Blockchain game design: analysis of opportunities and design challenges

Introduction

Each asset on the blockchain has its transaction and owner history recorded on an immutable ledger. When we apply this to games, it can represent a paradigm shift in the way that gaming business models and ownership works. This paper first defines how blockchain is actually used in games, providing concrete examples to anyone who doesn’t know what blockchain is. Second, it examines the unique game design challenges that are encountered in building blockchain games, with a focus on areas where blockchain directly conflicts with traditional game design.

Why Blockchain in Games?

Let’s begin with how blockchain is used in games.

At the most basic level, blockchain is simply a tool that gives gamers secure, decentralised ownership of their ‘stuff’.

Decentralised is the key word. Any individual game developer can do what blockchain can do without blockchain — for example letting players trade items for real money. The difference is that blockchain is decentralised, meaning there is no single entity making the decisions. The developer is not the single controller of assets and can’t take stuff away from you, even if you get your account banned.

Moreover, the ownership is secure. Blockchain is an incredible tool for providing a fraud-proof record of any item or transaction. It is technologically and economically impossible to ‘hack’, and once data is recorded on the blockchain, it cannot be changed. You can be confident that whatever the ‘blockchain’ says is the single source of truth.

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So how is blockchain actually used in games?

Buzzwords and principles aside, here is how blockchain is actually used in games.

Blockchain can…

1. Give players ownership and tradeability—Players can own their in-game items, gift them to other players, trade them for other items or sell them for real money. Yes you technically can do that right now, but blockchain makes the system entirely legal, safe and secure. Imagine being able to play a game where you can craft and upgrade an amazing item, and then securely sell that item to another player.
2. Create digital goods with real scarcity — Blockchain allows games to have provable scarcity of items. This scarcity can be enforced in code and is fully transparent. For example, a game may only ever have 1,000 legendary swords, and this can’t be changed because it’s coded onto the blockchain. So you know that when you get one, it will always be rare.
3. Serve as a record of ownership — Each asset on the blockchain has its transaction and owner history recorded on an immutable ledger. This means players will be able to know who has used that item before, how old it is or how many times it’s been used. Imagine owning the exact same gun as the one used to win a world championship, or owning the first ever legendary sword drop in a new game.
4. Unlock new business models in gaming —Currently, games monetise in very traditional ways. Skins, subscriptions and premium currencies. Blockchain allows for alternative means of monetisation, such as: the direct sale of in-game items; taking a percentage transaction fee of marketplace transactions; or the sale of tokens that provide permanent benefits to the holder of the token. Eventually, we will see even more innovative models, such as in-game land ownership, playing for keeps or social economies built on top of games.
5. Align incentives between all participants — Letting players own and trade in-game items automatically aligns incentives between the player and developer. This is because the player effectively owns a piece of the game, and they are incentivised to help the game succeed. If the game succeeds, their in-game items will be worth more, creating a win-win scenario. This principle can be applied to all other participants in the ecosystem — content creators, third party developers, community websites, investors, etc. Games which develop a sustainable system to align incentives will be able to 10x the growth of the game and its chances of success.
6. Reverse the fundraising approach for game developers — In traditional game development, developers typically invest a sum of money upfront to develop a prototype of a game, and then try to fundraise from investors or players to continue development. Blockchain can be used to reverse this business model. Game developers can instead fundraise by selling exclusive in-game assets to early backers. This allows developers to fundraise upfront, and provides early backers with a digital asset which will become valuable if the game becomes successful. It’s Kickstarter on steroids.
7. Allow third parties to build a business on top of the game — Decentralisation of in-game assets and game logic means that players and other participants never have to worry about their assets or code access getting taken away from them. This is huge, because it means third parties can build in confidence, without worrying about the game developer coming in and taking away everything they have built. For example, a developer can build a complex trading tool that takes a % of all transactions or a community member can organise a tournament league in exchange for in-game currency. Businesses can be built on top of the game, which don’t have to be subject to the whim of a single centralised authority.

