Source: Oasys

In recent months, a number of Japanese game companies have been making moves toward blockchain technology. Things move fast, so here’s a recap of what each of them has been up to:

  • In September, Sega announced a partnership with double jump.tokyo to produce a new blockchain game based on Sega's Sangokushi Taisen series. The upcoming game will run on the Oasys network, of which double jump.tokyo is a validator. The news comes after Sega announced an NFT project in April last year, then stalled due to backlash from fans.
  • In November, Square Enix unveiled Symbiogenesis, "a web-based, narrative-driven platform" leveraging blockchain technology. In September, it became the 21st validator on the Oasys network. In July, the company shared plans to bundle the sale of its upcoming Final Fantasy VII collectibles with digital copies and certificates sold as Polkadot-based NFTs. In May, the company sold off several studios to focus on AI, cloud gaming, and blockchain. In March, it brought the Dungeon Siege RPG franchise to The Sandbox.
  • In October, GREE (through its subsidiary BLRD) announced a partnership with Ava Labs to launch blockchain games on the Avalanche network. GREE is a validator of both Avalanche (of which it runs "over a dozen" nodes) and Oasys as of July 2022.
  • In October, Konami announced it would be "recruiting a wide range of talent for 'system construction' and 'service development' to provide new experiences such as WEB3 and Metaverse." The focus will be on developing "a unique distribution platform using the blockchain." In January, the company celebrated the 35th anniversary of its Castlevania franchise with a collection of 14 NFTs.
  • In February, Bandai Namco shared plans to develop a network of virtual hubs around IP such as Dragon Ball and Gundam as a new framework for connecting with fans.” In March, Bandai Namco Research — responsible for “entertainment innovation” within the group — was revealed as one of Oasys’ validators.
  • Finally, Capcom released Street Fighter NFTs on WAX last year.

You get the gist: at this point, most of Japan’s top publishers and developers are looking to at least try out blockchain, save for notable exceptions like Nintendo and Sony. While we’ve seen many developers in the West tinker with the technology, nowhere (to our knowledge!) have major players in a given country proven so keen to experiment. This is also in line with Japan’s long-standing history of being quicker and more open-minded towards embracing new technologies to create new types of entertainment experiences, versus their western counterparts.

At first sight, all these events may seem disparate. A bunch of NFTs here, some quickly aborted blockchain games there, and across the board we see player backlash pushing even the most daring companies to reconsider their plans. There doesn't seem to be a cohesive vision driving these moves. And indeed, why should it be otherwise? Each company has its own IP, its own strategy to leverage and monetize it, its own criteria for assessing the blockchain's relevance to its business, and its own ability to stay the course in face of criticism.

Look more closely, though, and one name starts to come up repeatedly: Oasys. It's worth exploring what the project is about and what it points to when it comes to the gaming industry's blockchain efforts.

What Oasys Is About

Oasys is an "EVM-compatible, multi-layered blockchain built by gamers for gamers."

Though the project was only made public in February, it has been making strides ever since. It raised $20M in seed funding in August from investors including Republic Capital, Jump Crypto, Crypto.com, Fenbushi Capital, Huobi, Infinity Ventures, Kucoin, and others. On October 25th, the network entered the first stage of its mainnet launch; the second and third phases are expected to begin on November 8th and November 22nd, respectively. The team is currently preparing for a public sale of its native OAS token.

On paper, Oasys' core value proposition is that it's both gaming-focused and environmentally friendly. Let's unpack these two attributes and see if we can scratch through the marketing veneer.

A Gaming-focused Blockchain

Oasys is primarily a gaming-focused blockchain. This is manifested in the project's founding team which is comprised of leaders from prominent gaming and blockchain companies, including Yield Guild Games, BANDAI NAMCO Research, Thirdverse, double jump.tokyo, and Sega. As mentioned earlier, several of these companies are actively involved with the network, either as validators (Bandai Namco, double jump.tokyo) or as users (Sega through double jump.tokyo). In addition, Oasys' broader validator network includes other leading gaming partners like GREE, Netmarble, and Ubisoft.

