What is web3 gaming: Future of the entertainment industry

Web3 is a new stage in the evolution of the Internet that differs significantly from its predecessor, Web2. The traditional Internet (Web2) is based on centralized platforms where large companies control access to data and user interaction. Web3, on the other hand, is based on decentralization, transparency, and autonomy, which is achieved through blockchain technologies. In Web3, users have control over their data, transactions, and digital assets, which provides a more secure and trusted online space.

Web3 games integrate blockchain, NFTs (non-fungible tokens), and smart contracts, creating a whole new level of opportunities for players. Thanks to the blockchain, game assets (such as characters, weapons, or other items) can be represented in the form of NFTs, which allows them to have a real value and be traded outside the game. Smart contracts automate transactions and ensure that all parties comply with the terms, making the gameplay more fair and transparent. In such an environment, players can not only play but also own assets, invest in them, and even profit from their time and efforts in the game.

In 2024, the topic of Web3 gaming is becoming more and more relevant due to the rapid growth of the blockchain and NFT industry. This trend is associated with an increase in the number of players seeking more freedom, transparency, and the ability to monetize their gaming experience. In addition, more and more companies are starting to explore and implement Web3 technologies in their projects, which creates new opportunities for innovation and industry development. In this context, Web3 games have every chance to become one of the key areas of digital entertainment development in the coming years.

History of Web3 games development

Beginnings: From the first blockchain games to today

The first attempts to integrate blockchain into the gaming industry began in the early 2010s, when developers began experimenting with this technology to create unique gaming experiences. One of the first such games to gain wide popularity was CryptoKitties, launched in 2017. The game allowed users to buy, sell, and breed digital cats, each of which was a unique NFT. This game became a real breakthrough, showing that blockchain can be effectively used in the entertainment sector, opening up new opportunities for players.

CryptoKitties quickly attracted the attention of both players and investors, which led to a significant increase in interest in blockchain games. However, at this stage, the technology was still in the experimental stage, and there were many difficulties related to scaling, user experience, and acceptance of the new model of digital asset ownership.

Evolution of gameplay models

With the development of technology and the expansion of blockchain capabilities, the gameplay of Web3 games has begun to evolve, leading to the emergence of new models such as Play-to-Earn (P2E) and Move-to-Earn (M2E). In the Play-to-Earn model, players have the opportunity to earn real money or cryptocurrency for their achievements in the game, which has dramatically changed the approach to the gameplay. For example, in the Axie Infinity game, players can earn tokens by participating in battles or breeding Axies (virtual creatures), which are also NFTs.

On the other hand, the Move-to-Earn model offers rewards for physical activity. Games such as StepN motivate users to live a healthy lifestyle by paying out cryptocurrency for achieving certain physical goals, such as the number of steps taken. This demonstrates how Web3 games can go beyond traditional gaming and influence other aspects of users' lives.

Important milestones

Over time, several important projects have emerged that have become milestones in the development of Web3 games and have shown the potential of this industry. One project is Axie Infinity, which not only popularized the Play-to-Earn model but also showed that Web3 games can become a source of income for thousands of players around the world.

Another important project is Decentraland, a virtual world built entirely on the blockchain where users can buy, sell, and build on land that is also represented by NFT. Decentraland opened the door to a new era of digital real estate and showed that the future of the Internet can be built on the principles of decentralization and ownership.

Sandbox also deserves attention as one of the most innovative projects in the Web3 field. This platform allows users to create, own, and monetize their gaming experiences in the virtual world using the blockchain. Sandbox has become another example of how Web3 games can give users full control over their content and even allow them to make money from it.

These projects not only influenced the development of Web3 games but also set a new vector for the entire gaming sector, where users are not just content consumers but full participants and owners of digital worlds.

Technological foundations of Web3 games

Blockchain and smart contracts

Blockchain is the central technology on which Web3 games are based. It is a distributed ledger that ensures transparency, immutability, and security of transactions carried out in the game. In traditional games, data about players and their achievements are stored on central servers controlled by developers. This creates certain risks, such as the possibility of data loss or game closure. Instead, the blockchain allows storing all game data in a decentralized manner, which means that no one but the owner can change or delete it.

