Web3 gaming continues to build on the advantages of blockchain, NFTs and decentralization to change the way we view, and interact with, video games.
After reading this, you'll understand:
Web3 projects create new gaming economies by letting players buy and sell their in-game items.
Web3 games aren't stored on the blockchain; they use traditional gaming and web2 technology for the gaming environment.
Developers use smart contracts to bridge the gap between the web2 software and its web3 components
Gaming has changed a lot over the years, and now, blockchain technology is revolutionizing how we view video games. Web3 gaming incorporates distributed ledgers, non-fungible tokens (NFTs), and decentralization to give players more control over their favorite franchises. The gaming sector continues to dominate blockchain activity, outpacing DeFi, NFTs, and social to account for 26% of all daily blockchain activity.
In this article, we'll dive into web3 gaming and its benefits, use cases, and future.
Web2 games generally are stored on corporate-owned central servers, which control access to information related to the game and to the status of players. By using distributed ledger technology (DLT), web3 gaming can enhance transparency and security, reward players with crypto assets, and democratize the development process. These games in-game items as NFTs, giving gamers full ownership of their in-game digital assets.
It's important to note that web3 games aren't stored on the blockchain. Instead, these games generally use traditional online gaming and web2 technology for the gameplay environment. In web3 gaming, however, players connect their crypto wallets to games so that in-game purchases and rewards can be transacted with cryptocurrency. Developers use smart contracts and dApps to bridge the gap between the web2 gaming platforms and the web3 components.
Smart contracts play an integral role in the web3 gaming space. When players earn digital assets like gaming NFTs or fungible tokens, smart contracts are used to send them to the players' wallets. If developers set up a gaming DAO, smart contracts are used to tally votes as the members of that gaming community make group decisions.
Theoretically, any web2 game could be converted into a web3 game. In fact, developers such as Ubisoft and Square Enix have incorporated web3 elements into some of their games, including popular franchises like "Tom Clancy Ghost Recon."
Decentralization is one of the fundamental features of blockchain-based gaming. Many developers use gaming dApps to support in-game transactions and blockchain interactions. These dApps rely on a series of interconnected nodes rather than a centralized server.
The benefits of the web3 gaming ecosystem include enhanced transparency, security, and privacy. In this section, we'll take a deeper look at the many reasons web3 gaming is flourishing.
The web2 gaming industry has been scrutinized for lack of transparency. Many publishers force their game developers to sign NDAs and only show in-game footage after they've created a polished demo. Many blockchain gaming developers share their games’ progress as they create them and even let players vote on development decisions.
In web3 gaming, transactions and item minting are stored in publicly distributed ledgers, giving players insight into how many copies of each item will exist.
Web3 projects create new gaming economies by letting players buy and sell their in-game items. For example, "Gods Unchained" allows players to trade their cards on the secondary market. Many web2 trading card games, such as "Hearthstone" and "Magic the Gathering Arena," reward players with cards, but they can't be sold to others.
It's true that the Steam Community Market allows gamers to buy and sell in-game items. In addition, some web2 games, such as "Magic the Gathering Online," let you buy and sell in-game items. However, these items are stored on a centralized server; if the developer shuts the server down, the items disappear.
A player might pay a good deal of real-world money over time to buy in-game items, like skins — cosmetic items, such as a mask, that change the appearance of a player. If a web2 player tires of a skin or the game itself, the money invested in it generally can't be recouped.
In web3 gaming, a player could earn money in-game, use it to buy skins and then sell the skins later in peer-to-peer transactions to other players for digital assets.
Web3 games store many elements on-chain, including items, achievements, and cryptocurrency rewards. These games can use distributed ledgers to store player data on-chain, providing enhanced account security through cryptography. Decentralized, on-chain account data storage makes these games less susceptible to hacking because there is no single point of failure.
No one organization or malicious player has the power to shut down or corrupt a game, nor change or delete any player’s digital ownership of assets.
NFT-based skins, characters, and items could be used between various games. This innovation may not be realized any time soon, but companies like Sony are interested in making it a reality.
