So it’s been a while since I’ve written an in-depth article. I find it a lot easier to just write threads (on the spot) and post them on Twitter. I don’t really have much time to continue producing frequent content like I previously used to do for this Substack — but I will occasionally post articles like these. I think it’s important to have a lot of information in one article, rather than split across multiple platforms.

The Future Of Blockchain Games

I have wanted to talk about this in detail for a while, particularly because I am a founder of a blockchain game that is in the works (Treeverse) and will be in this industry for a long time. I am very optimistic about the blockchain gaming space.

But at the same time, I am pessimistic on some games right now due to things like overblown valuation, and even long-term bearish on the ideas of trying to integrate “blockchain technology” to something that doesn’t necessarily need it.

Loopify 🧙‍♂️ @Loopifyyy

some people in this space underestimate how much money it takes to make a good game, and how long it takes to make a good game

Traditional, Web2 Games.

There is a lot, emphasis on LOT, of things that we can talk about. But let’s start with Web2 Games because all of the points link up at the end. What are the reasons people play games? Here are 15 reasons from one of the first google searches. Check out the hyperlink if you want more detail.

Novelty
- Video Games give you the opportunity to do something new. It keeps things fun and engaging.
Competency
- Competency is the feeling of mastery and control. Some games that require skill to play well draw in users who want to become masters at specific tasks.
Exploration
- Roam free in digital worlds, external or internal. Maybe through quests that are designed for you to explore lore or RPGs where you design whoever you want to be.
- Anonymity is key as online games give players the space to be themselves.
Risk-Taking
- Three main types of risk: Competitive, Quest and Social.
- Competitive: LoL or Fortnite have excitement and virtual danger, risk being going down a competitive rank.
- Quest: The Witcher or Fallout are games that are character-driven were interacting with NPCs or players can change the outcome of the game.
- Social: Many video games are played with others, like World of Warcraft, an MMORPG. Fight with others and risk losing your items.
A Safe Place to Fail
- You can safely fail as many times as you want in video games as it’s all virtual risk you are taking on. Failing allows people to learn from their mistakes, like figuring out the strategy of killing the boss that you died to 5 times in a row.
Competition
- “Every competitive video game requires hand-eye coordination, fast reflexes, quick decision making, and strategy.”
- Competitive games gather a lot of attention due to eSports. Allowing users to play professionally.
Income and Career
- People make a living from gaming through eSports and streaming.
- Many gamers also have a very wide reach and a lot of power due to how many people tune in to watch them play games. What they say can impact a game for good or bad.
Build and Create
- Sandbox games like Minecraft or Roblox allow users to build and create experiences. Houses, mansions, or any structure they can think of.
- RPGs allow you to also create your own character that represents you through the game.
Building Relationships
- Building social relationships are hard for many people. Online games allow people the freedom to communicate with others globally in a safe environment.
- The popularity of social media platform Discord is a great example of demand.
Relaxation
- Many games are very fast-paced, but others are slow. Like Stardew Valley or Animal Crossing. Different people like different experiences.
- If you are looking to relieve stress and relax, some of these games may help.
Excitement
- Video games allow you to experience excitement sitting at home in your chair. It may be a 1v1 in a search and destroy match where you decide if your team wins or loses. Or it may be a horror game that you are trying to finish.
- Many gamers feel the adrenaline from some of these games and get addicted (again, for good or bad).
Escape
- Escapism is a primary motivation for most gamers. It allows them to forget what may be happening in their personal lives for a period of time.
- Video games are a common way to escape from people or situations.
Autonomy or Independence
- A big part of video games is being free and making your own choices.
- For someone who may feel they have no independence in their life, video games are a great place to be.
Measurable Progress
- Progress is a big thing in games. Seeing positive results after doing something. It may be hitting the max level in a game or unlocking a hard achievement.
Collecting
- Many video games give you the ability to acquire items. It may be finding them in the open world, or trading to get them.
- Some people seek new items to collect, not just use. It may be a skin that has no utility.

Games are already one of the biggest go-to experiences in the world for a majority of people. Especially because most of them are digital, you can enter these virtual worlds in seconds with one click of a button. Making a game is making an experience.