Oasys Validated
Source: Oasys

This focus translates into concrete features, too. Oasys' premise on that front is that a gaming-first blockchain has vastly different requirements than a DeFi-focused one. Things like low gas fees (to accommodate repeat transactions), high transaction speed (for playability), and network stability (even during peak usage) are central to this thesis and enabling mass adoption. How Oasys plans to meet these conditions is through a multi-layered architecture composed of a Hub Layer (its L1) and a Verse Layer (its L2) — a structure that natively mimics the industry standard of combining Ethereum with an L2 like Polygon.

Verse Layer and Hub Layer
Source: Oasys

Another differentiator lies in the network's flexible token design, which will let developers choose between exclusive or interoperable tokens depending on their use cases. The goal here is to offer builders greater optionality in order to avoid the kind of large-scale token flight and dump that can durably disrupt a game's economy.

It's clearly early days, so some time needs to pass before we can assess the network's merits; a whitepaper only tells you so much. Oasys certainly isn't the first blockchain with gaming in mind. Immutable has long positioned itself as a go-to partner for game developers thanks to "near-instant confirmation and near-zero gas fees for NFT trading and minting." Sky Mavis launched Ronin to solve Ethereum's shortcomings. Meanwhile, Polygon and Avalanche have teased the ability for developers to launch game-specific blockchains through their net-based architectures (Supernets and Subnets, respectively). All in all, Oasys will have strong competition.

An Environmentally Friendly Blockchain

Though Oasys' marketing materials describe it as eco-friendly, the team doesn't expound much on this aspect of its value proposition. Judging from the company's whitepaper, the promise rests entirely on the fact that Oasys uses Proof-of-Stake (PoS) as its consensus mechanism, as opposed to the more compute-intensive and environmentally costly Proof-of-Work (PoW). (If you'd like to read up on this topic, feel free to review this in-depth piece we published in partnership with BITKRAFT earlier this year.)

For gaming companies, this point is important to address. Many publishers and developers who dared to dabble in blockchain technology have received heavy backlash (from both fans and industry professionals) and had to backtrack on their original plans due to players' concerns over the blockchain's environmental impact. This happens to include several Japanese leaders like Sega and Square Enix that are the focus of this piece.

As we mentioned in our deep dive in June, adoption of PoS ranked the highest among potential solutions to this issue. This was practically solved with the Merge, Ethereum's long-anticipated, network-wide transition to PoS that successfully took place in September, reducing the network’s energy consumption by roughly 99.95%. Meanwhile, competing L1 chains, including Avalanche and Tezos, have been running on PoS from the start — a fact that, until the Merge, differentiated them from Ethereum.

Ethereum Foundation
Source: Ethereum Foundation

As a result, it's uncertain how much Oasys' eco-friendly stance truly holds up in practice. With most chains now using PoS, the difference in environmental impact from one network to the next becomes all but marginal. And while it's true that PoS at large has only a limited carbon footprint, the fact that players haven't stopped opposing NFTs since the Merge is proof enough that the problem was never really about hard numbers. In other words, Oasys' eco-friendly positioning is unlikely to convince blockchain-skeptic gamers any more than the Merge did.

A Regional Blockchain Ecosystem Emerges

Perhaps more than its specs, what's interesting about Oasys is how it points to the emergence of a regional blockchain ecosystem. France's Ubisoft excepted, most of the network's validators are Japanese or, more largely, Eastern companies — Netmarble, Com2Us, and Neowiz are from South Korea. Oasys itself appears to be Singapore-based, most probably for regulatory reasons, considering Japan’s historically tough stance on crypto-related activities.

From a cultural standpoint, it’s notable that so many of the network's early contributors are from Japan, a country already familiar with sector-wide or even cross-sector coordination. Japan's industry, for example, is dominated by the keiretsu, a conglomerate of companies with interlocking business relationships and shareholdings. Similarly, the country's anime industry is notoriously governed by so-called production committees — private, project-focused ventures whereby specialized stakeholders join forces to derive a piece of IP into various forms of media.

From that view, Oasys seems like another, blockchain-focused coordinated effort to de-risk technology development and foster industry-wide growth.

One crucial difference here is that these publishers are actually... direct competitors! Differences in game genres and platforms aside, they're ultimately all vying for the time, attention, and wallets of the same players in an all-encompassing attention economy. Unlike keiretsu members, they don't hold shares in each other's companies, which means there is no shared upside. And unlike the stakeholders of an anime production committee, they're not incentivized to see the same IP succeed either.