Gaming interoperability would be difficult to pull off, as developers must account for items being transferred to their games from other franchises. As you can imagine, crafting hundreds of items for an "Elder Scrolls" game that look identical to items earned in "The Legend of Zelda" would be a substantial developmental burden.
However, we could soon see video games that provide players with comparable gaming assets based on the quality of a player's wallet contents. For example, if you earned a rare armor in "The Legend of Zelda," you'd be awarded a rare armor in "Elder Scrolls" after connecting your crypto wallet.
Play-to-earn games. These games allow people to profit as they play. Often, players are awarded NFTs for completing missions or ranking on daily, weekly, or monthly leaderboards. These NFTs can be used in the in-game economy or sold to others on the secondary market. In some cases, play-to-earn games award players with cryptocurrency tokens.
Metaverse and virtual worlds. Plots of virtual land can be represented as NFTs, letting players in these interactive environments buy and sell them on the secondary market. Many web3 metaverse projects let players buy items in their gaming worlds using digital currencies.
Gaming DAOs. DAOs impact web3 gaming in various ways. For one, investment DAOs collectively invest in web3 gaming projects. Video game publishing companies can be structured as DAOs, letting their employees vote on important business decisions and share in company profits. Web3 gaming projects, such as Decentraland, use governance tokens to let players make decisions about game design, growth and development.
In October 2024, Ubisoft, one of the world's leading video game developers, launched its first web3 game, "Champions Tactics: Grimoria Chronicles" on the specialist gaming blockchain Oasys.
In November, Web3 gaming and venture capital firm Animoca Brands launched a new effort with the maker of Lamborghini luxury autos. Gamers can drive, buy and sell Lamborghinis in games that are part of Animoco's Motoverse ecosystem.
Soon after hosting the GEN3 Playground event in Hong Kong, Animoca Brands announced that it had raised $10 million more for its platform for building its open metaverse — Mocaverse. Yat Siu, Founder and Executive Chairman of Animoca Brands, said in a news release that the Telegram and TON ecosystem and high-quality Web3 games would be major game changers for progress in the open metaverse. He also expects stablecoins to act as a bridge between web2 and web3 by converting traditional assets into Web3 assets and driving mainstream adoption.
Web3 games have yet to be accepted by the mainstream gaming ecosystem, and the ever-changing regulatory landscape is sure to present challenges. Also, some gamers say that the tokenomics of web3 — the NFTs and other economic underpinnings — often dominate the user experience. The game mechanics get bogged down in earning rewards and the games just aren't fun.
For web3 gaming to reach widespread adoption, developers and publishers must use DLTs with a track record of fast, secure transactions. The Hedera network is an excellent choice for game development, thanks to its lightning-fast Hashgraph Consensus mechanism.
A decentralized game that uses Hedera to issue NFTs allows for secure ownership and control. Assets can even be configured for sharing across multiple platforms and games. Low predictable fees enable NFT issuance for a fee less than $1 USD and transfer of $0.001 USD.
Hedera offers trust and transparency in player rankings and scoreboards. With its unique ability to create immutable, high-throughput, and publicly auditable logs, Hedera ensures that a single player, a minority group of players, or central authority cannot alter or falsely display a status or rank of any player or team.
Virtual native currencies created on Hedera can be earned, stored, and transacted across different web3 platforms and games, or even liquidated for another currency. Low and consistent fees that don’t fluctuate based on network activity enable predictable development costs.
In high-stakes environments like gaming, Hedera offers scalability and low costs for recording and validating player interactions, while removing the possibility of cheating or fraud. Trust is achieved in ways never before possible.
Additionally, Hedera is partnered with industry leaders in the gaming industry, such as Ubisoft and Animoco.
“Ubisoft has been a pioneer in its engagement with distributed ledger technology, and the decision to directly engage with THF (The Hedera Foundation) to enhance the support it provides to entertainment and gaming innovators provides tremendous opportunities for developers, startups and users alike,” said Alex Russman, Director of the Metaverse Fund at the HBAR Foundation.