Per the latest report published by DappRadar and Blockchain Gaming Alliance, blockchain games represent almost 60% of the technology’s active usage. By the end of the second quarter of 2022, blockchain gaming activity accounted for nearly 1.1 million unique active wallets (UAW). These numbers are enormous, considering that blockchain gaming is still in its infancy and the broader market selloff reflects ongoing economic turbulence.
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The demand for blockchain games and game-related NFTs is rising as emerging blockchain gaming projects experiment with new technologies and unlock new possibilities for developers and gamers alike. This unprecedented growth is still attracting investment, helping the blockchain gaming industry defy the bear market.
Underlining this point, more than $2.5 billion of investment flowed into blockchain games during the second quarter, representing 33% more than the total capital allocated to gaming throughout 2021.
With so much hype surrounding this blockchain segment, we invited Hosam Mazawi, the co-founder of Snook – a skill-based play-to-earn (P2E) game – to converse about blockchain gaming’s highlights, challenges, and gradual evolution.
How would you describe blockchain gaming to someone who isn’t a regular gamer? Are there any prerequisites to start playing these games?
Hosam: Blockchain games aren’t much different from traditional games, except that players get to own and monetize their in-game assets and the time spent playing them. You can play them on your mobile phone and computer, making them relatively accessible like most modern non-console games.
The only prerequisite is that you’ll need to sign-up for a digital wallet to connect to the game. Users who are totally unfamiliar with wallets and blockchain may find it difficult in the beginning, more so if the game doesn’t offer any fiat-to-crypto on-ramps.
What, according to you, differentiates blockchain gaming from traditional gaming? More importantly, what is the advantage of blockchain gaming over traditional gaming?
Hosam: Unlike traditional games, users actually own their in-game items (skins, experience points, etc.). They also get the option to earn in-game tokens, which they can use to pay for expenses or exchange for other tokens, depending on the game. Then there are NFTs that users can sell in secondary marketplaces, rent out, and even trade to generate additional revenue.
I would say the two most important advantages are the true ownership that users gain over their in-game assets, irrespective of whether they purchased them or earned them during gameplay. Also, the option to monetize the assets is another key advantage that attracts most users to blockchain gaming.
Once these assets become NFTs, the players can own them directly, and, as such, they become tradeable on secondary NFT marketplaces. Another interesting use case is how you link these assets, NFTs, and tokens to the game economics to incentivize players for certain skilled gameplay.
Could you please explain the role of NFTs and tokens in blockchain games? How are they connected to the Play-to-Earn gaming model?
Hosam: As the name suggests, play-to-earn simply means that users earn (tokens and NFTs) for playing the game. Each game has a different model. Usually, the NFT is a character in the game, and the token is the “in-game currency.” Both NFTs and in-game tokens are central parts of the game’s token economy. The in-game tokens can be exchanged for other tokens across different exchanges. Sometimes, they can also be used to pay for real-world expenses.
Meanwhile, the NFTs not only represent the user’s digital avatar, but they also hold value depending on their rarity. These NFTs can be sold on secondary marketplaces, helping the players to generate more income.
Let’s take Snook, for example. Snook NFT is a character you can buy (mint) at any time for $1.25 worth of SNK. The character is a snake with five lives and one random trait. Each time you die, you lose a life. If you lose them all, your Snook will have a one-hour timer for the resurrection with a fee paid in SNK. Otherwise, it’s burned, as in completely dead. If you kill another snake in the game, you earn their “life worth” in SNK. This is paid out from the $1.25 paid by the other user.
Scalability has been one of the biggest problems of blockchain technology. Do you think blockchain games can scale seamlessly without compromising other features as their user base grows?
Hosam: The blockchain community must work together to address multi-chain connectivity and scalability issues before we move on to other areas. The blockchain trilemma (achieving decentralization, scalability, and security) is a major problem that almost every blockchain developer faces. However, as I said, as the underlying technology continues to evolve, blockchains will achieve more scalability without compromising on decentralization or security.
Emerging scaling solutions like layer-2, zkRollups, sharding, and so many other options are being continuously experimented with, and there has been considerable progress in achieving higher scalability across several chains natively. Hybrid computation to connect on-chain and off-chain ecosystems, external Web2 APIs to connect with Web3 games, and much more are currently under development. So, yes, blockchain games will scale seamlessly fairly soon.
Games should ideally be built in a chain-agnostic architecture. It means each time the game supports a new chain, users from that newly added chain can be onboarded, and everything they do on that chain is in sync with everything else already built on existing chains. In the future multi-chain reality, the fact that user assets will be stored on separate networks will not impact the game experience.
Users often criticize blockchain games for lacking variety and realistic graphics. What do you think needs to be done so that blockchain games can match up to the standards of AAA games?
Hosam: Building AAA games is not cheap, and adding blockchain to the mix makes it more expensive for company payrolls. Such games will use blockchain to make it optional to own a certain character, so I assume one of the existing giants will take this step first.
To run AAA games, the underlying blockchain must have enough bandwidth (scalability, throughput, low gas cost, etc.). Most of these are limited in today’s blockchain infrastructure. As the underlying technology continues to evolve, we’ll gradually be able to match up to the experience delivered by the existing AAA gaming organizations, but it won’t happen overnight.
How is Snook contributing towards lowering blockchain gaming’s entry barriers and bringing Play-to-Earn mainstream?
Hosam: Snook is celebrating one year on Polygon on the 9th of September. In the time since we began, we have done some amazing work on the game.
As mentioned, the entry barrier is as low as $1.25 per Snook NFT. Essentially, in Snook, we have built a self-sustaining model where 98.25% of the fees paid by the players in the game are used to fund the rewards that are paid out back to the players.
Regarding user experience, we are now working on desktop and mobile applications as we focus on delivering Snook to the mainstream. We are going towards a Web2 user experience with a Web3 engine under the hood.
