Prediction: by 2025, 50% of all blockchain transactions will be related to the on-chain gaming activity.
For the past weeks I’ve been closely following the discussion on our channel. James has recently written a great article about the use-cases of purely on-chain games. In response to it, I’d like to go further and highlight how I see the grand thesis of autonomous worlds, in relation to the past century of personal computing, and the internet.
The path ahead is full of surprises, technical challenges, product market fit unknowns. In general, I see the end goal of our efforts as collaborating to build the Ethereum-hosted metaverse. The world emerged from only the initial rules set by builders, and then developed by the users and community builders.
World governed by smart contract-based rules that will be eternal, immutable, and spread through the whole crypto space. Anybody can join, play, consume content, add their own instances and modifications. At best, such a world would have the PoW-like currency emission to the 3 types of contributors: maintainers (like miners), creators (minecraft-like world builders), and merchants (players maintaining, creating, and governing trade routes inside the world, helping stabilize the economy).
In the sea of unknown, only building by the crypto/cyberpunk ethos like the godfathers of cryptocurrencies, can set us on the right path to the real crypto metaverse. Yet, to even discover the rules, toolsets, and ways to build such a world, we need to start from simple on-chain games.
Games. At this stage we shall all experiment with simple, small memory builds, suitable for a generalized rollups. Try to find what users care about. Build consumer applications, solve the problem of a general user adoption. At first, launch games for crypto users, then once some of them break through, optimize for new users, previously not interested in crypto. Interest them with absolutely unique game modes, building on top of the collaborative and open aspect of a shared state, global networks.
Best of on-chain games should be able to break any generalized rollups, showcasing the need, importance, and ways of building a better infrastructure. We should be at this point by mid 2025.
Active monthly addresses: below 1M globally.
Potential genres: MMORPGs, MMOTBS, hyper-casual focused on money games, board games-like productions.
Timeline: by 2025
Autonomous worlds. Ways of user interactions: closer to how players are interacting with Roblox or Minecraft, but with financial incentives, making the games meaningful and as immersive as ever, due to the high stakes of the play. Digital interactions start having real consequences, as with financial markets, but not the same. It seems to be the natural path for crypto. We move from building dApps based on the expertise of traditional financial products, to dApps based on internet era knowledge, and large scale collaboration experiments taken from the last 30 years of online gaming.
At this stage, normal on-chain games will still be at the top of activity charts, yet ambitious teams, core members that were building in the first stage, should move to pursue creating autonomous worlds, rather than consumer applications. To keep the funding and cash flows healthy, and have the attention of the general public, this should only be done by the core, the most experienced developers of the on-chain games.
How can stage II look, if autonomous worlds are meant to be more than games? Predicting anything meaningful on such a long time scale is nearly impossible, so I would love to hear what others have to say.
Active monthly addresses: rapidly from 1M to 20-30M.
Potential genres: Sandboxes, Squid game-like games with real life consequences (financial at first, social later).
Timeline: 2025 - 2027
Ethereum-hosted metaverse, emerged from the initial rules. We will set the “physical” laws of a digital world, and propagate it over the decentralized network.
Active monthly addresses: 300M+
Potential genre: digital world
Timeline: 2028+
I’d characterize the crypto customer base as: Builders, Investors, Traders, Speculators, Degenz, Collectors, Spenders, OG.
Below, I will show how each of them fits into the potential user, player or customer of the on-chain games. “User” is characterized more broadly, due to the nature of our industry. Crypto users tend to “use” crypto in various ways - spending, leveraging, hoarding, etc. - just using it as a currency.
Builders: general curiosity of what can be built on decentralized computers in the open, global networks. Builders can also add UCG for players, the same way people are building Minecraft servers. Builders could fork the already established on-chain games, creating new game modes. Something we have already seen with 0xMonaco and MatchboxDAO Battle of Titans tournament, where 0xMonaco’s rules were extended, creating a new experience for smart contract-based cars.
