Blockchain Technology in Empowering and Liberating Game Players

Quick Takes

• The anonymity and peer-to-peer transactions enabled by blockchain guarantee the privacy and security of players’ assets.
• Blockchain ensures players’ ownership of assets and allows them to trade freely on the blockchain.
• Players gain the right to be part of the construction and maintenance of Web3 games.
• Web3 games provide players with infinitely scalable space to co-create and help them truly own their works. Creators have their rights protected and can monetize their works.
• Web3 games enable asset rental and increase the value and utilization of NFTs.

Introduction

In November 2021, the emergence of four leading blockchain games, Binaryx, RAC, Farmers World, and CryptoMines, gave a quick nudge to the explosive development of the blockchain gaming ecosystem. Binaryx, for instance, as the hottest Gold farming game on BNB Chain (previously BSC), witnessed its players double their assets in only 16 days, which is certainly also inseparable from the continuous influx of players that has driven up the game’s token price.

However, after a month of frantic spikes, these games soon met a dramatic revenue drop in December. The craze and money flow relying on newcomers to the games eventually became a Ponzi scheme. Such a development model has caused a trust crisis and resentment among traditional users towards GameFi and Web3 games, which all come down to their unfamiliarity with the blockchain technology and ignorance of what innovations this technology can bring to gaming.

MixMarvel DAO Venture believes that the disruptive changes blockchain technology will bring to games can be explored from the following perspectives: security, player ownership, co-governance, co-creation, and asset rental.

Blockchain technology safeguards user privacy and asset security

According to a survey by Akamai in 2020, the number of attacks against the gaming industry has increased faster than any other industry. Two prominent issues with traditional gaming security are privacy breaches and asset loss of players due to centralized control. With the help of blockchain technology, games can avoid these security issues.

Web3 games run on an immutable public ledger where all transactions are publicly viewable and not subject to central management by any organization or institution. Thus, they are more transparent than traditional games and are able to minimize the chance of privacy breaches and asset loss caused by centralized foul play.

1. Decentralization and anonymity solve the problem of user privacy breaches in Web3 games

The wide use of big data in traditional fields has made user information less private. Even when personal identifiers such as user names and IDs are deleted, the information stored in big data related to various user behaviors is still sufficient enough to re-identify and track a person down.

MixMarvel DAO Venture believes that there are two main reasons for user privacy leakage: first, user data may be shared or traded by and across centralized network platforms, with no effective protection of users’ personal privacy; secondly, the login system of traditional games usually requires users to submit personal information such as phone number, email address or even real name authentication. Hence each virtual game account is trackable and corresponds precisely to the actual individual.

The decentralized and anonymous blockchain can effectively prevent the above problems from happening. Web3 game accounts are displayed in the form of wallet addresses. The wallet is created by smart contracts, with its address and transaction records being transparent and open to everyone yet subjecting to no game platform. On the one hand, there will be no need or channel for game platforms to gather or share user information. On the other hand, the anonymity of blockchain frees the user from providing any personal information when creating a wallet, and the wallet will, therefore, not lead to the actual identity of the owner, which effectively protects the user’s privacy.

2. The direct peer-to-peer transaction between players ensures asset security

The application of blockchain technology has made direct peer-to-peer transactions and transfers between players a reality, eliminating the risk of human misconduct in centralized management and the security issues caused by network code vulnerabilities. After the player purchases, on-chain game assets from either the game’s official or a third-party marketplace, these assets will be stored in the player’s wallet instead of being held on any centralized platform. Once the player has a need for trading, the transaction will be completed through direct transfer. Yet, in traditional games, transactions of items will have to be finished with the help of centralized platforms, for example, customer services or third-party custody services, which often bring a series of security problems along the way.

The in-game item trading platform Treasure Cabinet is a great representation of item trading channels for traditional games. Taking Fantasy Westward Journey as an example, we can see many potential security risks in the transaction process on Treasure Cabinet.

