What is Blockchain Gaming?

Blockchain gaming is a growing industry, full of new ideas and strong performance. This year teases big developments in this field, with intricately designed virtual worlds, more advanced game features, and NFT trading than ever before!

Blockchain Gaming: Q2 2023 Data Report from DappRadar

Investment Growth: Investments in blockchain gaming and metaverse projects soared by 31% from Q1 2023, reaching $973 million

Blockchain Growth: Klaytn and Oasys experienced significant increases in daily Unique Active Wallets, with 1067% and 5573% growth respectively

Strong Game Performance: Alien Worlds and Splinterlands dominated their respective blockchain platforms in terms of user activity

Emerging Strength: While facing setbacks in daily unique active wallets and trading volumes, the substantial increase in investment activity in Q2 2023 highlights the continued growth and robust potential of the blockchain gaming industry, indicating a positive trajectory for the future.

Blockchain gaming, also known as web3 gaming, play-to-earn gaming, or crypto gaming, leverages decentralized technologies to create a more equitable and transparent relationship between players and game developers.

This represents a shift in the gaming paradigm, driven by the principle of ownership.

In web2 gaming, players may enjoy their in-game assets, but true ownership remains elusive. These assets are confined within developer-defined boundaries and hold no value beyond the game's closed ecosystem.

By contrast, web3 gaming grants players true ownership of their in-game assets, such as characters, experience points (XP), weapons, and tokens. This ownership is secured and transparent, enabled by decentralized blockchain technology.

Players can transfer, sell, or trade these assets across various marketplaces and games, extending their value beyond individual gaming platforms. This concept of ownership is not just a feature; it is the very foundation of web3 gaming, enabling novel revenue streams and play-to-earn (P2E) models.

It's this decentralization and ownership that sets web3 gaming apart from traditional models, ushering in a new era where players have control, autonomy, and real value associated with their gaming experiences.

By harnessing decentralized technology, blockchain gaming offers players an entirely new level of ownership, trust, and interaction.

The Foundation: Web3 Technology

Traditional gaming relies on centralized control, where developers dictate the rules and own the digital assets. Web3 gaming is ushering in a decentralized era, where players not only play the game but also have ownership and control.

Smart Contracts

In web3 games, smart contracts play a vital role. They consist of rules or instructions that execute specific actions, such as transferring or trading in-game assets, when certain conditions are met. Imagine them as unbiased referees in the gaming world that ensure everything happens fairly and as agreed upon. These smart contracts add a new level of trust and transparency to gaming, allowing players to engage with the system confidently.

Crypto Wallets & Tradable Treasures

In web3 gaming, crypto wallets serve as personal lockers, housing digital assets like characters, currencies, and more. These wallets enable interaction with blockchain services, transforming virtual items into valuable possessions. Alongside this, these assets can be represented as Non-Fungible Tokens (NFTs), allowing players to have unique ownership of specific in-game elements. This ownership is not confined to the game itself; it can extend into various platforms and even translate into real-world value. By linking crypto wallets and NFTs, players can trade and manage their assets with full control and transparency, enriching the gaming experience.

Despite the potential and excitement around web3 gaming, there are still some hurdles and limitations that must be addressed. Let's go through some of these challenges:

The Initial Hurdles

Onboarding new players to web3 and blockchain gaming can be challenging. They need to set up a cryptocurrency wallet, grasp the nuances of various cryptocurrencies, and acquire the right crypto for specific games. This process can seem daunting for newcomers.

Performance and Scalability Issues

While blockchain technology is innovative and secure, it does currently have limitations when it comes to performance. Blockchains like Ethereum, which many games are built on, can struggle to handle a lot of users at the same time. This can lead to slow performance and high transaction costs, which can be frustrating for players.

Disconnected Ecosystems & Platform Incompatibility

Platform incompatibility poses a significant challenge in the web3 gaming world. Disconnected ecosystems across various blockchains make it difficult for games to interact seamlessly. Players are compelled to use different wallets for each game, leading to inconvenience and confusion. Streamlining interoperability is crucial to enhance the gaming experience.

