In-Depth Research on Full-Chain Games: The Core of Encryption Natives, Bubble or Revolution?

1. Introduction: What is a Full-Chain Game?

Recently, the popularity of the full-chain game Sky Strife's Pass card has skyrocketed to 21,000 ETH (testnet), attracting the attention of many non-full-chain game players to the allure of this field. Since the release of "Pong" in 1972, the gaming industry has developed rapidly, evolving from classic 8-bit games like "Super Mario" and "The Legend of Zelda" to today's complex online games such as "Fortnite" and "League of Legends". Games have long ceased to be just a simple form of entertainment. The social, competitive, and immersive experiences these games offer have surpassed our past imaginations.

With the rise of blockchain technology and the development of encryption currencies, the gaming industry is reshaping our experiences in unprecedented ways. From Axie Infinity, which closely integrates gaming with the encryption economy, to Stepn, which is centered around social interaction and innovation, blockchain games are increasingly seen as a hope for promoting the large-scale application of encryption technology. People are beginning to explore new ways to combine gaming and blockchain; beyond just asset on-chain, what other elements can also be put on-chain? This has led to the birth of full-chain gaming.

So what exactly is the difference between blockchain games and traditional games?

In traditional games, all game logic, data storage, digital assets, and game states are stored in centralized gaming companies. For example, when we play Honor of Kings, Genshin Impact, or Dungeon & Fighter, all game content, including in-game assets, is owned by centralized companies.

The emerging asset on-chain games (often referred to as Web2.5 games), such as Axie and Stepn, put assets on-chain. This allows players to have ownership of assets while increasing the liquidity of those assets. However, when faced with game shutdowns, game assets still face the dilemma of losing their circulation value. The relationship between asset on-chain games and traditional games is more like a complement, similar to the relationship between takeout and dining establishments. Web2.5 games also face competition from similar games as well as traditional games.

Recently, the highly watched full-chain games have all interactions and states of the game on-chain, including game logic, data storage, digital assets, and game states, all processed by the blockchain, thus achieving true decentralized gaming.

The characteristics of blockchain games can be summarized in the following four points:

1. The authenticity of data sources is ensured by the blockchain. The blockchain is no longer just an auxiliary storage for data, but rather the true source of game data; it is not limited to merely recording asset ownership but serves as the storage hub for all critical data. This approach fully utilizes the characteristics of programmable blockchains, achieving transparent data storage and permissionless interoperability.

2. The logic and rules of the game are implemented through smart contracts. For example, various operations in the game can be executed on the chain, ensuring the traceability and security of the game logic.

3. Game development follows the principles of an open ecosystem. Game contracts and accessible game clients adopt an open-source model, providing a vast creative space for third-party developers. They can creatively output content and share it with the entire community through plugins, third-party clients, and interoperable smart contracts, even redeploying and customizing their own gaming experience.

4. The game is independent of the client. This is closely related to the first three points, as the key to truly encrypted native games lies in the fact that even if the core developer's client disappears, the game can still continue. This depends on the permissionless storage of game data, permissionless execution of logic, and the community's ability to interact independently with the core smart contracts without relying on the interfaces provided by the core team. This truly achieves decentralization.

2. Why do humans need a fully integrated gaming experience?

Before understanding why we need full-chain games, let's first take a brief look at the current state and operating model of the traditional gaming industry.

The essence of on-chain games is still games, and understanding the operation model of traditional games is very important and necessary for us to understand and analyze the future of on-chain games.

1. Current Situation of the Traditional Gaming Industry

With the development of the gaming industry, many excellent Web2 games have emerged during our growth process. Whether it is FPS games like Counter-Strike and Crossfire, RPG games like Dungeon & Fighter and Dragon Nest, MOBA games like League of Legends and Honor of Kings, or card games like Onmyoji and Hearthstone, games have accompanied the growth of our generation and occupy a very important part of our entertainment life.

According to data from Fortune Business Insights, the global gaming market size was $249.55 billion in 2022, and it is expected to exceed $280 billion in 2023, reaching over $600 billion by 2030. In comparison, the global market size of the film and entertainment industry was $94.4 billion in 2022. It can be seen that, as part of the entertainment and leisure industry, gaming occupies a very important position in economic development. The commercialization Depth and the breadth of its types have many areas worth exploring, making it the crown jewel of the leisure industry.

