Compilation of the original text: Deep Tide TechFlow
Compilation of the original text: Deep Tide TechFlow
introduce
introduce
Today, judging by the amount of money raised, the attention gathered, and the expectations inspired, the dominant cryptocurrency metagames are often variations on “Web 2.5 games” with the following characteristics:
Web 2.5 Tokenization: Many projects and investors are focused on adding tokenization and financialization to popular Web 2 game genres like FPS, Action-Adventure, Simulation, MOBA, and MMORPG.
Web 2.5 Economy: A great deal of research has focused on how to make a hypothetical crypto-economy work in a fictional, highly immersive MMO world.
Web 2.5 Gameplay: Lots of investment and engineering resources are being worked on to develop the art and gameplay to compete with today's Web 2 giants.
In this paper, we aim to:
1) Interact with and ask questions about current popular Web 2.5 gaming methods,
2) Point out some interesting alternatives that we believe are currently underexplored at the cryptocurrency + gaming intersection.
Visualization of the search space
Besides Ethereum, gaming has always been an important testing ground for new technologies. Collective thinking on how to get crypto + games to interact usually takes one of two directions:
From Crypto to Gaming: Start with the core properties of crypto (programmable value, trusted neutrality, etc.) and develop it into a fun experience. (e.g. fully on-chain games, encrypted DeFi, etc.)
From Gaming to Crypto: Investigate the domain of existing games to find the parts of crypto that are most likely to adapt and add value. (e.g. racing games from Ubisoft, Animoca, and many other crypto games currently in production)
We at Maverick are slightly biased toward the first approaches (as they align with our crypto-native and token-maximizing philosophies). But this article focuses on the second approach, which we are interested in but not very familiar with, and are very curious to learn from those who know more.
We visualize the game-to-encrypted search space as follows:
Horizontal (Game Category): There are many game genres, each with its own domain expertise, target audience, gameplay, and in-game dynamics.
Vertical (Technology Stack): A successful and profitable game product needs most layers to come together: Token Economics, Gameplay, GTM, Operations, Economic Management, Ecosystem and Decentralization, etc. One weak layer can easily destroy the entire experience. Since cryptocurrency + gaming is so new, there is no tried and proven design for any single layer. Finding an optimal solution for a single unit (eg, how to market a crypto-enabled strategy game) is already difficult. Finding verticals that work together (eg how to solve more than 7 problems of a strategy game) is orders of magnitude harder. We believe we will see more iterations, experimentation, and trial and error before finding a full-stack solution.
Cells (Counts of Successful Attempts): The numbers in each cell represent the relative number of successful attempts the cryptospace has seen. Even if it ultimately fails, each successful game moves crypto's collective expertise forward and brings us closer to finally solving a cell or two. To date, the most well-known iterations have occurred in P2E (Axie Infinity and StepN), entirely on-chain based (Dark Forrest and CryptoKitties), casino games (several old and new designs that didn’t earn much DAU) and strategy games (Dark Forrest Forrest).
Collective Exploration: Builders in the crypto gaming space build and iterate their products so that we have more green dots with higher numbers. As we accumulate collective expertise, talent, experience, best practices, and case studies, we are probabilistically getting closer to creating the right crypto game.
In this search space, we find Web 2.5 methods in the yellow shaded area:
In terms of game genres, Web 2.5 games focus on genres that have proven popular, such as massively multiplayer online games (MMO), multiplayer online tactics games (MOBA), and first-person shooters (FPS).
On the tech stack, Web 2.5 games have traditionally focused on reinventing gameplay and tokenization. The latest conversations begin to explore more complex possibilities around in-game open economy management and ongoing operations.
Our Questions for Web 2.5 Games
Question #1: Should a lot of money be invested in disrupting gameplay and artistic effects?
The challenges of gameplay and artistic effects in popular genres hinder the possible potential of iterative crypto+games.
Today, many crypto game studios and investors are focused on reinventing the gameplay of popular genres such as MMORPG, FPS, and MOBA. While pursuing the largest potential market sounds logical, these are areas where product/market fit is often least defined. Crypto startups often spend significant resources developing gameplay before players attempt risky but crucial cryptoeconomic designs.
Historically, it has been extremely difficult to disrupt incumbent gamers with data, distribution, and social barriers. There are several important reasons:
Data: Over 10+ years, data optimizers like Sensor Tower and Unity have amassed endless data and analytics at the game level to fine-tune each player's retention, screen time, and propensity to pay optimization. Building an economic model and game loop that rivals 10+ years of experience in data optimization, both in terms of UIUX and profitability, is no easy feat.
