What are the Opportunities in Web3 Gaming ?
Opportunity #1: NFTs & Digital Asset Ownership
Non-fungible tokens (NFTs) have become a key fixture in Web3-related activities. In recent years, there’s been a lot of hype around NFTs, what they can do, and their value. Some NFTs have sold for millions of dollars, with people minting NFTs for everything from digital artwork to Rolex watches.
They are unique tokens stored on the blockchain that can represent a digital counterpart for real-world items , they can represent standalone digital assets, making them perfect for application in the Web3 gaming world.
NFTs, by their very blockchain-based nature, enable the unquestionable verification of ownership and are tamper-proof — these elements are what gives NFTs their inherent value. It becomes clear then how Web3 gaming can benefit, with in-game items and collectibles being stored immutably as NFTs on the blockchain.
In-game items are not only highly prized by gamers, they can also form the basis of an entirely new off-game market. Gamers can collect skins, ammo, weapons, or any other in-game usable assets, but as an NFT they will have true and fully transparent ownership they can take off the game.
As Web3 gaming grows alongside the concept of the Metaverse, these assets will become increasingly interoperable between gaming titles, meaning gamers will be able to show off their assets across several different gaming worlds.
Imagine a rare collectible sword that you acquired in an action game being easily transferable to your avatar in a social media Metaverse.
Equally, if a gamer would rather monetise that particular asset, they can trade the NFT-secured asset on external platforms such as OpenSea. These transactions take place via cryptocurrency wallets, this cryptocurrency can then be put onto exchanges and traded for fiat currency.
Having desirable in-game assets with the ability to be bought and sold on secondary NFT marketplaces will bring a new dynamic to games, and for gamers.
With NFT in-game assets, there is the opportunity for them to accrue real value and be collected for their resale value as well as the prestige of ownership.
NFTs allow gamers to extract maximum value from the gaming universes that they support without using unsecure networks to do so, protecting them from centralised failure and hacking as their assets benefit from blockchain security. Recently, it was seen that a CS:GO trading site was hacked to steal $6 million worth of skins.
Opportunity #2: GameFi, P2E & Gaming Economies
Gaming economies are already in play with the current crop of Web2 games. Several examples exist, including World of Warcraft’s Gold and Second Life’s Linden Dollars.
However, they have little usability outside their respective in-game ecosystems. Yet, if the gaming industry fully embraced Web3 and blockchain technologies, a new world of GameFi and Play-to-Earn (P2E) could be unlocked.
GameFi and P2E (play-to-earn) are concepts within the Web3 gaming space which allow players to earn cryptocurrency through playing games.
Depending on the game’s objectives and type, this could include defeating other players in pitched battles, completing previously defined quests, or even acquiring certain in-game items (for example, specific cards in trading card games).
In exchange for their effort, the game rewards the players with it’s specific in-game currency. This utilises Web3 tokenisation and popular blockchain networks such as Ethereum or Solana.
If for example the game is built on Ethereum, then these tokens will be ERC-20 compliant and exchangeable for other cryptocurrencies across major exchanges.
Players are given the opportunity to choose or trade their tokens for other major cryptocurrency that can be later traded for fiat money to be used in the outside world, or retain the tokens within the gaming universe and utilise them there.
Either way, this new concept remunerates players for their time, skill and attention in a way never-before-seen in gaming. Web3 games also commonly have a governance token alongside it’s tokenised in-game currency.
This enables investors and players to have increased influence on the direction of game and community development or voting in important matters.
Opportunity #3: Decentralized Platforms & Gaming DAOs
To grow the gaming space further, Web3 can invite and open opportunities for next-level participation in the form of decentralised autonomous organisations (DAOs).
DAOs are governed by smart contracts, removing the need for human supervision and intervention. Organisational decisions and changes are determined through voting and reaching a consensus among members.
In most cases, voting rights are determined by the possession of ‘governance’ tokens, which can be freely bought and sold on secondary markets (or exchanges).
While DAOs do have founding members, there is no centralised head (such as a CEO) or management team at the top of the organisation making isolated decisions that impact gamers. This creates a flat management structure, making it the gamers that shape their own game.
Maintaining decentralised power for games means those who are closest to the game can have an input into its development and evolution thanks to Gaming DAOs.
Gaming DAOs often incorporate the financial element of GameFi into their structure, meaning that members of the DAO stand to make real-time returns on investment depending on the rules set out in the smart contract.
Gaming Guilds, a type of Gaming DAO, are becoming integral to the Web3 Gaming industry. They operate similarly to investment clubs, representing a collective interest in certain gaming titles.
Oftentimes, these guilds will lend NFTs or tokens to new members (often referred to as ‘scholars’), enabling them to get started in the blockchain gaming space without needing to provide the initial investment themselves.
This helps to democratise access to Web3 games, especially for players in developing nations, as it removes the monetary requirement to get involved.
The loot from the scholars’ exploits are collected in the Guild’s treasury and distributed between members based on the rules of the DAO.
Other type of Gaming DAOs include Incubators & Accelerators and Developer DAOs.
By using DAOs and voting mechanisms, players are the ones that influence the in-game evolution rather than the traditional closed organisational teams.
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