The Strongest Crypto Gaming Thesis
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July 29th, 2021

Crypto is not an incremental innovation. Rather, it unlocks fundamentally new ways of doing things that were not possible before. This is true across a wide set of domains: corporations reimagined as decentralized autonomous organizations (DAOs), traditional financial vehicles reimagined as permissionless DeFi protocols, legal agreements reimagined as smart contracts, and other constructs that we don't even have the language to describe yet.

The most interesting and important applications of crypto will lean heavily into the new affordances provided by blockchain technology, instead of just offering incremental improvements to existing applications. This is the same pattern that we've seen with previous computing platforms: smartphones, the World Wide Web, and the personal computer itself. In each of these examples, the longest-lasting and most impactful applications of the tech use the tech to do new things, not to do old things better. Think social media apps versus newspaper websites, online stores versus digital catalogs, or interactive TV versus... well, the Internet.

What does this mean for crypto gaming?

Crypto-Native Games

Gaming is a leading indicator on up-and-coming technologies. Games are a technically demanding yet relatively low-stakes environment to explore scalability and usability problems early in a technology platform's lifecycle: security and compliance concerns in games are less critical compared to more "serious" commercial or financial applications, often allowing for faster iteration loops. So while the untrained eye might dismiss a platform with "just" a bunch of games as frivolous, the discerning will recognize that this state is a valuable testing grounds. How many mobile interaction patterns and habits have their roots in early mobile games like Doodle Jump, Cut the Rope, and Angry Birds?

If we accept that games are a leading indicator of new technologies, and that the most interesting applications of new technologies will lean into truly new affordances rather than incremental improvements, then it follows that the bleeding edge of crypto application design in the next few years will be found in crypto-native games.

A crypto-native game is a game that maximally embraces the architectural patterns and ethos of blockchain application development:

  • The source of truth for game data is the blockchain. The blockchain is not just used as an auxiliary store of data, or a "mirror" of data stored in a proprietary server. All of the meaningful data is stored on the blockchain—not just i.e. asset ownership. This allows the game to fully utilize the benefits of programmable blockchain: a transparent data store that is permissionlessly interoperable.
  • The game logic and rules are implemented via smart contract. For example, combat in a game, and not just ownership, is all on-chain.
  • The game is developed in accordance with open ecosystem principles. The game contracts, and an accessible game client, are open-source. Third-party developers are empowered to customize or even fork their own gameplay experiences, through plugins, third-party clients, interoperable smart contracts, and even total redeployment. This in turn allows game developers to harness the creative output of an entire (incentive-aligned) community.
  • The game is client-agnostic. This is closely related to the three above points, in that a litmus test for whether or not a game is crypto-native is: "if the core-developer-provided client disappeared tomorrow, would the game still be playable?" The answer tends to be yes if (and only if) the game data store is permissionless, if the game logic can be executed permissionlessly, and if the community can interact with the core smart contracts without relying on interfaces provided by a core team.
  • The game embraces real-world value digital assets. Blockchains provide a native API into the notion of value itself, and digital assets are by default interoperable with cryptocurrency. This allows game developers to build new, positive-sum incentive structures for their player and developer communities.

Notably, we do not consider the following "crypto-native games":

  • A traditional mobile shooter with a crypto wallet integration.
  • A TCG where card assets are stored as ERC721 tokens on Ethereum, but battles happen off-chain.
  • A DeFi app that is "gamified" or has a playful skin. These apps are valuable and innovative in their own right, but we are specifically interested in applications that are games first and foremost, rather than primarily financial vehicles or protocols. We consider games that are essentially pure speculation on NFTs (an asset class) to be of this category.

This is not to say that only crypto-native games can be successful (commercially or artistically), while games that use blockchain in weaker ways cannot. However, crypto-native games are the most important games to look at if we want to understand the long-term implications of blockchain tech.

These games seek to unlock mechanics that are fundamentally new, rather than just making incremental improvements on existing games. They provide us with sandboxes—microcosms of the integrated digital worlds of the future—to see how these mechanics play out. And finally, they are probably most well-positioned in the long term to leverage the unique new incentive mechanisms and ownership models unlocked by blockchains.

In future posts, we'll discuss a few of these new affordances that we think will be especially important, and the ways that we're using ZK Games like Dark Forest to prove these out conceptually.

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