Huobi Ventures Weekly Report #45
Huobi Ventures Weekly Insights
Insight provided by Rahcel of Huobi Ventures
On-chain Game: Next Phase of GameFi
The future of on-chain games benefits from transparent rules, multi-point collaboration and preserved gameplay. On-chain game is a direction that has attracted much attention in the field of GameFi.
As our previous analyses indicate, the future GameFi will have polarized developments. Content providers that are close to modern video games will reduce financial attributes, gradually reduce their own Ponzi characteristics, and increase players’ consumption behavior. Games with more crypto-native forms will be composed of core teams with mathematical backgrounds and cryptography backgrounds. Games will go down the road of “fun” that geeks and financial players enjoy. Therefore, while most institutions emphasize the playability of GameFi, follow-up research on on-chain games is quite essential.
What’s an on-chain game?
According to what we have observed so far, on-chain games mainly have the following three features: 1) Their rules are written by smart contracts, and the formulation of these rules may come from the community. 2) A large proportion of in-game data is on-chain and most of these games are currently built on L2. 3) Game genres are mainly divided into two: a more immediate genre which currently could be more developed to demonstrate the performance of L2 and the introductory genre which is endowed with diverse possibilities such as on-chain chess.
What’s the benefit of this?
Games in a broad sense include not only modern video games but also games featuring simple mechanisms and diverse results. The latter is a more suitable type for the chain. The transparency of the mechanism, the privacy of the results, and the decentralization of the operation are realized by smart contracts. Even if there are a large number of possible results, the results themselves can be concisely defined, complexly calculated, and derived in a variety of ways. The different ways of obtaining the possible results in games, the design and formation of consensus, seem to be more in line with the designing logic of decentralization.
Where are we now?
At present, the number and development progress of on-chain games are yet as promising as expected. Is the root cause the progress of game development, problems with infrastructure optimization or a matter of team preference? No one can give an accurate answer as of now. What we know is that many monopolized chains or Layer 2 based on ZK encryption technology can achieve relatively good performance, which can barely meet the needs of some frequent on-chain trading activities. However, throughout the step-by-step on-chain processes, the costs may be more expensive than those of a centralized server. Players are not necessarily more inclined to play games with almost the same experience at a higher cost. And at present, most GameFi players are not very familiar with the entry and operation of on-chain games, making the education of users a daunting task which can take a long time. In the future, we still buy in on-chain games. When on-chain performance is no longer the main bottleneck, some new genres will appear. But before that to happen, we will have to wait a long time.