And making a p2e (play-to-earn) game is making an experience. Because people want to make money of course. Right? But, it’s not that simple. At least I believe designing a game in this way is unsustainable long-term.

Making a game fun is the most important thing, and then allowing them to earn NFTs as assets or a token as a bonus is the next.

Using the 15 points above, here is a little infographic for what I believe blockchain games improve.

Axie Infinity paved the way for blockchain games, it proved that the market valued ownership and p2e. This led to dozens of people creating blockchain games, and thousands saying they are going to create a blockchain game. It became a buzzword just like “Metaverse”.

But, it’s not as easy as making a 10K avatar project. Most founders of blockchain games that I have spoken to are focused more on tokenomics than gameplay. Tokenomics are very important, don’t get me wrong, but the game is what people are playing and that should be what you spend most of your time thinking about.

GameFi & Blockchain Games

Loopify 🧙‍♂️ @Loopifyyy

gamefi = defi / farming financial incentives with a visual aspect to it blockchain games = video games where you can earn tokens or nfts as bonuses

It’s important to define these words because they aren’t the same. It’s like comparing Poker to Runescape. This article is talking about blockchain games, but some games that I would classify as “gamefi” are trying to be blockchain games when I don’t think it’s possible to combine the two. It makes more sense for GameFi games to focus on tokenomics rather than gameplay.

Was This Poker Player's Luck Too Good to Be True? | WIRED

Traditional Game Studios

So a question I am asked often is,

“What if [insert popular game studio] decides to make a blockchain game or adds NFTs to their existing games, how will any of these crypto-native studios compete?”

Most of these studios will struggle to enter the blockchain game space because of public sentiment around NFTs. This is already stopping companies and celebrities in their tracks. It will hurt their brand more to implement NFTs as an existing game, or even if they decide to make more games.
They aren’t competing with “crypto-native” studios for most games. I believe the teams that have many “crypto-native” team members, will actually fail. For Treeverse, the actual team members building the game are developers, artists and game designers with years of experience.
In my opinion, it’s +EV for them to invest in blockchain games (at least for now) and collaborate with studios that are building already. It’s the best way to gain exposure to the inevitable big boom, without sacrificing their existing users that are against NFTs.

It’s already evident from the backlash on social media when hearing of the Ubisoft or Square Enix news interested in the blockchain gaming sector went viral. Many of the reasons that the general public hate NFTs are due to misinformation, which is unfortunate, and education is required for them to change their mind. However, it will be very hard. And, may take years. But, the more years traditional game studios wait for them to be accepted, the longer it will take to catch up to everyone building in this space.

Now, we will have a few studios that don’t care and take the step forward. But I don’t think integrating NFTs into existing games will be what works for them. It will be starting from scratch. Integrating NFTs to games that have an already existing userbase won’t work well, even in the cosmetic example, unless they make a full switch. For example, what happens with every Fortnite skin that has been released if Fortnite decided to make all future skins NFTs? The tech isn’t ready for many users yet, UX is bad, and adding something like that would hurt Fortnite more than help them.

Another thing that a majority of gamers think, due to a lack of education, is that studios integrating NFTs is another way for them to “cash-grab”. Traditional games selling items to you and taking 100% of the money, with an endless supply of primary drops, is the norm. Them integrating NFTs is them losing out on revenue because of the secondary market, where users will take 100% of the profits (dependent on royalty fee, could be a bit less). And this is also a reason some traditional game studios aren’t even looking at NFTs, they don’t see it as worth their time until the statistics show they can make more money.

Let’s use a quick example! I initially thought that people would really value existing games adding NFTs when I found out about Habbo Hotel (a game many of you have definitely heard of) was releasing avatars as NFTs. Currently, Habbo Hotel has an estimated 850,000 monthly active players. They ended up going below 0.1 ETH, a collection of 11,600 avatars, with other collections that have 0 utility being over 1, 2 and even 5 ETH. This had an established product that was super successful in the past and hasn’t died yet, why did it fail? I still stand by those reasons above, but also the market remains immature and as time passes, these have room to grow OR others will come down drastically.

The current blockchain gaming market.

