NFTY #57: The value of blockchain games is prototyping incentives

Talk about blockchain games have declined at ETHGlobal hackathons

NFTY tracks the ever-evolving narrative of how mainstream will enter crypto through user-facing applications.

After ETHBerlin last weekend, many individuals on Twitter have pointed out that blockchain games & NFTs were barely incorporated inside of hackathon projects, let alone talked about. Here are my thoughts of why this has been the case, and what the future of blockchain games are:

No consensus on the value of blockchain games

If you asked ten different individuals who are deep into blockchain games what the value of blockchain games are, you'll most likely receive a different answer from each one. Some may say "true item ownership" while others may say "player-owned economies". DeFi and DAOs are much easier to have consensus on for Ethereum developers.

Ethereum has not proven itself as the blockchain for games.

Many existing blockchain games have moved to sidechains or state channels in order to reduce fees and create games that seek to compete with centralized games. The fragmentation of ecosystems has created further debate among which blockchains/scaling solutions are the best for games.

Composability makes it easier to hack together projects from primitives; blockchain games take much longer to build

Primitives like Compound are easy to build on because of the existing developer network effects. Many developers at hackathon prefer to use multiple building blocks to speed up development time as opposed to creating an application from scratch. This also enables them to hit multiple bounties. Primitives like Uniswap and Compound are also starting to prove themselves as essential pieces for multiple projects (ie. Dharma V2 pivot).

What is the future of blockchain games?

The decline of talk about blockchain games has led many to question the value of blockchain games. Here’s how I see it.

I like to compare blockchain games to open-world building games like Roblox, Minecraft or RecRoom. Many indie developers actually use Roblox to prototype their games because it's faster, more efficient, and easier to get testers. While I don't think blockchain games poise any real threat to centralized games due to current scalability problems, blockchain games are a great way to prototype blockchain economies and other decentralized applications.

Here are two ways in which this can work:

Incentivized Testnets

Simualtions such as incentivized testnets are a great example. Game of Stakes on Cosmos or Tour de SOL on Solana are a lot of setup work for little reward. Coda Protocol takes this one step further and creates a point system for completing certain tasks related to their incentivized testnet. Protocols could incentivize further participation by award NFTs to validators for completing certain tasks.

Consumer Facing DeFi

Jed Halfon wrote a great post about how future blockchain games can trick you into investing a significant amount of your net worth into the S&P. For example, If Dharma wanted to grow the amount of money locked in it's new V2 contracts, they could easily create a game that requires at least 100 DAI/USDC locked up in order to play. PoolTogether's new V2 contract is coming close to this with things like philanthropic pools and automatic buy-ins.

We need to remain focused on creating proper incentives

The importance needs to remain on exploring proper incentive systems. Using games as a way to rapidly prototype and bootstrap value is still a very underexplored territory for DeFi applications and blockchain economies who wish to draw newcomers to their ecosystems.

Disclaimer: I work on helping create a world of infinite possibility at Dapper Labs. All opinions and words written in NFTY are my own.