Entering Web3 Gaming: Multi-Chain, One-Chain or AppChain?

Introduction

In this post, we’ll discuss the benefits and drawbacks for Web3 games to go “multi-chain”, deploy to a existing chain (“one chain”) or building an “AppChain” in regards to customer-acquisition, token-models, user experience, and technical complexity. We aim to help game developers think thoughtfully about which strategy works best for them and to also discuss where Saga may fit into the decision.

Many hope that games will help onboard the next billion users into Web3. As gaming companies explore novel business models in Web3, it’s natural to become overwhelmed by the abundance of technology stacks, ecosystems, varied ideologies and trade-offs that are inherent in blockchain design. As opposed to finding a specific blockchain that may best suit the needs for a specific Web3 game, many gaming studios often choose to go “multi-chain” — a go-to-market strategy of building applications on a portfolio of popular blockchains today (Ethereum, Polygon, Solana, Avalanche to name a few) — and thereby potentially attracting users from every major ecosystem in Web3. This approach is in contrast to building on a single chain — either someone else’s chain or one’s own “AppChain”.

Customer Acquisition

Multi-Chain

One of the first questions that game developers will ask when developing a game is: where can I find gamers to play my game? For those who are building Web3 games, a natural answer is “crypto-native users”. Crypto-native users can be easily found on-chain. As of October 2022, Ethereum has just under 500,000 daily-active users (DAU), whereas Solana sits at around 700,000 DAU. Polygon — a Layer 2 for Ethereum that is home to many Web3 games — boasts just under 1,000,000 DAU. It’s natural to conclude that going “multi-chain” is the best way to go as deploying on all these chains can allow a game to attract many more users than just building on one chain.

In regards to a multi-chain strategy, one should ask two questions. The first: Is there double-counting with the statistics above? For example, do any of the active users on Polygon also interact with Ethereum on a daily basis? While there are no clear statistics to answer this question, many crypto-native users often interact with multiple blockchains (author included) as unique opportunities present themselves in different ecosystems. Even if double-counting doesn’t occur, there are still only “millions” of potential users worldwide that are directly interacting with blockchain today. In comparison, there are over 3 billion gamers in the world today, and there are already established methodologies for attracting users to traditional games. The Web3 game that will find massive product market fit will be the one that brings non-blockchain users into blockchain as opposed to the other way around.

The second question is more fundamental: Does it make sense for a Web3 game to target crypto-native users? According to JoJo at Fair Play Collective, many crypto-native users “are often more interested in the speculative aspects of a Web3 game and its economy as opposed to the specific game itself”. While speculation around an in-game economy can drive traction and interest, a game is not likely to achieve long-term success if its core users are more focused on financial speculation than enjoying actual gameplay. Ultimately, the best games are the ones that are intrinsically more fun to play, regardless of in-game economics and speculative premium.

One-Chain or AppChain

Does this mean Web3 games, regardless of whether they deploy multi-chain or on a single chain, should never target crypto users? Not necessarily. For games that deploy on a single chain an effective method for customer acquisition in Web3 is airdrops, which can be programmed to target a specific group. Many types of airdrops exist, like bounty airdrops, exclusive airdrops or holder airdrops. A bounty airdrop (or as Bogdan Alexandrescu, Co-Founder & VP of Engineering at Saga, calls it, a “Workdrop”) distributes tokens to users who help to market a token on social media or perform some other activity that actively helps a project. An exclusive airdrop can be distributed to loyal users of a game, i.e. current gamers or members of a Discord community. A holder airdrop can airdrop tokens to holders of another token.

This strategy is particularly useful when deploying to an existing chain or building one’s own AppChain. In either situation, a new Web3 game can give tokens to an existing community that has a high chance of playing a new game. For example, a new card-playing Web3 game can give a targeted airdrop to the gamers of Gods Unchained, one of the more popular crypto trading card games today. Or, they can target an airdrop to a guild like indiGG — a Saga Innovator — that provides resources and education to new Web3 gamers. These targeted airdrops are generally more effective when games take a one-chain or AppChain approach. This is because targeted airdrops tend to be more effective when the value of tokens has a high value per user. For example, a gamer will be more likely to explore a new game if the value of his/her airdrop is $100 as opposed to $2. The value of the airdrop is less when the number of communities that are targeted increases, which is common when airdropping to multiple communities in multiple ecosystems.