• Players turn to an in-game NPC to deposit the items for sale, such as in-game weapons or characters;
• The deposited items will be uploaded to Treasure Cabinet by the game’s customer service;
• Players log on to Treasure Cabinet, edit the selling price (in fiat currency) of the items, and put them on the shelf.

The above manual operations lack proper supervision and are bound to suffer from certain errors and security risks. Vicious incidents, including accounts being stolen, item prices being changed, and even huge amounts of in-game assets being transferred by customer services, have frequently occurred on Treasure Cabinet.

Another example in this case is BUFF, a platform application supporting the trading of items from CSGO, DOTA2, and other games. There has been a user report on an abnormal transaction of a prop skin on BUFF. While a failed transaction and a terminated fund transfer were shown on BUFF, the transaction was somehow completed on Steam, with the seller losing the item yet receiving no money.

Blockchain technology ensures players’ ownership of assets

Blockchain technology can help players truly own their in-game assets — mainly in a sense that Web3 players will have the right to freely use and trade the assets they own. The in-game assets shall not be affected by any centralized subject.

The digital distribution model of games has become more and more mature since the launch of Steam in 2003. Steam brought together many features, such as digital rights management (DRM) and player trading marketplaces to protect player-generated content and in-game asset trading. The evolution from distribution through physical media (e.g., cassettes, chips, and disks) to distribution through digital channels means that the original relationship between games, players, and game developers has been overturned.

At the beginning, traditional gamers only had access to the game’s content. The digital download model of the game implied that players could only gain access to the game content but did not really own the assets within the game. The trading of game content and in-game items in traditional games was pretty much centralized and held in the hands of the developers. Once the developers go out of business or the servers shut down, these game content and items (even if the player had paid or worked to acquire them) will be gone.

The application of blockchain technology in games has led to a disruptive change in ownership — players became the true owners of the game assets. This ownership is manifested in the players’ absolute freedom to use and trade their assets.

• Freedom in use: players can use their assets to go through the whole game storyline, upgrade the character, monetize them by posting them on trading platforms, etc. Whatever it is, the decision is the players’ to be made. The game officials can only guide but not interfere.
• Freedom in trading: players can decide on which assets and how many of them to trade. And these transactions are not bound by any time or space limit.

In addition, players’ ownership of their assets also means that these assets will not be affected by any centralized subject. The existence of traditional games relies on the developers and servers, but the decentralized nature and the everlasting memory of blockchains ensure that the assets owned by players will exist forever, unaffected by the life cycle of the games or the comes and goes of the developers. It is no exaggeration that 50 years later, we will still be able to find a CryptoKitty with a string of contract addresses and trace all its history records.

Players are not only consumers but also creators

Players can participate in game governance and content co-creation. Players are the ones who know the game best. Compared to other asset holders, players are often more capable of making decisions in favor of the game’s development.

The assurance of asset ownership also implies that players are not merely consumers but creators of the game. After all, the reason why Web3 players would ever become creators is that, be it play-to-earn or play-to-own, the interests of players and that of game officials are tied together. They both want the game to develop in the right direction, generate higher revenue, and benefit them with more privileges or more control. To elaborate on this point:

• Players owning assets want not only a good gaming experience but also a positive growth of the game that leads to a constant value appreciation of the token they hold.
• For Web3 game developers, game assets (tokens) and interests are distributed to different organizations or individuals engaged in the game, so their resources and benefits are far less than those of traditional game developers. Yet such broad distribution is the very reason that every party becomes a winner. Driven by interests, all parties holding assets will act in a way that is beneficial to the development of the game, thus forming a strong community consensus. And in the long run, such community consensus will promote game development and bring long-term gains to Web3 game developers in the end.

There are two ways for players to get involved in the construction and maintenance of Web3 games: participate in game governance and in game content co-creation.

