Overview of Crypto Gaming

Key Takeaways

• Crypto gaming is one blockchain use case that has captured plenty of attention and venture funding.
• The proposed benefits of crypto gaming mostly have to do with player ownership and the monetisation of digital assets.
• Traditional game publishers like Ubisoft and Square Enix are cautiously entering crypto gaming, signalling mainstream interest.
• Challenges affecting the adoption of crypto games include regulatory uncertainty, market volatility and sustainability in token design.

The Rise of Crypto Gaming

Crypto gaming started as a niche within the broader blockchain ecosystem but has grown substantially due to the promise of true digital ownership and new economic models. Early successes like Axie Infinity (AXS) in 2021 demonstrated the potential for play-to-earn models, where players could earn real-world value through in-game activities.

Crypto gaming is still in its infancy, with many games in development or early beta stages. Significant investment continues to flow into the sector, with $5.5 billion AUD raised in 2023.

Crypto gaming is one of many sectors to have seen a decline in venture investment in recent years (Source: GamesTX)

Challenges For Crypto Gaming

Like any new and emerging space, crypto gaming faces several challenges that may impact its growth potential. These include:

• Regulatory uncertainty: The legal status of cryptocurrencies and NFTs varies globally, creating a complex landscape for developers and players.
• Market volatility: The value of in-game assets can fluctuate wildly, impacting the stability and attractiveness of these games.
• Sustainability: Many early crypto games struggled with unbalanced economies and poor user engagement. As with any new development, the iteration and learning curve is steep, but developers should, in the future, create more balanced economic ecosystems.
• Reluctance from web2 companies: Traditional gaming companies are generally cautious about relinquishing control over digital items to public blockchains.

Current Gaming Projects

In the crypto space, the term ‘gaming projects’ can refer to either individual games or the blockchains on which games are built. The blockchains that house most games are purpose-built for games and are different to the more general-purpose blockchains (e.g. Ethereum, Solana). Two examples of gaming projects are Ronin (RON) and Illuvium (ILV).

Ronin (Platform)

Ronin is among the most widely used gaming chains, designed for fast transactions and cheap fees. Of the dozens of games available on Ronin, some notable ones include Axie Infinity (AXS) and Pixels (PIXEL).

Illuvium (Game)

As one of the most well-known crypto games, Illuvium is a role-playing game (RPG) where players mine, harvest, capture, and fight characters known as ‘Illuvials’. Some components of Illuvium are built on the Ethereum blockchain, while others are on Immutable X, an Ethereum layer-two solution targeted at gaming.

Four games are available under the Illuvium brand (Source: Illuvium)

Outlook For Crypto Gaming

Despite the hurdles, the future of crypto gaming looks promising. As technology matures and regulatory frameworks become clearer, the sector is likely to see increased adoption and innovation. Key areas to watch include:

• Further adoption by traditional game publishers: The blending of traditional gaming experiences with blockchain technology could attract a broader audience.
• Development of high-quality games: As more resources are invested, the quality and enjoyment of crypto games are expected to improve, addressing one of the main criticisms of early projects.
• Expansion of gaming-specific blockchains: Platforms like Ronin and Immutable X could lead to more efficient and gamer-friendly ecosystems.

Crypto games are increasingly launching across multiple blockchains (Source: Big Blockchain Games List)

Conclusion

Crypto gaming stands at a pivotal point in its development. While there are challenges to overcome, the potential for decentralised, player-owned gaming experiences offers a compelling vision for the future. By leveraging blockchains, the gaming industry could undergo a transformation, unlocking opportunities for developers and players alike.