# Which solutions do building games onchain bring? Source: https://x.com/tax_cuts/status/1867703339271573926 Kiwi News: https://news.kiwistand.com/stories/Which-solutions-do-building-games-onchain-bring?index=0x675d4542caea1605fd2b3993b58969b9de93a115150e3b9a03ac5eac3a2d19dc71964c08 Submitted by zinkk.eth on 2024-12-14 UTC, 1 upvote, 0 comments ## Summary Primodium Inc., after two years of building onchain games, concludes that its hypotheses for why onchain games would beat Web2 games are not adequate, and that players may not care whether a game is onchain. The company examined three hypotheses: games as open-source protocols funded by tokens, real money economies enabled by provably scarce assets, and high-stakes gaming where an onchain program pays out trustlessly. For each, the article cites problems such as token demand relying on speculation, with Pirate Nation's token below its Series A valuation, and players being risk averse about wagering money, as seen at Primodium Empires and Duper. The article also says onchain games remain about two generations behind in player UX, and that the main onchain enthusiast group has stayed the same size. ## Article Primodium Inc. has been building onchain games for the last two years under the basic assumption that onchain games as a category would become the next gaming computing platform. The real mechanisms for why it would, however, was our job to discover. Throughout every product iteration, the main question we have is whether it can outcompete Web2 games. That is, assuming fully onchain game infrastructure was able to hit parity with Web2 games, why would we be able to attract more players to play onchain games? The following is a list of hypotheses that all answered how building the game onchain could be a 10x solution to Web2 players’ problems. For each hypothesis, I listed the reasoning and the issues we’ve faced while working through it. The game as a protocol Example: Primodium, Pirate Nation (?) Having a game be a protocol means to make it fully open source. Tokens are used to incentivize the game developer to create the otherwise free game. Traditional game building architectures disincentivize developers to open source their games; developers opt for onerous IP protections because there is no other way to monetize. Launching a token is the way to monetize for the studio while keeping the core IP open source. The lack of open sourcing discourages modders and content creators from creating extensions of the game, as privately creating mods or hosting games may come at odds with the game developer. Examples of this have been given from numerous clashes between Roblox, Minecraft, Warcraft, and many other games against their third party developers. Had these games been open source, one could imagine that third party development would be significantly more vibrant. The reason for choosing the onchain game architecture is to allow for a canonical game instance to be launched with a native gas token. The developer makes money, yet the game is still open source. Problems The token valuation primarily comes from a) speculative memetic brand, and b) gas fees for player demand. Given the decreased cost of compute over time, it seems likely that even if the game reaches significant product market fit, the real demand for tokens (by usage) will remain low. In this case, the demand will have to be offset by speculation. The token becomes the product, while the game becomes the marketing engine for the product. The current market conditions do not seem to favor a product of this kind, however. We also have significant reservations for running a company this way, as it seems to create a series of never-ending problems. Additionally, the market demand for this type of token launch seems increasingly scant. Pirate Nation, for example, has a token below the valuation of their Series A from three years ago. Potential solutions There may be room for the token demand to come from MEV (priority fees) for players to access the game state while intense battles or other important game events are occurring. This way, even if compute costs trends to zero, the token demand may remain high, as during intense gameplay moments, players would outbid each other on gas costs to make sure their desired outcome is met. A corollary is gas costs on Solana, where compute is extremely cheap, but most of the chain revenue is expected to come from MEV. Solana users spend similar amounts as Ethereum users on MEV to access hotly contested mints and swaps, despite transaction costs being 1/1000 lower. Real money economy Example: Critterz, Primodium (as it would’ve been) The principle that everything onchain becomes provably scarce is the foundation of this idea. When assets are onchain and the developers relinquish control over minting new game resources, the supply of all game assets are then programmatically controlled. The logic goes that when supply is limited and there is constant player demand, players would assign real value to all in-game resources. In addition to increased player confidence in the game economy, the reason to build games like this onchain is because of regulatory arbitrage. Real money games have been tried before, but never widely implemented because of regulatory concerns around money transmissions. Using crypto rails to house these assets and, crucially, the game logic for item transfers, solves a core problem that could not have been solved