Artistic Effects: According to Unity's CEO, game companies have 3-5 times as many artists as engineers. For popular games like Fortnite, Genshin Impact, and Honor of Kings, Unity and Unreal tailor their rendering engines to optimize performance.
Gameplay: Every new gameplay is rigorously A/B tested, and even for the most successful studios, successful titles are rare. Over 95% of game titles lose money. For crypto newcomers, this upgrade path will only get steeper.
Additionally, focusing resources on gameplay and art means that fewer resources, attention, and product iterations are devoted to open economy design (more on that later). Founders and foundations instead focus on hiring ex-studio product managers, artists, and renderers to make the most eye-catching concept videos.
We believe that not all games need world-class art and gameplay to have a fighting chance at success. We believe games exist on a spectrum from creative/gameplay heavy to economic/strategic heavy. Games like casino games, board games, strategy games, and strategy-focused RPGs often don't require the latest graphics cards. These games instead compete on distribution, operations, economics, game loop design, and more. These categories will feel more natural in terms of crypto-dynamic reinvention.
We believe that the limited resources of the Web 3 are better spent exploring how the crypto economy can unlock new paradigms in games, rather than funding a former AAA producer to make another MOBA/FPS game, just throwing in some tokens. To further emphasize the point, what really propelled DeFi into its own chapter of history were its native composable LEGOs that allowed people to play, iterate, and ultimately reimagine finance and leverage.
So, let's leave the discussion of gameplay and art behind and talk about how to design an internal open economy system with cryptocurrency in the game.
Question 2: Benefits and challenges of designing an open economy
In an on-chain MMO economic system, the potential benefits are huge, but so are the challenges.
This section was inspired by an extensive article by Aiko on how to design a sustainable in-game economy and tax-based revenue model.
In our opinion, Aiko's article represents the latest frontier of Web 2.5 game design: creating an internally sustainable economy where in-game transactions occur frequently so that creators can profit by taxing internal transactions. In this way, the incentive goals of players and operators are consistent with each other, and they all hope to have a prosperous economic system, higher GDP and capital flow velocity.
We have no doubts that the end goal is very exciting. Leveraging the promise of cryptocurrencies to boost in-game economics by 10x to recreate games like Genshin Impact or Fantasy Westward Journey is anyone's dream. But we did identify a lot of difficult prerequisites before the crypto MMO economy could take off from scratch:
Necessary Complexity: In order to have a sufficiently sustainable economy, the game itself may need to be of sufficient variety and complexity. To properly represent such game logic, we need to have many different fungible and non-fungible assets across different levels and areas of expertise.
Aggregated trading liquidity: Given the complexity and volume of assets, the market needs to have sufficient trading activity to have operational liquidity. This aggregated trading activity can be interpreted as DAU x average number of daily transactions. But is there a player base large enough to support an immersive trading-focused MMO?
Freedom and Abuse: Freedom implies the potential for abuse and exploitative behavior. Even in a game as simple as Dark Forrest, guilds can exhibit abuse that is detrimental to the experience of other players. More complex games simply carry greater risks. How these abuses are regulated, or whether they should be centrally regulated, remains an open question.
Economic management and centralization: In real economies, there are central banks and treasuries that regulate economic activity in a fairly free manner. In traditional games, massive operations teams work around the clock to balance the numbers. It is impossible to build a perfect economy, and it cannot work perfectly forever. But central economic regulation naturally creates tension with crypto’s promise of ownership and trusted neutrality. Finding the delicate balance between playability and ownership predictability will be challenging.
We do not believe that the above challenges are impossible to solve.
Instead, we believe that there may be many paths worth exploring in addressing each individual challenge. Each solution can be exciting, but they may require many iterations before they are ready for mass production.
Our question/suggestion is: Considering how difficult it is to solve all the challenges in a complex MMO game, is it better for game studios to start with smaller, simpler game types first so that they can gradually solve the different challenges dimension? For example, we could start with a simple on-chain casino, simulation, or board game and explore one or two practical problems at a time. Here are the specific questions (the list will grow) that we would like to see Product Discovery answered:
A paradigm for evaluating and exchanging certain in-game assets without overly complicating the UI/UX.
Best practices for evaluating and integrating tangible and intangible assets across games.
Best practices for opening certain mod SDKs to the community and aligning economic incentives.
Best practices for managing the in-game economy through democratic, algorithmic or technological means to counter internal and external cycles.
The new original solution for funding, distributing and buying games.
Profile and differentiation solutions that address user abuse or bot behavior.
Question 3: Are asset-centric immersive games dying?
Most gamers today prefer fast-food games to immersive game worlds and plots.