1) Why do humans love to play games

According to data from Statista, the number of gamers worldwide has exceeded 2.5 billion, nearing 3 billion. So how is it that games can attract more than one-third of the global population to participate? The core reason can be summarized as meeting human needs and weaknesses from multiple aspects.

1. Escape reality and restart life: The game provides a place to escape from the stresses and challenges of daily life. In the game, people can free themselves from the troubles of reality, immersing themselves in a virtual world and enjoying a second life.

2. Burden-free socializing: For multiplayer online games, the game provides a platform for social interaction and is relatively friendly for those with social anxiety, allowing players to engage in activities they want without worrying about the gaze of others in real life, thus enabling them to build relationships with others.

3. Rewards for timely feedback: Unlike the daily struggles of students and workers in real life for their studies and jobs, the charm of games lies in providing a rich reward system and timely reward mechanisms. After putting in effort, defeating monsters, and completing challenges, players quickly receive new skills, unlock new levels, or obtain new items. This incentive mechanism can stimulate people's motivation to keep moving forward.

4. Low-cost free exploration: Many games offer rich virtual worlds where players can explore unknown territories, interact with NPCs and other players, and advance the plot, satisfying the human innate desire for adventure and exploration. In the real world, however, due to constraints of money, energy, time, and geographical location, exploration compared to the game world incurs significantly higher costs.

5. Pursuing achievements and self-realization: By completing a series of tasks and goals, individuals can fulfill their desire for success and recognition, whether through leaderboards or achievement points. In games, people can more easily achieve self-challenges and character growth.

By targeting specific, even multiple, human weaknesses, games can cleverly satisfy the needs and preferences of different users, thus performing well in both the breadth of the audience covered and the provision of a deep immersive experience.

2) Current Status and Development of Traditional Games

Next, let's briefly understand the current situation of the traditional gaming industry.

In traditional games, they can be roughly divided into game types such as Shooter, Adventure, Role Playing, Battle Royale, Strategy, Sports, Puzzle, Action, and Simulation.

According to Newzoo's data, role-playing and adventure games perform excellently on PC, mobile, and console platforms, both ranking in the top five. Additionally, shooting and battle royale games are very popular on PC and console platforms. The mobile platform shows a slight difference, with puzzle and idle games also being quite favored by users.

2. The Predicament of the Traditional Gaming Industry

However, traditional games currently face two major dilemmas: first, game distribution is restricted by licensing numbers, and second, the costs before game distribution are too high, leading to a slow return on investment and potential for silent costs.

1) Game releases are restricted by licensing numbers

A game license refers to a specific permit issued by the government that is required to publish games in certain countries or regions. This system aims to regulate game content, ensuring that games comply with the laws, culture, and values of the country or region, to protect minors from inappropriate content and maintain social stability.

For example, in Germany, the content of games is subject to strict scrutiny, with a particular focus on content that may have adverse effects on young people; South Korea and Japan have a game rating system that is evaluated and issued by relevant national agencies.

In China, the impact of the license number is even greater. China implements a strict game license number system, which is issued by the National Radio and Television Administration. Games must obtain a license number before they can be released in the Chinese market.

After the release of 87 game licenses on July 22, 2021, there was a long period of stagnation, which gradually began to change only in April 2022. In April 2022, 45 game licenses were released, and another batch was announced in September and December. However, during the period of license approval stagnation from 2021 to April 2022, only a few large companies survived this period, while a large number of small and medium-sized companies faced the prospect of closure. According to data from the Tianyancha App, over 14,000 small and medium-sized game companies (with registered capital below 10 million) were successively deregistered from July to December 2021.

As the world's largest gaming market, China has over 500 million people playing video games. However, the licensing issue has become a pain for countless Chinese companies. Even with the resumption of license approvals, the contraction or constant adjustment of these licenses has become a sword of Damocles for every game project team. During the days of waiting for license approvals, one can hear countless sighs from projects without financial backing facing bankruptcy.

2) The pre-issuance costs are too high, and it is easy to incur a lot of sunk costs

In the development model of Web2 games, during the game development phase, there are upfront costs for human resources and infrastructure. There is idle time cost during the waiting period for the approval number. Only when the approval number is released, the game is published, and commercial revenue is generated can profit sharing take place.

It is not difficult to find that a large amount of costs are spent in the preliminary stage, once the development stage, version number stage, and acquisition of use.