Produced by: CGV Research
Author: Cynic
TL; DR
What is a full on-chain game?
Challenges and solutions for full on-chain games
Why do we need full on-chain games?
Which blockchain is suitable for full on-chain games?
What types of games are suitable for being full on-chain?
The past of full on-chain games — Decentralization, trustlessness, and let’s open a casino here
The present of full on-chain games — High-performance public blockchains make full on-chain games a viable option
The future of full on-chain games — From full on-chain games to on-chain society?
What is a full on-chain game?
A full on-chain game refers to a game where the game logic and data are stored entirely on a blockchain. The operation and interaction of the game are based on smart contracts, allowing for the full utilization of blockchain technology’s advantages, including decentralization, trustlessness, verifiability, transparency, and traceability.
A full on-chain game is contrasted with a partial on-chain game. In a partial on-chain game, only certain game elements such as game assets and transaction records are stored on the blockchain, while the game logic and data processing still rely on traditional centralized servers.
Depending on the content stored on the blockchain, partial on-chain games can be categorized into core logic on-chain, asset on-chain, and achievement on-chain.
Core logic on-chain typically involves storing key game data and algorithms on the blockchain to ensure fairness and transparency. For example, putting the random number generator (RNG) or combat result calculation logic on the chain can prevent cheating and manipulation. Alternatively, parts of the in-game economic system can be placed on-chain, allowing for more diverse and innovative incentive mechanisms. For instance, players can earn token rewards through mining, staking, or participating in in-game activities.
By putting assets on-chain, virtual items, characters, or other resources within the game are usually represented as non-fungible tokens (NFTs) or fungible tokens (FTs). This enables players to own, trade, and manage these assets, providing them with economic benefits and incentivizing their participation in the game ecosystem.
Achievement on-chain typically refers to players unlocking certain achievements in the game and choosing to register them on the blockchain as proof of their game level or as credentials for subsequent airdrops. However, these achievements cannot be directly traded. Compared to asset on-chain, achievement on-chain provides much smaller economic incentives to players, but it helps the game focus on its essence — “After all, the most important thing about a game is that it’s fun.”
Challenges and solutions for full on-chain games
Since the inception of the concept of full on-chain games, it has yet to be widely adopted due to several challenges in the real-world implementation.
1. Performance and scalability: Blockchain networks have limited processing capabilities, especially in terms of transaction throughput and confirmation speed. Full on-chain games may lead to network congestion and latency, which can impact the gaming experience. To address this issue, developers need to explore scalability solutions such as sharding, state channels, and layer-two scaling.
2. Transaction costs: Every operation in a full on-chain game requires a transaction to be submitted to the blockchain, resulting in corresponding fees (e.g., gas fees on Ethereum). If the transaction costs are too high, it may restrict player participation and the overall playability of the game. Reducing transaction costs requires considerations like optimizing transaction structures and utilizing more energy-efficient consensus algorithms.
3. User experience: Compared to traditional games, full on-chain games may face challenges in terms of user experience. For instance, users need to understand and use cryptocurrency wallets, manage private keys, and handle transactions, which may pose certain barriers and learning curves for the average user.
4. Privacy concerns: Due to the public and transparent nature of blockchains, player data and transaction information in full on-chain games may be at risk of privacy breaches. Protecting player privacy requires the adoption of technologies such as zero-knowledge proofs and privacy-preserving computations, but these may further increase system complexity and development costs.
5. Game design limitations: Due to the performance limitations of blockchain technology, full on-chain games may struggle to implement complex game mechanics and real-time interactions. This implies that full on-chain games may face restrictions in terms of game genres and gameplay, making it challenging to adapt to high-performance demanding game types such as large-scale multiplayer online games and action games.
High-performance Layer 1 solutions and the recent popularity of Layer 2 solutions are expected to reduce transaction costs and improve confirmation speeds, effectively addressing challenges 1 and 2.