Token Models and User Experience

Multi-Chain and One-Chain

Currently, there is no Web3 without a token. Games that take a multi-chain approach or deploy onto one existing chain are beholden to the token models of those underlying chains. Typically this requires end-users to acquire the gas-token of those existing chains which may mean that end-users are required to learn the basics of how to potentially interact with multiple blockchains. For example, gamers playing a game that is deployed on Solana would need to download a wallet like Phantom and would need to acquire and transfer SOL tokens in order to transact on the Solana network. Gamers on Polygon would need to do the same with a wallet like MetaMask and would need to acquire and transfer MATIC tokens. Gamers would have to learn best security practices for managing their crypto wallets and understand how to properly sign transactions on a public blockchain. The friction of interacting with a blockchain network can lead to a poor user experience for many crypto gaming applications as the user experience for interacting directly with a blockchain today can improve significantly .

There are a few solutions to address some of the UX issues with deploying to existing chains. One solution is to partner with a protocol like Biconomy that enables gasless transactions for end users. Biconomy can allow a game developer on Polygon to deposit MATIC into their relayer network. Anytime an end user needs to interact with a smart contract deployed by that game developer, Biconomy’s relayer can send MATIC tokens to pay for the associated transaction cost. This solution helps to abstract away blockchain interactions. However, even with solutions like this, Web3 games are beholden to the underlying token model of the network they deploy to.

AppChain

Another solution is for a game developer to build their own AppChain to manage the end user transaction costs themselves. Axie Infinity (a very popular Web3 game in 2021) originally deployed onto Ethereum in 2020. After realizing that the high gas costs on Ethereum made certain aspects of gameplay cost-prohibitive, Axie set out to build their own blockchain, where they could design their own token model. After months of development, they released Ronin — a Layer 2 scaling solution — that allowed gamers to utilize the blockchain 75 times a day for no charge. By abstracting away blockchain interactions via free transaction, the Axie Infinity game was able to scale, eventually resulting in over 1 million daily active users in November 2021.

Technical Complexity

Multi-Chain

Multi-chain strategies require integrating a gaming application across multiple blockchain networks, each with its unique tech stack. For example, let’s say a gaming studio wants to deploy on Solana and Polygon. For Solana, a studio would need to hire Rust engineers who are familiar with Anchor, Solana’s runtime framework. For Polygon, another set of Solidity engineers who are experts in building secure EVM applications would need to be utilized. To create a seamless experience, an engineering team would need to effectively manage RPC endpoints for each chain and ensure that smart contract logic is consistent across both chains. Game developers would also need to be mindful of how to manage separate liquidity pools for in-game assets. White-listed bridge partners would need to be curated to properly transfer tokens and NFTs between multiple chains. All this integration work adds complexity to deployment.

One-Chain

In contrast, deploying onto one existing chain minimizes the technical complexity needed to build a Web3 game. An engineering team would only need to build a single set of smart contracts and interact with one set of wallets and RPC endpoints to create a unified experience. Deploying to an existing chain also allows developers to build with permissionless composability — the ability to easily build on top of other applications within a particular network. A gaming application that would like to provide liquidity to an in-game token would not necessarily have to build its own decentralized exchange. Rather, it can plug into a popular decentralized exchange that already exists within a specific network. For example, Stepn, a Web3 lifestyle app that gamifies exercise, built liquidity for their tokens by plugging into a popular DEX on Solana named Orca. By building on top of another application, Stepn was not only able to tap into the Orca community but also save itself significant development time.

AppChain

Permissionless composability is one of the key benefits of deploying to existing chain(s) and is not currently a feature for games that desire to build their own AppChain, because an AppChain has to build its own applications from scratch. An AppChain like Ronin had to build their own DEX named Katana to bootstrap liquidity for their in-game assets. While the development time is longer, it does allow an application to accrue more value as swap fees from the exchange are kept by the application as opposed to leaking to a separate protocol. In addition to building their own DEX, Axie Infinity was able to build out their own wallet (Ronin Wallet). Between their own AppChain, their own exchange and their own wallet, Axie Infinity was able to build a tightly integrated system of applications tailored specifically to their game. While this did require heavy allotment to engineering resources, this allowed for a far better user experience as compared to games that deployed to existing chains.

AppChains allow for the greatest value-capture in comparison to deploying on existing chains but require careful engineering. Axie Infinity took months to develop Ronin, and while that brought massive success in 2021, a bridge hack in 2022 led to over $600 million being stolen from the protocol. The attack was possible as the Ronin blockchain was relatively centralized as compared to other blockchains (only 5 validators needed to be compromised in order for the hack to occur). The success and subsequent hack of Ronin over 2021–2022 leads to two conclusions: building an integrated application can lead to massive success, and building your own secure chain in Web3 is not easy to do.

Where Does Saga Fit In?

Saga has designed its protocol to capture the benefits while minimizing or altogether eliminating the tradeoffs of the multi-chain, one-chain and AppChain models. Let’s look at each aspect in turn.

