Introduction

After the success of “Black Myth: Wukong,” I, as both a gamer and a Web3 professional, have begun to reflect on the current state and future prospects of the Web3 gaming sector. If my thoughts are incomplete or biased in any way, I welcome constructive feedback. Additionally, I encourage entrepreneurs in the industry to join us in exploring the full potential of this sector.

Revisiting the Original Purpose of Web3 Games

As I mentioned earlier, it’s important to focus on the team and not be swayed by new trends. I’ve seen many gaming industry entrepreneurs shift to Web3 as soon as it emerged. Personally, I would never invest in such individuals because they lack true passion for gaming. How could someone who doesn’t love games create a great one? It’s such an obvious truth.
This statement, made by Wu Dan (Daniel), the first investor in “Black Myth: Wukong,” during an interview with ZhenFund, sparked widespread debate both within and outside the gaming industry. Is Web3 gaming just a buzzword, or does it represent a genuinely transformative future?

Looking at the current landscape, the main appeal of Web3 gaming seems to be its profit-making potential rather than its ability to foster real innovation in the gaming world. Many people are drawn to this space with hopes of quick financial gain or airdrop windfalls. During the last market cycle, the quality of Web3 games was generally low, with most projects focusing on rapid user acquisition followed by short-term profiteering. This reflects the fact that many developers are overly focused on the immediate financial prospects of Web3 gaming. As Daniel, the investor in “Black Myth: Wukong,” pointed out, many of these developers lack a genuine passion for games and are instead enticed by the speculative nature of Web3. This “get rich quick” mindset is especially prevalent in the P2E (Play-to-Earn) model, often leaving behind chaos. While “2Earn” models have generated a lot of hype, the market is starting to see them as more of a marketing gimmick rather than a genuine approach to game design.

It’s time to return to a more rational perspective and rethink the true purpose of Web3 in gaming. Just as blockchain was originally intended to create a fair monetary system, what is the original goal of Web3 gaming?

The story of Vitalik and Warcraft has been retold countless times, so instead, I’d like to share a significant event that recently occurred in a game I play:
“On November 27, 2023, the People’s Procuratorate of Xuanwu District in Nanjing issued a public prosecution statement, revealing that since August 2022, the defendant Tang had exploited a vulnerability in the personal backpack and warehouse system of the online game DNF. Using scripts provided by defendant Cai, they illegally duplicated eight types of game items, including ‘Crystals of Conflict’ and ‘Distorted Dimensional Crystals,’ profiting over 91.63 million RMB.”

In short, two players exploited a game bug to duplicate valuable in-game materials. These included eight of the most tradable items in the game, such as Contradictions, Twisted Dimensional Crystals, and Impeccable Green Beryls. They then sold these duplicated items in the game’s marketplace, making a profit of over 91.63 million yuan.

This led to widespread protests from other players, who saw the value of their hard-earned equipment and items plummet. Despite spending significant time and money, their assets rapidly depreciated. Because traditional games operate under a centralized model, all in-game assets are legally owned by the game company, not the players. Although the company implemented some compensation after the incident, the players’ rights were never fully protected. This situation highlights a fundamental issue in centralized games: the system not only failed to prevent asset duplication in time but also struggled to handle the long-term effects on the game’s economy. In-game assets are not truly owned by the players; they are completely under the control of the game company. When problems like asset duplication or economic imbalances occur, players’ interests are at risk, and they have no means to safeguard or manage the virtual items they “own.”

This brings us back to the original question: What is the goal of Web3 games? For me, it’s about creating a gaming world that rivals traditional games in both gameplay and visuals, but where players truly own their assets. It’s about building a community where players have a say in the game’s future and no longer have to helplessly accept changes dictated by an official update, such as sudden class rebalancing. Web3 games aim to create a more open and advanced cross-platform trading system within the metaverse, where in-game assets can transcend the boundaries between virtual and real economies, as well as between different games and platforms.

Web3 Games Exacerbate the Economic Problems Seen in Traditional Games

Idealism is always grand, but reality tends to deal harsh blows. The idea discussed earlier, focused heavily on “assets,” has been the centerpiece of these considerations. The first attempt to push boundaries with Play-to-Earn (P2E) has now crashed and burned.

Why did this happen? Terms like “profit margins,” “revenue,” “grinding,” and “farming” are commonly debated by players in traditional games, especially in MMORPGs. Grinders, who invest time to farm in-game gold, are a crucial part of these economies, often using their earnings to enhance characters or trade with other players. So why do traditional gamers look down on Web3’s “Play-to-Earn” model? After all, both systems offer returns on investment, so is the income from Web3 games somehow dirty?

One reason is that Web3’s decentralized asset model amplifies the problems seen in Web2 games. In Web2 games, developers and operators maintain control over the in-game economy. They can balance it by adjusting the flow of resources, tweaking currency systems, launching events, or altering item drop rates. When inflation or devaluation occurs, they can increase or reduce the supply of goods or currency to stabilize the economy. But in Web3, where decentralization prevents easy intervention, the in-game economy is much more prone to imbalance.

