Web3 Gaming: A Revolution in Play?

Introduction

The fusion of technology and gaming has often led to profound shifts in how humanity perceives and interacts with the digital world. From the early days of Pong in the 1970s to the birth of in-house consoles in the 1980s and 1990s to the sprawling universes of MMORPGs of the present day, each technological leap has shaped the gaming industry in unforeseen ways. Now, as we stand on the cusp of another transformative moment, Web3 technology promises to redefine gaming, making good games even better.

But what exactly is Web3? At its core, Web3 represents the third era of the internet. Web 1.0 of the 1980s and 1990s was about static content, Web 2.0 of the 2000s and 2010s was centered around user-generated content and interactivity. Web 3.0 of the 2020s and beyond is about a decentralized internet — built on blockchain technology, allowing for trustless peer-to-peer transactions, decentralized applications, and, most importantly, user ownership and control of one’s data and assets.

Web3’s integration into gaming and the multiverse is opening the door into countless possibilities. Imagine a world where in-game economies are not just digital figments but are connected to real-world value through financialization. Consider the deepened sense of community engagement where gamers don’t just play together, but also govern game rules and systems collectively, backed by the trust and transparency of Web3. And what if games were no longer isolated experiences, but interconnected realms, achieved through the extensibility of open-source standards? The transformative potential doesn’t stop there. With Web3, the concept of ownership and self-determination takes a revolutionary turn. Players are not merely users; they become stakeholders; their digital assets, achievements, and even game-related governance can be authentically their own.

In this post, we will delve into the fascinating synergy of Web3 and gaming, spotlighting areas like financialization, community engagement and game extensibility. As we embark on this exploration, we’ll explore not only how these three aspects are interconnected but also how Web3 can fundamentally change our relationship with the digital universe. Let’s dive in.

Financialization in Gaming: The Web3 Revolution

Games have always had their economies, from the gold coins of Super Mario Bros. to the intricate trading systems of modern MMORPGs. That said, attempts to merge these in-game economies with real-world value have often been fraught with challenges. Two notable examples that spotlight the potential pitfalls of game financialization are Counter-Strike: Global Offensive(CS:GO) and Diablo III.

Consider CS:GO, a first-person shooter developed by Valve and Hidden Path Entertainment. As the fourth game in the Counter-Strike series, CS:GO features teams of terrorists and counter-terrorists battling over maps, hostage-takings, and other objectives, with a strong emphasis on team play and strategy. CS:GO introduced weapons, skins, and aesthetic modifications that can be traded and sold amongst players. While this started off with good intentions, these in-game assets led to the proliferation of third-party gambling sites, where players could wager these skins in casino-style games. The unregulated nature of these platforms raised concerns about scams, unfair practices, and underage gambling. Valve, the game’s developer, found itself amidst controversies and legal challenges, struggling to curb the unintended consequences of its in-game economy.

In a similar vein, Blizzard’s Diablo III tried an ambitious experiment with its Real Money Auction House (RMAH). Players can sell in-game items for real-world money. While the idea was promising, it fundamentally destabilized the game’s core mechanics — players prioritized item farming over gameplay. The Diablo in-game economy faced a host of issues where sometimes item drops were too infrequent, resulting in only those with a lot of money being able to get certain items. On the other hand, too-frequent item drops led to the auction house being useless. In addition, the introduction of real money led to account hacks and several security issues. All this led to Blizzard eventually shutting down RMAH and acknowledging its adverse impacts.

As the gaming industry has reflected on these challenges, a new paradigm is now emerging to combat these issues around the financialization of gaming assets: Web3. The decentralized web offers a framework to intertwine gaming and finance in a transparent, secure and equitable manner.

Consider metaverse games like Decentraland and The Sandbox. These are virtual worlds where every piece of land, every structure, and many in-game actions are tokenized on a blockchain. For example in Decentraland, players use the $MANA cryptocurrency to buy virtual real estate, which are represented by non-fungible tokens called NFTs. These plots have tangible value, can be developed, rented out, or sold, bridging the virtual and real-world economies. Similarly in the Sandbox, the $SAND token is used for transactions, giving players the autonomy to monetize their creations and activities in the game. So why are the in-game economies that power Decentraland and The Sandbox better than their predecessors like CS:GO and RMAH? Consider the following:

• Decentralization: Web3 games operate on decentralized networks, eliminating the need for intermediaries. Players deal directly with each other, reducing the risk of fraud.
• True Ownership: Assets like NFTs or cryptocurrencies provide players with genuine ownership. Unlike in-game items in traditional games, which players ‘lease’ under terms of service, NFTs and cryptocurrencies belong to the player and are protected by public/private key management.
• Transparency: All transactions on a blockchain are recorded on a public ledger, ensuring that deals, trades, or sales are transparent and verifiable.
• Interoperability: Assets in one Web3 game can potentially be used in another, breaking the silos that traditionally bound games — for example $MANA tokens can be seamlessly converted into $SAND tokens and be used in the Sandbox.