Web3 helps realize the decentralization of rights in games, as evidenced by players’ governance rights of proposing and voting. These rights symbolize the importance that game officials have attached to players. They want to make players feel more involved and satisfy their vanity and self-esteem in the game.

At the same time, since players are the ones most familiar with the game, when it comes to how the game should be iterated, their decisions would always be more fair and accurate than other groups who are equally empowered. To have players involved in game governance is conducive to the healthy development of the games.

Jagex, the studio behind Runescape, launched a poll on whether some old game servers should be restored to the game. The poll was participated by 1.4 million players, whose decision would decide the fate of “Old School RuneScape” (OSRS for short). At the end of the day, Jagex accepted the poll result, leading to the new OSRS of today, which is even more popular.

Likewise, being part of game content co-creation is also a testament to the role of players as game creators. Although game content co-creation is not pioneered by Web3 games, the openness and traceability of blockchain technology have pushed the idea to a new stage.

Co-creation is infinitely scalable with creators’ rights and interests under protection

The openness and traceability of blockchain break the shackles on players’ creation in traditional games, and the space for co-creation is infinitely expanded. The ownership of works is well-defined. Creators have their rights and interests guaranteed, with their creations free to be monetized.

The openness of Web3 provides unlimited creative space for creators. Applying blockchain technology and Web3 features to games not only provides an environment for players to participate in game co-creation but also stimulates creative players to exploit their creative potential and show their true value. To elaborate on this point:

• The convenient game editing tools enable players to create;
• Blockchain smart contracts can tokenize the creation as a way to generate further revenue;
• Every creator has the equal opportunity to show their talent, regardless of region, ethnicity, religion, etc.

It was not in the Web3 era that game co-creation was invented. There have already been good innovations made on this matter in traditional games, which have even been market-proofed. The co-creation in traditional games can be divided into two types: secondary creation and direct modification/ addition based on the original game content.

The first type is commonly seen when players are making secondary content creation of the game’s backstory or to develop the original stories in multiple dimensions, such as writing fan fiction, drawing fan art, making video cuts, etc. This type of co-creation exists outside the game and does not have a direct impact on the in-game world.

The second type is what we would like to lay emphasis on. This is where players, without affecting the existing game content, use the in-game tools or third-party tools to make direct changes and additions to the game. Duke Nukem 3D has a “Build Editor” which allows players to create their own in-game levels. There are many other types of such editors, each with various features, such as the in-game level editor, map editor, and other development tools, which players can use to add new game content on top of the original game. Especially in open sandbox games, players will have more freedom to modify the game world and may even create the gameplay as they want. This type of creation enables players to actively create game content rather than just passively receive it. The boundary between developers and players becomes increasingly blurred.

However, there are certain limitations in the creative environment built by the traditional games for their players — creators’ rights and interests are not protected, and the creative space is strictly limited.

First of all, the creators’ intellectual property in the game is not protected. Encouraged by the game company, Duke Nukem 3D players often shared in-game levels they had created online. Then the company just downloaded 300 user-created levels from the Internet without the creators’ permission, named them as a new game, and sold them to the public. This has undoubtedly undermined the creators’ interests and their enthusiasm to create.

However, copyright is still hard to define between game developers and player creators. Oftentimes, it will have to be negotiated between game developers and players to decide whether there is an infringement or not. But what is certain is that the developers of traditional games are in a more favorable position.

Secondly, players’ creative orientation in traditional games is often restricted. They cannot go beyond the settings and the storyline of the original game. Some game officials would even have specific themes determined for players’ creations.

The openness and traceability of blockchain break the shackles on players’ creation in traditional games, and the space for co-creation can be infinitely expanded. The ownership of works is well-defined. Creators have their rights and interests guaranteed, with their creations free to be monetized. The Sandbox provides a free in-game NFT editor, VoxEdit, allowing players to create animated 3D works. Players’ works can be displayed, shared, traded, and even used by other players for secondary creation within the game. And the owner of the original work can earn a share from others’ secondary creations as well. Decentraland also allows players to not only create their own exclusive content and applications but also experience their works in the game and tokenize them.