Investors: on the business level, on-chain games give us two things: new revenue sources comparable to the exchanges’ business, and a new user onboarding & adoption tool, resulting in a rapid market growth. If my hypothesis comes true, the potential investment opportunity in on-chain games is even bigger than Defi and NFTs combined. Especially as non-art NFT returns diminish, knowing the best product those had was a social club (which is something big, but there is only a limited amount of clubs that can be high value - looking at the front page of Opensea/Blur gives us the full answer -> top monthly assets are all from Yuga, or perhaps Azuki on a good day).
Traders: on-chain games require some direct potential ROI, since the costs of playing these are somewhat high compared to the normal games. It creates the need to make on-chain games “money games”, either through NFTs, open item markets, or direct p2p stakes between competing players (e-sport for everyone). We have already seen it with Axie. On-chain games make the process safe, trustful (rules won’t change), and permissionless (accessible). Traders will find themselves using on-chain games, trying to reap the profits, either by the edge, or other processes comparable to the standard crypto markets.
Speculators & Degens: same as above, but further on the risk curve.
Collectors: modern games and game assets can be a work of art. The vast amount of artistic skill being put into game creation (illustration, modeling, rigging, animation, vfx, sfx, music!) makes them memorable and culturally important as pieces of art that collectors might want to hold. Previously, we have seen this behavior with collecting physical boxes & deluxe editions of important games.
Spenders: comparable to the OG vision of crypto as a money, it’s a subgroup of people generally exploring ways of spending crypto, and acting upon all the new ways & extension of the “spending” use-case of crypto. Be it altcoin buying for BTC, leveraging on OkCoin, Defi farming or NFT purchasing, crypto is just good for using as a currency, and we love spending it on novel digital artifacts. Purchasing a word in Words3 is, well, spending crypto.
OG: it’s hard to find something more fundamentally aligned with the values of the initial crypto adopters and cyberpunks than a fully on-chain games. They are a pinnacle of decentralized application building, as they convey both technological advancements and cultural importance through game art. The newest example (in a small scale) of this can be found by the energetic and extremely positive stance of OGs towards the BTC’s “NFTs” aka ordinals. Refer to Hal’s Finney “crypto trading cards” email from 1993 if you are not getting it.
All the categories above have a meaningful reason to “why”, when it comes to using fully on-chain games. That’s why, in my opinion, games we are building cover the grand spectrum of crypto users. Phenomenon which hasn't really happened in a long time.
Oh, did someone mention the favorite “selling the shovels during the gold rush” - infrastructure building?
On-chain games are hard to build, and require the best architecture and infrastructure that crypto as an industry can produce. Even right now, so early, we are seeing the need for zkp hardware acceleration, due to the need for hidden information in some on-chain game designs. My intuition is that we will research, develop and provide most of the next gen crypto infra as needed to launch some of the on-chain games.
That brings me to the next big thing:
Oh irony, oh irony, you cruel witch. The best businesses in crypto are middlemen. At one point, the exchange model in crypto has made CZ the richest man on Earth in the shortest time in history. Outside of a standard service fee, and commissions from volume, crypto has been struggling to come up with sustainable revenue models. General path is to sell tokens or other variants of tokens, like NFTs. Even honest crypto companies generate really high costs, due to the novelty of technology (try finding top tier zkEVM devs on the market). We must find other revenue sources.
I can now think of the 3 sustainable revenue sources for on-chain games: own marketplace for in-game items (0.5-1% fee), selling each of the pawn in money games (again, Words3 style), and taking a volume fee on top of the direct p2p stakes in competitive plays between players.
Now, let’s come back and think more broadly about the applications we are just creating. Here are my observations:
In the 80s, when the personal computer industry was emerging, we saw a shift from big centralized units of computation, to small, decentralized machines. This movement helped unlock the creativity of individuals like never before, giving them tools and platforms to create and collaborate. Building the right tools for people yet again proven to be groundbreaking in our history. Forty years later, Apple became the biggest company in the world.
In the 90s another shift happened. This time we figured out how to connect all of these single, powerful units, now equipped with personal computers. Highly specialized individuals could now connect and work together. It didn’t matter where you lived physically. New industries emerged. Search (Google), e-commerce (Amazon), multiplayer games (WoW).