If players are only playing a game for profit, the game is bound to collapse quickly. The virtual world evolves constantly, creating new products, tokens, markets, supply-demand dynamics, and pricing models. Managing a stable economy is challenging. I’ve played Dungeon & Fighter for 14 years, and the exchange rate for gold has plummeted from 1 yuan = 200,000 gold coins to 1 yuan = 890,000. Several factors contributed to this drop, like developers ignoring player feedback, failing to protect player rights, and poor infrastructure for trading and bug fixes. These issues caused players to quit, not just the flawed economic model. Even with blockchain’s fairness and transparency, better token design is still needed to enhance the value of in-game goods.

Currency plays a critical role in both real and virtual economies. In games, whether trading with NPCs or between players, numerous factors must be considered. Especially in MMORPGs, the value of gold can influence whether players spend money to upgrade their characters. In a thriving gold market, high gold prices suggest that players are investing, while grinders are motivated to farm and sell for a profit. There’s a popular saying in multiplayer games: “Graduate, then farm,” meaning that after completing the main content, players return to farming to recoup their expenses.

In traditional games, “sinks” are crucial to maintaining economic balance. Players constantly earn gold, but without mechanisms to reduce the gold supply, inflation occurs, prices skyrocket, and player satisfaction drops. Developers introduce clever gold sinks, such as items with a lifespan, repair costs, obsolescence, inventory limits, and trade-in systems. These systems help drain excess gold from the game, keeping the economy stable. Web3 games, however, often lack these mechanisms, leading to severe inflation and economic instability. Introducing such “sinks” is a critical issue Web3 games must address.

Today, while a few Web3 games with strong content and gameplay exist, most are overshadowed by projects chasing short-term profits. A stable currency economy is vital. If blockchain could provide secure asset ownership and liquidity for in-game currencies, it could give players a more authentic and reliable gaming experience. This would prevent their in-game assets from feeling worthless and protect the ecosystem from hackers and cheaters.

Is Adding Tokens Directly to Web2 Games a Feasible Strategy?

Some well-known Web2 games, like “MIR4,” experienced massive user growth and revenue spikes after incorporating Play-to-Earn (P2E) mechanics. However, it’s worth noting that these models aren’t entirely dependent on tokens. Even without Web3 elements, these games could still succeed by using features like a “currency exchange” system. Sinjin | MAYG (https://x.com/SinjinDavidJung) pointed out that you can’t simply add tokens to a successful Web2 game and expect it to succeed. Web3 gaming isn’t just about tacking on new features; it demands a complete rethinking of game design and monetization. Traditional game development practices can actually become obstacles during this transition, as they rely on established distribution channels, stable currency systems (like fiat), and assets linked to player accounts.

In contrast, Web3 introduces token economies, player-driven asset trading, and token circulation, which require a fundamentally different design approach. For a successful transition to Web3, it’s not enough to just add tokens. Every game system, especially the mechanics surrounding token creation and flow, must be deeply rethought and adjusted.

Can AAA Games Spark a New Wave of Enthusiasm?

Following the massive success of Black Myth: Wukong in China, the media has been quick to hail it as “China’s first AAA title,” with widespread promotion. But what exactly is a “AAA game”? In the gaming world, AAA refers to top-tier games developed by large studios, with massive budgets, high production values, and substantial marketing campaigns. These games are often praised for their stunning visuals, expansive open worlds, and intricate gameplay mechanics. AAA games are seen as the pinnacle of the industry, representing the highest standards in production, quality, and technology.

As Web3 gaming grows, many projects in this space have begun to use the “AAA” label in an effort to attract investors and players. However, from my perspective, this term isn’t very compelling. As an investment manager, AAA signifies the need for large, highly experienced teams and significant financial investment on both the development and marketing fronts. Considering the risks involved in attempting this within the emerging Web3 space—where the infrastructure is still underdeveloped—very few projects meet my expectations in terms of team qualifications. As a gamer, for me, there are only two types of games: fun ones and boring ones. The “AAA” label doesn’t mean much—it doesn’t guarantee a game’s quality. If a game isn’t fun, it isn’t fun, no matter how polished it looks. Many so-called AAA games, despite their impressive visuals and technical achievements, often fall short when it comes to gameplay and overall player experience.

indie games

Many indie games, developed by small teams, manage to capture players’ hearts through creativity and engaging gameplay. Despite lacking the big budgets of blockbuster titles, these indie games often deliver unique experiences that offer players fresh and enjoyable content. Much like the continuous stream of new protocols in the DeFi space, the Web3 gaming sector is witnessing a similar trend: more projects are dressing themselves up with flashy labels and grand concepts, while neglecting the most important element—the core fun of the game.

