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Cryptogaming sucks – but developers can fix it

by SuperiorInvest

What we have today in terms of web 3 games doesn’t work. Play-to-earn didn’t work and neither did play-to-earn or any X-to/and-earn. In addition, non-fungible tokens (NFTs) are viewed with suspicion by traditional players. They dip expensive monkeys and are skeptical of big game publishers using NFT lipstick for additional monetization.

Nobody yet knows what a successful Web3 game will look like. To achieve this, we need more developers to experiment with more models. We need an infrastructure that lowers the barriers to Web3 game development and makes it easier for developers to experiment. This is why it is essential to invest in the development of basic infrastructure rather than getting carried away by speculative hype.

The Web3 gaming infrastructure can be divided into two phases:

  • Preview: Infrastructure to launch before the game
  • Post-release: Infrastructure for post-game launch.

In both development stages, the gaming Web3 needs technical infrastructure (blockchains, analytics and tools), financial infrastructure (marketplaces and launchpads), and a third category that cuts across both types of infrastructure, such as metaverse platforms and guilds.

Mint navigation in development before release

Game developers have a wide range of options to choose from when deciding where and how to mint NFT games. Dedicated gaming blockchains like ImmutableX and Klaytn offer low to no gas fees and high throughput.

Many games are also setting up their own blockchains for maximum enjoyment flexibility and scalability. Axie Infinity launched a Ronin sidechain and DeFi Kingdoms has an Avalanche subnet called the DFK Chain. However, starting a separate chain is not technically simple.

Upstart players like Saga are trying to capture this new demand by offering a streamlined experience for developers looking to launch their own chains.

Unique active wallets connected to DeFi and GameFi applications from January 2022 to August 2022. Source: DappRadar

In the future, in addition to building your own chains, Web3 game developers opts for the simplest experience with complete Web2.5 integrators that simply offer SDK and API toolkits. Forte, Stardust, and Particle Network are examples of full-stack infrastructure providers that cater to the developer experience.

Inflationary tokenomics is on the wane

Web3 games have the option to fund initial development by pre-selling game tokens and game assets. We have seen the rise and fall of the inflation token economic model.

In the future, the sale of tokens and game assets, especially those with equity-like management and ownership characteristics, will be more selective. Projects are whitelisted or prioritized by buyers who are players or meaningful contributors such as content creators, infrastructure providers, and community managers.

Social engagement mechanisms must be increased

The infrastructure for game growth and engagement on Web3 is in a tricky chicken-and-egg situation as traction is still relatively low due to a lack of compelling games.

However, once a few Web3 games reach critical mass, the network effects from identity data will allow these platforms to adopt faster and innovate collectively.

Related: GameFi developers can face big fines and hard time

In addition to the lack of compelling games, familiar aspects such as reviews and social features are missing from Web3 games. There is huge scope for competition and innovation as users can easily transfer to new entities without losing their assets.

Asset Unlock Tool (NFT).

Web3 games generally share value capture with their players and community. Instead of buying everything from the game creators, players can earn or buy game assets and currency from each other, creating a player economy.

For mature Web3 gaming economies, productive digital assets become an attractive source of revenue through leasing, lending or betting. In fact, successful games may even choose to capture their own financial layer by creating their own replacements, given how lucrative it can be, as in Axie Infinity Marketplace or the new StepN decentralized exchange.

Guilds and metaverse platforms

Finally, there are guilds and metaverse platforms that offer game funding, integrations, and partnerships. They are well positioned to be at the heart of gaming on the Web3, as a major publisher and distributor of traditional gaming. The key difference is that players and creators can own significant stakes and contribute through governance through decentralized autonomous organizations.

Sandbox and Decentraland are the premier metaverse platforms. But both require developers to buy land up front, so a lot of land has been sold to speculators who don’t contribute anything meaningful to the ecosystem. A different approach is taken by Mona, which is free to creators up front until the space is minted and sold.

Related: Get ready for the feds to start charging NFT traders

Meanwhile, they have Web3 gaming guilds such as Yield Guild Games and Merit Circle thousands of players on board to support upcoming games, especially Axie Infinity.

Guilds are forced to differentiate themselves amid increasing competition. Snack Club, for example, connects Loud, Brazil’s largest esports and gaming lifestyle group with 300 million followers. Jambo is building an African super-app that includes telco services and decentralized finance in addition to gaming.

Games play a vital role in our lives and have long been the frontier of human experimentation. What we’ve seen so far in Web3 games is part of that experimentation. There are undoubtedly many pitfalls.

Most current iterations of the Web3 gaming economy are problematic because everyone assumes they’ll make money playing games. That’s not how economies work. So let’s not confuse speculative hype, which is fickle and volatile, with real adoption and retention.

Shi Khai Wei is the General Partner and COO of LongHash Ventures, a Web3 focused venture fund and accelerator. In 2021, Shi Khai was awarded Forbes 30 under 30 in recognition of his achievements. He was previously a management consultant at McKinsey & Company focusing on digital transformation and analytics across the financial and telecommunications sectors in Southeast Asia.

Saga, Particle Network, Mona and Jumbo – mentioned in this piece – are LongHash portfolio companies. This article is for general informational purposes and is not intended and should not be construed as legal or investment advice. The views, thoughts and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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