In-Depth Research Report on Blockchain Games: A Revolution or a Bubble for Native Encryption Games?

1. Introduction: What is a full-chain game?

Recently, the Pass card of the full-chain game Sky Strife has reached a trading volume of 21,000 ETH on the test network, attracting the attention of many non-full-chain game players to this field. Since the release of "Pong" in 1972, the gaming industry has undergone tremendous growth, evolving from 8-bit classic games to the complex online games of today; gaming has long since ceased to be merely a simple form of entertainment.

With the rise of blockchain technology, the gaming industry is reshaping player experiences in new ways. From Axie Infinity, which combines gaming with encryption economy, to Stepn, which is centered around social innovation, blockchain games are expected to drive the large-scale application of encryption technology. People are beginning to explore new ways to combine gaming and blockchain; besides asset on-chain, can more elements also be put on-chain? This has led to the birth of full-chain games.

So how does blockchain gaming differ from traditional gaming?

In traditional games, all game logic, data storage, digital assets, and game states are stored on centralized game company servers. The subsequently emerged asset-on-chain games ( are often referred to as Web2.5 games ), such as Axie and Stepn, which put game assets on-chain, allowing players to own the assets and improve their liquidity. However, when a game shuts down, these assets may still lose their circulation value. Asset-on-chain games are more like a supplement to traditional games rather than a replacement.

The highly anticipated full-chain games will put all interactive behaviors and states of the game on the chain, including game logic, data storage, digital assets, and game states, all processed by the blockchain, thus achieving true decentralized gaming.

The main features of full-chain games can be summarized as follows:

1. The authenticity of data sources is ensured by blockchain. Blockchain is not only an auxiliary storage for data but also the true source of game data, covering the storage of all key data.

2. The game logic and rules are implemented through smart contracts. Various operations in the game are executed on-chain, ensuring the traceability and security of the game logic.

3. Game development follows the principles of an open ecosystem. Game contracts and clients adopt an open-source model, providing creative space for third-party developers.

4. The game is not related to the client. Even if the core developer's client disappears, the game can continue, achieving true decentralization.

2. Why do we need full-chain games?

Before discussing the necessity of fully on-chain games, let's first understand the current state and operating model of the traditional gaming industry.

1. Current Status of the Traditional Gaming Industry

The gaming industry has nurtured many excellent works during our growth, from shooting games like Counter-Strike and CrossFire, to role-playing games like Dungeon & Fighter and Dragon Nest, to MOBA games like League of Legends and Honor of Kings, as well as card games like Onmyoji and Hearthstone. Games have become an indispensable part of our entertainment life.

Data shows that the global gaming market reached a scale of $249.55 billion in 2022, and it is expected to exceed $280 billion in 2023, with the potential to break $600 billion by 2030. In contrast, the global film and entertainment industry market size was only $94.4 billion in 2022. The gaming industry occupies an important position in economic development, and its commercialization Depth and variety of types still have huge potential.

Why are humans keen on games?

The number of global gamers has approached 3 billion. The reason games can attract so many people is mainly because they meet various aspects of human needs:

1. Escape Reality and Restart Life: The game provides a temporary escape from the pressures of daily life, allowing people to have a second life in a virtual world.

2. Burden-free socializing: Multiplayer online games provide a friendly social platform for socially anxious individuals, allowing players to build relationships with others without the constraints of reality.

3. Instant Feedback Rewards: The game offers a rich reward system and timely reward mechanisms, motivating players to keep progressing.

4. Low-cost free exploration: The virtual world in the game allows players to freely explore unknown territories, satisfying humanity's desire for adventure.

5. Pursuing achievements and self-realization: By completing tasks and goals, players can achieve self-challenge and character growth, satisfying the desire for success and recognition.

The game cleverly meets the needs and preferences of different users, excelling in covering a wide audience and providing a depth immersive experience.

Current Status and Development of Traditional Games

Traditional games are mainly divided into types such as shooting, adventure, role-playing, battle royale, strategy, sports, puzzle, action, and simulation. According to statistics, role-playing and adventure games perform excellently across PC, mobile, and console platforms. Shooting and battle royale games are more popular on PC and console, while puzzle and idle games are also well-liked on mobile.

2. Challenges Facing the Traditional Gaming Industry

However, traditional games are currently facing two major dilemmas: game distribution is restricted by licensing numbers, and high costs before release result in a long payback period.

