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The road to web3 game building

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The way to native games.

The building of a web3 game

Original author: Blue Fox Notes

Web2 games vs. web3 games

Web2 games are Free To Play (Free To Play) and their core is To sell virtual items such as equipment. In this model, game companies and others control the direction of the game, with the primary goal of capturing more revenue from game design. Furthermore, while players buy virtual items, they don't actually own them. Of course, there are tradeoffs that need to be made, not all for revenue, but also for the player's experience.

Web3 games are P2E (Play To Earn) models and open ecology, with the core of making the player the true owner of in-game items. After P2E made players a major part of the game, player retention increased. This can be seen from Axie Infinity, which has a higher retention rate than most Web2 games.

Web2 modification games and Web3 games

Axie Infinity becomes the banner of Web3 games. Many Web2 games try to replicate its success, hoping to become the next Axie Infinity. However, some games still have a corporate-controlled model, and incentives still don't activate players. This may make these "modded" games difficult to develop.

This is a "crypto game" in the guise of a modified game, the main feature of which is to use NFT technology to make its virtual items represented by NFT, and also to issue its tokens. But the game itself is still controlled by the project side, including the direction of the game, the experience, etc. For the project side, the core is to sell more "NFT" and get more revenue from it.

These "modded games" make use of encryption, but have a lot in common with Web2 games. While the NFT sold is owned by the user, the design and distribution of the NFT itself remains in the hands of the project owner. In other words, the "modding game" itself is not a true DAO, nor is it a true open ecosystem, but rather uses blockchain to build a system that is still closed.

Native crypto games are not only about NFT of in-game "virtual objects", but more importantly, it is a process of building an open ecosystem, a process of connecting all participants in the ecosystem through financial incentives. Not only developers, publishers, players, but also guilds, investors, etc. If there is a certain dominant mode in the start-up process, it is understandable, but its final direction is to open, for example, part of the game revenue into the DAO Treasury, the Treasury support ecological development, etc. The development direction of the game is determined by the participants, and the player experience and incentive mechanism are gradually promoted through DAO. It even uses composability to communicate with other meta-universes and so on.

Web3 games are finally becoming community games that can grow from the bottom up. Web2 "modding games" still relies on top-down drive and is ultimately limited by its closed system.

Web3 games are crypto native games

*P2E and community DAO governance

In web3 games, P2E is an important part. It can involve the player in the ecosystem of its development, and the player has a real stake in it. Players have a need to express themselves and participate actively in the development of the game. As the game progresses, the participants become more aware of where it is going.

For example, how do you balance in-game assets? Without balance, the in-game economy would collapse, so how to balance token production and consumption? How does the game DAO Treasury accumulate assets to support its ecosystem? How does the game open up more scenarios? Does the game collaborate with other games? How does the game enhance the player's experience? And so on.

There are a lot of big decisions that need to be made by all the players in the community, and if one group of players is too concerned about their own interests, such as investors, then it may lead to the loss of players, and ultimately, it may not be in their long-term interests. These are all issues that need to be considered.

Since Web3 games adopt the GOVERNANCE mechanism of DAO, its core is not the priority of single subject's best revenue, not the priority of increasing more users, not the priority of simple retention rate, but the priority of participants' ecological interests. Of course, there will still be competing interests among the different players, but there will also be the interests of the community as a whole, which is an open ecosystem with creators, builders, users, investors, etc. Without proper checks and balances or direction, eventually a web3 game will die. In the end, as with web2 games, there will always be a small number of successful games.

Finding a way to drive game development through DAO governance is a major issue and there is no successful precedent. It is a process of continuous exploration.

* True open ecology

In a web2 game, data itself is one of the biggest moats, whereas in a web3 game, data is open and can be built by any builder and can innovate across different game ecosystems.

If a game's community is better built, it has a chance to attract more builders, leading to a larger game ecosystem. In the open situation, the game no longer has the data moat of Web2, the quality of the game itself, the experience of the player becomes more and more important, and the reasonable economic incentive mechanism becomes more and more important.

