The State of On-chain Games: Pioneering the Next Generation of Virtual Autonomous Economics

The State of On-chain Games: Pioneering the Next Generation of Virtual Autonomous Economics

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Date published
March 22, 2023

Hey you! Do you know that many Web3 games we see today aren't truly native blockchain games?Let's explore the world of on-chain games and uncover the excitement it brings! 🧵


1/ What are on-chain games? Simply put, those are games that exist entirely on a blockchain and are referred to as fully on-chain (FOC) games.

2/ Specifically, they possess the following properties:

⛓️ FOC Logic: game logic is encoded in on-chain smart contracts

🏟️ Shared State: game data is stored on-chain & accessible by all players

👨‍💻 Client Agnostic: no core devs? Community creates clients for on-chain moves

3/ In traditional Web2 games, in-game items, rules of games and states are stored in a centralized game server.

If the company shuts down its server tomorrow, your beloved game (and all your valuable skins & in-game assets) vanish...

4/ Based on the definition, those popular "Web3" games we know today like @AxieInfinity@TheSandboxGame and @splinterlands don't fall into this category. They are minimally on-chain → They are akin to Web2.5 games or, as @3pa15 classifies, "weakly on-chain" games.

5/ This is because their assets exist on-chain while the game's core logic and state reside off-chain on a central node.


6/ Upsides: UX resembles traditional games, low latency & smooth updatesDownsides: potential censorship, rule changes, limited interoperability & composability. Game publishers can ban players violating terms of service.

7/ In contrast, the other alternative is called "strongly on-chain"/FOC games.This category not only solves Web2 gaming centralization but also opens up novel avenues for developers/players to unleash their imagination and achieve things that were previously impossible.


8/ Here are what FOC games bring to the table:

💡 Permissionless Innovation

🤝 Possible Interoperability

⚡ High-Powered Incentives

9/💡 Permissionless Innovation

FOC games achieve permanence (no shutdown) & enable permissionless innovation.Players can creatively modify games with user-generated logic via smart contracts, like DeFi composability.

10/ It also retains classic rules while allowing new second-layer rules.Players can create tokens, guild systems, quests, trading systems, & more, as long as they align with the base rules.

11/ 🤝 Possible Interoperability

FOC games offer potential interoperability for assets, unbound by single-game logic.Assets exist as tokens within an ever-growing gaming universe.Imagine using CS:GO's $1M+ knife in @PlayVALORANT! 🤩


12/ ⚡ High-Powered Incentives

Unlike Web2 games where there are weak property rights for players, FOC games offer stronger incentives for them, with uncensorable, permanent creations in immutable smart contracts.

13/ Creators have full control over their tokens, game mechanics, and rules, competing within the gaming economy.Game devs foster a dynamic, open gaming world by not altering rules, enabling player creations to thrive & ending gaming dictatorships.

14/37FOC games have unveiled 10 emerging trends that spark excitement among the team at

15/ Let's have a quick tour to see how this niche domain has been developing 👇

16/37 FOC games trend took off with @darkforest_eth, an RTS (Real-Time Strategy) game that emerged in 2020.Players compete for planets & resources, using ZK-SNARKs to keep coordinates secret while verifying actions.


17/37 Plugins can extend the game's functionality.Nightmarket, a plugin for Dark Forest, introduces an escrow smart contract for buying/selling planet coordinates, enabling players to profit from in-game success.

18/ @0xcurio, an on-chain gaming studio, explores User Generated Logic (UGL) in FOC games.

UGL takes the UGC trend, seen in games like Roblox, to the next level by letting players create rules, assets & interactions via smart contracts.

19/ UGL not only lets players envision new worlds but also defines how they come alive & interact. Customizations are composable, enabling player extensions to be utilized by others, creating a powerful framework akin to the App Store for mobile computing.

20/Traditional crypto wallets lack advanced features gamers enjoy in analog apps, such as discovery, identity and community.=> A native solution is needed.

 @cartridge_gg, the "Steam" of crypto gaming, aims to fill this gap.


21/Cartridge users can browse curated FOC games, earn rewards, upgrade avatars, and connect with friends and communities, providing discovery and social features for web3 gamers.

22/Bet you might be surprised to discover the thriving FOC gaming ecosystem, often overshadowed by hybrid Web3 (Web2.5) games. Here is a snapshot of the on-chain games landscape by chains (@TheBlock__)


23/ What's stopping them from gaining popularity?Some of the weaknesses and challenges:

🕐 Latency

🤖 Botting

💸 Cost

24/ 🕐 Latency

When thousands of players make the moves to update the shared state simultaneously, it will cause network congestion.

Slow syncing with the chain leads to degraded user experience.

=> @Calderaxyz's rollup infra is actively addressing this issue.

25/ 🤖 Botting

Permissionless worlds open the floodgate for bots.

Web2 & Web2.5 games can mitigate this via KYC, selective bans and costly entry barriers, but FOC games lack such centralized controls.

26/ 💸 Cost Developing

FOC games in the absence of mature Web3 game engines can be costly.On-chain interaction costs and gas fees also pose a burden on players, especially those unfamiliar with wallet concepts in Web2. => @dojostarknet is working on this problem.

27/ Enjoyed a conversation with @Dave__White recently 🎮 .While he's positive about on-chain games' future, he acknowledges that their present design is mainly for developers to experiment and satisfy their intellectual curiosity.

28/ But is that necessarily a bad thing? Blockchain is a new technology that empowers people to explore innovative ideas and unleash their creativity. "Much of the innovation is a result of people being willing to work on the blue sky moonshots" - @gubsheep

29/ @gubsheep also beautifully quoted a concept in his speech at @EFDevcon"A finite game is played for the purpose of winning, an infinite game for the purpose of continuing to play"

30/ Playing infinite games in this context means:

🌎 Engendering innovation

📚 Experimenting with new rule sets

🧰 Developing new tools for continued creative expressions.

More 👇

31/ That being said, to play on-chain games is to unlock new possibilities for the advancement of on-chain games 😃 .Challenges are temporary, but possibilities are endless.

32/ To reach a wider audience, better user tools are needed, like @latticexyz's MUD engine.

Better user tools can boost creator expressivity & compete with traditional games on take rates, attracting more creators to the crypto space.

33/ As FOC games enhance tooling & gameplay, creators will find more incentive to build in crypto.

The first successful FOC games could see lasting network effects, with content, dev tools & activity fueling a positive feedback loop.

Credit: @kelxyz_

34/ Thanks for reading and hope you learned something new 🙌Special thanks to @nonieengel@seidtweets@danxtao and @AlexGuuu for looking over this thread 🤝

35/ Notable projects to follow:

36/Curious how the gaming industry has evolved over the decades and what web3 components can bring to games?

Check this 👇

37/ Interested in reading more content from the @chapterone researchers?Check out the Chapter One Research Twitter List!