Game Design Challenges in Blockchain Game

There is huge potential in using blockchain in games. Massively multiplayer digital worlds, where players turn their passion of gaming and content creation into careers. However, there are various design challenges to overcome before we get there.

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1. People play games for fun, and involving money in a game may make it not fun

People play games for different reasons. Making money is not typically one of them. Adding money to a game can ruin the fun, unless it’s done in a very sustainable way.

If people only play to make money, then everyone will operate as an ‘extractor’ from the ecosystem and minimise their investment while maximising their output. This devalues the economy over time. The issue is exacerbated by the ‘newbie gap’ issue, where new players typically lose to older players. This means over time there will be less new players and less ‘profit’ to be extracted. A game which players purely play to ‘earn’ will eventually spiral down and crash, unless the game is fun even with the money component.

Example solutions:

• Create a game design where the intersection of money & the game occurs in a way that boosts the underlying game as opposed to detracting from it
• Target the right audience mix, with those who purely play to earn vs those who look to play for fun
• Go with the flow — create a game where making money using complex game strategies is the fun (similar to say, poker)

2. Players can freely trade in-game content, but buying stuff and skipping the in-game progression may ‘ruin’ their own experience

One of the main benefits of blockchain is that it allows people to buy anything from other players — including, potentially, high level characters, accounts or rare items. This may seem great at first for the person buying it, but letting players buy their way through the game may end up in them ruining their own play experience. This is because they will be skipping game content and not experiencing what truly makes that game fun, whether that is the narrative, mastery, progression or something else. An example of this would be the Diablo 3 Auction House, which quickly turned the game into a ‘trading simulator’ and ruined the core gameplay.

Example solutions:

• Don’t allow the free trade of all content, design some content to be untradeable and only obtainable via gameplay
• Design in-game content to be traded in a way that supports the core gameplay as opposed to detracts from it

3. As early players progress they will make more assets at a faster rate, which causes rising depreciation of the economy

In all games which have some sort of progression (such as an RPG), players will typically become more powerful the more they play. This means they will also continually increase their economic output potential, as they will be able to access higher level content and produce higher tier blockchain assets. Overtime, the value of assets will depreciate in value as more and more of them get produced. It also becomes less appealing for new players to join, as the ‘lower tier’ assets that they can produce is likely already in high supply. At the same time, it’s difficult to curb progression because this is the goal of many games (for example, imagine WoW but you can’t level). Thus the paradox is how to give players progression without continually devaluating the economy.

Example solutions

• Balance the rising power of players with economic output so that there is only gradual inflation over time
• Implement soft and hard sinks to items / currencies so that there won’t be an oversupply of assets
• Implement soft and hard resets to the progression of players (i.e. seasonal resets) which temporarily reduces economic output

4. Underlying technology to access cryptocurrency has poor UX which will drive down new player acquisition and retention

It is notoriously difficult for someone to obtain cryptocurrency for the first time. You have to wade through 10 different steps including making an account, KYC verification and bank deposit before you can get your hands on some ETH or Bitcoin. It’s even harder to use it in a game. There are scary ‘metamask’ pop-ups, terms such as ‘nonce’ and ‘gas’ which will confuse any gamer and no clear UI / UX. And let’s not talk about how it costs $2–5 to do a single transaction. Conversely, games rely (sometimes differentiate) on providing a great user experience in order to acquire and retain players. The challenge for game developers is figuring out how to work around the existing poor UX infrastructure whilst providing a good experience for their players.

Example solutions

• Use blockchain scaling solutions (i.e. Immutable X) to allow for instant transactions with no fees
• Centralise part of the onboarding to ‘hide’ blockchain from new players until they earn their first item
• Use a third party wallet and on-ramp solutions (i.e. getting crypto into your wallet) with a good UI / UX

5. Developers compete with players when monetising via in-game asset sales

The first issue is that developers directly compete with players when they sell tradeable assets. This is because players can choose to buy from either the developer or from other players. This is an issue because it is a zero-sum game, either players or the developer won’t make money. Both outcomes are undesirable.