Account abstraction (AA) can lower user barriers and address challenge 3. ERC-4337 has passed the audit on March 2, 2023, and has been deployed on the mainnet, indicating that widespread use of account abstraction is on the horizon.
Zero-knowledge proof technology has proven effective in protecting privacy, addressing challenge 4.
As for challenge 5, do we really need to put every game type on-chain? The answer is likely no.
Why do we need full on-chain games?
With so many issues still existing in full on-chain games, why do we need them?
This question is somewhat akin to asking why we need permissionless blockchains.
The need for full on-chain games can be understood from the following perspectives:
1. Decentralized gaming world open to everyone: Full on-chain games eliminate the reliance on centralized servers, making game operations more decentralized. This can increase system security and resistance to censorship, while reducing reliance risks on a single organization or individual.
2. Trustless and verifiable game fairness: Since game logic and data are stored on the blockchain, game rules and states are transparent to everyone. This enables players to verify the fairness of the game and the correctness of outcomes, enhancing the credibility of the game.
3. Ownership, not just usage rights: Full on-chain games can utilize non-fungible tokens (NFTs) to represent in-game items and characters, allowing players to truly own and control these assets. This ownership can incentivize player participation in the game while providing real-world value and profits.
4. Once on-chain, running permanently: Due to game states and logic being stored on the blockchain, full on-chain games have high sustainability. Even if the original developers no longer support the game, as long as the blockchain keeps producing blocks, the game can continue running and evolving.
5. Reliance on the community, dedication to the community: Full on-chain games achieve community-driven development and governance through smart contracts and decentralized autonomous organizations (DAOs). This enables games to better adapt to player needs and market changes, increasing the game’s lifecycle and attractiveness.
6. Open collaboration, user-driven innovation for iterative evolution: Open-source code and an open system facilitate collaborative efforts between individuals. With the assistance of AI large models, users’ creative abilities will be fully unleashed, and user-generated content (UGC) or AI-generated content (AIGC) will bring about more diverse, richer, and more sophisticated gaming experiences.
Which blockchain is suitable for full on-chain games?
A five-dimensional comparison can be made based on TPS (transactions per second), confirmation time, transaction cost, security, and independence, with a maximum score of 5.
The primary prerequisite for full on-chain games is excellent transaction performance. A shorter confirmation time can provide a better gaming experience, a robust ecosystem can offer the necessary infrastructure for games, security is crucial for protecting game assets, and independence ensures that games are not affected by congestion caused by other events on the blockchain. There is no one-size-fits-all solution in the real world, as each option has its strengths and weaknesses. Game projects can choose based on their specific design characteristics.
What types of games are suitable for being full on-chain?
We believe that full on-chain games should leverage the advantages of being entirely on the blockchain, rather than simply migrating their operational logic onto the chain. In other words, the goal should not be to go fully on-chain for the sake of it; going fully on-chain is a means to an end, not the end itself.
What types of games can benefit from the advantages of blockchain technology? We believe there are two main types that are particularly suitable.
One type is Multi Party Games (MPGs) that utilize the blockchain’s openness, transparency, and verifiability in a multiplayer setting. Interestingly, the term “game” can refer to both the concept of entertainment games and strategic games.
“Multi Party” implies that the game is not single-player or based on fixed game logic but involves interactions between players. With permissionless blockchains, anyone can participate in the game.
“Game” suggests that the parties are engaged in competitive interactions. By utilizing the blockchain, we ensure fairness in the game, and the public, transparent, and verifiable nature of the blockchain prevents game designers from tampering with the results.
The most direct example of an MPG is gambling. Broadening the scope, various types of card games and turn-based strategy games can also be categorized as MPGs. MPGs are characterized by relatively fewer interactions, emphasizing players’ strategic thinking rather than reflexes. Through the blockchain, adversarial parties obtain a fair judgment.
