A warm respite from Crypto Winter?

Blockchain games are experiencing a surge in both user engagement and investment, with mainstream game studios keeping an eye on the emerging sector. Keep your friends close but your enemies closer seems to be the mantra. There’s no doubt that traditional gaming studios like AE Sports have this in mind as blockchain gaming threatens the core business of traditional gaming companies.

So, for those burnt out on FTX, cratering coin prices and flat carpets, we offer a quick guide to blockchain gaming and how it can lead to wider adoption of blockchain technology.

Blockchain games explained

Blockchain games are video games whose mechanics are powered by cryptocurrency, smart contracts and NFTs. It is also known as Web3 games, Play-to-Earn (P2E) games or cryptocurrency games. There is a lot of semantics discussion within the gaming industry, mainly used for marketing purposes.

NFTs are only meant to be used for in-game items in blockchain games. However, they can also operate a crypto-based gaming economy.

Regardless, elements of ownership are crucial to a Blockchain-based game. In-game assets, or in-game currencies, are owned by players, which are traded on exchanges and markets. Clothing, equipment, weapons, and currencies are all examples of in-game assets.

There is also an element of collectability, as players hold on to their digital objects.

Companies can allow players to have a voice in the game’s future by incorporating a governance model, while third-party developers can create services on top of the existing game. What exactly is a decentralized application (DApp)?. Ethereum is the first programmable blockchain, allowing developers to create software on it.

These are called smart contracts. To create a decentralized exchange, for example, a contract is needed to set up the liquidity pools, while another contract rules about functionality. A decentralized application, or DApp, is made of one or more smart contracts. A DApp can be used by game developers to distribute in-game elements to users.

It’s one of the easiest ways to integrate Web3 elements into your games. DApps, on the other hand, can handle more complicated rules, such as adding finances or setting game rules.

Nine chronicles is one example of a game that runs entirely on its own blockchain, while Soccerverse is a manager game that uses Xaya’s Custom Blockchain. Remember that blockchain games and Web3 games are not new concepts.

NFTs

Non-fungible tokens (NFTs) were first introduced to players with a mobile game called Spells of Genesis back in 2017. This was before the ERC-721 token standard was created, and these NFTs existed in Counterparty, a Layer 2 network built on the bitcoin blockchain. With the implementation of the ERC-721 token standard in 2018, the concept of NFTs took off. But only now, four years later, are we seeing games released with qualities that are on par with what mainstream gamers are used to.

More importantly, the process for entry has evolved. Instead of having to fiddle around with private keys and MetaMask, players can now simply create an account. In the background, games may create a wallet, but players are never aware that blockchain technology is fueling their experiences.

The big players

Major gaming companies such as Sega, Square Enix and Ubisoft are going to launch wallets with NFTs incorporated into blockchain games in the next few years.

Web3 native companies such as Gala Games, Mythical Games and Animoca Brands will be part of the next generation of games. Web3 had a tough year in 2022, as cryptocurrency prices plunged amid macroeconomic upheaval, war in Ukraine, fallout from the COVID-19 pandemic, and an impending economic downturn.

However, development and adoption continue unabated. Blanko’s Block Party and Star Atlas were both added to the Epic Games Store this year.

Billions of dollars have been invested in blockchain games and metaverse projects, with several brands becoming interested in the concepts of digital real estate, NFTs, and blockchain games. Meta (Facebook) alone has spent over $15B trying to develop their version of the Metaverse—which will include some components of games.

According to the Blockchain Gaming Alliance and BGA’s gaming report from DappRadar, games now represent a large portion of blockchain transactions. An average of 912,000 wallets interact daily with blockchain gaming dapps as of Q3 2022. These wallets represented 48% of the total activity on the blockchain.

Blockchain ecosystems that allow for fast and affordable transactions would become popular among game developers. These platforms can flourish if their onboarding systems are convenient for users.

Currently, most gaming activities take place in WAX and Hive, pushed by gaming DApps such as Alien Worlds and Splinterlands respectively.

When comparing Q3-2022 to the previous quarter, Solana experienced a significant increase.

Where can I find the best Web3 game DApps?

Gaming decisions are often driven by qualitative studies, such as star ratings and user reviews. Blockchain technology, however, allows for a more quantified goal. Users can supplement their decisions with data from the blockchain, rather than relying on reviews.

You can see how many users there are for a game DApp on Web3. You can see how often they engage with the DApp, how much value is transferred across the ecosystem, and what NFTs are going to be worth. Users can find every gaming DApp available on the market right now through platforms like DappRadar.

The platform offers quantitative measurements that help users make well-considered decisions. Unique Active Wallets, or UAWs, are used to sort the game’s rankings. NFT Explorer also allows players to find NFTs required by a game. To find a digital asset, simply enter the name of a game in the search field.

DappRadar provides details on total trade volumes, the rarity of the individual digital assets, trade history and valuation.

What are unique wallets?

Dappradar’s core indicator is Unique Active Wallets (UAW), meaning wallets that have interacted with a smart contract.

What that means varies depending on the game. For example, an interaction with a smart contract in Axie Infinity, the strategy battle game, means someone is claiming the rewards, while in Splinterlands, playing a game, lending game cards, or collecting rewards all count as interactions.

Although the two games had identical player counts, Splinterlands would have been higher on UAW. Simply because that game has used smart contracts to develop their game mechanics.

What are the best DApps games for 2023?

Many new game projects will have either launched, or entered alpha or beta by the end of 2022. The amount of blockchain games will explode over the next few years, and these games will almost certainly hide any reference to NFTs, metaverses, or cryptocurrency. You’ll be able to play a game for free, find out you have in-game items, and then either trade them in-game or on an open marketplace.

The most active blockchain games on the market can always be found at DappRadar. These can be filtered based on which blockchain ecosystems they support, or how many transactions they process. The game ranking on DappRadar is free to use and provides an additional discoverability option where only recent DApps are filtered.

Are gaming DApps worth investing in?

Don’t think of gaming DApps as short-term investments. This is not a case of analyzing trends, nor does any of the above constitute investment advice. However, gaming is likely to be a major driver of Web3 adoption.

Many will be exposed to concepts such as digital property, cryptocurrency and NFTs. The appealing aspect of gaming DApps is that there are a variety of ways to engage with these gaming economies.

One can just play a game, or they can foster businesses that contribute to a gaming economy. Perhaps some NFTs allow users to own key parts of the game’s financial framework, or users can run a node that supports a custom, decentralized network.

Final thoughts

In the long term, promising projects can yield good returns, but for every successful project there will be projects that do not pan out. Before investing in cryptocurrency coins, NFTs or any blockchain gaming project, you should always do your own research and never risk more money than you can afford to lose.

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Jay Speakman is a technology writer based in San Francisco, California. He writes on the topics of blockchain, cryptocurrency, DeFi and other disruptive technologies. Clients include Avalanche, Be[in]Crypto, Trust Machines and more blogs devoted to blockchain games. He will not rest until fiat currency is defeated.