Written by: Ryan Berckmans

Translated by: Deep Tide TechFlow

Paradigm recently published an article on the open problems of on-chain games. I used to work on game and virtual world development before Ethereum, and I would like to share some thoughts in response to Charlie and Doug's article. In the following text, "you" refers to Paradigm.

Four Types of Chain Types for Basic On-Chain Games

It seems that there are four basic types of blockchain, although one of them may be purely theoretical:

(Public, Private) x (Centralized, Decentralized)

- Decentralized public chains such as BSC. Depending on different people's opinions, this may or may not include Solana.

- Public decentralized chains such as Ethereum or advanced L2 solutions.

- Private centralized chains, such as federated chains running in industry organizations' VPNs. Or Ethereum zk L2 that keeps data off-chain and restricts the list of participants, but settles on Ethereum.

- Private decentralized chains are an interesting concept, which may be purely theoretical. Monero? Cryptographic EVM?

These types of chains provide us with a perspective through which we can explore the potential of pure on-chain gaming.

1. Why put games on private, centralized blockchains? What functionalities can the Baseline blockchain architecture provide that may not be related to public or decentralized aspects? For example, for a closed, centralized game, the EVM architecture, infrastructure, and tools may provide a platform with superior functionality or lower operating costs than existing solutions.

2. Why put games on public, centralized blockchains? What are the advantages of public chains compared to private chains? Is there a possibility that decentralization could become a disadvantage and centralization would be preferred?

3. Why put games on a public, decentralized blockchain? What benefits does starting with a public chain and adding the resistance of a highly powerful decentralized property and censorship system, along with the expectation of a permanent chain, bring?

To what extent is the reason for putting games on the blockchain due to the ability of core blockchain technology, rather than the openness or decentralization of the chain? This seems to be an interesting research area.

This is a Mod, or an API?

I think you're right, Mod is a great example of a competitive on-chain game. Typically, the problem with Web2Mod platforms is that the Mod execution environment is an internal game environment. That is to say, no matter how cool your Mod is, it usually has to run within the game itself.

Compared to the Web2 Mod platform, on-chain games can provide better data, assets, core algorithms, identity, and structural separation (as well as the composability of the former), thereby creating opportunities for any downstream architecture, integration, and experience.

Of course, the Web2 game API has provided "downstream freedom", such as extensive third-party tools for EVE and League of Legends.

So, what is the difference between the Mod platform and the API?

Of course, in Web2 games, APIs are usually separate products that are detached from core data, so they often have different data and functionality from the underlying engine from a technical standpoint.

On-chain games can provide the freedom of Mod functionality and API, as well as all other benefits that exist on-chain.

Regarding the question "What is the difference between Mod platform and API?", for blockchain games, the answer may be "Who cares?"

Through public smart contracts, open data, and other superior building blocks, we enable the market to offer anything it wants and go beyond the classification of off-chain Mod and API.

In the field of product economics, combining N abilities (each of which has value in an independent state) on a surface often results in a total value that exceeds the sum of its parts. This may help to inspire our intuition to have high expectations for the integration of Mod, API, payment, and other aspects in blockchain games.

For example, if we publicly disclose the data and algorithms of player guilds, the market can use this information to provide downstream experiences for any relevant stakeholders. Examples include investor or advanced user dashboards, management tools for guild leaders, secret productivity tools for top guilds, tools for distributing team loot (a common pain point), and completely independent games using guild member lists for team-building activities.

Of course, these downstream experiences may support any cryptographic financial components, such as payments related to core games or native to downstream experiences, and can be directly embedded into players' main experiences (i.e. game clients), or provided as third-party web pages, applications, data sources, Times Square billboards, etc. Do these meet the definition of Mod? API client? The answer is "yes".

It seems that the on-chain capabilities have blurred the boundary between game mods and APIs, just like modern wallets and account abstractions have blurred the boundary between transactions and operations.

Did I pay someone or vote on a social post? Did I create a video call or mint an NFT representing the call as a composable artwork that can be integrated into Web3 social? The answer is "yes" - both are possible.

How far apart are two L1s? Any two L2s? Two L3s from the same family?

For users, all costs are transaction costs, and all gains are transaction gains.

This does not refer to the straight-line distance, but rather the user experience.

An advertiser once joked that they shouldn't spend $1 billion to shorten the train travel time to London, but should spend $50 million to provide better WiFi and more attractive train staff.

As you know, there is continuous evidence to suggest that soon, cross-chain/inter-chain exchanges may be as simple, fast, easy, and relatively inexpensive as L1 exchanges conducted today.

If cross L2 DeFi operations become "good enough", this may have an impact on the actual benefits of combining the open economy of gaming with mature DeFi/liquidity, rather than being placed on an application chain or other chain.

For example, suppose a chain successfully becomes the host of a valuable and moated chain of independent game open economies. The factors that make this chain so ideal for on-chain economics may have nothing to do with DeFi or liquidity.

If there are more players, will Ticks increase?

Regarding the technical open issue of Ticks, I appreciate your mention of modifying the state transition function of Rollup, including a game loop with the time difference since the last Ticks.