All of them changed how we deliver products and search through the vast amount of information. Ship goods via the common layer of connectivity that then influences the real world actions. How we interact socially between people from different countries and cultures, now connected under the same mission, set by the developers of the rules we saw inside these massive games. Thousands would align under the same banner or guild, and storm the castles of opponents under the fictional kings.
A new century has brought us yet another revolution. The problem was simple. How to index every human on the planet in one registry, and how to incentive people so that they will index themselves. Everybody quickly realized that such a network would be a perfect ground for credentials based collaboration and creativity over large sets or groups of individuals, again aligned under some characteristic or issue. Schools, favorite movie series, or a local fundraising initiative.
The common topic we see in all of these examples is: technology letting us build tools, unlocking people’s creativity, and then setting the common ground for a better collaboration. Does it sound familiar? Nothing really changed from the first human migration from Africa.
Despite revolution in personal computing, the internet, and then the social layer on top of the internet, something important was missing. A common unit of wealth denomination. With a social layer built on top of the global network with social media, we could see proof of our work materializing socially. More followers. Increasing activity. Yet one thing native to the internet was still abundant. Something that could finish the equation of collaboration over the interconnected network. Currency.
Then in 2009, Bitcoin was born. Money previously only imagined in sci-fi movies like StarkTrek. A common denominator, issued by the protocol, to the suppliers managing the network, and then able to be redistributed to whoever wanted, for goods and services.
With Bitcoin humanity solved the impossible problem of aligning the collaboration over the globally shared network, and coming up with the accepted consensus. Then some smart nerds figured out that you should be able to run programmable applications on top of a network like that. With Ethereum, we could not only transfer the currency by the rules of global consensus, but program how money should flow.
The first, most obvious applications were financial ones. Related to trading. Programming the money flows in accordance with rules already known and familiar from the traditional finance industry. Built on top of the expertise of over three millennia of trade.
It’s 2023 now, and it’s time to break those rules, and create our own. A new type of applications built for the crypto networks, based on the expertise of 30 years of the internet. We can do so much more than mimicking traditional finance. Decentralized applications should use the properties of being shared among all the participants in the network, in the nearly real time. No time in history have we seen such a massive platform for human collaboration and creativity without a central overseer.
The first type of these new applications are multiplayer games, since they require a set amount of people collaborating to solve problems. Games are also perfect for a potential virality, which could spread the awareness of such applications, giving them the initial momentum, and beginning the snowball effect.
(virality - massive networks of decentralized individuals judging the quality of the content, and picking the winner)
With games, we can discover a periodic table of these new rules by which we can design money flows in global, collaboration networks.
“They are as revolutionary as arcades, consoles and mobiles”
We are seeing first attempts to create complex logical systems with a pure adventure and entertainment use-case on decentralized computers. I’d argue they are going to be even more revolutionary than the previous examples, since the state of the game is shared among all the network participants, systematically testing human collaboration. Learnings from these tiny fun games can then be used to build a much stronger decentralized networks, knowing how users will collaborate and act in different scenarios under various conditions.
The attack of 100 players that need to cooperate without the built-in ability to trust themselves on a castle in an on-chain game, could even potentially teach us about different solutions to the Byzantine Generals Problem, when there is a reward at stake. On-chain games are the experiments needed to teach us how to solve various scenarios when collaborating at scale without a central unit of governance, and only knowing the initial rules of the system.
“Current on-chain games are limited by the blocktimes, latency, and information-hiding”
That means on-chain games are closer to the board games or turn-based RPGs/strategy games, than a real time FPS. Player’s action per second is limited to the time block is confirmed and broadcasted to the rest of the nodes in the network. Nevertheless, the vast majority of known game designs are possible to build under such conditions. Let’s also account for all the future game modes and game types that were previously impossible to build without blockchain/crypto technology. A new game type I am the most optimistic about is a MMOTBS, with tens of thousands of possible concurrent players making nearly real-time changes to the board/map/battlefield via units placement. Such builds don't need information-hiding, since there exists a natural unknown of the motives and moves that can be continuously (blocktime) submitted in fixed time by all the players.