Game release is subject to licensing restrictions

Many countries and regions require game releases to obtain licenses issued by the government. Taking China as an example, it implements a strict game license system, which is overseen by the National Radio and Television Administration. From July 2021 to April 2022, the suspension of license approvals led to many small and medium-sized gaming companies facing bankruptcy. Even with the resumption of license issuance, the uncertainty of approvals remains a concern for every game project team.

High pre-issue costs can easily lead to sunk costs

In the traditional game development model, a large amount of human resources and infrastructure costs must be incurred in the early stage, and there is also idle time cost during the waiting period for the game license. Profit sharing can only occur after the game is released and generates commercial revenue. This model leads to significant cost expenditures in the early stages, and if there are issues in development, licensing, or user acquisition, the initial investment may become a sunk cost. For medium-sized games, costs typically amount to several million dollars. The lengthy development and release cycles extend the profitability period and increase the risk of not achieving expected returns.

3. The Breakthrough Attempts of Web2.5 Games

Faced with these challenges, Web 2.5 games are the first to attempt breakthroughs. On one hand, they bypass domestic licensing restrictions by targeting global users. On the other hand, by issuing NFTs and tokens, they can generate revenue in the early stages of the game, lowering the financial barriers to game production.

Projects like Axie and Stepn have emerged as highly regarded in the Web2.5 gaming space. Axie is very popular in Southeast Asia, with many people earning incomes above the local average wage through the game. Stepn's "earn while running" model has also attracted a large number of non-Web3 users. However, with the collapse of the economic model, it is difficult for Web2.5 games to replicate their early success.

Developers are beginning to explore new directions, some are turning to AAA titles, trying to claim a share of the Web2 user base. Others are turning to full-chain games, exploring new possibilities and value validation. In this emerging industry of Web3, there are always those willing to be pioneers, forging new paths.

3. Analysis of the Current Situation of the Whole Chain Game Industry

Currently, the entire on-chain gaming field is in a very early stage, and both game projects and related infrastructure are under development. The on-chain gaming industry can be roughly divided into four categories: on-chain game projects, on-chain game engines, on-chain game dedicated chains, and on-chain game distribution platforms.

1. Full Chain Game Project

Most current on-chain gaming projects are still in the early stages. Here is an analysis of several representative projects:

Dark Forest

Dark Forest is a decentralized strategy game created on Ethereum using zkSNARKs technology, developed by MIT graduate Brian Gu( under the pseudonym Gubsheep), partially inspired by Liu Cixin's science fiction novel "The Dark Forest."

The main highlights of the game include:

1. The game logic, data, and state are all on the chain, and centralized individuals cannot independently control the outcome.

2. An open and highly composable game ecosystem: As an open-source full-chain game, Dark Forest features permissionless interoperability, fostering a thriving ecosystem of secondary creations.

3. Using zk-SNARKS technology for information hiding, achieving partial information opacity required for strategy games.

The game is currently in a free-range state, and players can participate in experiences through rounds organized by the community. Dark Forest redefines the possibilities of Web3 gaming and is regarded as a model of the combination of gaming and encryption, providing inspiration for subsequent full-chain game projects.

Loot Survivor

Loot Survivor is an important part of the Loot ecosystem developed by the BibliothecaDAO team. It is a text-based dungeon game that debuted at the Lisbon Blockchain Gaming Summit in May 2023.

The gameplay is relatively simple, involving monster fighting through text interaction until the character dies, and encouraging players to continuously challenge themselves through a leaderboard. Overall, the game's scale and playability are small, mainly continuing the gamified narrative of the Loot ecosystem.

Imminent Solace

Imminent Solace is a recently launched treasure brawl-style battle royale game based on ZK War Fog, developed by PTA DAO and built on the MUD engine. The game combines PVP looting, autonomous world exploration, and PoW resource mining, with gameplay similar to Dark Forest but with simpler controls and a better experience.

The ultimate goal of the project is to create a war simulation game similar to EVE, where players will face actual resource and asset losses and strategic challenges. Compared to other recently launched full-chain games, Imminent Solace offers better playability and interactive experience.

In addition, projects like Sky Strife, OPCraft, Word3, Framed, Loot Rayale, and Genki Cats are exploring the full-chain gaming, but most are still in the testing phase.

It is worth noting that most current on-chain games are web-based, with very few PC and mobile versions. This is related to the characteristic of on-chain games that do not require a client; web development is faster and cheaper, making it more suitable for quickly launching MVP versions for community testing. On the other hand, on-chain games are still in the proof-of-concept stage, and rapidly developing playable versions to validate game value is key.

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