July 2023 saw an incredible surge in funding for blockchain gaming companies - presumably to meet the demand of engaged crypto gamers who are as passionate, if not more passionate than they were during the last crypto bullrun.
Why is user demand for blockchain games still so robust, even as appetites for anything crypto and metaverse-related has waned?
Simply put, whether the games are powered by blockchain or not, games are still games. As long as the games are secure and fun to play, the demand will always be there.
Blockchain games seem to be slowly realizing their fact, which has led to a greater focus on overall game quality and security, instead of just the underlying blockchain technology.
Read on to find out three aspects where blockchain games have leveled up in 2023 and why they are drawing investors back.
#1 Blockchain Games are Becoming More Enjoyable
In the nascent stages of blockchain gaming, a recurring challenge faced by many companies was the less-than-ideal gaming experience they provided.
This was hardly surprising given the speed at which web3 developers once churned out games - almost one release every two or three months. Where traditional web2 games would have long testing cycles, web3 developers would let players jump in the game immediately and do the “testing” live, only making improvements after the launch.
Add in the fact that most early crypto games were actual Ponzi schemes - that meant creation of tokens and NFTs often took priority over game design or utility cases. Besides the embarrassing rugpulls, it also meant blockchain games were plagued by a whole host of problems such as slow transaction times, clunky user interfaces, and unenjoyable game mechanics.
However, companies are now either incorporating blockchain technology into established IP (such as Square Enix committing to the addition of NFTs into their Final Fantasy series) or creating high quality games with a secondary focus on tokens and NFTs, such as Illuvium, an open-world fantasy game featuring AAA graphics powered by Unreal Engine 5.
It’s not rocket science. More enjoyable games equals more new gamers.
#2 The Tokenomics are Starting to Make Sense
One of the most pressing challenges that early blockchain gaming companies grappled with was tokenomics - the fundamental structure of a game’s economics and value system.
Many blockchain games struggled with creating a sustainable and logical token economy. Whether it's inflationary pressures, poor distribution strategies, or a lack of clear utility, these tokenomic missteps have led to confusion and dissatisfaction among players and investors alike.
For example, the inflationary properties of two-token economics has led many to consider Axie Infinity a Ponzi scheme. Without anyone to purchase $SLP, hyperinflation will occur and the entire system will be quickly destroyed (similar to the Luna debacle). In other words, this model is almost certainly doomed to fail - the number of Axie players can only grow by so much!
Recognizing the pitfalls of poor tokenomics, newer blockchain gaming companies have taken a more thoughtful and strategic approach and shifted towards a more sustainable form of tokenomics, which share the following characteristics: reduced token supply, boosted scarcity, increased token value, and the generation of sustainable revenue for gamers.
#3 Digital Asset Security Takes Center Stage
In the initial phases of blockchain gaming, security breaches and hacks have been recurring nightmares. The lack of robust security measures for in-game assets has left players vulnerable to theft and fraud, undermining trust in the very technology meant to enhance ownership and transparency.
In fact, the victim of the largest crypto hack to date ($625 million in ethereum and the USDC stablecoin) is none other than the Ronin Network, an ecosystem affiliated with the Axie Infinity blockchain gaming platform.
However, as the industry matured, newer blockchain gaming companies began to prioritize security, recognizing its paramount importance.
While some companies turned internally to beef up their security with advanced encryption techniques and multi-factor authentication, some turned to companies like CoinsDo, a complete digital asset custody solution provider, for the ability to store, transfer, and govern their digital assets securely.
By providing players with confidence in the security and integrity of their digital assets, players are more likely to spend their time and money on the game.
The surge in blockchain gaming and web3 investments in July 2023 wasn't a random power-up; it was a calculated move, a strategic play in a game that's far from over. The challenges are real, but so are the solutions. The future of blockchain gaming is as bright as a freshly minted coin, and the opportunities are as vast as the virtual worlds they inhabit.
As we look to the horizon, one thing is clear: the game has changed, but it's still in play. And as industry professionals, players, and spectators, we're all part of this exciting, evolving, virtual adventure. Game on.