Asset Rental increases the value of NFTs

Web3 games make asset rental possible and enhance the asset utilization of NFTs. NFT rental in Web3 games pioneers a sharing economy in the track of NFT, which can also be seen as an innovation brought by blockchain technology to gaming. The advantages of game asset rental are listed as follows:

1) Improving asset utilization and capital turnover, which may help maintain or even increase the value of NFT

We have envisioned two ways of rental: NFT asset renters either stake their idle NFTs or pay rent directly with tokens. While the former creates more usage scenarios for idle NFTs and increases the utilization rate of assets, the latter directly improves the capital turnover rate in the ecosystem of the game. In addition, commodity price is influenced by its use value. Therefore, the use value of the rented NFT will increase as its application scenario expands, and the price of the NFT will also rise accordingly.

2) Lowering the entry barrier for users

The rise of the rental model saves time for some players and assists them in exploring more complicated content. For example, skill-based players can rent NFT equipment from asset-based players to help them increase upgrade speed, acquire more assets, and clear more challenging levels.

3) Stimulating the willingness of whale players to invest

Possessing a high-level NFT that many players would like to rent brings a sense of honor. Purchasing advanced NFTs may also become an act of showing off for the whale players.

4) Potential benefits for both NFT asset owners and renters

For NFT owners, they can gain revenue from asset rental with NFTs that were originally left idle to be reused to create more value. For NFT asset renters, by renting someone else’s assets or renting assets from the game official to put into the game, they can enjoy a better gaming experience and even make profits for their own.

Asset rental provides more asset application scenarios for Web3 games and will perhaps become one of the most common forms of revenue income for Web3 game players. The most common form of rental at present is NFT stake rental — the asset owner stores NFT into the game’s smart contract and rental program, and the terms negotiated between the NFT asset owner and the NFT asset renter (about price, repayment date, etc.) will be written into the smart contract. Then the smart contract becomes valid and starts to operate automatically, transferring the NFT to the asset renter. In terms of price setting, the NFT owner will specify the rental price, and the NFT renter will propose the NFT for staking and the duration of the rental. The asset renter needs to stake assets worth more than the target NFT for the rental to proceed, which is to protect the NFT owner’s assets. In addition, to validate the value of each NFT, the on-chain oracle can be used for verification.

DeHero, a Web3 game incubated by MixMarvel, has already announced an NFT rental feature to be included in its new version. According to the latest information from the DeHero team, the new game will be launched very soon. And we will keep up with every detail of the asset rental function in this much-anticipated game.

Conclusion

Web3 gaming is an inevitable topic in the revolution of blockchain. We have seen in many media articles, news, and social media that people are concerned, questioning and envisioning the future of Web3 games. This is a good sign, as all changes throughout history have occurred amidst constant doubt and discussion. We believe that the same will apply to the changes that blockchain is bringing to games.

In our previous two Web3 game-themed reports, we discussed what types of players should be targeted and what kinds of games would better suit Web3 elements and concepts. In this report, we elaborate on what disruptive changes blockchain technology is bringing to games. The Web3 integration of games is still a long way to go. Apart from the above issues, there are also more macro perspectives to be considered, such as how to maintain the balance between gameplay and GameFi, and how the game’s underlying infrastructure can support the interaction required by large games. These are the questions that need to be thought about and solved, which are also the next mission for MixMarvel DAO Venture to fulfill.

About MixMarvel DAO Venture

MixMarvel DAO Venture is a decentralized investment organization that unites builders and investors from the Web2 and Web3 worlds. Concentrating on pioneering Web3 applications, tools, and infrastructures, MixMarvel DAO Venture empowers Web3 ecosystem constructors through financial support and consulting services. It comprises a diverse portfolio of GameFi, Metaverse, Web3 engine, and infrastructure projects.

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