Let’s move on to something I have wanted to talk about for a while. The current blockchain gaming market. Looking at overvalued games.

I’m not going to call out any names here. But, these studios are taking the “release a token first” approach to capitalize on the hype, most of them have no underlying product. These tokens are worth billions, some in the 11 digits (if you take into account FDV). This is the biggest problem with the market right now because it’s unsustainable.

Some of them are complete, and because they are of the few that actually have a product, they also have extremely high valuations. I expect this to calm down a lot, with more blockchain games developed in the next few years. Having “fun” in a game is subjective, but the points I listed at the beginning of the article are all reasons that one might play a game. In terms of gameplay and visuals, the existing blockchain games are alike to games built 20 or so years ago. Rather than on the level of AAA+ games, but, this will also change as studios enter.

A token should be released AFTER the product.

I think this is where the market is lacking, the experience a player may have while playing these games. I truly do think a fun blockchain game with great tokenomics will change everything for crypto, in terms of mainstream adoption. We already saw it with NFTs (art and collectibles mainly) but games are the next level. Nailing this is extremely important.

Things that aren’t really benefits

The interoperability of NFTs in different games is something pushed quite often by people in the NFT space. I admit, I used to be really fond of the idea too, till I learnt more about games and understood it isn’t as bullish as people may think. The sandbox game genre is the only one I can think of where it makes sense, but you don’t really need an NFT for this. In other games, it doesn’t make much sense for you to support a “Bored Ape in a battle royale p2e game…” as an example.

Interoperability is also harder to add than most think, it’s not an easy feat. Artists have to support and specifically design the item in an environment that fits the game. It’s also not a benefit of having NFTs in games, it’s more of adding utility to existing NFTs that might not even be game-related.

Play-2-earn VS Play-and-earn

Let’s talk about the difference between “P2E” and “PAE” in more detail. The terms aren’t as defined because “play-and-earn” hasn’t really been done before, but Treeverse will be doing it so I’ll explain how we are approaching it.

P2E: You can play this game and one of the core primary benefits is that you can earn the native currency of the game for doing so. It can be treated as a payday from your job.

PAE: You can play this game and one of the secondary benefits is that you can earn the native token of the game for doing so. It can be treated as an extra reward.

Simple definitions above, let’s expand.

A primary benefit of playing a play-2-earn game is making money from playing the game through earning the native currency. Typically, they have an economics model where tokens are given out to all players who may own whatever is needed to play the game.

A secondary benefit of playing a play-and-earn game is you can be rewarded for good gameplay. You’ll receive the native token of the game. Typically, they have an economics model where tokens are given out to certain players depending on chosen factors of gameplay. *It’s secondary because of other systems like earning NFTs.

Currency Or Reward Points

Very important. We’ve spent months and months thinking about how to create a sustainable game because mixing finance with fun… blurs the reason for someone to play a game. We came to the conclusion that it’s not possible. Countries can’t even sustain currencies with millions of people dependent on it that use the currency daily. We believe it’s 10000x harder for a game to try and do that, if anyone wants to challenge me on this, try it out.

Reward points are a bonus, not a currency and they won’t be treated like one. The utility can vary, it doesn’t need excessive deflation, and it doesn’t need to be stable. Not everyone can depend on it, but it might be +EV for people who actually play the game for fun. Meaning an average player shouldn’t think about “earning $” from the game. Think like a tournament with rewards, you win more if you are skilful, and probably nothing if you aren’t.

Summary

The blockchain gaming market has so much potential to grow. We are at the first step of a long staircase. But, the market is immature right now because the money alongside demand far exceeds the product in this case. Existing blockchain games are trying models, most are unsustainable, but that doesn’t mean they all will be in the future. Traditional game studios don’t have as much of an edge in this market as you may think, if you decide to ignore the potential of startups and early adopters, you’ll regret it. Let’s carry on building, it’s important to be rational and not blind.

Also, this article is basically a slight shill because I am building in this field. This is the mindset I am approaching Treeverse with, a fun game with a sustainable tokenomics model. That’s it, that’s what will make a successful blockchain game. Easy to say but harder to do. If you liked this article, feel free to share using the button below.

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The future of "blockchain" games?