One of the significant pain points in traditional gaming is the nebulous concept of digital ownership. Players spend countless hours, and often real money, amassing in-game assets. Yes, they don’t truly ‘own’ these assets. They exist at the mercy of game developers or the platform’s terms of service. Through financialization, Web3 enables players to have genuine ownership of their digital assets and achievements. This can be easily enabled through no-code deployment offerings from companies like Third Web via Saga’s chainlet deployments.This sovereignty not only reinforces trust but can significantly enhance the bond between gamers and game developers.

Community Engagement: Power to the Players

Games have an uncanny ability to forge bonds among players. From late-night raids in MMORPGs to competitive esports teams, gamers are often united by shared objectives and experiences. Consider gaming guilds — a structured group of players who come together within a video game to achieve common goals, such as completing advanced challenges, raiding, or PvP combat. Guilds often provide a sense of community, offering members resources, in-game assistance, and social interactions. They operate with their own internal hierarchies, rules and communication channels, fostering collaboration and camaraderie among members. That said, traditional gaming guilds can fall prey to a host of issues.

Consider World of Warcraft set in the high-fantasy world of Azeroth where players create characters, explore expansive landscapes, undertake quests, and engage in combat with various creatures and other players. Since its release in 2004, WoW has become one of the most influential and enduring online games in history, with multiple expansions and a dedicated player base. Within WoW, few guilds captured as much attention and intrigue as Serenity. Originating from a schism within another top WoW guild named Method. A significant fraction of Method members, disillusioned with the guild’s direction and management, broke away to form their own group, aiming to dominate the WoW raiding scene.

At its inception, Serenity seemed poised for success. It attracted many top-tier players and was viewed by many as a genuine contender for world-first raid achievements. However, the guild’s ascent was plagued by multiple issues. The complexity of managing a top-tier guild, with its inherent need for coordination, collaboration, and rigorous practice schedules, was compounded by off-game challenges. Disagreements arose over sponsorship deals, with some members feeling short-changed and not adequately represented. In addition to these problems, logistical issues further strained the guild; managing in-game resources and consumables required for high-end raiding became a daunting task and the lack of unified leadership and trust created a cauldron of tension and eroded team cohesion. In a game where collaboration and teamwork are paramount, internal discord ultimately led to the guild’s collapse.

The advent of Web3 can transcend the boundaries of these gaming guilds. The decentralized, transparent, and immutable nature of blockchain technology has paved the way for Decentralized Autonomous Organizations (DAOs) — a new form of a guild but with more power and potential. A DAO is a digital entity that operates on predefined rules encoded in smart contracts on a blockchain. Unlike traditional organizations, DAOs are not governed by a centralized authority. Instead, decisions are made through a consensus mechanism, often involving voting by token holders; voting via tokens can be easily enabled through no-code smart contracts. This structure aims to promote transparency, fairness, and democratic governance, reducing the influence of singular entities or intermediaries. Essentially, a DAO can be seen as a programmable, self-executing organization where governance and decision-making processes are transparently recorded on the blockchain.

While it’s impossible to say for sure, if Serenity had operated as a DAO using blockchain, the dynamics and eventual outcome might have been quite different. The inherent transparency of a blockchain would ensure that all transactions, agreements, and decisions made within the guild were visible to every member, significantly reducing the potential for clandestine actions or disputes over resource management. DAO structures would allow for democratized decision making, ensuring that issues like sponsorship deals or logistics would be settled by community consensus, rather than a few central figures. Moreover, the immutable and trustless nature of blockchain would foster an environment where members could have more confidence in the guild’s operations.

There are a few successful gaming DAOs today. Decentraland’s DAO empowers its community to shape the game’s destiny. Through its DAO, players can propose, discuss, and vote on everything from land auctions to policy updates. It’s not merely about playing in the world; it’s about actively building and governing it. Similarly Yield Guild Games(YGG) represents a modern manifestation of the gaming guild. However, instead of just gathering in-game, YGG members come together to invest in, manage, and monetize in-game assets across various blockchain games. Through the DAO structure, members from across the world can vote on strategies, game partnerships, and other key decisions. When a gaming guild can organize its resources in a certain way or a player asserts ownership of a rare in-game item, blockchain’s immutable records validate these claims, fostering an environment of trust.