What we really need is not more shallow “AAA blockbusters,” but innovative indie developers who can break free from the traditional game development frameworks. By leveraging new paradigms like “fully on-chain games” and “ServerFi,” they can deliver unique, creative experiences without sacrificing gameplay. Just as the DeFi space thrives on constant innovation, small developers have a crucial role to play in Web3 gaming. Rather than chasing after big budgets and the luxurious appeal of the AAA label, I believe this space needs more daring and innovative small teams. While they may lack the resources and funding of large studios, they can use creative design, rich storytelling, and distinctive mechanics to challenge the conventions of the gaming industry and provide players with more diverse, engaging experiences.

Breaking the “Impossible Triangle” in the Web3 Gaming Ecosystem

In the book Virtual Economies by Vili Lehdonvirta and Edward Castronova, they discuss the idea of a “virtual balance scorecard” for game economies, which focuses on achieving three key goals: content creation, user engagement, and profitability.

1. Content Creation: This involves building engaging single-player experiences or providing a framework for player-generated content. A well-designed virtual economy can incentivize players and third-party developers to create new content. When virtual property rights and markets are properly defined, the virtual economy can ensure that scarce resources—like in-game content and player attention—are maximized efficiently.
2. User Engagement: This refers to attracting and retaining users. Virtual economies can offer free content to draw in players, while reserving premium content for those willing to pay. Players who recommend the game to friends or play consistently can be rewarded with virtual goods or currency. These virtual goods help keep users engaged because once they stop playing, the time and money they’ve invested in the game are effectively lost.
3. Profitability: This involves generating real-world revenue by selling virtual goods and currency to players. The virtual economy can transform game content and user attention into profit. For games that rely on subscription fees or ads, tweaking the cost of new content for players can be equally profitable. If content updates are too slow, players may lose interest and leave the game. However, if updates come too quickly, players might consume new content too fast, making it hard to retain them long-term.

In Web3 games, the three main goals—content, user engagement, and profitability—have formed an “impossible triangle,” making it nearly impossible to perfectly balance all three. The traditional gaming industry has long struggled with similar issues, but Web3’s decentralized economy and asset ownership concepts have further intensified these challenges.

1. Content Variety and Depth

Maintaining both scarcity and sustainability in game content is often a tough challenge. When players are primarily driven by short-term profits through tokens or NFTs, they tend to focus on maximizing the game’s economy rather than fostering creativity. This leads to shallow gameplay in many Web3 games, often designed just to “cash in.” The real challenge is creating games that are both innovative and engaging, while also encouraging long-term participation from players.

1. Challenges in Attracting and Retaining Players

Players in Web3 games face more than just gameplay hurdles. Complex economic systems, volatile tokenized assets, and speculative behaviors in the market can overwhelm and turn off casual players. As more Web3 games crowd the market, it becomes harder to attract and retain players, especially since Web3 games tend to have shorter lifecycles, with players often dropping out after an initial trial period. Developers need to design games that are not only fun but easy to understand, without relying too heavily on token or NFT-based economies.

1. Profitability and Long-term Sustainability

Web3 games often tie their revenue models closely to token economies, leading to a focus on short-term profits at the expense of long-term sustainability. Players may engage in these games primarily to earn money, but when token values drop or the game economy collapses, they leave quickly, causing the entire ecosystem to unravel. Traditional games achieve long-term success by continuously updating content and maintaining balanced economic systems, but the volatility of Web3 game economies makes this much harder to achieve. Additionally, relying too much on external market forces makes it difficult for developers to stabilize the economy through content updates alone. For Web3 games to achieve long-term profitability, developers need to build more stable economic systems that are less reliant on external market swings, ensuring the game’s ecosystem can thrive over time.

Summary

Daniel’s view on Web3 games may be biased, but he raises a crucial point: games that focus solely on short-term profits and exploit the Web3 concept are poisoning the entire industry. These projects not only disappoint players but also make the goal of “breaking through” increasingly difficult. What players truly desire isn’t just games with a Web3 label, but creations that fundamentally disrupt traditional models and deliver unprecedented experiences. Just as Black Myth: Wukong allowed countless players to immerse themselves in the legend of the Monkey King, Web3 games should offer players new levels of immersion and creativity.

Web3 game developers, in their quest to explore new frontiers and break traditional rules, will inevitably face setbacks and confusion. This is a necessary part of the industry’s journey—breaking free from old frameworks and forging new paths. Despite the current challenges, these efforts prove that we are moving toward the future.

Every developer and player who persists through this revolution is a hero of change. Challenges and setbacks aren’t signs of failure, but symbols of progress. Just as Black Myth: Wukong reignited players’ excitement and anticipation, Web3 games must offer innovations that truly resonate. Only those brave enough to chart new paths will leave a lasting mark on this industry’s evolution.

“Lost, are you? Only those with a path to walk can stray; this is proof of your heroism.”

See you in the games of the future. Until we meet again in the game world.

Disclaimer：

1. This article is reprinted from [ForesightNews]. All copyrights belong to the original author [Luke，Waterdrip Capital 投资经理]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
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