offchain. Problems The main problem is that of player incentives. Just as regulatory concerns have yielded few real money games, a bigger bottleneck is the lack of a well designed player economy. When real money is attached to player actions, players seem to only optimize their gameplay around increasing their earnings through accumulating items, creating a race to the bottom for game asset prices and creating a massive glut in supply. Weirdly, this happens even if the player actions yield far below minimum wage prices. On top of massive supply increases, because of the lack of “real” players consuming in-game items — most are just trying to optimize their earnings — demand also drops precipitously, leading to a broken game economy. All of this ignores the certainty of player created bots populating the economy too. Bots are an inevitability in this case, and poses a problem 1000x greater than the above. A secondary concern is that it is unclear if, aside from regulatory arbitrage, building onchain games really is a 10x solution over existing centralized databases for game economies. Most players do not seem to care if their assets are centrally controlled or not, and others happily trust the game devs for the drop rates of their items. The number of players that feel similar to Vitalik in World of Warcraft seem very few and far between. A common counterargument is the existence of games that simulate a virtual real money economy like EVE online or Runescape. The arguments here are that, despite the gray area that these games have towards using real money, there is still significant economic activity, which is indicative of player demand for this kind of gameplay. However, I would argue that the causation is actually the other way around: it is because of the gray area that real money economies are able to exist within these games. For the same reasons above, if there was no gray area, there would be a race to the bottom, destroying the economy (See Diablo III’s case study on this). High stakes gaming Example: Primodium Empires, Tub, Duper High stakes gaming relates to putting real money on the line through the course of gameplay. A simplified version of this is: money in → skilled gameplay, change in balance → money out. The main draw for building this kind of gameplay onchain is that an impartial onchain program has the ability to pay out money trustlessly to all parties. Such a game is hard to build without onchain infrastructure. Additionally, this allows for hyper-competitive players who are confident in their abilities to win to heighten their gameplay experience, creating an experience that normal games cannot provide. Prediction markets are also an example for such a type of game, where players who are confident in their ability to forecast certain actions put money on the line to illustrate their confidence. Problems For a player to be comfortable putting money on the line, they must be confident in their ability to win the money back. The bigger their perceived edge is, the better. Therefore, it is highly unlikely that players would be willing to put money on the line for a brand new game that they have little actual skill in. This problem has been seen beyond our play tests at Primodium Empires. Player experience is similar in Duper, where only the most skilled players are willing to risk money, but even then, they are few and far between. Even in cases where people understand the games they play, players seem to be particularly risk averse to put money in. Players Lounge, a company that lets people stake money for existing games, seem to have issues getting players to pay for stakes. This problem can also be extended to prediction markets: through the years, only politics and sports have endured as betting categories because they are the only ones that people have an overconfidence in their understanding in. Therefore, games built in this category must have an extremely low learning curve. It seems to us that anything more complicated than even the most basic games will discourage players to put money on the line. A fun exercise is to ask yourself whether you’d wager $10 on Tic Tac Toe campaign. The core problem At the end of the day, the core problem we face is whether markets will actually receive whatever we build. The way to achieve this is to actually solve their problems that they cannot get without us. In the context of onchain games, this means that our north star has always been to find a game that cannot exist without crypto, and the above hypotheses were what we believe to be the best routes to approach game design. It has become increasingly clear that the above reasons are not entirely adequate when considering whether players would care just because the game is onchain. On top of that, an unaddressed problem is that of player UX, where onchain games are still around two generations behind. This is likely the reason why, despite two years of progress, the main group of onchain game enthusiasts have stayed the same size. Furthermore, even if parity is reached and playing onchain games no longer have tradeoffs from playing a Web2 game, and even if we were able to create net new experiences, we would still need to compete with well optimized Web2 game studios on funding, distribution, live ops, and all other moving parts required to stay competitive. The battle unfortunately does not end at creating a net new experience or reaching parity with a Web2 game experience.