Example Solutions:

• Avoid direct competition by having sale periods where trading is locked, followed by trading periods where sales end
• Split content so that the assets players ‘earn’ are different to the ones which developers sell — this way there is never any direct competition

6. A ‘pre-sale’ incentivises flooding the game economy before the game even launches

The second issue occurs when a game releases some sort of pre-sale where they sell exclusive heroes or items before releasing the game. While this serves as a great way for developers to fundraise, incentives are not aligned with players. Developers will want to sell as much as possible and ‘flood’ the economy before the game is even launched. Buyers will want the opposite, and prefer to only buy scarce assets which will appreciate.

Example solutions

• Avoid oversupply of assets in a presale, instead focus on limited, premium assets which achieve fundraising objectives while benefiting players
• Don’t do a presale at all, instead soft launch the game and monetise via a more traditional liveops approach

7. Blockchain assets are immutable which make them appealing but makes it difficult to do in-game balancing

By definition, the blockchain is immutable. You cannot change it’s properties. This ‘immutable’ nature of blockchain assets directly conflicts with the concept of of both asset progression and game balancing. Heroes and items in a game can typically change, either through some intentional action by the player or through some sort of game balance designed by the developer. So how can developers use ‘immutable’ assets in their game while retaining the ability to change those assets?

Example solutions

• Use blockchain creatively — instead of trying to change a ‘level 20’ hero to a ‘level 21’ hero, instead use an asset swap to achieve the same objective
• Keep key balancing properties off-chain, for example the HP and attack of a card could be kept off-chain so it could be balanced at any time
• Create a balancing period where the in-game item can be used but isn’t yet on the blockchain yet, before ‘locking’ its properties after the balancing period

8. Blockchain allows for decentralisation but game development and game design is an art that is best ‘centralised’

Game development is centralised because it takes an expert team of designers, artists, producers and others in order to build a good game. It’s also extremely difficult to ‘opensource’ an entire game and its servers, while still ensuring its a good game. On the other hand, blockchain is all about decentralisation, and taking away ownership and decision making away from a single entity. How does putting assets on the blockchain make sense when a game can just shut down its servers and make those collectibles / items no longer useful?

Example solutions

• Developers can decentralise parts of the game — for example let the community make binding votes on the direction of the game or important economy balance changes
• Games can go full opensource and decentralised, where even the development and content creation is open sourced and rewarded with in-game currencies or items
• Create strong financial incentive alignment between developers and the community — for example by making it so that the developers get paid in in-game currencies of which they can sell a fixed amount per day

9. Giving away ownership of games comes with unknown legal risk

The final challenge of building blockchain games is legal uncertainty. Currently there is no legal precedent for a lot of things in crypto, and it is uncertain how different authorities view the application of digital currencies in games.

Examples of this include:

• Issuing tokens in a game may be seen as issuing a security (making them subject to securities laws). SEC recently announced a charge against Ripple
• Doing raffles to giveaway assets may require compliance with lottery and raffle laws
• Letting players hold a digital currency may require some money exchange laws or KYC compliance
• Other anti-money laundering or counter-terrorism financing laws

Example solutions

• I’m in no position to give legal advice… get a good lawyer

Conclusion

Blockchain has massive potential to be used as the underlying technology behind games and digital worlds. It’s an incredible tool that can unlock new business models, game designs and ownership models in gaming. However, it is not a silver bullet solution. Applying blockchain in games will come with its own unique challenges — many of which may seem counter-intuitive at first. These challenges are heightened by the fact that it’s never really been done well before. There is no blow-out game which uses blockchain, nor has a ‘formula’ been established of how it should best be used. This opens up huge opportunities for game developers and designers to take the lead and reinvent a $100 billion gaming market.

PS: If you are interested in working on new, innovative blockchain games then send me a DM