Classical gaming VS GameFi: is it time for the old head to blow out?

As blockchain technology grows in popularity, so does its number of valid applications in and beyond finance. One such example is GameFi, an innovative in-game economical system that allows players to have a greater influence on a game's economy and development.

This article’s goal is to compare classical gaming with GameFi to determine whether transitioning to a DAO-oriented gaming model makes sense.

Overviewing the classical gaming model

While some video games may differ in economic systems, the majority of them depend on the “Past” model. In other words, a player may purchase items from the market with either in-game or fiat currencies. Those items then remain in the players' inventory as either permanent items or temporary consumables. 

Here, the investment of money can only be categorized as an investment in entertainment, as the gaming experience might improve but that money will only come back if a player decides to sell his/her account.

Drawbacks of the F2P model

Some games, on the other hand, permit players to trade items which opens up the possibility of an item-oriented marketplace run entirely by the players. In this scenario, item prices are set depending on the rarity of the item and the business smarts of the first player to obtain said item. Items that can be purchased from the official market, and which are sold at a fixed price, are commonly used as a type of less advanced cryptocurrency.

For example, keys that open crates in the popular games TF2 and CS:GO can be seen as used as acceptable forms of payment for in-game cosmetics. These games are known for being the most successful examples of free-to-play games with bustling marketplaces, and yet what remains unmentioned is that the items traded among these players are strictly cosmetic, meaning they have no influence whatsoever on who wins or loses, thus keeping the game in a fair, free-to-play state. This free-to-play system allows new players to join in no matter how old the game has become. 

The downside that comes with free-to-play, which can be seen even today, is that the passive and autonomous income the company earns from the game stops needing a large team to maintain it. This leads to the downsizing of the development team, thus either slowing down updates or bringing them to a complete halt. While this might not cause the game to become boring, it does affect recurring players and dedicated creators, since those who want to continue playing will crave new content. Creators with new item ideas will never have their applications accepted, since there are no developers or personnel to implement these ideas. 

GameFi industry & its innovative approach  

A new decentralized era of gaming might be on the horizon, as dedicated developers and gamers alike try to disconnect autonomous games from their publishers to prioritize fun and innovation over sticking with “what works”.

The technologies that could bring forth this era are GameFi and DAO. GameFi allows players to trade in a safe cryptocurrency economy, while DAO orients token holders into a board of directors who will decide future changes to the game (see “Present” on the scheme below).  

Source: Nansen 

DAOs – a real game changer 

A Decentralized Autonomous Organization replaces a game publisher in decision-making with a board of players who can be trusted due to the effort and investment it takes to gain a vote that matters.

Source: Metaverse Education 

In the scenario of a properly implemented DAO system, players can decide on future implementations and changes to old functions by voting on them. This can be a double-edged sword, as players could make a decision that would ruin the game for a specific player base, or give an unfair advantage to the voting party. To avoid said scenarios, smart contracts are put into place to limit the severity of changes.  

Another issue that might arise when implementing DAO is security, since the source code of the game would have to be made open-source, permitting anyone who can get intimate enough with the code to breach and abuse faults. On the other hand, any bugs found by a non-malicious player could be easily patched out without having to wait for developers to release a hot-fix one week after the bug was first discovered by the more dedicated player base.

If a DAO game were ever to arise with a talented and massive player base, the world of gaming would revolve around it. A community of developers well-supported by a fluctuating and constantly refreshing board of innovative players would make decisions that don't prioritize profit and don't ruin the gaming experience of the more experienced players for the sake of those who spend more.

Malicious business strategies used by mainstream game developers

A common trend in video games is the manipulation of the balance of the game to sell more cosmetics and thus make a greater profit. For example, the popular MOBA game League of Legends releases monthly updates that constantly mess with the balance of the most popular characters, only to release new expensive cosmetic skins for those very same characters while the unpopular characters remain untouched for years.

Source: NPR

Another way to manipulate the balance for profit in a less direct way is often used by EA. EA will lock an overpowered item behind a game of chance known as loot crates. In this scenario players with money and luck can pay a hefty sum of cash for a chance to obtain this item, those who succeed then proceed to ruin the game experience for those who would rather not gamble. This business model is actually banned in some European countries due to the exposure of children to gambling at a young age.

Is it time for veteran developers to make a way for GameFi?

Game developers have proven again and again their disregard for their players' well-being, thus, taking the risk and putting in the effort to implement DAO into the mainstream of gaming seems to be the only way to improve the longevity of a gaming community and permit the implementation of an economic system worth investing in.

The only people that should be trusted with the future of a game are those involved deeply. At this point, GameFi developers bring inevitable improvement to the world of gaming by making multiplayer games generally safer, more dynamic, and fun. 

Some games with stagnant developers but bustling player bases have already been fully rebuilt by dedicated players, only to have their servers shut down in court cases. If these companies were to come to an agreement with their player bases concerning organizational issues, then both parties involved have a lot to gain in both playability and monetization cases. To summarize, if the classic gaming industry doesn't fight the pressing problems, GameFi will win over the market.