As web3 gaming comes into its own and takes shape into what will define the future of gaming, there's a need to address the misconceptions surrounding it. Cryptocurrency, DeFi, IGOs, and P2E no longer accurately represent the spirit of web3 games. Moving forward, the buy-in from users and developers that’s needed to push web3 into the mainstream requires a new take - that web3 gaming is about creating fun and engaging games with an added layer of user ownership. With that in mind, let’s dive into what the next generation of gaming is, and isn’t.
Misconception #1: You need to use cryptocurrency to play web3 games
One of the first ways early adopters looked to capitalize on web3 technology is cryptocurrency, turning the outputs generated by the decentralized registry into a decentralized currency (tokens). The potential of this currency created a speculative boom, a boom many developers at the time used to finance their projects. Due to this, in many people's minds, web3 and crypto became inextricably linked.
"You can’t build a strong in-game marketplace if you’re relying on a currency that fluctuates in price"
But, in fact, crypto is difficult to implement in web3 games and can even be detrimental to the stability of the game economy. That’s because the speculative nature of cryptocurrency and the markets tied to it can create an unstable foundation - you can’t build a strong in-game marketplace if you’re relying on a currency that fluctuates in price. On top of that, crypto is for the most part unregulated, meaning the technology is prone to abuse by scammers and subject to huge changes in regulation - which could upend your game economy.
Misconception #2: DeFi is baked into web3 games
By incentivizing users to stake NFTs (purposely setting aside the tokens in a "trust" on a decentralized platform), developers are able to create markets for their NFTs and gamify the experience of engaging with them. But this system is a purely financial mechanism, expecting users to play an active role in generating capital for developers. DeFi is asking for users to become involved in a way that, for many, strays too far from real gaming.
While DeFi is good for a lot of things, in the gaming ecosystem it works against adoption. Users see the inclusion of DeFi as a red flag, warning them that a gaming experience is primarily about making money and not about having fun.
Misconception #3: IGOs are how web3 games are made
IGOs (initial game offerings) were a useful tool during the NFT boom of 2021, allowing developers to raise funds and create buzz by selling NFTs with the promise that they'd be used in a future game. But due to rampant scams and a lack of regulation, it's come to be seen as an inefficient way to make games - often aimed at speculators looking to take advantage of the NFTs once the project is ready for launch.
"IGOs are geared towards crypto-enthusiasts, not gamers - it offers users to invest in an NFT, not the game"
This works against building web3 games for several reasons. First, there are the risks involved. The lack of regulations means that developers could find themselves facing significant liability, both from users and regulatory agencies.
Second, is the kind of community IGOs create. IGOs are geared towards crypto-enthusiasts, not gamers - it offers users to invest in an NFT, not the game. So while IGOs can create a community and help acquire users, that community is largely made up of investors and not gamers.
Misconception #4: All web3 games are P2E
Not long ago Play-to-Earn (P2E) was seen as the future of web3 games. The model promises that users can play the games they want for free and earn money doing it. P2E shortly became the dominant model of the web3 gaming industry. But its reign was short-lived.
Ultimately, the model issn’t sustainable, relying on a constant influx of new players to maintain the value of the tokens that users are earning. In P2E, users are rewarded with cryptocurrency tokens as they play. The monetary value of these tokens is based on the market value that other users are willing to assign to them, which requires enough demand to meet the supply. P2E games depends on new users to hit this threshold. Without new users entering the market, the value of the tokens already held by players collapses.
"P2E has the merit of being able to offer users a new and unique value proposition. But, that proposition comes at a cost"
With so much emphasis on the secondary market, many users feel that the model puts the focus on making money and not on gaming. Even for the minority of users who want to earn revenue through play, the unreliable foundation of the P2E market disincentivizes them from taking part.
P2E has the merit of being able to offer users a new and unique value proposition - they can earn money playing games. But, that proposition comes at a cost, alienating the majority of users who are just looking to have fun. The model is now being left behind by developers so that the focus can return to putting fun first.
Play & Own: A better understanding of web3 gaming
To foster mass adoption, web3 gaming needs to be, at its heart, about fun and user ownership - and Play & Own (P&O) is all about giving users exactly that. P&O doesn’t leverage earning potential or offer get-rich-quick schemes to entice users, it gives them a new way to enjoy games through digital ownership, enabling users to own the assets, like characters, weapons, and skins, they love.
For developers, this model has significant benefits, too. In P&O, developers can access new revenue streams through royalties, incentivize increased in-app purchases through user ownership, and better retain users through more engaged communities. Add an open ecosystem that allows anyone to join in and collaborate, plus interoperability to enable the sharing of assets, and now we have an accurate vision for what web3 gaming is - a better way to make and play games.
Want to learn more about web3 gaming? Check out this podcast with Melissa Zeloof, VP of Marketing at ironSource, and Deconstructors of Fun’s Ethan Levy and Javier Barnes as they discuss what the gaming industry needs to do to take blockchain games mainstream.
