In the past few months, I’ve spoken to people up and down the ecosystem of crypto gaming - from game directors, designers, investors, blockchain operators, to platform builders, to understand what it is, and what the future holds.
I’ve had questions about crypto currencies in the past. Adding gaming and a huge hype cycle to the mix, it was tricky to sort out the signals from the noise. I hope this article helps clarify and strengthen our understanding of crypto gaming. It's also the beginning of a conversation and I welcome your comments and thoughts (find me @theBrandonWu)
I've split this into two parts. In part 1, let's look at crypto's impact on the macro level around the games we build. In part 2, we'll take a closer look at crypto assets themselves on a micro level.
Firstly: I am assuming you have a basic understanding of NFTs and the concept of digital scarcity, and have had some exposure to blockchain gaming.
Part 1: Macro — New Participants, Permission-less Opportunities, and Communities
New Categories of Participants around Games
Let's start with the thing that I am most excited about - the ability to bring in new categories of participants to the ecosystems in and around games, each with new value-adding activities.
Games have long had two main categories of participants - players and developers. Developers create a fun experience for players to purchase and enjoy.
Now with tokens and new ownership models, there can be collectors, community organisers, landlords, traders, promoters, creators…etc. New categories of participants can get involved and participate in the economics around the games efficiently.
You can be a landlord who rent out the property you've beautifully created in game, a trader who analyses the market of in-game items to find arbitrage opportunities, or a collector who enjoys the thrill of hunting for valuable assets and completing sets of collections. You can also be a marketer who takes on tasks set out by the community to earn tokens. (More on this in the community section below)
Just as eSports introduced spectators and sponsors to competitive gaming (many of whom don't play the games themselves), crypto is allowing more people to engage and participate in the activities around games without necessarily being a player.
This opens up new opportunities for shared interactive experiences.
It’s the meta meta game. I believe it will make gaming an even bigger market than we know it today, blurring the line between games and our digital lives.
Products for New Participants
All of these new categories of participants need to be considered and designed for if we are to maximise the value of blockchain for games. I believe the most successful crypto games will be ones that figure out how best to design around all the different incentives and motivations in the ecosystem around the games.
We will also see different products being built (by the developers or the communities) for different categories of participants, all integrated to the same game world. They will have different interfaces and interactions to suit the needs of each category of participants.
The interface for in-game asset day-traders will have more charts and fewer particle effects. The interface for landlords will look more like Shopify’s dashboard and less like SimCity.
The products can be a collection of desktop apps, browser extensions, Discord/Twitch add-ons…etc. Different apps connecting to the same game world.
These client side interfaces all interact with the same game, but they offer different utilities, and provide different values from the game itself.
Permission-less Opportunities
The new categories of participants are possible because of the new, crypto-enabled, ownership model of digital assets.
When assets are owned by players, they are no longer locked inside individual games. Anyone can build on top of them, and opportunities outside of the games themselves start to emerge. You can use high-value in-game NFTs as collaterals for loans, or rent out items you own to other players.
Bundling is one of my favourite permission-less opportunities. When in-game items are NFTs owned by players, they can bundle up items from different games and sell them as a single package, without having to get every single developer behind all of the games to work together to create the bundling.
Without NFTs, all it takes is a single developer disallowing the bundle to break the whole package; the permission-less nature of NFTs make this a feasible idea. With NFTs, you will be able to bundle up assets from a thousand different games, and list the bundle up for sale within a few clicks without months of negotiation.
Side-note on Bundling
Bundling is a powerful tool to create win-wins for both buyers and sellers. Quick Example:
- A market has one Seller who has 2 apples and 2 oranges to sell, and two potential Buyers.
- Buyer A is willing to pay $5 for 1 apple and $1 for 1 orange
- Buyer B is willing to pay $1 for 1 apple and $5 for 1 orange
No Bundling:
- Selling apples at $5 and oranges at $5 => Seller gets $10
- Buyer A buys 1 apple at $5 and 0 orange, Buyer B buys 0 apple and 1 orange at $5
With Bundling:
- Selling bundles of 1 apple and 1 orange at $6 per bundle => Seller gets $12.
- The bundle is attractive to both Buyer A and Buyer B, as they are both willing to pay $6 for 1 apple + 1 orange.
With bundling, the seller makes $2 more, and the buyers each save $4 (they would have had to spend $10 to get 1 apple + 1 orange without the bundle)
With non-player participants now in the ecosystem, bundles can have more value by appealing to these new group of people. Players place little value on items from games they don't play in a bundle. On the other hand, a trader might see a bundle as an arbitrage opportunity if they consider some of the items in a bundle to be hidden gems that will go up in value. The inclusion of new participants opens the door for new value creation opportunities.
The bundling idea came when we started discussing the value of Steam cards, particularly, what do you do with all the low value cards? There is a lot of wasted value in digital assets at the moment. Bundling is a powerful tool that can better extract value from digital assets. This gets even more interesting when we started thinking about bundling with raffles.
Bundling is just one example. With crypto, the efficiency gain isn’t necessarily on performance (how fast things can be done), or scale (how big it can get), but on how fast consensus can be reached (in the bundling example above, the only consensus needed is between the buyer and the seller).
We have increased the efficiency of machines to a point where the biggest speed bumps are now us humans. With crypto, we can increase the efficiency of humans. With permission-less-ness (composability), we increase the efficiency of human collaboration.
Community
The community of all the aforementioned new categories of participants will be the most valuable part of a crypto gaming project.
With 13k members on our Discord server, members help us with testing, moderating, hosting events, helping new players, creating content and tools...etc. And so far we've been rewarding their effort with Discord roles and in-game badges. These are good tools but also very limiting. The more "roles" you accumulate, the less meaningful they start to become.
The idea of leveraging tokens to encourage community activities is very compelling - a great tool for incentivising content creators & community volunteers (e.g.. tournament hosts). Having been a community builder in the past when I started the Seattle Unity User Group, I've seen first hand how a strong community can lead to value creation - creative collaborations, knowledge sharing, not to mention enhanced social well-being and the launching of new careers for many.
Modding, Creators, and User Generated Content
Crypto offers an efficient way to distribute value created by the community by way of tokens.
Crypto-enabled communities, Decentralised Autonomous Organisations (DAOs) in particular, can supercharge community and creative activities around the games. DAOs introduce a way for you to be rewarded for contributing to a project. As long as there are interests in the project, the development of a fan project can continue. There have been many times I was excited about upcoming mods (modifications to games) but disappointed when the people behind the mod decided to stop. There aren't a lot of incentives for someone else to continue the development. An efficient way to reward and attribute contribution is a huge benefit that allows us to embrace an open and transparent creative/modding scene around our games.(See Gitcoin)
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More on DAOs:
- Peter Yang “What is a DAO?”
- David Phelps “13 WAYS OF LOOKING AT A DAO 👇”
- Packy McCormick “The Dao of DAOs”
- @Cooopahtroopa “DAO Landscape”
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Can this lead to games being completely open-sourced and sustained by both the communities and the developers? When I first moved to the UK 6 years ago, I was intrigued by one of its prominent business institutions, John Lewis, one of UK’s largest department stores. John Lewis embraces a structure of strong employee ownership with an aligned goal. I believe DAOs could enable us to do the same with our communities.
Next Up
Now that we've explored how crypto changes the ecosystems and communities around games, let's take a closer look at NFT assets, their value, and their impact on game design in part 2.