Saro McKenna is the CEO of Dacoco GmbH and cofounder of Alien Worlds.
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Web3 set big goals to host decentralized applications using blockchain and token-based economics. However, such an ambitious target takes time, and momentum only took off in 2021-2022 when an explosion of activity led to growth of over 2,000%.
Gaming And Metaverse—Core Focus For Web3
One of the key areas of success has been gaming and the metaverse, as underlined in the DappRadar August 2023 report that shows an average of 758,330 daily unique active wallets (UAW), representing a 6.4% increase from July, and a commanding 37% of all blockchain activity in August.
The 2022 Electric Capital Developer Report reveals that monthly active developers involved in Web3 grew 5% year-on-year during 2022 to reach an all-time high of 61,000 developers contributing code for the first time.
The stability in the number of users and developers is a sign of robust health in a still-young market with grand aspirations. It is reassuring that Web3 applications have already made great strides to become a significant part of the global gaming industry, with the goal of building a substantial market share over the next decade.
Blockchain Gaming—A Story Of Continuous Improvement
Blockchain game developers today are targeting higher-quality games that focus on fun and a better user experience. The aim is to make blockchain technology a complement to the game rather than a defining characteristic. This approach replaces “play to earn,” which received a mixed response from players and developers alike.
AI tools are increasingly used to enhance the look and feel, bringing a new level of realism and an immersive experience to games. AI simplifies the development process and enables the introduction of dynamic, continuously evolving in-game environments that boost realism. Greater efficiency also contributes to improved cost control.
As blockchain technology matures, traditional gaming companies are exploring ways to integrate Web3 features into their ecosystems. Games markets like Epic Games Store are gradually considering hosting Web3 games. These steps in bridging Web3 and traditional gaming bring a much wider potential audience.
Key Strengths
The impetus enjoyed by Web3 games is due to players enjoying true digital ownership—a step that changes the business model for developers and the value proposition for players.
Ownership of virtual assets affects the way players engage with a game as users increasingly appreciate the opportunity to buy or sell in-game assets in the form of NFTs on decentralized platforms.
For the first time, players have some say in community management and can contribute to future game development by participating in decentralized autonomous organization (DAO) structures that sit at the heart of a fully decentralized application. These benefits place an emphasis on data privacy—in contrast to the data exploitation by the previous internet generation.
Without central control, checks and balances are necessary and decentralization requires users to accept some personal responsibility for managing their own data. However, mastering a short learning curve is a worthwhile investment to enjoy the greater freedom of the Web3 experience.
Challenges Remain
Despite recent progress, blockchain gaming still faces challenges.
The current need to open a wallet, and use in-game tokens, is a bigger challenge than many users expect when playing a casual game. Simplifying these steps will remove one important obstacle to mass market adoption.
Early blockchain games were closely associated with crypto projects, which deterred many gamers. Now, Web3 developers must return to their roots and ensure that high-quality games are simply fun to play.
Different territories have taken varying approaches to Web3 regulation. The resulting lack of universal clarity comes at a time when this new industry needs a more transparent and supportive approach. Better-defined regulations can help instill greater confidence among users.
Grounds For Optimism
After many months in development, steady streams of Web3 games are approaching market readiness. These AAA-quality productions have a “fun-first” approach with blockchain elements hidden out of sight. Success will depend on firing up the market for mass adoption.
Casual games have always thrived with each new generation of tech—arcade, console, mobile and lately web-based games. Now casual games are starting to push upward in the rankings for blockchain gaming. This is a positive factor in the potential for mass adoption, which is critical to the long-term success of Web3.
Just as blockchain games have evolved beyond play to earn, the metaverse has moved beyond transactional engagement with their users to a more sustainable, community-based model where players cooperate and compete in a way that is increasingly close to real life.
The rising sophistication of metaverse narratives and the participation of multiple real-world players—brands, educational institutions and regular employers—all bring a degree of much-needed diversity and added color. Gradually, more and more of our everyday activities are taking place online in a multidimensional virtual world.
These are just some of the ways in which virtual worlds can leverage blockchain elements, enabling users to truly own their in-game possessions, earn rewards for playing or benefit from microtransactions as creators or modders.
In a virtual world where innovation is key, I believe there is room for optimism that Web3 can complement the gaming experience and add real value for a diverse array of players.
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