Striking the Balance

A crucial dilemma for web3 game developers lies in striking the right balance between financial incentives and enjoyable gameplay. Focusing too much on the financial aspect might diminish the overall experience, emphasizing the need for game designers to create engaging games that players will genuinely enjoy.

Scalability Solutions

Blockchain scalability and L2 advancements are revolutionizing gaming. L2 solutions conduct transactions off the main chain, securing them later, boosting throughput, and reducing costs. This ensures a smoother gaming experience, free from network congestion and high fees, accommodating more players and elevating the gaming landscape.

Account Abstraction

Account abstraction in web3 gaming marks a dynamic shift from rigid Externally-Owned Accounts (EOA) to flexible Smart Contract Accounts (SCA).

This evolution ensures a user-friendly onboarding, akin to web2, eliminating the hassle of managing private keys and multiple transactions. With session keys, sponsored transactions, bundled transactions, and social logins, account abstraction seamlessly integrates wallets within games, empowering developers to provide personalized, frictionless gaming experiences.

Dynamic In-Game Assets & Gelato

In the world of gaming, dynamic in-game assets are revolutionizing the way players interact with games, offering a more immersive and personalized experience. These assets, often represented as NFTs (Non-Fungible Tokens), can change and evolve based on real-world events or personalized player stats.

Imagine a football game where a player's virtual card or avatar reflects the real-world performance of the corresponding athlete.

Enter Gelato’s Web3 Functions, a powerful tool that bridges the gap between the on-chain and the off-chain data. By leveraging Gelato, a game's smart contract can query off-chain web2 APIs to gather real-time sports data about an athlete's performance, such as goals scored, assists, or match ratings. This information can be used to dynamically update the in-game NFT, making it a living, evolving asset that reflects actual events.

For example, if a famous football player scores a hat trick in a real-world match, Gelato can fetch this information from a sports API, and the corresponding NFT in the game can be updated to reflect this achievement, perhaps enhancing the player's stats or appearance.

This fusion of real-world data with virtual gaming assets, enabled by Gelato’s Web3 Functions, creates an engaging and authentic gaming experience, connecting players more closely with real-world sports and taking interactive gaming to a new level.

Automated Rewards Distribution

Automation in blockchain gaming, powered by tools like Gelato, revolutionizes player rewards and recognition. With Gelato Automation, achievements and milestones are instantly detected, and rewards are swiftly distributed in real-time. Whether conquering a challenging level or accomplishing a rare in-game feat, players no longer wait for their well-deserved rewards. This instant gratification not only elevates player satisfaction but also ensures fairness and transparency in the gaming experience.

Join our community and developer discussion on Discord.

Web3 Functions are available today in private beta. For more information, please check out the Web3 Functions documentation. To learn how to write, test, and deploy your own Web3 Functions, check out our in-depth tutorial.

Apply here to be one of the first to test Web3 Functions.

If you are reading about us for the first time

Gelato is web3’s decentralized backend empowering builders to create augmented smart contracts that are automated, gasless & off-chain aware on all major EVM-compatible blockchains including Ethereum, Arbitrum, Polygon, Optimism, zkSync, and many more. Over 400+ web3 projects rely on Gelato for years to power the execution of millions of transactions across DeFi, NFT, and Gaming. Gelato currently offers four services:

• Web3 Functions: Connect your smart contracts to off-chain data & computation by running decentralized cloud functions.

• Automate: Automate your smart contracts by executing transactions automatically in a reliable, developer-friendly & decentralized manner

• Relay: Give your users access to reliable, robust, and scalable gasless transactions via a simple-to-use API

• Gasless Wallet: A powerful SDK that enables developers to provide a world-class UX by combining Gelato Relay + Safe's Smart Contract Wallet, enabling Account Abstraction

Witness the ongoing journey towards a decentralized future led by Gelato!