DAOs, decentralized governance and improved trust and transparency via Web3 can help to address the shady corners of gaming, where black-market sales, fraudulent transactions, and scamming can sometimes thrive. When every gamer feels like they have a voice and that they can be part of a greater community, even the smallest participant can feel engaged and valued. The split in guilds like Serenity mirrors what Web3 refers to as a community-driven fork, something blockchains facilitate seamlessly. Furthermore, the transparent nature of the blockchain allows for tactics like airdropping to attract members from various DAOs and gaming communities, making the discovery of new gaming social circles much more accessible and enriching.

The Evolution of Games Extensibility through Web3

Traditionally, game extensibility — the ability to adapt, expand, or integrate new features into a game — was largely in the realm of the original game developers. Expansion packs, downloadable content (DLCs), and moderators can all play a role in this extensibility but oftentimes happens in isolation and often locked within the specific ecosystem of a game. User-Generated Content (UGC) has been a driving force in the gaming world, with mods for games like “Skyrim” and “Minecraft” dramatically expanding and personalizing player experiences. Web3 represents the next evolution of this UGC wave. Beyond just creating content, Web3 enables players to truly own, trade, and monetize their own creations via the blockchain. Games can transition from static experiences to dynamic ecosystems, molded and evolved by their communities, with Web3 as the backbone for this transformation. Web3 enables a technological shift to a collaborative and interconnected multiverse.

In order for there to be a collaborative and interconnected universe of games (defined as the metaverse or in Sagaland as the multiverse), it must be built on open standards and decentralized principles. In regards to gaming, this means that games can now easily inter-operate on top of open-source standards, where games can share assets, achievements, narratives and even players, creating a network effect that amplifies the appeal and longevity of each participating game. Game developers alike can leverage existing decentralized applications that already offer a plethora of functionalities. Need a governance mechanism for your game? Integrate an existing DAO platform. Want to introduce a marketplace? Use an existing DeFi protocol. Want to tokenize unique in-game assets? Utilize fully audited NFT smart contracts. The possibilities are endless and perhaps most importantly, time-efficient.

Imagine a scenario where the gamers of Decentraland and The Sandbox wish to form a wider inter-connected community. Via collaboration from distinct gaming guilds, there could be an announcement of an “Inter-Realm Quest” where players in both games receive a message about an ancient portal reopening that must bridge the two realms together. To achieve this, Decentraland players must gather unique shards from their game while Sandbox gamers must do the same. When enough shards are collected, a portal activates for a limited time which allows free passage between the words. As the event culminates, participants receive a hybrid NFT, a blend of elements from both games which symbolizes a collaborative success. This kind of NFT can serve as both a rare collectible and functional item in both metaverses.

Such a collaboration need not be theoretical. Within the Saga Multiverse, two games, Another World and Bacano Go! collaborated to seamlessly integrate elements from each game, enabled by Saga’s first-class interoperability. Such a collaboration can only be possible on the open, trustless, permissionless standards of Web3, fostering community ties and innovation across platforms.

Conclusion: The Triad of the Web3 Gaming Landscape

The advent of Web3 in the gaming arena has ushered in a renaissance that can partially be understood via financialization, community engagement, and extensibility. But more than their individual impact, it’s the synergetic relationship between these facets that truly transforms the gaming universe. Financialization not only democratizes in-game economies, granting players genuine ownership over assets, but also sets the stage for deeper engagement. When players perceive tangible value in their in-game pursuits, they naturally are inclined to engage more passionately. This value recognition acts as a trust bridge, fostering stronger community bonds.

Extensibility can become the canvas where greater community cohesion can lead to a transformation of a game itself. As games interoperate, assets and achievements from one realm can be celebrated and leveraged in another, giving birth to unprecedented narratives and collaborations. Such cross-polication deepens community ties and further accentuates the value of in-game assets. In essence, Web3 doesn’t just enhance gaming components in isolation. It weaves them together in a dynamic tapestry, where each thread strengthens and elevates the other. Financialization drives community engagement, which in turn fuels extensibility, creating a holistic, immersive, and ever-evolving gaming multiverse for all to participate and cherish. In this new paradigm, players are just participants, they become co-creators, stakeholders, and community leaders. Their decisions, investments, and engagements have ripple effects that have yet to be fully understood. Web3 doesn’t just change gaming, it elevates it into a collaborative art form, where every player’s input contributes to an ever-expanding multiverse of digital adventures.