(Note from DeepTech: tick means the number of delay frames per second on the server)

Another research area may be to change the frequency of Ticks based on the amount of player activity, and the size of Ticks can be either constant or dynamic.

For example, consider a world where time speeds up or slows down based on the popularity of the game. Alternatively, time may not speed up, but the resolution increases.

We can imagine a zero-knowledge proof "Ticks World Chain", where anyone can submit the next Ticks of the world without permission, as long as they are willing to calculate. In the early stages of its launch, the world chain may run 5000 Ticks per day, and in the following years, when only a group of loyal nostalgics remain, the speed may slow down to 20 Ticks per day.

Of course, in this example of a PoW blockchain, controlling the amount of Ticks and its relationship with hardware performance may require support similar to Bitcoin's difficulty adjustment.

By introducing artificial transaction costs, we can limit the maximization of incentive compatibility

I agree that composability is essentially financialized, which has led to an increase in economic efficiency and pushed the system to its maximum incentive compatibility. I call this "maximizing incentive compatibility."

As for why composability produces this effect, a fundamental reason may be that composability reduces transaction costs, as explained by Adam Smith: (i) transaction costs limit the scope of the market, (ii) the scope of the market limits specialization, and (iii) as specialization increases, we obtain better, cheaper, and more novel goods and services.

In other words, by reducing transaction costs, i.e. minimizing friction, composability helps increase the transaction network scale of on-chain games.

A large-scale trading network enables specialization, thereby achieving internal financialization, creating high economic efficiency, and further pushing the game to its maximum incentive compatibility.

If the transaction costs are high in the opposite direction, the intrinsic financialization may be hindered, and the game often stabilizes in a state of low economic efficiency, with players only responding partially to incentives.

Due to the extreme ideology of reducing transaction costs to promote economic efficiency and incentivize compatibility, on-chain games can intentionally limit the market scope by introducing artificial transaction costs to find solutions.

You gave an example of using licenses as transaction costs, which can suppress inherent financialization.

Let me explore the relationship between access control and the introduction of human transaction costs to limit the maximization of incentive compatibility:

Interesting research questions may include whether all possible transaction costs that could be introduced to mitigate or limit the internal financialization and economic efficiency are instances of access control? What are the fundamental strategies or components that can be used to reduce internal financialization?

My intuition is that, yes, any mechanism that can introduce transaction costs to limit internal financialization seems to be a possible instance of access control, and there may be various orthogonal access control primitives.

Examples of permission control that restrict internal financialization and economic efficiency may include:

- Use password/identity authentication. Like all passwords, this can be (i) who you are, such as a mage above level 90, (ii) what you know, such as a password discovered in a dungeon, or (iii) what you have, such as the Ganjiang Mo Ye sword.

- Usage rate limit. Of course, this can be a one-time operation for each identity in each time period. Or there may be ten chances for the entire game world within each cycle, and perhaps one person can claim them all.

- Whitelists, including proprietary whitelists run by developers, on-chain governance-based whitelists, or lotteries. There is an interesting intersection with cryptography, as technically every form of access control is a whitelist. We can generate a whitelist that lists everyone who has completed this week's team battles, obtained special items this week, recently met with at least five players in a city tavern, or has ever obtained a specific legendary item.

After building the permissions, there is a separate issue of how to handle it.

The key is that the degree of incentivizing maximum compatibility depends on the actual feasibility of transaction costs.

Therefore, incomplete access control may be sufficient to maintain the economic interest.

For example, over the years, "Path of Exile" has continuously reduced the level of friction in in-game trading. However, it is well known that it requires characters to physically meet in the game in order to manually exchange items in the trading window.

The developers of "Path of Exile" do not allow automatic item transfer because they understand that this creates the minimum transaction cost friction necessary to make the economy interesting. Automatic item transfer would create "excessive" economic efficiency, disrupting the pace and exploration of the game.

Another example is the real-money auction house in "Diablo III", which is a good case study of the danger of unexpected economic efficiency.

Within less than a month, players have quickly completed the entire game, several months faster than what the developers had anticipated.

In the era of Diablo III, it is foolish to search for items on your own - anything worth using is cheaper on the auction house. Why spend 50 hours farming equipment when you can buy a great item for 30 cents? Why be the worst player in your friend group when others can become invincible for just $3?

Introducing artificial transaction costs to regulate the maximization of incentives compatibility seems to be an interesting research area. Especially with regards to the issues and differences in tools related to established patterns in successful on-chain and offline games.

On-chain Metaverse dynamics seem to be easily handled

Regarding the issue of stagnation in the metaverse game industry, I appreciate the examples you mentioned about seasonal trends, automatic feedback, and new governance mechanisms.

The concept of seasonality is deep and diverse.

The new season is an instance of most or all of the content in the game. Will players start from scratch again? Is the new season mainly focused on elements such as rewards and leaderboards, or is it focused on physical concepts? Is the new season mandatory? Can old players choose to opt out and continue playing the old season? How will the impact on the chain affect these decisions or opportunities?

