchain gaming’s evolution. On one hand, possession is what makes blockchain video games particular; on the opposite, requiring it deters gamers. To draw conventional avid gamers, who lack Web3 familiarity, builders have prioritized accessibility.
Findings from the 2024 BGA State of the Trade Report again this up. When requested in regards to the largest challenges dealing with the {industry}, greater than half (53.9%) cited onboarding challenges and poor person expertise, whereas one other 33.6% stated that blockchain ideas are usually not totally understood. Thus, with out clear, tangible advantages, the trouble and price of changing into a digital asset proprietor is unjustified. This reveals a significant ache level for builders attempting to promote noobs on a clunky tech stack that feels extra like a chore than a selection, so you possibly can see how they arrived on the choice to not power it.
However this raises the query: How a lot blockchain can a blockchain sport omit, earlier than the blockchain sport is not a sport on the blockchain?
This half-hearted method to embracing on-chain experiences signifies that probably transformative Web3-native improvements — just like the promise of interoperability, the place gamers might use a sword from Recreation A in Recreation B — stay largely theoretical. Some progress has been made, resembling enabling NFT profile image (PFP) collections to turn into playable avatars, however this principally caters to current web3 communities fairly than delivering a palpable profit to lure the Web2 gaming plenty.
True interoperability requires industry-wide collaboration, each technically and economically, which continues to be fragmented throughout chains and ecosystems. In the meantime, builders are sweeping Web3 beneath the rug, treating it as a layer within the tech stack fairly than a defining function. So for many gamers, the “Web3” half is hidden, optionally available, and about as impactful as a collectible spoon in a cereal field.
Frankly, the notion of “possession” in Web3 is vastly overhyped and largely unsupported by any substantial product-market match. Web3 possession, because it’s typically bought, is a mirage. The fact is: even in the event you “personal” an NFT, its utility and worth typically rely fully on the builders’ centralized infrastructure and ongoing operations. What Web3 does provide is elevated company over your belongings, permitting for faster, frictionless gross sales. However true possession? Not a lot.
There’s truly little proof to recommend that Web3 possession has pushed sustainable demand. That stated, the flexibility to exert extra management over your digital belongings is undeniably useful — simply not the “true possession” that’s typically claimed.
That stated, there have been some very promising experiments with totally onchain video games and artistic catalysts such because the Loot NFT assortment. Its composable construction allowed builders to construct by-product tasks, video games, and economies round it with no need approval or enter from the unique creators.
Different latest improvements born within the area of digital asset possession embrace Ethereum requirements ERC-6551, ERC-4337, ERC-404 and soulbound tokens (SBTs). ERC-6551 launched tokenbound accounts, permitting NFTs to behave as their very own wallets. ERC-4337 delivered account abstraction, enabling customizable wallets that improve safety and value with out counting on centralized custodians. ERC-404 mixed the options of fungible and non-fungible tokens, to supply versatile possession of each distinctive and divisible digital belongings. SBTs gave us non-transferable, identity-linked belongings representing credentials for belief and status.
Whereas nonetheless early on the adoption curve, these developments empower avid gamers to unlock experiences that might by no means have been potential with out digital property rights. And the outcomes of the annual BGA survey affirm that the attraction of digital asset possession stays robust: it offers gamers company, management and worth.
The problem now could be to let gamers expertise the enjoyable first and uncover the worth of possession organically. However we shouldn’t be ashamed to face up for what we really imagine in. If we wish others to get onboard with our imaginative and prescient, we have to develop experiences that reveal the advantages of digital asset possession from the get-go.
In any other case, we’re not doing something very particular in any respect. Are we?
Due to Nathan Smale, Duncan Matthes and Owl of Moistness for his or her evaluation of this text.
