Many winters ago, in 2017, the first, rather infamous, game that used a blockchain infrastructure was launched. CryptoKitties allowed users to mint, breed, trade, and collect their Kitties. The game had explosive growth in 2017, with transactions accounting for more than 10% of the traffic on the Ethereum blockchain at its peak (honestly, not many of us used Ethereum in those days, but still). The hype created by the game was huge.
On 2 December 2017, the Kitty ID 1 was sold for more than 100,000 $ (247 Eth at the time, worth >750,000$ today). Such an exorbitant price tag gained plentiful media attention, attracting even more players into the ecosystem. On Day 10 and Day 18, after the game’s launch, the highest number of new addresses were registered with the game. However, no party lasts forever. This one didn’t last more than a month. CryptoKitties, like most of the games before the 2020 bull market, lacked in playability. Within a month after the launch, the gap between the rich and the poor increased vastly, disincentivizing new players to start playing. The game mechanics were broken, so the chance of getting richer with each breeding transaction fell to less than 50%. Considering that (i) the breeding (and then selling) transactions accounted for around 65% of the transactions in the game and (ii) the average profit for a player to breed and sell a kitty became negative, the game started losing traction.
The number of kitties available on sale increased daily, while fewer kitties were sold every day. Even though the first major experience of a crypto game was not a pleasant one, it taught a lot of things to future game developers. Today, multiple games on the blockchain allow people in the world’s poorest regions to make a living. Games like Axie Infinity, Sandbox, and Decentraland are currently sitting at a market cap of more than 1 billion $ each. The new movement in P2E (Play-to-Earn) has gained popularity in countries like the Philippines, with around 1 million daily active users of Axie Infinity. In Axie Infinity, players participate in battles using colorful blob-like Axies. They are mainly rewarded “Smooth Love Potion” (SLPs) that can be exchanged for cryptocurrency or cash — or invested back into the game’s virtual world Lunacia.
Crypto gaming guilds began as a solution to solving the entry barrier issue with the play-to-earn game Axie Infinity. To play the game, you must own Axie NFTs in your wallet. In the beginning, there was no flaw in the design of the game, and many new users started playing Axie Infinity. However, with further demand for the Axies rising, the prices for the Axie NFTs also increased significantly. To start playing, you need to have 3 Axies.
So, roughly, at the start of the game, an excellent Axie team with high chances of winning may cost more than $10,000. As previously discussed, the P2E movement thrives in the corners of the world where people’s financial reach is limited. Affording a 10k USD NFT just to start playing a game for people in countries like the Philippines, Malaysia, and India is not possible.
For this reason, specific organizations were created that gave access to players to these NFTs via lending in exchange for a percentage of the user-generated earnings. Gaming guilds often split the profits in a 30/70 ratio, i.e., 30% of the earnings/airdrops go to the guild.
The guilds, in return, provide users who want to join (AKA “scholars”) with the resources required to play the game. A symbiotic relationship. Guilds generally concentrate on a particular game, and separate guilds are created for individual games. The guilds also support the gamers in case of a change in conditions. Supposedly, if the game becomes unpopular, they may shift to new games or offer mutually profitable solutions to the users.
As it should be clear by now, gaming guilds have only two primary objectives: maximizing profits by recruiting talented scholars and supporting the scholars’ growth. Guilds often spend lots of time filtering out the best candidates to recruit the best of the players.
The process generally occurs like this: “A community manager will give you study material and train you about the basics of the game. After a ton of back and forth communication, a test is conducted. After successfully passing the test, the guild onboards the gamer to its platform. The entire process is inefficient, with a conversion rate of 0.1%, which means that out of every 1000 applications, only one gamer becomes a scholar. This method isn’t sustainable because web3 games and guilds miss out on potential gamers who could generate revenue and increase profits”.
Several teams are currently working on solving this problem for the gaming guilds. One of such prominent examples is Respct.co, which is working on blockchain-based “CVs” for gamers. The idea they have proposed is that when a user plays a game for a certain guild, all the data and progress will be tracked, and most of it will be available on-chain.
Using ERC721 and ERC1155 interfaces, the gamers will mint on-chain NFTs representing their experience in a game. This means that players will be able to build their gaming “resume” by simply playing and constantly upgrading their NFTs (that represent a player’s experience in the game). Whenever user experience reaches a certain threshold (experience is measured using engagement points), the corresponding guild can allow the user to upgrade their NFT. When a game becomes unpopular or if the user wants to apply for other guilds, he can always show proof of his hard work and ability with the non-fungible tokens.
On the other side, Guilds do not have to do extensive research on the player’s experience and can save time by simply taking a look at the user-owned tokens. A simple signature off-chain will be probably needed to prove that the gamer actually owns the wallet (and consequently the NFTs representing practise and XP) that he claims to own.
Moreover, the recent paper published by Vitalik Buterin’s team on SBTs talks about social recovery for wallet keys. Down the lane, if social recovery of keys is implemented, players will feel safer to hold their on-chain resume linked to a single wallet. In case of loss of the private key, the players will be able to recover it with social SBTs (originated, most probably, from gaming communities in which the user must have been active). But we will have to wait a “short” while for that to be implemented xD.
While bull and bear markets repeat in cycles, blockchain gaming is here to stay. Have a great day! 🚀
Also published here.