Smart contracts are automated programs that run on the blockchain. They ensure the fulfillment of the terms of agreements without the need for intermediaries. In the context of Web3 games, smart contracts are used to manage various aspects of the game: from the purchase of game assets to the payment of rewards to players. For example, a smart contract can ensure that a player receives a reward only after achieving a certain result in the game. This makes the gameplay more fair and transparent, as all conditions are specified in advance and cannot be changed.

NFTs and gaming assets

NFTs (non-fungible tokens) are another key technology of Web3 games. Unlike regular tokens, each NFT is unique and cannot be replaced by another. In the context of games, NFTs can represent various game assets: characters, items, skins, land plots, etc. The main advantage of NFTs is that they give players full ownership of these assets.

In traditional games, all assets remain the property of the developer, even if the player has spent real money to purchase them. With NFT, the situation is different: the player owns the asset and can sell, trade, or use it in other games that support this standard. This opens up new opportunities for players to monetize their achievements and investments in digital assets. In addition, the uniqueness of NFTs adds value to in-game items, which creates new economic models within gaming ecosystems.

Multichain solutions and interoperability

As the blockchain ecosystem consists of many platforms, each of which has its own characteristics, the problem of interoperability is becoming increasingly relevant. Multichain solutions allow gaming assets and data to move between different blockchains while maintaining their value and functionality. This is especially important for Web3 games, as they often attract players from different blockchain platforms.

One approach to ensuring interoperability is the use of cross-chain bridges that allow assets to be moved between different blockchains. For example, NFT created on Ethereum can be used in a game that operates on the Binance Smart Chain thanks to such a bridge. Another example is protocols that support multichain smart contracts that can be executed on multiple blockchains simultaneously.

Such solutions not only provide more flexibility for players and developers, but also contribute to the creation of a single decentralized Internet space where users can interact seamlessly with different platforms and projects. In the future, this can significantly expand the capabilities of Web3 games and create new models of interaction between players and game worlds.

Analysis of current trends in Web3 games

Play-to-Earn (P2E)

The Play-to-Earn (P2E) model has become a real revolution in the gaming industry, allowing players to earn real money or cryptocurrency for their achievements in the game. This concept has been made possible by blockchain and NFTs, which allow the creation and ownership of digital assets with real value. Millions of players around the world are already actively using this opportunity, which not only increases their engagement but also changes the very nature of the gameplay.

The main advantage of the P2E model is the ability to monetize the time and effort spent on the game. This is especially important for players from countries where the average income level is lower than in developed countries, as they can earn money by playing their favorite games. For example, in the Axie Infinity game, many players from the Philippines and Venezuela use the game as a source of primary or secondary income. In the future, the P2E model may become one of the main driving forces behind the development of the gaming industry, facilitating the transition from casual gaming to gaming as a way of earning money.

Integration with metaverse

The integration of Web3 games with metaverse is another significant trend that is gaining momentum. A metaverse is a virtual space where users can interact, work, play, and create content in a decentralized environment. Web3 games integrated with metaversions allow users to transfer their game assets, such as NFTs, to different virtual worlds, which expands the possibilities for interaction and content creation.

For example, users can buy land in metaverse such as Decentraland or The Sandbox, build their game assets on it, and then sell or use them to create games. Integration with metaversions also allows for more complex and engaging gaming experiences, where players can interact with other users in real time, participating in joint activities or even organizing virtual businesses.

Expansion of game ecosystems

The growing interest in creating your own game ecosystems is another key trend in the field of Web3 games. Developers are increasingly offering players the opportunity not only to play but also to create their own game worlds, objects, and even entire game universes. Such ecosystems allow players to fully immerse themselves in the process of content creation, while providing the opportunity to monetize their creativity.

Another area is the integration of NFTs with real assets such as real estate or art. This allows creating unique digital representations of physical objects that can be used in games or other digital environments. In the future, we can expect an increase in the number of such projects, which will contribute to further blurring the boundaries between the virtual and physical worlds. As these technologies evolve, we can anticipate the development of more sophisticated systems where NFTs and cryptocurrencies are not just representations of digital or physical assets but are actively used to influence and enhance real-world experiences.

