This text is my speech manuscript on MuChiangmai.
In the past six months, blockchain games have gained popularity. Let's take a look at how other VCs and institutions view blockchain games. In the past two months, Paradigm and Coinbase have both identified two promising future trends: on-chain games and RWA. Paradigm's list includes on-chain games and on-chain treasuries (government bonds), while Coinbase's list includes on-chain games and tokenizing real-world assets. Therefore, in the next bull market, on-chain gaming is likely to become a mainstream narrative.
Since many people have high expectations for this trend, let's first understand what blockchain games are. A simple definition is as follows:
A fully on-chain game refers to a game where all game logic and assets are on the blockchain and implemented through smart contracts. Sometimes, we also use the term "on-chain game" to refer to it. In the literature of on-chain games, we often come across terms like "autonomous world" or "on-chain reality."
At other times, we may come across concepts like Web2.5 games and GameFi games. What are the differences? You can refer to the table below:
[Table Image]
To explain briefly, Web2.0 games do not use any blockchain technology, referring to traditional games. Web2.5 games only tokenize assets, while game logic is implemented off-chain, as mentioned earlier in GameFi games. True Web3.0 games have both assets and game logic on-chain, known as fully on-chain games.
At this point, someone may question why we should put all game logic on-chain when the performance of blockchains is currently low. I have previously attempted to answer this question from a narrative (autonomous world) and technical (composability and serverless) perspective, but the results were not satisfactory. So now, I will try to answer it from a historical perspective. First, let me ask a question: why do we have DeFi? You can try to think about it yourself; the answer is not that simple.
Let's go back to the period from 2012 to 2018 when we did not have concepts like DeFi and Web3. The mainstream narrative of cryptocurrencies during this period was "payments." For example, BTC was considered a peer-to-peer electronic cash system, and electronic cash is used for payments. Under this narrative, a typical characteristic was that whenever a major online retailer announced that they would accept BTC as a payment method, the market would surge.
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During this period, blockchains had not yet introduced smart contracts, so most chains were forks of BTC. Each chain had a native coin, and most were based on proof-of-work (PoW).
In 2015, Ethereum was born as the first smart contract platform. Its emergence greatly changed the operation of Initial Coin Offerings (ICOs). The changes can be seen in the following diagram:
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In the beginning, ICOs used BTC as the fundraising medium, and participants had to send BTC to the project's address, and the project manually returned the altcoins. At that time, altcoins were referred to as "coins." After Ethereum appeared, the fundraising medium became ETH, and participants only needed to send ETH to the ICO contract address, and the contract automatically returned the corresponding altcoins. At this time, altcoins were referred to as "tokens." From an investment perspective, this can be seen as a paradigm shift from "centralized investment" to "decentralized investment," or "DeInvest."
From 2019 to 2022, the infrastructure for DeFi started to emerge. Examples include the on-chain exchange Uniswap, on-chain lending protocols AAVE and Compound, and the on-chain stablecoin protocol MakerDAO. Initially, all on-chain protocols were called "Open Finance." In 2018, Brendan Forster of Dharma Labs first proposed the term DeFi, which became popular worldwide.
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Now, let's try to summarize DeFi. How did the financial industry combine with blockchain technology? Refer to the table below:
[Table Image]
Looking at later DeFi projects, they aimed to write "financial rules into smart contracts." So, the initial combination was simply "issuing coins" or "tokenization," which later transitioned to "using smart contracts," and the narrative changed from "Open Finance" to "DeFi."
Now, let's discuss the combination of gaming and blockchain technology. Should we "tokenize" or use "smart contracts"? If we choose "tokenization," should we use "fungible tokens" or "NFTs"? It should be noted that in the financial industry, currencies and securities are fungible, while game assets and characters are non-fungible. This is why NFTs are commonly seen in blockchain games but less so in DeFi.
Let's continue reviewing the history of blockchain games.
Going back to 2017-2020, why choose 2017 as the starting point? Because CryptoKitties was born in that year, and all cats were NFTs (they are also the inventors of NFTs), with breeding rules written into smart contracts. However, they did not issue coins. In the following years, 2020-2022, GameFi had its moment in the spotlight, with numerous star projects such as Axie Infinity, Starsharks, Metamon, and StepN. These projects typically used sophisticated multi-token systems and NFTs to represent game characters but did not use smart contracts. Therefore, they were still centralized games (CeGame).
Now it is 2023, still in the midst of the crypto winter, and it seems that 90% of GameFi projects have died. Is creating a game just about "issuing coins"? What if we also write the game rules into smart contracts? This is where we discovered the fully on-chain game "Dark Forest." Following the DeFi approach, it could be called "DeGame."
Following the DeFi approach, we can conclude that fully on-chain games can help achieve decentralization and protocolization in gaming. Decentralization means writing game rules into smart contract code, usually managed by DAOs. "Protocolization" refers to the process of standardizing specific functions or operations. This standardization means that these functions or operations are no longer private or proprietary but become "public goods" or standards that can be widely adopted and used by developers or organizations. Projects in DeFi, often based on composability, are called "DeFi protocols," and fully on-chain games can also be based on their high composability, called "game protocols." At this point, games also become a "public good."
Now we can answer the question we started with: why do we need "fully on-chain games"? The answer is actually very similar to DeFi:
- Games are eternal: There is no centralized entity or server; they exist forever on the blockchain.
- Trustless: Code is law.
- Permissionless: Anyone can participate.
- Interoperability: Different systems, devices, or applications can effectively communicate and interact.
- Composability: Various components or systems can be combined to create larger or more complex systems.
- Promote innovation: Any developer can create new applications or services without starting from scratch, avoiding "reinventing the wheel."
Does this mean that all types of games can be made into fully on-chain versions? No, in my opinion, only games that meet the following criteria are suitable for being fully on-chain:
- Games with relatively simple rules
- Games that do not require real-time feedback
- PvP rather than PvE
- An open system
- Online games rather than single-player games
Next, let's discuss the narrative.
The term "fully on-chain games" is more of a technical discussion. Currently, the popular narrative is "autonomous world," coined by Ludens from Lattic. In 2022, he wrote a short paper to explain his ideas. For more details, you can refer to this link: [Link]
Additionally, following the DeFi approach, funblock and I have proposed the term "decentralized games" or "DeGame." For more details, you can refer to this link: [Link]
That concludes what I wanted to discuss about fully on-chain games. However, I would also like to briefly touch on the social track.
Following the practices of finance and gaming, is there also a way to combine social media with blockchain? It can be done through issuing coins or using smart contracts. In that case, should we call projects that only issue coins without using smart contracts "SocialFi" or "Web2.5 Social"? And should we call projects that write social rules into smart contracts "Onchain Social," "DeSocial," or "Web3.0 Social"? We could even call them "Open Social" or "Autonomous Social." Let's categorize some well-known social projects:
[Table Image]
If anyone is interested in the concept of "on-chain social," feel free to contact me. I have some new ideas in this area that we can discuss. Thank you all.