Why Gaming on Blockchain and in Web3?
A couple of weeks ago in Singapore, we attended the Star Atlas Impact Summit, which was held alongside the Solana Breakpoint Conference. It was a fantastic event with many Star Atlas community members as well as Star Atlas team members!
With the Impact Summit co-located with Breakpoint, we saw quite a number of individuals coming into the Star Atlas expo area who were either new to gaming, or new to gaming on chain.
There were some great questions posed, especially: “Why gaming on chain?”.
This not only initiated some great conversations, but also made us reflect ourselves on why we joined the Star Atlas community years ago, and the appeal even back then of gaming on-chain. Here, we lay out some of our own thinking, in case it helps any of you with a perspective!
As always, none of the information in this article constitutes financial advice.
This article assumes some familiarity with blockchain in general.
Traditional Gaming’s Primary Goal — Entertainment
As longtime avid gamers, we’ve played thousands upon thousands of hours of games. RTS (real-time strategy), FPS (first person shooter), RPG (roleplaying game), you name it. From all-nighters to skipping classes and missing meals, gaming has been an immense source of entertainment and enjoyment (and of course oftentimes frustration) for us.
Entertainment & enjoyment has, in our opinion, been the main output of ‘traditional’ gaming. The inputs from gamers are time and labor; the output is entertainment value. Generally speaking, if I spend 1000 hours in a game beating levels, collecting gear, building bases and any number of other things, there is no tangible output that I can immediately take away other than the entertainment value.
A Sidebar — In-Game Purchases
Years ago, game revenue primarily came from the sales of the game itself, as well as additional game content. This might be a console cartridge, a CD/DVD, or a download; regardless, it was the game itself that made publishers the bulk of the revenue.
In more recent years, publishers have realized that players will pay big money for ‘microtransactions’, occurring mostly in-game, that do things like give the player new character skins, emojis, moves, content, etc. For example, the game Fortnite is entirely free to play, but sells items that are purely cosmetic (have zero impact on gameplay). Yet, since launch, it is estimated to have made $26 billion in revenue to date primarily from such in-game microtransactions. Not only has the gaming market continued to grow overall, but gamers are more used to and more readily transacting in various ways (beyond the traditional one-time upfront cost).
Perhaps a bit tongue-in-cheek, but at Galia Crafters, we tend to view skins as an interesting concept; however, if it doesn’t impact gameplay, we tend to stay away (but nothing wrong with buying skins!). We’ll end this section with this meme, which sums up our personal view…
Monetizing Gaming Effort — Black and Gray Markets
Over the years, some gamers in some games have craftily found ways to ‘monetize’ their effort. For example, years ago with the first online games, players could make unofficial side deals to sell items or entire accounts for money. Over time, these unofficial transactions grew into their own entire ecosystem. What’s interesting is that many of these unofficial ecosystems centered around an ‘economic’ transaction, such as players paying money to other players, in return for the results of labor (game progress, game items, game currency, etc.). We’ll come back to this later, as it forms the basis of a true Web3 game economy.
At the end of the day however, two issues persisted:
- Almost all of these transactions were not officially allowed by the game developers, and so there was no systematic support or interfaces built. Because of the closed-loop system of video games, even if players wanted to, they couldn’t build their own tooling anyway, outside of game mods that still only had impact within the game and match itself.
- Because all of the player profiles, items and such were tied specifically to the game by the developers, there was no real freedom or ownership of the items. Your account, and all of your effort, was entirely in the control of the game developers.
“You are not allowed to buy or sell WoW items, products, or services for real money. Accounts involved in real money transactions may be penalized under our End User License Agreement.” — Blizzard (Publisher of WoW)
Don’t get us wrong, there is nothing necessarily wrong with this. This has been the de facto way that games have operated for decades. However, it’s obviously left certain players wanting, not only for official policies to support a more open ecosystem, but also the underlying technology to support that openness.
Enter… the blockchain.
Blockchain and NFT’s — The Basis of Gaming On-Chain
At Galia Crafters, our first experience with blockchain was around cryptocurrency, many years ago. As with many others, it was fascinating even in the early days of how borderless, immediate and cheap (relatively speaking) using cryptocurrency was, at least within the network of others who used crypto.
We then got into NFT’s, which helped us to understand how ‘digital assets’ worked on chain, as well as some hard lessons in the volatile NFT market. One thing we’ll note is that in the last hype cycle where NFT’s were the star, something that always bothered us was the lack of utility. Images (often referred to as PFP’s, or Profile Picture NFT’s) with zero value or utility were going for crazy amounts, which was obviously driven entirely by mania and FOMO. Not happy with buying and selling PFP’s simply to try and capitalize on mania, we started search for projects bringing utility to the space.
The basis of our learnings here would help us understand the goals of Star Atlas.
Star Atlas — Blockchain Concepts
This is a topic with many different points of view and passionate debate from all angles. From here on out, we will speak only about the Star Atlas ecosystem, as the various blockchain games can be quite different in their approach.
