The crypto-winter is causing web3 game developers to reconsider many aspects of their project.Our observation in recent months is that more and more Web3 games are abandoning their plans for issuing their own in-game tokens because of market volatility. As a result, some of these games have returned to using more stable crypto assets like USDC, USDT, ETH, and even BTC for handling fees and rewards. Note that in the article we specifically focus on turning the reward currency off-chain while keeping the governance token and non-fungible tokens intact. Before we explain this trend, let's learn why web3 games use tokens.
Web3 gaming and tokens
In Web3 games, tokens are commonly used as a way to represent in-game assets or as a means of exchange within the game. This can add an extra level of functionality and make the game more engaging for the players. Tokens can also be used to incentivize certain behaviors or provide utility within the game, such as acting as a virtual currency that players can use to buy items or participate in events. Another advantage of using tokens is that they are based on blockchain technology, which offers a level of security and also allows players to truly own their in-game assets.
Here are a few examples of how web3 game developers use a native currency.
Creating a unique economy: One of the key reasons for using tokens in Web3 games is to create an in-game economy. Web3 games generally issue a native currency, which players can use to buy and sell items or services within the game. This helps to create a more immersive and engaging gaming experience, as players can earn, spend, and trade tokens as part of the gameplay.
Decentralizing the game: Another reason for using tokens in Web3 games is decentralization. In the world of Web2-based gaming, developers basically play gods in the virtual universes they create. But think about it: if gamers don't engage with the game, will there be any value created? However, this crucial fact is often disregarded in Web-based gaming, and players are left at the mercy of developers. Tokenization essentially allows web3 game developers to decentralize their creation, which means sharing the ownership and governance of the project with its community.
This can provide several benefits, such as reducing the risk of censorship or interference by outside parties and allowing players to have more control over the game and its future direction.
Raising capital: Finally, using tokens in Web3 games creates another avenue for game developers to raise capital. This can involve the use of initial coin offerings (ICOs), where the game developers sell tokens to investors in order to raise funds. Many games allow their community to directly fund the game in its early stages instead of reserving tokens for accredited investors. which can potentially turn out a life-changing ROI for the early investors from the community if the game makes it to the big leagues.
Let’s look at two popular Web3 games that are taking a different approach to establishing these objectives:
EV.IO is a fast-paced first-person shooter that you can play directly in your web browser. The game has a very simple and quick onboarding process, making it easy for you to start playing right away. You don't need to create an account, set up a wallet, or buy an NFT character; just visit the website and click "play" to begin. As you can notice, ev.io does things a little differently than the Web3 games that came before it. The development philosophy behind the title is to increase the fun quotient while decreasing onboarding hurdles like wallets and buying NFTs. A player can choose whether to interact with web3 elements and earn money while playing or simply enjoy a fun FPS.The game applies the same "no complexity approach" to its payout structure too: players don’t earn on-chain tokens that fluctuate in value while they play Ev.io; instead, the game gives them "e" tokens that can be exchanged for SOL if the player wishes to make a withdrawal.
Undead Blocks: Here is another game that uses a novel payout strategy from the perspective of Web3 gaming. In Undead Blocks, you'll be plunged into a dark and violent world overrun by zombies. This first-person shooter is filled with gore as you fight for survival against the undead. The only way to stay alive is by using your weapons to blow off the heads of the zombies that are trying to attack you. It's a tense and thrilling game that will keep you on the edge of your seat. Similar to ev.io, Undead Blocks rewards players with gold ZBUX, an off-chain stable reward currency that is valued at $0.10. The game allows players to exchange their gold ZBUX earnings for fiat currencies or other digital assets.
The key takeaway from studying these two games is that the key to a game’s success is its gameplay. "Games that rely too heavily on financial rewards or play-to-earn mechanics are not as resilient to market changes and can experience significant drops in players when the market fluctuates." The proof is in the pudding, folks. We won't name names, but the early games in the space focused too heavily on the financial incentive side of web-based gaming. The result should be obvious: players who engaged with the game were primarily interested in the financial incentives, and once the market turned and they lost the ability to make a quick buck through the game, they dropped it. Contrast this with games like Undead Blocks and ev.io that are super fun, and the financial incentives are like the cherry on top instead of being the whole cake.
Other benefits of using established crypto assets for payouts
- Increased liquidity and value of virtual assets: By using an established cryptocurrency, players can easily convert their in-game assets into a widely used and easily traded digital asset, which can make it easier for them to sell or trade their assets with other players. This can help increase the liquidity and value of the game's virtual assets.
- Credibility and trustworthiness: Using an established cryptocurrency can help to increase the credibility and trustworthiness of the game, as it shows that the game is using a reputable and well-known digital asset. This can help to attract more players to the game, which can in turn help to increase the value of the game's virtual assets.
- Unique economy: A web3 game can create a unique economy with an established cryptocurrency by implementing game-specific rules and mechanics that affect the supply and demand of the game's virtual assets. This can help create a dynamic and interesting economy within the game.
The trend kind of makes sense to us—it’s a design change that leads to a narrative change. Making the rewards assets stable reduces speculation and gives players the space to focus more on the gameplay. However, to make this work, the developers need to ensure that their game is indeed fun.