We have observed some clear trends in the gaming industry over the past 10-20 years:
Adjusted for inflation, only mobile games grew, while PC games and consoles lost market share.
Reduced overall engagement/immersion in games and players. The average game time is getting shorter and shorter.
This phenomenon is easy to understand, driven by our collective shift to a more fragmented way of life. Our time is divided by long commutes, always-on notifications, and many competing forms of media and entertainment. The comfort of a basement game console may never be more than a fantasy of the past. It's the same trend that ultra-short video formats like TikTok and Reels are taking over YouTube, Netflix and movie theaters in the entertainment wars.
Take Tencent’s Honor of Kings (MOBA), one of the highest-grossing mobile games in history, as an example:
Tencent has been reducing the average game time of King of Honor, a MOBA game, from the initial 25 minutes to the current 15-18 minutes, while introducing faster-paced game modes.
Tencent continues to simplify the game's non-competition plot, making the game more focused on the MOBA competition itself, and gradually downplaying the importance of accumulated assets such as player levels, experience points, gold coins and collectibles.
We recognize that there is a small group of players who enjoy deeply immersive games. For these fans, games are like a second life, even more so than what others call "real life."
However, if we look at the list of the top mobile games today, the list is mostly made up of non-immersive fast food games that feel like quick additions to the hectic and mundane modern life rather than full-fledged replacements.
The vast majority of tokenization designs we've seen so far add more complexity to the game itself. It's almost like playing a hyper game on top of the original game. This approach leaves some problems:
There are special categories of games, which are suitable for different user groups and situations. Trying to force strategy super games into games such as FPS/MOBA/SLG is unlikely to be naturally integrated. Likewise, concepts such as assets, ownership, accumulation, and surreal in-game careers are not ubiquitous features.
The extra layer of tokenization of the game is likely to make the game more complex and lengthy, which may frustrate modern gamers who just want a quick entertainment experience.
Question 4: What is the extent of tokenization for immersive MMO games?
Let's finally focus on a specific class of games: MMORPGs and MMOSLGs. Many see these two categories as the most natural on-chain categories for traditional games.
The reason is pretty intuitive: they inherently have concepts of identity, ownership, accumulation, growth, and P2P exchange in gameplay. For example, "Assemble! Animal Crossing Friends Club, Grand Theft Auto, Sim City, The Sims and Yuan Shen, etc. In theory, we assume that there exists a MMORPG/SLG that is perfectly suited for cryptocurrencies. However, we still have some unanswered questions:
"Escape and Reality": "Escape" is Nintendo's hit game of 2020 "Collection!" The first word in the Animal Crossing promotion. Part of the game's charm is that players are transported to a parallel universe that's both relaxing and predictable. The typical player of an MMORPG will be more risk-averse and calm than the typical trader obsessed with monetizable commodities and securities. We're not sure if the promise of interoperability, connectivity, and global mobility is something gamers want to have on their Nintendo Islands.
Definancialization can be a feature of MMOs. A successful MMO game must bring together people from all walks of life. Different players have different opportunity costs for investing time in the game. I'd happily spend an hour of my leisure time waiting for SimCity Trade HQ to refresh every 30 seconds to find rare items. But once I realized there was a price tag on my effort and investment of time that was likely well below my hourly opportunity cost of trading cryptocurrencies, the emotional value of the game suddenly lost its commoditization and financialization.
While we can't exhaustively discuss all possible MMO games, there are bound to be some exceptions. An exception that comes to mind is NetEase's Fantasy Westward Journey, an MMORPG where almost everything is tradable. The game has been around for 8 years and grossed over $4 billion (and counting). If ever there was a crypto MMO dream game, this is it. There's a lot to learn from "Fantasy Westward Journey," but the jury is still out on whether it's an exception or a model, and we'll have to keep watching.
So where do we go from here?
Honestly, we don't know. We try to engage in this ongoing discussion by asking our honest questions, and we are happy to be persuaded to change our minds.
Today, we feel like people are trying to recreate popular Web 2 game genres with encryption. But we see a lot of hurdles to overcome, such as competing with Web 2 competitors, designing an open economy, and attracting a broad enough player base for the economy to thrive.
On the other hand, we identified several currently underexploited areas of play that may be more conducive to meaningful cryptographic experiments:
Category: Cryptoeconomic (and social) experiments in "games" that don't require perfect art and gameplay as industry prerequisites. (Casino, strategy, casual, table games, sports, simulation games, etc. fully on-chain)
Layers of the Stack: Even within these categories, we are more interested in projects that focus not purely on gameplay, but broadly on how cryptocurrencies can reimagine other stages of the game lifecycle.
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