Customer Acquisition

Much of Saga’s efforts over the last several months has been centered on attracting protocols focused on Web3 gaming, NFTs and the metaverse. Given Saga’s strong commitment to seeding a gaming ecosystem, new gaming companies can also benefit from the rich community of gaming companies within our ecosystem. IndiGG mission is to on-board 500+ million gamers from India into Web3 gaming; Infinity Keys is creating no-code creator tools to build engaging metaverse experiences; MetaGameHub is acquiring metaverse assets and developing their own tools and infrastructure; exciting games such as Red Door Digital, Cosmic Horizon and FTribe are exploring Saga as a potential platform to scale their own game just to name a few. The possibilities to find users and abstract away blockchain complexity are all within arms-reach at Saga.

Customer acquisition can be enabled via a key interoperability feature that is core to the Saga techstack: Inter-Blockchain Communication (IBC). As discussed in a previous post, IBC is a protocol that is best-in-class for allowing separate blockchains to communicate with each other in a secure manner. Unlike bridging protocols that rely on a trusted third party intermediary, IBC generates trust from the underlying blockchain protocol itself. IBC currently connects to over 50 blockchains in the Cosmos today and processes millions of dollars of transactions daily. With interoperability, gamers are able to freely transfer assets back and forth with other games in other ecosystems and establish multiple worlds that are part of the same gaming universe. In addition, targeted airdrops to other IBC-connected chains has been quite effective for protocols like Juno, Stargaze and Evmos to bootstrap users and a community.

In addition, and this will be explored further in the section on technical complexity below, Saga can act as a multi-chain hub. Our platform enables deployment via multiple virtual machines. This will make it possible for developers who have deployed on other platforms to import their smart contracts onto Saga in a seamless manner. With bridging back to the chain from which the smart contracts were exported, Saga is able to give access to other ecosystems from our ecosystem. One example of a flow is this: a game built on ETH can use Saga’s EVM-based deployment to get their game onto a chainlet. From there, their gamers can take advantage of IBC to transfer in-game assets with other games on Saga, even those not based on ETH or built using Solidity. If the game needs to transact with the original instance on ETH, it can do so via a bridge between Saga and ETH. That kind of interoperability is what makes the decentralization of platforms promised in Web3 truly possible.

Token Models and User Experience

Saga’s flexible approach to token economics means that game developers can offer their users free transactions on a blockchain. This allows for a 10x improvement in user experience as the blockchain components behind a crypto game can be abstracted away. Similar to Ronin, gamers won’t need to worry about buying specific cryptocurrencies to pay for gas, nor would chainlet developers need to work with third-party relayers to create gasless transactions. By not forcing end users to acquire gas tokens on other networks, this frees up developers to explore alternative monetization schemes via freemium models, targeted ads or other strategies that are popular in Web2 today.

Technical Complexity

Abstracting away the creation of a blockchain can save at least 8–10 months of development time. By utilizing Interchain Security, developers can access Saga validators to provision a blockchain in a permissionless manner and rely on the economic security offered by the Saga mainnet. A developer can request blockspace without worrying about recruiting validators, designing a staking token, bootstrapping economic security or needing to understand the nuances of consensus or the Cosmos SDK. The ease of development can be seen in Andromeda, the first iteration of Saga’s core product. As James Ross, Head of Product at Saga points out:

“Developers and projects are looking for dedicated blockspace environments to experiment, scale, and control their own economics where they can pass cost-controlled benefits to their communities. With Saga’s Andromeda, developers can launch chainlets, instantly creating dedicated blockspace, with a few simple keystrokes and be fully turned up in less than 15 minutes. Saga has turned a very complex task into an easy-to-use, fast-to-launch, developer tool that will scale and expand for the developers and their communities’ needs.”

Saga’s core infrastructure can bring much of the benefits of an Apchain like Ronin but without the technical complexity of building one from scratch. Saga’s core product — automated chainlet deployments — allows for game developers to access their own blockchain specifically for their own game. Game developers can focus on smart contract development and building a great user experience.

Finally, as mentioned, Saga is attractive for developers because our platform allows for multiple virtual machine-based deployments. While Saga’s G2M strategy is to support the EVM and Solidity/Vyper smart contract programming languages, Saga will one day support Rust-based smart contracts in CosmWasm, Solana’s VM (which is also based in Rust), and newer languages like Move, which is the smart contract programming language for Aptos and Sui. Developers who have already deployed on other platforms can import their smart contracts onto Saga in a seamless manner and use all the features of Saga via that instance.

Conclusion

Crypto gaming faces many challenges before hitting mass adoption. The Web3 game that may one day help onboard millions of users into Web3 will likely be a game that is intrinsically fun to play with authentic digital ownership as a notable feature. As Web3 games explore the entire Web3 ecosystem, there are many pros and cons associated with various go-to-market strategies. As aspiring gaming companies try to find a home in Web3, we hope that there is much thoughtfulness put into the decision and that some of these games eventually make their way onto the Saga platform.