With the rise of blockchain technology, a new era of gaming is upon us, popularly referred to as Web3 gaming or blockchain gaming. As the name suggests, it is a new type of gaming that uses blockchain technology to create a more secure and decentralized gaming experience.
And the great thing about Web3 gaming is that it enables players to own their in-game items and experiences, which was pretty much unheard of in the traditional gaming industry. Besides that, it also enables developers to create new types of games that are impossible to create with traditional gaming platforms. With this, Web3 gaming will bring about a more fair and more secure gaming experience for all players.
Intro to Web3 Gaming
The world of video gaming has come a long way since the early days of arcade cabinets and home consoles. As such, today, it has become a multi-billion dollar industry with a global audience of 3 billion gamers, all thanks to technological advancements that have provided a more immersive and enjoyable experience through powerful gaming hardware and better graphics.
Although blockchain technology has been a recent addition to gaming, it is already shaping its future. However, Web3 gaming is still in its infancy, and there’s no denying it, but several factors suggest that it has a long way to go before it becomes mainstream.
For instance, there are many advantages of Web3 gaming over traditional gaming, the most obvious of which it’s the cost advantage. After all, there is no need to purchase expensive in-game items, and you can often play it for free or at a very low price. On top of that, one gets to own the assets they own in the game and make money in the form of tokens and NFTs that can be sold for real money. Finally, Web3 gaming is much more social, offering a much more diverse gaming experience.
GameFi and Play-to-Earn (P2E) are part of the larger trend of web3 games, which is the intersection of gaming and finance. These games reward players for their time and effort spent in the game. These models make gaming more affordable and more convenient than ever before.
Simply put, Web3 gaming is changing the world of gaming for the better by providing a plethora of opportunities for players to make money. The global Web3 gaming market size in 2021 was $5 billion and is expected to surpass $30 billion by 2030, as per the internal estimates by Fungies.
Key Features of Web3 Gaming
The rise of Web3 has been a game-changer for the gaming industry due to its ability to connect players directly and securely using blockchain technology.
One of the most exciting aspects of Web3 gaming is the way it is opening up new possibilities for game design. After gaining the ability to easily and securely create in-game items that can be traded or sold on the open market, game developers can now create games with truly dynamic economies. This is giving rise to a new breed of games that are more engaging, realistic, and immersive than ever before. Besides this, Web3 gaming also allows for more complex game mechanics and gameplay, as well as a more social and interactive gaming experience.
What’s more, by using Web3 to connect players directly, games can now be played on a truly global scale. With no need for centralized servers, players worldwide can come together and compete in real-time. This is opening up new opportunities for competitive gaming and giving rise to a new generation of e-sports stars.
Web3 gaming is all about ownership and interoperability. Players can own their in-game items and progress and take their game data when they switch to another platform or game. This allows for a much more open, flexible, and interconnected gaming ecosystem, where players are not locked into any one game or platform.
Transparency is another key feature of blockchain-based Web3 gaming. All game data is stored on the blockchain, which is publicly accessible. This allows players to verify the fairness of the game and the results. In addition, all transactions are transparent, so players can see how their money is being used.
With the rise of Web3, player-driven gaming is becoming the key feature of many online games. In a player-driven game, the community of players significantly impacts the game itself through things like in-game voting, player-created content, and other forms of player interaction. This allows for a more dynamic and ever-changing gaming experience that the players themselves shape.
All these features make Web3 games more engaging and immersive than traditional online games. So, it’s clear that Web3 has revolutionized the gaming industry.
Technology Stack of Web3 Gaming
Web3 gaming is the next evolution of gaming, made possible by the convergence of several cutting-edge technologies.
At the heart of Web3 gaming is the blockchain, which enables secure, decentralized transactions. Adopting blockchain technology gives players and owners the right opportunity to fully explore the game world. By leveraging blockchain’s qualities, such as decentralization, immutability, and transparency, the web3 ecosystem significantly improves players’ gaming experiences.
With the distributed ledgers of the blockchain, cryptocurrency games allow their players to prove ownership over their digital assets to generate revenue. Players receive cryptocurrency gaming tokens as revenue, staking digital assets for tokens and other rewards. Players may even be allowed to stake the digital assets in the future with a fair stake and accumulate it by actively participating in the games themselves.
Smart contracts, which are programs stored on a blockchain that run when predetermined conditions are met, meanwhile enable developers to create games that are fair and transparent, while digital wallets allow players to store and manage their in-game assets.
Non-fungible tokens or NFTs are another important facets of Web3 games which are used to create unique, one-of-a-kind, unforgeable items that can be traded or sold on secondary markets. There are decentralized marketplaces for trading these digital assets, which allows players to trade directly with each other without the need for a central authority. This enables a more open and transparent market, which can help to prevent scams and other fraudulent activities.