Another type is User-Generated Games (UGGs) that leverage the blockchain’s openness, autonomy, and ownership.
In this type, the initial game designer sets minimal core rules, and users can unleash their imagination and creativity within the framework of these rules, exploring various gameplay possibilities. With the assistance of AI large models, users can easily put their creative ideas into practice and gain profits from the blockchain’s rights attribution.
Without centralized organizations, UGGs rely on collaboration between individuals, and true autonomy is achieved by distributing governance rights to everyone, representing the broadest form of democracy. If users are dissatisfied with the core rule set established by the original designer, they can modify it at any time and deploy a new smart contract to create a new world.
Starting from a small seed, with the momentum of positive feedback, the game will eventually grow into a towering tree.
The past of full on-chain games: Decentralization, trustlessness, and let’s open a casino here
On November 1, 2008, Satoshi Nakamoto published “Bitcoin: A Peer-to-Peer Electronic Cash System.” On January 3, 2009, the genesis block of Bitcoin was created. As Bitcoin transactions became more widely known, people started using it for online gambling. In 2012, the first Bitcoin-based gambling game, SatoshiDice, emerged. SatoshiDice was a simple blockchain-based gambling game where players placed Bitcoin bets, and the game returned the results of wins or losses based on predetermined odds and a random number generator. During this stage, blockchain gambling games were primarily limited to the Bitcoin ecosystem, and the variety of games was limited.
In 2013, the Ethereum project was launched, and its smart contract functionality had a significant impact on blockchain gambling games. In 2015, when the Ethereum mainnet went live, blockchain gambling games started to transition from Bitcoin to Ethereum. With Ethereum’s smart contract technology, developers could create more complex and interactive gambling games. This phase saw the emergence of many Ethereum-based gambling games and platforms such as vDice and Etheroll.
In May 2014, Kevin McCoy and Anil Dash created the first known non-fungible token (NFT). In 2017, CryptoKitties, the first Ethereum-based NFT game, successfully attracted a large number of users. NFT technology had a profound impact on the development of blockchain gambling games. NFTs could be used to represent unique in-game assets, such as limited edition gambling props or virtual tokens, and an increasing number of gambling games began utilizing NFT technology.
In the summer of 2020, the DeFi Summer explosion occurred, and decentralized finance (DeFi) began to rise, leading blockchain gambling games into a new stage of development. Gambling games started integrating with DeFi projects and platforms, providing players with more extensive financial functionalities such as liquidity mining, staking, and lending.
During the same period, the public blockchain sector experienced a significant boom. Blockchains like Binance Smart Chain (BSC), Polygon, Solana, and Tron optimized transaction costs compared to Ethereum, offering players faster and cheaper transaction experiences.
As the blockchain gambling game market gradually matured, innovative game types and gameplay also emerged. For example, prediction market platforms like Augur and Gnosis allowed players to bet on the outcomes of future events. These platforms used smart contracts and blockchain technology to create fair, transparent, and trustless gambling environments.
Gambling games, in fact, were the first games on the blockchain. They are naturally suited for full on-chain implementation since games of chance or guessing numbers are essentially mathematical calculations, easily verifiable through simple hash functions. By learning from history, we can understand the rise and fall. Although gambling may have a negative reputation for many people, we should not forget that full on-chain games had their humble beginnings here.
The present of full on-chain games: High-performance public chains make full on-chain games a viable option
With the rise of various high-performance Layer 1 and Ethereum Layer 2 scaling solutions, full on-chain games has gradually become a feasible reality. People’s exploration of full on-chain games has also deepened, with the emergence of the game Dark Forest marking a milestone event in the development history of full on-chain games.
Source: Twitter@Ner0nzz
Dark Forest is the first on-chain game in the category of incomplete information games. It utilizes the blockchain’s transparency and verifiability while hiding information that affects the gaming experience through ZK-SNARKS technology. It achieves incomplete information games and recreates the environment of the “dark forest” from the novel “The Three-Body Problem” on the blockchain.