Gamification of the real world

Web3 technologies also open up new opportunities for real-world gamification, where game mechanics are used to interact with real assets and events. This trend is reflected in various projects where cryptocurrencies and NFTs are integrated into everyday life, creating new forms of interaction between the physical and digital worlds.

For example, Move-to-Earn projects such as StepN use Web3 technologies to reward users for physical activity. Players receive tokens for walking a certain number of steps or achieving other physical goals, which encourages them to adopt a healthy lifestyle. This is just one example of how real-world gamification can help connect games and real life, creating new forms of economic activity.

Another area is the integration of NFTs with real assets such as real estate or art. This allows creating unique digital representations of physical objects that can be used in games or other digital environments. In the future, we can expect an increase in the number of such projects, which will contribute to further blurring the boundaries between the virtual and physical worlds. As these technologies evolve, we can anticipate the development of more sophisticated systems where NFTs and cryptocurrencies are not just representations of digital or physical assets but are actively used to influence and enhance real-world experiences.

Advantages and challenges of Web3 games

Benefits for players

One of the main advantages of Web3 games is the ability to own digital assets. Thanks to NFT, players can be full owners of their game items, characters, and land plots in virtual worlds. This means that players have the right to buy, sell, or exchange these assets on open markets, allowing them to make a real return on their investment in the game.

Transparency and security are also important aspects of Web3 games. Since all transactions are carried out on the blockchain, players can be sure that the gameplay is fair. All transactions are recorded in an open registry, which makes fraud or manipulation by developers or other players impossible. Besides, the blockchain provides a high level of protection of personal data and assets of users.

Web3 games also open up new opportunities for earning money. With the emergence of Play-to-Earn and Move-to-Earn models, players can earn income by participating in the game or performing certain tasks in the real world. This not only increases motivation to play, but also allows players to turn their hobby into a source of income.

Benefits for developers

Web3 games open up new horizons for developers in creating business models. Thanks to the use of blockchain and NFTs, developers can introduce unique economic models where players become complicit in the gameplay. For example, developers can make a profit from the sale of NFTs, as well as from commissions for transactions in the secondary market.

Another important aspect is the involvement of communities. Web3 games are often created around the idea of decentralized management, where players have a say in critical issues related to the game's development. This contributes to the formation of active communities that not only play but also help to develop the game by offering their ideas and making changes to the gameplay. This approach allows developers to create more lively and dynamic game worlds that are constantly evolving with their audience.

Challenges and risks

Despite its many advantages, Web3 gaming faces a number of challenges and risks. One of the main problems is scalability. Blockchain technologies are still under development, and many of them cannot provide the necessary bandwidth to support large game projects with millions of players. This can lead to transaction delays, high fees, and limited user experience.

Regulation also remains an important issue for Web3 gaming. As this area is new and technologically complex, many countries have not decided yet on their approach to regulating it. This creates uncertainty for developers and players, as new laws can significantly change the rules of the game. It is also worth considering that some countries may impose strict restrictions on the use of cryptocurrencies or blockchain technologies in games.

Environmental impact is another critical aspect that needs to be considered. Many blockchains, in particular those that use Proof of Work algorithms, consume a large amount of energy, which has a negative impact on the environment. Although there are already solutions, such as Proof of Stake, that are more environmentally friendly, the problem is still relevant and needs to be further addressed.

Finally, the risks associated with fraud and security are also a serious challenge for Web3 games. Despite the high level of security provided by the blockchain, this technology is not immune to attacks or fraudulent schemes. Players can become victims of phishing attacks, wallet hacking, or other types of fraud. Therefore, developers should constantly improve security mechanisms and educate their users on safe behavior in the digital environment.

The future of Web3 games: Expert predictions

Expected changes in 2024-2025

In the coming years, the Web3 gaming technology and market are expected to develop significantly. The main change will be the improvement of blockchain scalability, which allows supporting a larger number of players and reducing transaction costs. In particular, the development of Layer 2 solutions such as Optimistic Rollups and ZK-Rollups will significantly increase blockchain capacity, which will contribute to the growth of Web3 games users.