“Longevity & immersion”
I feel like the fear we all naturally have is making something that will be forgotten in a week. Current gaming landscape is broken. AAA games spend hundreds of millions, on years of development only to be put back on the shelfs in a few weeks after the release. Only a few survive to be played for years.
With on-chain games, they can be reused, rebuilt, and remade. Even by the different teams, or people who just love and care about the title, or a new genre. When it comes to immersion, it will be much stronger, because there is a real value at stake, not just our time spent playing. It’s not for everybody, but crypto participants are highly competitive in nature. With on-chain games we can redefine what esport is, since all the players are playing for “stake” at any given moment. It’s Hungry Games for millions, and for potentially hundreds of millions to watch live streamed.
“Non-trivial gameplay, persistence by forkability and a worldwide character”
No on-chain game server can ever be shut down (see WoW shutting down in China). On-chain games are a story of evolution by mutation (forking). The best mechanism we have for innovation. The same mechanism that worked in creating the industry defining genres like MOBA and Battle Royale. They were made as forks, by the community. As more and more players join the battlefield, each outcome of the play is nearly guaranteed to be different, making the experience unique and hard to forget. It’s like going to a new Star Wars movie, and as more and more people join you to watch, the story in the film is changing. The outcome is unknown to the last block. And even then a reordering of transactions inside a block may result in an unforgettable experience.
“Modular, open structure”
Again, it’s the same story of evolution and mutation in the open environment. Something new is introduced, we then iterate over it in all the possible ways, forking it, adding new features, trying to see what works. Crypto market is a perfect playing ground for experiments like this. That’s why in 14 years we have created an alternative financial system and the first decentralized, programmable computer from scratch. Because we’ve embraced the best solutions to progress that nature has given us.
“Hyperstructures & trade in global networks”
I don’t fully believe hyperstructures are possible, because once someone builds it, the incentives are to make profit of it. I don’t see why any individual or a team would pursue other goals. It would require someone like Satoshi, or changing human nature. Maybe a properly trained AI could do it. It’s not a human way of thinking.
With on-chain games we can also build new rules defining how ETH (or any other currency/token) can flow. Historically with dApps, we have built them with the same rules in mind as traditional finance. With on-chain games, money flows can be dictated by other rules, like: two players participate in the battle. Whoever wins, gets the ETH stake. So we built dApps on top of the expertise of the internet era and activities known from MMORPGs for example, rather than pure traditional finance (lending, borrowing of funds, trading, locking).
“Smart contracts allow entities & individuals to work together and share revenue, eliminating the need for trust”
Same rules apply and amazingly amplify competition, with ETH rewards at stake, in a trustless environment. As Bohdan from Mitreum says, when the system is decentralized and players can trust that rules of the play won’t change, stakes can go really high.
“Games are the testing ground for generalized governance primitives”
I would go as far as saying that on-chain games can become a testing ground for generalized coordination between multiple agents in the global and trustless environment. Learnings like these will be crucial in, for example, future space exploration & settlements missions.
Other random thoughts:
Games are the testing ground for generalized governance primitives. I’d say a better idea would be: Generalized, upgradable ranking & experience system for on-chain games in the form of SBT.
Why? Because being forced to use some arbitrary token for your game (when you can’t set the rules of distribution yourself) can break it.
Just as we saw with metamask becoming the wallet standard used across the whole industry, I believe introducing the generalized standard for tracking users on-chain activity in games is a massive use-case. Any on-chain information can be imputed into the contract, ex. first game of the day, number of killed opponent units, or games won. Such applications can then be extrapolated to more games, serving as a basic credential system for all the players. We can further think of additional use-cases of having standardized ranking system for all the on-chain games. We could go as far as saying that it might serve as a credit system for under-collateralized lending/renting of NFT assets, based on the on-chain gaming activity and history.
(I think similar ideas were introduced in the Decentralized Society paper by Vitalik and others. But in the example below, we are moving from theoretical applications of SBT to something every player can use.)
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Link to James Brodie article: