In-Depth Research on Blockchain Games: Core of Native Encryption, Bubble or Revolution?

1. Introduction: What is a Full-Chain Game?

Recently, the Pass card for the full-chain game Sky Strife has fomo'd to 21,000 ETH on the testnet, causing many non-full-chain game players to marvel at the magic of this track. Since the release of "Pong" in 1972, the gaming industry has been in a frenzy, evolving from classic 8-bit games like "Super Mario" and "The Legend of Zelda" to today's highly complex and socially interactive online games like "Fortnite" and "League of Legends." Gaming has long ceased to be merely a simple form of entertainment. The social, competitive, and immersive experiences these games provide have surpassed our past imaginations.

With the rise of blockchain technology and the development of encryption currencies, the gaming industry is reshaping our experiences in unprecedented ways. From Axie Infinity, which tightly integrates gaming with the encryption economy, to Stepn, which focuses on social interaction and innovation, blockchain games are gradually being seen as a hope for the mass adoption of Crypto. People are also beginning to explore new ways to combine gaming and blockchain. Besides asset on-chain, can more elements be put on-chain? Thus, the birth of full-chain games.

So what are the differences between blockchain games and traditional games?

In traditional games, all game logic, data storage, digital assets, and game states are stored in centralized game companies. For example, when we play Honor of Kings, Genshin Impact, or Dungeon & Fighter, all game content, including in-game assets, belongs to the centralized companies.

The asset on-chain games that appeared later, referred to as Web2.5 games, such as Axie and Stepn, put assets on the chain. On one hand, players can own the rights to the assets, while on the other hand, it can enhance the liquidity of the assets. However, when faced with the shutdown of a game, the game assets still encounter the dilemma of losing their circulation value. The relationship between asset on-chain games and traditional games is more of a supplement rather than a replacement, similar to the relationship between takeout and dining establishments. Likewise, Web2.5 games also face competition from both similar Web2.5 games and traditional Web2 games.

Recently, the highly regarded full-chain games have put all game interactions and states on the chain, including the game logic, data storage, digital assets, and game status mentioned earlier, all processed by the blockchain, thus achieving a truly decentralized gaming experience.

For ease of understanding, the characteristics of full-chain games can be summarized as follows: 4 points:

1. The authenticity of the data source is ensured by the blockchain. The blockchain is no longer just an auxiliary storage for data, but the true source of game data; it is not limited to just recording asset ownership, but is the storage center for all key data. This approach fully utilizes the characteristics of programmable blockchain, achieving transparent data storage and permissionless interoperability.

2. The logic and rules of the game are implemented through smart contracts. For example, various operations in the game can be executed on the chain, ensuring the traceability and security of the game logic.

3. Game development follows the principles of an open ecosystem. Game contracts and accessible game clients adopt an open-source model, providing a wide creative space for third-party developers. They can creatively output content and share it with the entire community by using plugins, third-party clients, and interoperable smart contracts, or even redeploying and customizing their own gaming experience.

4. The game is independent of the client. This is closely related to the previous three points, as the key to truly encrypting native games lies in the fact that even if the core developer's client disappears, the game can still continue. This depends on the permissionless storage of game data, permissionless execution of logic, and the community's ability to interact independently with the core smart contracts without relying on interfaces provided by the core team. This truly achieves decentralization.

2. Why do humans need full-chain games?

Before understanding why we need full-chain games, let's first take a brief look at the current situation and operating model of the traditional gaming industry.

The essence of blockchain games is still games, and understanding the operational model of traditional games is very important and necessary for us to understand and analyze the future of blockchain games.

( 1. Current Status of the Traditional Gaming Industry

With the development of the gaming industry, many excellent Web2 games have emerged during our growth. Whether it is FPS games like Counter-Strike and CrossFire, RPGs like Dungeon Fighter Online and Dragon Nest, MOBA games like League of Legends and Honor of Kings, or card games like Onmyoji and Hearthstone, games have accompanied our generation's growth and occupy a very important part of our entertainment lives.

According to data from Fortune Business Insights, the global gaming market size was $249.55 billion in 2022, and it is expected to exceed $280 billion in 2023, reaching over $600 billion by 2030. In comparison to the film and entertainment industry, which had a global market size of $94.4 billion in 2022, it can be seen that gaming, as part of the entertainment and leisure industry, occupies a very important position in economic development. There are many areas worth exploring in terms of the depth of its commercialization and the breadth of its types, making it the crown jewel of the leisure industry.

