While many crypto games claim to be decentralized, the reality is that most of them still rely heavily on centralized servers. Despite the branding of Web3, these games are more accurately described as “Web2+” due to their partial decentralization. While game assets are stored on the blockchain, the game logic, state, and storage remain off-chain.
There is a simple reason why fully decentralized games are not common yet – blockchains are still not powerful enough to handle the high volume of transactions that video games require. According to Ludens, the CEO of Lattice, building a fully on-chain game right now is comparable to building video games on a computer from the 1980s. The blockchains, including Layer 2 solutions, lack the necessary power for complex on-chain games.
Developers also have to consider the accessibility of their games to non-crypto audiences. Making a game fully decentralized may alienate players who are not familiar with crypto wallets and the complexities that come with them. To bridge this gap, developers like Aurory have created hybrid inventory systems that allow players to leave their assets in the custody of the game but move them into their own wallets if they choose to do so. This strategy, called Syncspace, aims to bring the game to a wider audience of non-crypto-native players.
However, there is a passionate community of players who are interested in fully on-chain “autonomous worlds” built by the players themselves. These worlds face numerous challenges, but the early results are impressive. For example, players have modded games to form communist collectives where everyone “wins” the same. These fully on-chain games have their assets, game logic, state, and storage all on-chain, ensuring immutability and transparency. They also allow for open composability, similar to the DeFi space, where anyone can build second-layer rules on top of the original game’s rules.
The history of Web3 games has seen a focus on financial returns, which contributed to their brief mainstream prominence during the last crypto bull cycle. However, when token prices took a dive, the appeal of these games diminished. Games like Axie Infinity, Pegaxy, or Crabada, which promised significant returns for players, saw a decline in active wallets and token prices. In response, Web3 games are now shifting their focus away from financial returns and emphasizing the ownership of game assets and the overall enjoyment of the game.
The emphasis on financial returns also attracted scammers to the industry, tarnishing its image. In contrast, Web2 games are less susceptible to scams due to centralized control. To counter this, Web3 games are rebranding themselves and placing more emphasis on fair gameplay and community engagement.
Despite the challenges and limitations, there is a smaller community of builders dedicated to fully on-chain games. These games allow players to overcome collective action problems, create their own in-game marketplaces, and even fork the game onto different chains or layer 2 solutions. They offer unique experiences that are not possible in traditional gaming.
Overall, while the majority of crypto games are still partially decentralized, there is a growing interest in fully on-chain games. As blockchain technology evolves and becomes more powerful, we can expect to see advancements in the development of truly decentralized and immersive gaming experiences.
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