NFTs can further help to create a new revenue stream for developers. By selling NFTs, developers can directly monetize their games and content. This can help sustain and grow the gaming industry and support the development of new and innovative games.
The NFT market is growing at a CAGR of 35% and is expected to register an incremental growth of USD 147.24 billion between 2021 and 2026. Interestingly, 43% of the growth is expected to originate from the APAC region.
Finally, the metaverse is a virtual world that players can explore and interact with, powered by the blockchain. Metaverse represents a massive opportunity, with its market size alone expected to be multi-trillion dollars by the end of this decade.
Together, these technologies create a powerful and immersive gaming experience that is unlike anything that has come before. The possibilities are endless here, and the potential for Web3 gaming is huge.
Blockchain has also brought about DAOs (Decentralized Autonomous Organizations), which allow Web3 players to use voting rights to determine game futures.
While technologies such as blockchain and NFTs are serving as the backbone of Web3 in games to bring about new models of monetization and innovative ways to game, Gaming DAOs enable gamers to pool their resources and cooperate to improve the gaming industry.
A DAO is a community-owned organization governed by its members through blockchain technology instead of a centralized leadership that works towards a shared mission.
This type of company structure allows people with similar goals to work together without having to trust a leader who might misuse power or funds.
With a DAO, no CEO can make impulsive decisions with the company’s money, or a CFO can falsely manipulate records. Instead, there are rules written into the blockchain code that define how the organization functions and manages its finances. This provides a higher level of transparency and accountability for all members involved.
The DAO enables gamers to vote on how to allocate funds and make decisions about the gaming industry’s future. Designed to be transparent and accountable to its members, Gaming DAO is an experiment in decentralized governance and cooperation, and its success will depend on the participation and cooperation of its members.
There are many different types of gaming DAOs. Some are informal groups of gamers that function similarly to investment clubs, while others involve an evolving class of incubators and accelerators that provide funding to develop new gaming ventures. Developers also form DAOs that work on Web3 game developments on a common platform.
The Market Size of Web3 Gaming
Gaming actually has a total addressable market size of $300 billion, with Korea, the Philippines, and Vietnam being the fastest-growing gaming economies, according to Antler. The growing popularity of online gaming and the increasing adoption of blockchain technology are the major factors driving the market growth.
According to a new report by Grand View Research, North America is expected to be the largest market for Web3 gaming, owing to the early adoption of blockchain technology and the presence of a large number of gaming companies in the region. Meanwhile, the Asia Pacific region is anticipated to witness the highest growth rate during the forecast period, owing to the increasing number of smartphone and Internet users in the region.
However, Web3 gaming is not a mass market. For instance, a user study by mobile gaming company Coda Labs revealed that 52% of gamers are unfamiliar with any web3 gaming term. But that is about to change sooner or later, as Web3 gaming is successfully bringing more gamers into its fold.
For instance, blockchain Gaming Activity has increased by over 2,000% since 2021, with over 52% of Blockchain Activity coming from game-based dApps. And in 2021, there were 1 million unique active wallets (UAW) involved in Web3 gaming which is further expected to record over a 5x growth by 2025.
Moreover, the gaming market is also likely to reach a billion users, compared with 100 million users for current blockchain games.
According to Blockchain Gaming Alliance and DappRadar’s report for the first quarter of 2022, blockchain games raised $2.5 billion, as opposed to $4 billion raised in the industry during the entire year of 2021, showing a significant acceleration of the amount of money flowing to this space.
Interestingly, the blockchain-based games still managed to raise US$1.3 billion in 3Q22 despite the crypto winter. Overall, in the first three quarters of 2022, investments in Web3 games reached the $7 billion mark, with analysts and investors in the market still paying attention to the potential lying within its digital hands.
As for revenue numbers, they are also expected to grow far higher and higher over the next few years as gamers shift their focus away from video games to blockchain-based games, considering the benefits it offers.
The Future of Web3 Gaming
This is not to say Web3 gaming is not without its issues. There are several limitations to Web3 gaming that need to be considered when developing games for this platform.
Firstly, the games must be designed to work within the confines of the Web3 ecosystem. Its decentralized nature also gives rise to issues of interoperability and compatibility between different games and applications.
But most importantly, due to the still nascent nature of the Web3 platform, there is a lack of mature tooling and development frameworks, which can make game development on this platform more challenging. However, some solutions like Fungies provide a suite of tools to drastically reduce the costs of developing a Web3 game from a customizable NFT marketplace to non-custodial wallets.
Overall, the future of Web3 gaming is looking very bright. Here, players have full control over their in-game assets and data and can interact with other players in a completely transparent and secure way. This could lead to a new era of gaming where players are truly in control of their own destinies.
But it’s still in its infancy, and to grow the Web3 game world, these blockchain-based games need to show players their games are entertaining and then find ways to make them engage and contribute to the economy while playing.