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Blockchain Gaming Challenges & Solutions

& Two Blockchain Games to keep an eye on

Despite Blockchain potentially having a lot of positive features that could significantly change gaming for the better, so far, it hasn’t taken off yet.

A few things that might be to blame is the limitations imposed by smart contracts. Games such as World of Warcraft or even Animal Crossing, which got hugely popular throughout the pandemic, are based on players moving through complex game logic. They involve players interacting with each other, fighting, levelling up, building their own spaces, and so much more, influencing how the game flows for every player.

Smart contracts so far can limit game logic as they’re not built to support such a complex path. Nevertheless, innovative companies are finding ways to marry smart contracts and games, as we’ll see below.

Another potential problem hindering the adoption of blockchain in gaming are barriers to entry. The gaming industry is dominated by a few massive game studios that aren’t interested in letting any indie developers tear down the walls they’ve built. Gaming studios have access to substantial marketing budgets and infrastructure to spread their games worldwide, the ability to host events and brands and the trust they built over decades.

Lastly, one of the challenges that don’t just influence gaming but many other industries when looking at blockchain: Scalability.

Blockchain developers face a trilemma that’s well known in the industry: the Scalability Trilemma.

Scalability Trilemma


The trilemma blockchains or other databases face because they can’t have it all: decentralization, security and scalability. Any Ethereum user is well aware that while Ethereum is one of the most distributed networks with thousands of nodes, its scalability is still lacking, making it unfit as a global payments infrastructure (for now). Similarly, Bitcoin isn’t known for processing many transactions per second either.

Both of these examples have chosen decentralization and security, limiting scalability. On the other hand, as we’re all aware, traditional databases are centralized, making them highly scalable and secure (to a certain degree). SQL and Oracle are a few of those.

Why do all three matter?

  • Security: the more decentralized a network, the more difficult it is to attack the network. Anyone trying to gain more than 51% of the power of the network to overtake it will have a hard time if it’s significantly decentralized.
  • Decentralization: is at the core of blockchain technology. Blockchains are open-source, accessible and the more decentralized, the more censorship-resistant they are. Even if nowadays a government tried to shut down a major cryptocurrency, it’d face real difficulties doing so, similar to any malicious player trying to introduce false information.
  • Scalability: how many transactions the system can handle is crucial to cater to growing demand. Most 1st generation blockchains are still trying to figure how to scale without sacrificing any of the other attributes.

Fortunately, as space evolves, different approaches to increasing scalability have been suggested and tried. We can differentiate between First-Layer Scaling Solutions and Second-Layer Scaling. There’s also one protocol that’s working on Layer 0, but that’s the exception (It’s called Marlin Protocol)

Layer 1 Scaling Solutions

Everything that’s layer one scaling will require changes to the codebase of the original blockchain. These are often made to enhance features — depending on how drastic the change is and how many nodes support it, the network might have to undergo a hard fork.

  • Segwit: was a protocol upgrade to the Bitcoin chain that changed how data is stored, freeing up memory space to include more transactions in one block.
  • Sharding: is a proposed scaling solution for the Ethereum blockchain once upgraded to Proof-of-Stake next year. It consists of breaking down the chain into manageable chunks running in parallel.
  • Hard Fork: is the creation of a new chain. It often happens when a part of the community disagree with the core. A famous example is Bitcoin Cash, a Hard Fork of Bitcoin that increased block limits to increase scalability and make Bitcoin Cash again.

Layer 2 Scaling

All scaling solutions that aren’t targeting the original code but built on top of the main chain are called layer two scaling solutions. Most of them attempt to ease the transaction load on the main chain.

  • Lightning Network: This is a solution for the Bitcoin network that incorporates smart contracts to facilitate payments off-chain. Instead of confirming each transaction on the main chain, with lightning, private off0chain channels are created that will only broadcast their final balance to the main chain. When two parties interact within their channel, there is no block confirmation time and no need to pay mining fees, making it an attractive option for real-life payments.
  • Raiden Network: similar to the lightning network but for Ethereum. Lets users establish private channels for payments.
  • Plasma: another off-chain scaling solution for Ethereum working with side chains that function as separate blockchains.

How do these solutions help blockchain gaming? One explanation for game developers is obviously to choose a chain that’s already highly scalable. To name one example, Alien Worlds is running on an EOS side-chain specifically for NFT games. However, that’s, of course, at the expense of sacrificing decentralization.

Other blockchain games developed on Ethereum are increasingly cooperating and integrating layer two scaling to make their game scalable and enable a seamless gaming experience. A few months ago, we saw Decentraland enable transfers on Polygon to decrease transaction fees for game players.

Axie Infinity is taking a similar approach. But first things first, what is Axie Infinity?

Axie Infinity


Axie Infinity is a blockchain game where players can earn by playing. The digital pet universe is a mix of pokemon and cryptokitties. The whole game is built on top of the Ethereum blockchain, with all items stored as NFTs or ERC20 tokens. It was also the first blockchain game with a mobile app, making it popular among many casual players.

Pets in Axie Infinity are called Axies. Throughout the game, players will foster their Axies to upgrade their attributes and improve battles. The native tokens of the game are AXS (Axie Infinity Shards) and Small Love Potions (SLP).

By breeding their pets or by playing and battling, gamers can earn SLP tokens. It seemed so profitable that some players did it full-time as these tokens are listed on exchanges and can be sold against fiat.

Players can also form their own teams t battle monsters and receive SLP when winning. In February 2021, the game had 27,000 players who were earning AXS and SLP.

With that amount of players and high ethereum gas fees, the team decided to use a sidechain to increase scaling or, as they say, “to reach our second, third and fourth-degree connections (the friends and family of our friends and family).”

To keep Axie Infinity easy, fun and cheap to use, they’re building their own sidechain called Ronin (Japanese for wandering samurai without a master to serve). When moving the game to the Ronin sidechains, players benefit from fast, seamless transactions, reduced gas fees, simplified onboarding and a block explorer for transparency.

Learn more or start earning by playing here.


Illuvium is taking a different approach to scalability to Axie Infinity. Instead of developing their own sidechain, the game that’s said to be the first AAA game on blockchain relies on integration with ImmutableX.

Illuvium is an open world battle game with creatures called Illuvials that players can capture, nurse back to health and then use in battle. The fusion between open-world exploration and game obviously requires high scalability, which with the current state of Ethereum isn’t possible.

Therefore, the team of over 40 professionals from gaming to blockchain backgrounds decided to work together with ImmutableX — a layer 2 scaling solution. Thanks to ImmutableX, players of Illuvium will profit from near zero gas fees, instant trades and high scalability for their NFT and token trades. By implementing zero-knowledge proofs, the ImmutableX sidechain doesn’t have access to anyone private keys so that players remain in control at any point in time.

It’s a fascinating scaling solution, and we’re excited to see how it plays out once Illuvium goes fully live. You can read more on Illuvium in our blog or on their website.

Scalability remains one of the biggest challenges for blockchain not only in gaming but outside of that. Nevertheless, we’re seeing incredible innovation from blockchain gaming teams doing their best to increase scalability by using side-chains or other layer-2 scaling solutions. We’re looking forward to seeing things play out and hopefully soon people playing blockchain games on their phone on the train be a normal thing. 😉



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