Before we get too much into detail about Star Atlas’ approach, it’s good to recap what the game aims to do. You can read our prior guide on the ‘game modes’ and game assets here, with the main changes in recent months centering on further updates in the Unreal Engine (UE) version, as well as the top-down/RTS mode to be evolved into “Fleet Command”.
Regardless of the game mode, every single unit of game resources, game items, game crew, game ships, etc. are all on chain. Every. Single. One.
What this means in essence is that when you mine a resource, which is you putting in effort and labor, as soon as a single unit of that resource is mined, you have a corresponding set of NFT’s for that resource associated with you (more precisely, your wallet). That unit of resource exists on chain.
Being an NFT, you own them, and can now put them in your wallet, and do with them as you please, such as sell it or trade it. These actions are officially supported by Star Atlas, and actually encouraged (mining, refining, and production are key to the economy). Contrast this to any ‘traditional’ game where your effort in-game and what you might produce has no real tangibility.
Additionally, because these game assets are NFT’s and thus can be traded, it also means an easy path to ‘monetizing’ these assets. If I mine a unit of Iron Ore, for example, I can immediately sell that for currency (such as ATLAS), and if I want, convert that immediately to USDC. Within seconds, my effort and labor has now given me the crypto version of cold, hard cash.
The Rise of Play-to-Earn
Given what we’ve described above in terms of inputting labor and outputting a monetizable asset, this means that Star Atlas is definitely included in the Play-to-Earn (P2E) category. Now, many would also say it’s broader than just P2E, which is fine, but P2E is definitely a key part of gameplay.
With P2E, all of a sudden, games like Star Atlas become more intriguing to many audiences who otherwise may not participate. For example:
- The Star Atlas community has many members from lower-income countries where earnings from gameplay can mean a material difference in their assets. This aspect will be greatly strengthened as the Unreal Engine/Epic Game Store game modes are updated, opening the possibility of starting from zero (with zero dollars spent) and earning tangible rewards simply through gameplay.
- The Star Atlas community has many members who are willing to inject large sums of money in order to secure cashflow from the game. Almost no one would pay tends of thousands or hundreds of thousands of dollars for a ‘traditional’ game… but quite a few would when you can turn that into an income stream, as your assets in essence produces cashflow.
- With the Star Atlas economic loop acting as a multi-step process from mining to refining to production to (in the future) fighting, this has also opened the door to arbitrage and middlemen to make a profit buying, reselling and/or producing needed goods.
In a nutshell, the ability to output a monetary reward from labor input has provided gamers (and in some cases acting as investors) a whole new avenue and reason for ‘gaming’.
Entertainment and Extraction — A Fine Balance
With money and monetization involved, then of course human nature steps in. While many participate in Star Atlas for the appeal of the gameplay (especially in future updates as the Unreal Engine game continues to evolve), many are also interested in the monetization aspect. It’s important to note that looking for entertainment and looking for monetary rewards are not mutually exclusive; we can have both.
At Galia Crafters, for example, we’ve spent tens of thousands of hours over the years playing games like EVE Online, which have highly complex in-game economies. We’ve spent hundreds of hours poring over spreadsheets to track profit & loss (P&L), to find lucrative and efficient production chains, etc. To us, this was all part of the gameplay, and part of the entertainment.
With Star Atlas, those kinds of activities are now rewarded with actual monetary rewards, and actions like finding more rewarding supply chains means our effort in doing that work means more profitability.
Taking the above and adding in the fact that Star Atlas has a player-driven economy means that there is a constant balance between supply and demand. If for some reason the price of a certain material or component goes up, players will be more incentivized to produce it, leading to more supply, and thus the price returning to ‘normal’ levels.
In the full economic loop that Star Atlas is building towards, every one of these types of actions has an impact on the entire player base. Even for players who have no interest in getting into production, and just want to do some racing or first-person shooter matches, they’ll be a part of the economy.
If they use the free crew or ships to win matches, for example, they can be rewarded with ATLAS or other goods. These can simply be sold, or could be leveraged up into other game assets. Regardless, everything they touch, from the ammo they use in their guns to the fuel they use in their ships to the ATLAS rewards, are produced and cost-balanced by the rest of the economy.
A Final Word — To Each Their Own
We hope that this article has been helpful, especially to those who have been wondering what gaming on-chain has been all about. For us here at Galia Crafters, it’s been an incredible experience to have been part of the Star Atlas ecosystem the last few years, and we’re still in the early stages of the game.
At the end of the day, no two individuals are the same. We all have different motivations, needs, resources, time constraints and the realities of life. Our one piece of advice is to give new things a shot, and find things to do that bring you joy and entertainment. Too often now we are ‘trained’ to have FOMO, and to have to maximize our output. The reality is that most individuals can be very happy just doing simple, fun things (whatever that definition is to you).
So, we wish you a happy journey, and if that journey includes Star Atlas, then we’ll see you in the Galia universe!