Despite all this, some of the world's largest gaming companies have chosen to participate in the same blockchain experiment to advance their objectives. Let's see why.

Solving the Cold Start Problem

A common issue with blockchains — and, really, any network — is something called the cold start problem: How do you convince developers to start building on your platform? This is an even tougher sell for established developers who may be content with their existing infrastructure. For those, switching blockchains represents considerable friction and is not something they'll take on lightly.

There are usually several ways a blockchain can break through this kind of resistance:

  • First, technical superiority. For instance, a blockchain might boast its faster transaction speed, higher throughput, or greater security compared to competitor networks. Depending on which part of the blockchain trilemma they favor, developers may prove more or less receptive.
  • Second, unique features. Though most blockchain games today use the same mechanics, some are pushing the envelope in terms of gameplay. For example, Dark Forest, "a fully on-chain massively-multiplayer 4X strategy game," uses a privacy-focused tool called ZK-SNARKs to let players certify the validity of their moves without revealing their positions. Failing to offer these capabilities would make a blockchain ill-suited for the developers who have built their games around it.
  • Third, incentives. In the same way that social platforms launch their own dedicated funds to lure creators, blockchains can use financial incentives to attract and support developers. Solana Ventures' South-Korea-focused $100M fund, Avalanche's "Multiverse" program (4M AVAX tokens), and the $100M Astar Boost program all fall into that category.

Oasys is bringing a mix of all three. The lower fees, higher speed, and greater stability promise a superior experience for players. The network's unique NFT offering could be a strong differentiator for developers. Finally, 12% of its total token supply is set to go to the foundation, 14% to early backers, and 21% to staking rewards — strong incentives for early contributors.

Oasys Token
Source: Oasys

All those arguments have convinced enterprise partners to launch something new together. As opposed to most blockchain gaming partnerships where a gaming company evaluates multiple solutions before opting for the most appropriate one, here the blockchain is being developed from scratch to address these developers' requirements.

This feels all the more significant given that several of these companies were already involved with a variety of chains: Square Enix with Polkadot, GREE with Avalanche, Konami with Ethereum, and Capcom with WAX. They could also have gone with already battle-tested, gaming-ready blockchains such as Immutable or Polygon. Whether that’s due to these chains’ technical limitations or a desire to better steer the network’s progress (and capture value) as early contributors, it seems that no single existing solution could do the trick in their eyes.

No matter the reasons, these companies’ involvement all but guarantees product-market fit by tightening the product development process with direct feedback and faster iteration. In turn, validating the network's core capabilities with such demanding customers should make it easier to attract up-and-coming developers further down the line. If Oasys is good enough to serve Sega, Konami, and Square Enix, it's likely good enough for smaller-scale and more adventurous players, too.

It's hard to overstate the impact this could have. Collectively, Oasys' early believers are worth dozens of billions, hold some of the most beloved gaming IPs in the world, and operate across all gaming platforms. The fact that they're willing to throw their financial, cultural, and reputational might behind the network, and do so at the risk of alienating gamers, is a sign of their commitment.

It’s too early to tell whether Oasys will be successful. Despite a steady stream of announcements, the project’s communication has focused more on its partners than on their IP or actual projects. So far, SEGA and double jump.tokyo’s Sangokushi Taisen game is the only one that we know with certainty is being developed on Oasys. Hopefully, we’ll get to see more such examples once the network’s mainnet has fully launched and stabilized.

It will be interesting to see how Oasys fares in the next few months. Will top-down industry coordination be enough to bootstrap the network? How will Oasys’ intricate NFT system be leveraged by developers? Will partners like GREE and Square Enix continue to work with other chains or switch all their efforts to Oasys? Finally, if Oasys proves a success, will it inspire similar initiatives in other regions of the world?

Source: Oasys

Clearly, Oasys has big goals: its whitepaper anticipates over 1,000 projects on the network by 2024. Our main concern, though, is that we haven’t seen the project discussed even once in the wild. As we’ve all learned by now, blockchain games are… just games, which means that at the end of the day the players’ enjoyment is what matters. Until we see some actual excitement — meaning, not just PR — we’ll stay on the cautious side.

A big thanks to Maxime Eyraud for writing this essay! If Naavik can be of help as you build or fund games, please reach out.

Don’t miss our next issue!

Sign up to receive the #1 games industry newsletter, straight in your inbox.