As an open MMO strategy game, Dark Forest encourages players to create their own in-game and out-of-game gameplay, leading to the formation of a large community ecosystem. Some players have formed guild organizations and made significant contributions in plugin development, game exploration, and event planning. As a real-time strategy full on-chain game, each player interaction is presented on-chain through contract calls and updated in real-time among different players. The “war fog” implemented through ZK-SNARKs technology achieves incomplete information games and simulates the dark forest environment.
Dark Forest has proven the feasibility and playability of full on-chain games. Since then, the doors to full on-chain games have truly opened.
Various major public chains are nurturing the full on-chain games sector, with Starknet being the most active. On Starknet, several full on-chain games have emerged, such as LootRealms, GO L2, Isaac, and Unstoppable Games, gaining significant popularity. However, considering the persistently high Gas Fees on Starknet, the mainnet launch of these games is still a long way off.
Looking at the overall trend of various game projects, two game themes stand out: strategy-based battle games like Dark Forest and casual mini-games with a focus on financial attributes. Considering the current high Gas Fees, it may require tangible economic incentives to attract people to participate in the games. From this perspective, the latter is likely to launch on the mainnet faster.
The future of full on-chain games: From full on-chain games to on-chain society?
Where will the future of full on-chain games lead?
In the short term, the role played by Ethereum scaling solutions, primarily Rollups, remains limited. Anchoring on Ethereum can also be negatively affected by other financial activities on the Ethereum network (such as MEV attacks causing sudden gas spikes during significant cryptocurrency market price fluctuations). The cost is still too high for more complex full on-chain games, and relying solely on game experience is insufficient to attract users. Meanwhile, high-performance Layer 1 solutions, due to their lack of compatibility with the Ethereum Virtual Machine (EVM) and a limited number of developers, struggle to build a large user base. In the short term, GameFi, which provides higher economic incentives to players, may dominate.
In the medium term, we believe that Ethereum’s dominant position will be challenged, and more high-performance Layer 1 solutions will attract a significant number of users due to lower costs and better experiences. ZK-Rollup technology will mature further, truly reducing gas fees to levels comparable to traditional transactions. More customized dedicated chains will emerge to avoid congestion caused by unrelated activities. On this basis, various complex full on-chain games will be deployed on the mainnet, exploring the full potential of on-chain gaming in practice. With the development of VR and AR technologies, full on-chain games have the potential to be more vividly presented in the physical world, bridging the gap between on-chain and off-chain, recording on-chain and experiencing off-chain.
In the long term, games, starting from entertainment, may generate real-world value. The interaction records and game processes of each player can serve as valuable data for training AI systems, benefiting real-life applications. The blockchain’s ownership authentication allows every user to control their own data and profit from on-chain interactions. For example, a player’s reaction in a racing game can better train autonomous driving systems, at least providing many boundary cases that are difficult to encounter in real life. The emergence of decentralized autonomous organizations (DAOs) will gradually bring games closer to social ecosystems. Human society, built upon a core set of natural laws and created through exploration and innovation among individuals, can develop social ecosystems on the blockchain just as it has in the physical world.
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About Cryptogram Venture (CGV):
CGV (Cryptogram Venture) is a crypto investment institution headquartered in Tokyo, Japan. Since 2017, its fund and predecessor funds have participated in investing in over 200 projects, including the incubation of the licensed Japanese yen stablecoin JPYW. CGV is also a limited partner in several globally renowned crypto funds. Since 2022, CGV has successfully hosted two editions of the Japan Web3 Hackathon (TWSH), supported by Japan's Ministry of Education, Culture, Sports, Science and Technology, Keio University, NTT Docomo, and other institutions and experts. CGV has branches in Hong Kong, Singapore, New York, Toronto, and other locations. Additionally, CGV is a founding member of the Bitcoin Tokyo Club.
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