The blockchain industry may provide new seasonal or dynamic models. For example, due to the on-chain capabilities of digital scarcity or zero-knowledge privacy.

Using Augur as an example, it adopts a voluntary forking model, where users must make mutually exclusive choices among N target forks.

What does immutability mean for games or worlds? This is a great example of the virtual world theme, with deep literature dating back decades. Early virtual world designers understood that immutability and persistence have many key points and structural implications.

We may tend to see immutability and persistence as similar concepts, but in games or worlds on the chain, they are orthogonal.

Immutability is the content that can be changed, why it can be changed, and who changes it.

Persistence is the concept of how long content remains changed and why it may revert to a certain baseline or next generation.

One interesting empirical result of the old virtual world is that there is a positive correlation between the mutation of non-permissibility and the types of mutations that will continue to exist.

In the old virtual world, the more people who could change things (such as anyone being able to change things, or only non-newbie, experienced players, trustworthy players, well-trained administrators, developers, etc.), the more diverse the types of changes that persisted (such as only character changes persisting, or objects, physical locations, the entire world, or functional/custom algorithms also persisting).

It has been proven that this correlation is not only due to the principles of product economics (i.e. "allowing more people to change things leads to more things being changed"), but also due to the positioning or value proposition of the game:

Only a few people are allowed to engage in limited and persistent changes in games, which often resemble movies or prescriptive approaches when dealing with player experiences. "You are playing in our world."

Games that undergo highly sustained changes by many people are often sandbox-style and have extremely high sociality in terms of player experience. "Our world is created by you."

This historical relevance and whether it will continue to exist in blockchain games seems to be an interesting area of research.

Perhaps a game can be played multiple times by any number of people, but cannot be modified or extended by anyone. Such games perform very well off-chain, such as Tetris. Or imagine, even if the updates stop, how many people will continue to play League of Legends or Dota. Can similar games succeed on-chain?

In short, invariance and persistence and their relationship with the stagnation of meta-games and opportunities for on-chain games seem to be a rich design space and research area.

Now turning to the problem of stagnation in the metaverse gaming industry:

The key is that meta-game balance is a function of the opportunity cost net value of the entire game or a sufficiently connected system, even the game network.

Usually, refreshing meta-games only requires adding new content that breaks the cost balance, without modifying old content.

Please note that a game that only accepts data extensions can still receive new code by materializing the algorithm into data. This is a popular pattern in Web2 game engines, especially for implementing more advanced creator tools.

You mentioned automatic feedback to help refresh meta-games. Of course, automatic feedback can take countless forms.

(i) The next season of the game is modified or based on the previous season's winner and loser.

For example, perhaps the most successful player from the previous season becomes the team leader for the next season. In this case, the popular strategy from the previous season determines the challenges for the next season.

Perhaps mutation can be achieved through prophesying or crowdsourcing. Imagine a zero-knowledge machine learning + data pipeline that submits seasonal mutations, which are provable transformations output by privately authored hint models written by players.

Classic Motivations of Gamers: How to Apply Them to Blockchain Games?

There is a lot of experience and theoretical evidence supporting the argument that players usually want to relive the hero's journey in each game. Therefore, the ability to transfer powerful items obtained in old games to new games, for example, often undermines the value of the gaming experience.

Does this mean that on-chain games must be limited to a subset of motivations unrelated to Hero's Journey, such as competition, speculation, and socializing? This seems to be an interesting area of research.

Nick Yee has conducted years of research on the motivations of gamers. First, he conducted a series of studies with players in online massively multiplayer role-playing games (MMORPGs). Later, he conducted research at his company, Game Motivators, on gamer motivations.

Raph Koster has a greater understanding of virtual worlds and the motivations of players who reside within them than anyone else in the world.

Nick and Raph will both be interesting research partners. But what questions would you ask them? How do we effectively communicate between Web3 and classic games/virtual worlds?

Virtual world is a place, not just a game

Experienced virtual world builders believe that these worlds are first and foremost places, rather than just games.

For these experienced virtual world builders, the differences between Facebook, Twitter, and World of Warcraft are insignificant compared to the places they all provide for humans to have some governance concepts.

Experienced virtual world builders will widely use the term "governance" like "the US government", rather than narrow and functional DeFi governance.

"Before becoming a game, the virtual world was a place." This important concept is significant because it provides a high-level general principle that drives the success of games and entertainment products:

For example, perhaps an important part of blockchain games is ultimately better described as "activities in the internet world". These games can be deeply embedded or easily accessed from other online experiences, such as hyperlinks, regular web pages, social media bots, etc.

Perhaps the social layer of the Internet can ultimately succeed in providing "external governance", thereby requiring less governance or management on-chain compared to off-chain for games and the world.

Perhaps one successful path for blockchain-based gaming is to rely on traditional social platforms for message delivery and player connections. This is not only for viral growth, but also for the core game loop. Clearly, blockchain capabilities such as open data, permissionless access, and embeddability may drive this forward.

In short, what is the impact of the blockchain on games or worlds? What are the opportunities or obligations for governance? What about social functions? Blurring the boundaries between the world, games, and the internet? These seem to be interesting research areas.

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