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1( Why do humans love to play games

According to data from Statista, the number of gamers worldwide has exceeded 2.5 billion, approaching 3 billion. So how is it that games can attract more than one-third of the global population to participate? The core reason can be summarized as meeting human needs and weaknesses from multiple aspects.

1. Escape reality and restart life: The game provides a space to escape the pressures and challenges of daily life. In the game, people can free themselves from the troubles of reality, immerse themselves in a virtual world, and have a second life.

2. Burden-free socializing: For multiplayer online games, the game provides a platform for social interaction and is relatively friendly for those with social anxiety. Players do not have to worry about the gaze of others in real life, allowing them to do what they want and build relationships with others.

3. Rewards for timely feedback: Unlike the daily struggles of students and workers in real life for their studies and jobs, the charm of games lies in the rich reward systems and timely reward mechanisms they provide. After putting in effort, leveling up by defeating monsters, and completing challenges, players quickly gain new skills, unlock new levels, or receive new items. This incentive mechanism can inspire people to keep moving forward.

4. Low-cost exploration of freedom: Many games offer rich virtual worlds that allow players to explore unknown areas, interact with NPCs and other players, and drive the development of the storyline. This satisfies humanity's innate desire for adventure and exploration. In the real world, however, due to constraints of money, energy, time, and geographical location, exploration compared to the game world incurs significantly higher costs.

5. Pursuing achievement and self-realization: By completing a series of tasks and goals, people can fulfill their desire for success and recognition, whether it is through leaderboards or achievement points. In the game, individuals can more easily achieve self-challenges and character growth.

By targeting certain, or even multiple, human weaknesses, games can cleverly meet the needs and preferences of different users, thus performing well in both the breadth of coverage among the population and providing a deep immersive experience.

2) Current Status and Development of Traditional Games

Next, let's take a brief look at the current state of the traditional gaming industry.

In traditional games, they are roughly divided into Shooter), Adventure), Role Playing(, Battle Royale), Strategy(, Sports), Puzzle(, Action), Simulation(, and other game genres.

According to Newzoo's data, role-playing and adventure games perform excellently on PC, mobile, and console platforms, both ranking in the top five. Additionally, shooting and battle royale games are very popular on PC and console. On mobile, there is a slight difference, as puzzle and idle games are also quite favored by users.

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) 2. The Dilemma of the Traditional Gaming Industry

However, traditional games currently face two major difficulties: first, game distribution is restricted by licensing numbers; second, the costs before game distribution are too high, leading to a slow recovery period and easy occurrence of sunk costs.

1( The game release is subject to licensing restrictions

A game license refers to a specific permit issued by the government that is required to publish games in certain countries or regions. This system aims to regulate game content, ensuring that games comply with the laws, culture, and values of the country or region, to protect minors from inappropriate content and maintain social stability.

For example, in Germany, the content review of games is quite strict, with a particular focus on content that may have adverse effects on teenagers; South Korea and Japan have a game rating system, evaluated and issued by relevant national agencies.

In China, the impact of game licenses is even greater, as China implements a strict game license system, which is issued by the National Radio and Television Administration. Games must obtain a license before they can be released in the Chinese market.

After the release of 87 licenses on July 22, 2021, there was a long period of stagnation until a gradual turning point began in April 2022. In April 2022, 45 licenses were released, followed by another batch of licenses announced in September and December. However, during the period of license approval stagnation from 2021 to April 2022, only a few large companies managed to survive, while a large number of small and medium-sized companies faced bankruptcy. According to data from the Tianyancha App, more than 14,000 small and medium-sized companies with registered capital below 10 million were successively deregistered from July to December 2021, ).

As the world's largest gaming market, China has over 500 million people playing video games. However, the licensing system has become a pain for countless Chinese companies. Even with the resumption of license approvals, the contraction or constant adjustments of licenses have become a Damocles' sword for every game project team. In the days of waiting for license approvals, one can hear countless sighs from projects without funding chains facing closure.

2( The pre-issue cost is too high, and it is easy to incur a lot of sunk costs

In the development model of Web2 games, there is a need to bear the initial human resources and infrastructure costs during the game development phase. There is idle time cost during the waiting period for the license number, and only when the license number is released, the game is published, and commercial profits are generated can profit sharing occur.

It is not difficult to find that a large amount of costs have been spent.