Interoperability between different blockchains can also be expected to grow, allowing players to transfer their assets and data from one platform to another without losing functionality. This will contribute to the creation of a more integrated ecosystem environment for Web3 games. In addition, new decentralized governance protocols will provide players with more opportunities to influence the development of the games they participate in.

Market growth and new opportunities

The Web3 gaming market is showing rapid growth, and this trend will continue in the coming years. Analysts predict that by 2025, the Web3 gaming market may increase several times, reaching billions of dollars. This opens up huge opportunities for investors who can invest in new projects at the early stages of their development, as well as for developers who can create innovative products for a growing audience.

The growing interest in decentralized financial instruments (DeFi) will also contribute to the development of Web3 games, as many of them will integrate DeFi capabilities to monetize the gameplay. For example, players will be able to earn cryptocurrency, invest it in decentralized platforms, or participate in various financial transactions related to their game assets.

The role of artificial intelligence and AR/VR

Artificial intelligence (AI), augmented reality (AR) and virtual reality (VR) technologies will play an important role in the future of Web3 gaming. AI can significantly improve the gameplay by providing more adaptive and intelligent interactions between players and the game environment. This may include creating more complex NPCs (non-player characters) that can learn and adapt to player actions, or using AI to generate unique content in real time.

AR and VR can take Web3 games to the next level by providing players with a fully immersive experience. Combined with blockchain technologies, these innovations can allow players to create and own virtual worlds that they can explore in a full-presence format. For example, players can attend virtual concerts, travel through metaverse, or participate in realistic simulations where all objects have real value thanks to NFTs.

Integration with the traditional gaming industry

The integration of Web3 games with the traditional gaming industry is one of the key areas that can significantly impact both sectors. Although there are certain obstacles, such as the complexity of integrating blockchain into existing games and regulatory issues, the prospects for this integration are very high.

Web3 technologies can offer traditional games new opportunities, such as NFT integration, decentralized markets, or new monetization models such as Play-to-Earn. This can attract new audiences to traditional games and enable developers to expand their capabilities in new markets.

On the other hand, for Web3 games, integration with the traditional gaming industry means access to large user bases and the use of already proven game mechanics. For example, large publishers can integrate blockchain technologies into their most popular franchises, which could be a crucial step for the mass adoption of Web3 games.

In general, experts predict that the coming years will be a period of active development and integration of Web3 games. Which will lead to the creation of new gameplay formats, changes in economic models, and the merger of traditional and new technologies into one. This will open new horizons for both players and developers, creating opportunities that we are only beginning to realize.

Conclusion

Web3 games are not just a new technology or a trend — they have the potential to revolutionize the entertainment industry. Thanks to blockchain, NFTs, smart contracts, and decentralized governance, Web3 games provide players with a new level of control, ownership, and earning potential. They not only push the boundaries of what traditional games can offer, but also create new economic models where players become active participants in gaming ecosystems.

Market growth, integration with metaversions, development of artificial intelligence and AR/VR only confirm that Web3 games have long-term potential. They do not just add a new dimension to the gameplay, but can also become a key element in shaping the future of digital entertainment, where the boundaries between the real and virtual worlds are becoming increasingly blurred.

Our vision:

In order to maximize the opportunities offered by Web3 games, developers, investors, and players should prepare for the upcoming changes.

Developers are encouraged to actively research and implement blockchain technologies in their projects. Creating unique gaming assets, implementing decentralized management, and using smart contracts can be crucial factors for success in a rapidly changing market.

Investors should pay attention to promising projects in the field of Web3 games, especially those that offer innovative approaches to monetization and integration with metaverse. Investing in Web3 games can be a profitable investment amid market growth and increasing interest in decentralized technologies.

Players should actively join new Web3 games, explore their capabilities, and experiment with Play-to-Earn and Move-to-Earn models. Mastering new technologies and understanding how they work can open up new horizons for players and even allow them to earn money from their favorite entertainment.

Web3 gaming is not just the future of gaming; it is the future of the digital world, where users get more freedom, control, and opportunities. It is time to act and join this exciting journey.