In this context, the possibilities for web3 games are endless, and with financial incentives, creators can build innovative games to create experiences that never existed before. Players can pool their forces to decide which meta-universe to cooperate with. The composability of Web3 games is similar to the composability of DeFi, and we can see the birth of creative products in basic Lego bricks. Interconnections across the meta-universe may include object image, rules of interaction, asset value, player reputation, etc. There is even a cross-chain protocol that allows for intercommunication between different chain games like Illuvium and Star Atlas.

The sustainability of Web3 games

Just like web2 games, web3 games have sustainability issues, and the number of successful games is still very small.

The sustainability of a game depends primarily on the cumulative value of the ecology itself, and sustainability occurs when the value flowing into the ecology exceeds the value flowing out of the ecology. That is, we often talk about having application scenarios. When a player invests time or money into a game, there is consumption, and once consumption exceeds output, the in-game economy begins to grow, attracting more players, builders, and investors.

One of the important reasons for the development of Axie Infinity is that, on the whole, its SLP consumption is higher than output. There must be a balance between the consumption of Axie through reproduction, and the production of Axie through participation in battles and quests. However, only reproduction itself may require more players and investors to maintain its sustainability, and new usage scenarios are needed to maintain and increase its value by getting participants to invest more.

Therefore, for web3 games to be sustainable, they need to consider the inflow and precipitation of value.

Composability of web3 games

Through its token economic incentive mechanism, Web3 games have built economic systems of different sizes. Some are sustainable and developable; some cannot complete the cold start; some cannot find the impetus for development after completing the cold start.

In this cold start, the developer, as the first mover, can come up with the game's world design, theme, player type, player actions, player world, game assets, etc. From there, ownership of the game can be divided among participants, early backers and players in order to attract more participants. What connects early participants are financial incentives, and early distribution patterns often determine community loyalty and future support. TreasureDAO early distributed its MAGIC tokens to community users, which formed its first loyal users. Once basic support is in place, it means that early consumption can support output, thus completing the cold start.

The games that do grow may not start out as big games. There may be a point at which a new mechanic can attract a loyal community of players, builders, investors, etc., and build from there.

When games grow to a certain point, there is composability, which leads some games to be more ecologically resilient.

Data is no longer the moat of web3 games

TreasureDAO began to develop from the community, it found inspiration from loot project development, through the community distribution of tokens, through the construction of NFT market (based on THE L2 network of Arbitrum) series, through cooperation with different meta-universe games, through the construction of its own flagship games, By working with liquidity protocols (such as OlympusDAO) and with Mural, an NFT circulation protocol that spans different EVM chains, it tries to weave its own network.

In addition, its token mechanism is coordinated with the resources in the game. New tools and new equipment in the game need to be upgraded and iterated, which requires the cooperation of MAGIC token and resource NFT, which further produces the effect of mutual promotion.

Of course, mechanics alone do not guarantee a game's success. The success of a game requires fair distribution, good game narrative and gameplay, and ultimately player size.

The real underpinning of sustainability is the community culture that the game itself creates. It's the culture that attracts people to stay for the long term, and then there's value retention and sustainability. Therefore, web3 games need to have their own culture. If MEME culture can be formed, it will be more sustainable and more stable.

As web3 games grow and participants' time and money are more likely to become decentralized, how they focus on their players becomes more and more important.

The more core participants, the higher the cost, the higher the loyalty, the more people will be attracted to come in. From the beginning, web3 games will do what defI did, where the defI protocol pays the most money. This is where the design of financial incentives becomes increasingly important: give incentives to real contributors and let real contributors settle, rather than rewarding capital flowing back and forth.

Ultimately, the value of a web3 game depends on how much of a loyal community it has and the culture that goes with it. The data moat of web2 game mode is gone. Culture and sound economics are the strongest moats of web3 games. This is also the fundamental reason why Web3 games should be built in accordance with the spirit of Web3 at the beginning. If there is no distractions at the beginning, the culture behind the game will eventually come out and return to its "everything is for my use, not mine".