Five Fundamentals of Blockchain Gaming

Reading Time: 9 minutes

Hi Everyone. Over the past year we've experienced a rising interest in blockchain games and have enjoyed sharing our findings with all of you. Today, in collaboration with Forte — the leading end-to-end platform for token-based game economies — we're excited to further level up these efforts!

Over the coming months, Forte and Naavik will be teaming up to provide a stream of deep dives geared toward helping game developers better build, launch, and scale successful and sustainable blockchain games. We'll cover topics like picking the right infrastructure, building sustainable economies, best practices for launching, and much more. Both of our organizations believe that player-owned economies are increasingly important to the future of games, and we hope our collaboration will play a small role in helping pull the future forward. Today's essay, Five Fundamental Questions to Get Started in Blockchain Gaming, is just the beginning.

To learn more about how Forte's platform can help your team better build and manage blockchain games — from compliance and liquidity to in-game wallets and marketplaces — check out Forte's website. Plus, feel free to contact the team with any inquiries.

Crypto Corner: Token Economy Design For Games

What do fungible tokens bring to video games? What do you need to keep in mind when designing a game economy with tokens? How will tokens & games evolve over time? Tokenomics expert Jeremy Parris and crypto-skeptic Lars Doucet join your host Nico Vereecke for a deep dive on economy design

You can find us on YouTube, Spotify, Apple Podcasts, Google Podcasts, YouTube, our website, or anywhere else you listen to podcasts. Also, remember to shoot us any questions here.

Check Out The Episode

#1: Five Fundamental Questions to Get Started in Blockchain Gaming

GM, game developer!

If you’ve been following games industry news closely over the past year, you’ll know that one topic has undoubtedly captured the attention of developers, executives, and players alike: blockchain gaming.

For many of us, this journey of exploration begins with a lot of basic questions, like “WTF is a blockchain?” or “Why are people spending millions of dollars on .JPEGs?” Given that you are reading an article from Forte and Naavik and presumably did not arrive here by accident, we will assume that you have answered many of these beginner questions for yourself already (but don’t worry if you haven’t; there will be additional resources later on that will allow you to dive deeper on these topics and more). Rather, this piece will aim to address many of the fundamental questions facing game developers seeking to go further down the web3 rabbit hole.

You may be a games industry lifer seeking to understand a new trend. Perhaps you’re an entrepreneur looking to innovate in a nascent field. Or maybe you’re a mid-career games industry professional, equal parts curious and confused, wondering whether you’ve already missed the boat riding a wave of new innovation and discovery. Regardless of what brings you to blockchain gaming, it’s important to take the time to learn and understand the space due to its many peculiarities and unique aspects.

Remember, those of us who have been active in web3 for many months or years now were also once in your shoes. The learning curve can seem nearly vertical when just starting out. Simply trust that you will grok it all in time and that this piece will be one of many stepping stones along your path.

To aid you in beginning your blockchain gaming journey, the experts at Naavik and Forte have come together and prepared a set of five fundamental questions that, when considered carefully and answered thoughtfully, will lay the foundation for you to build a great game upon.

The answers to these questions will help guide you on your web3 journey. After you’ve run through the questions yourself, we encourage you to take them back to your team, discuss them carefully as a group, and consider a variety of perspectives; after all, it’s dangerous to go alone, and (as you will soon learn) there are some risks associated with blockchain game development that can easily trip up an unprepared development team.

With all that said, let’s get you started on your journey to blockchain gaming success!

Read the Deep Dive

#2: Niantic: VPS, Campfire, and the Road to AR

Last week, Niantic — still most known for Pokemon Go — released its AR-based location mapping software, launched a location-based social network, and hosted its first ever developer conference. Even though XR is still a few years away from becoming the next major computing platform, it’s worth paying attention to these announcements to better understand how and when any paradigm shift may play out. And, yes, there are gaming takeaways too.

Last November, Niantic launched Lightship, its SDK that’s “the toolset for building the real-world metaverse, offering the best world-mapping, semantic segmentation, and shared AR feature sets.” This was a big moment — officially transitioning from an app to platform business — but last week’s update to Lightship was also notable. The addition of AR-based location mapping software, which the team calls the Visual Positioning System (VPS) and refers to as “the map of the future,” is key infrastructure for making true AR at scale useful. What makes VPS special is its ability to map real world objects in 3D. This means that digital objects in AR can better stick to certain mapped objects (a building, fountain, sidewalk, tree, whatever) instead of floating awkwardly on a phone screen. Additionally, these objects can be seen in the same spot by multiple devices from multiple viewpoints and remain persistent over time. None of this has been possible before, and it’s now in the hands of developers who can build for both app-based and web-based experiences.

Another cool element is that the map is user-generated. Instead of cars driving around taking 360 degree footage (like Google Maps does), users in Niantic’s apps are prompted to record what’s around them. There are obvious trade-offs (what if there aren’t many users in a big rural area?), but this enables the map to be updated far more frequently in prominent locations, which makes sense given that objects in the real world can be moved around. The VPS software is free to use at the beginning but will eventually adopt a business model similar to Google Maps’ API, which charges based on the number of users. However, if it’s anything like Google Maps, whose API powers millions of web and app experiences, VPS has a chance of being just as core to the next generation of computing (yes, the metaverse). We shall see.

The technology is cool, but it doesn’t really matter if no one uses it. This will be the challenge for the next couple years before purpose-built AR hardware devices from companies like Apple, Alphabet, or Meta are good enough to hit the mainstream. However, to help solve this problem Niantic also released Campfire. On one hand, Campfire is a social network that integrates into Niantic’s games and makes them more social — shows players’ friends on a map and allows them to see, organize, and RSVP for local in-game experiences. However, the bigger idea is that once users opt in, they’ll also be able to discover new AR-based experiences. This is designed to help bring early Lightship developers more traction. Of course, this will stay niche for some time — and it might be too much to assume that the average Pokemon Go player wants to explore beyond Pokemon (if so, other AR games would likely perform better) — but it’s a clever way to bootstrap a broader development ecosystem with existing users. We’ll see how it goes.

If anything, Niantic will continue to serve as its own #1 customer until the prime time for AR actually hits. According to Sensor Tower, Pokemon Go still brings in over $20M per month, essentially as it’s done for the last 4-5 years.

On top of the company’s fundraises — most recently a $300M Series D at a $9B valuation six months ago — this provides steady funding to subsidize underlying platform development until traction hits. Niantic itself may also continue to experiment with new games; however, as we can clearly see in the chart above, nothing — including 2019’s Harry Potter: Wizards Unite and the recent Pikmin Bloom game — has been able to match Pokemon’s unrivaled product market fit. Most IP and F2P genres simply don’t make sense for geolocation-based AR; apart from rare exceptions, like Pokemon, this emerging “genre” will need to organically chart its own path, including its own best practices.

With a platform that’s steadily improving and more functionality open to third party developers, there’s a chance we could see more AR gaming experimentation. In fact, I sincerely hope we do, because with VPS enabling digital object permanence, players being able to see the same thing from different vantage points, and better embedded social features new types of multiplayer experiences can be made that simply weren’t possible before. I hope we see more indie developers test new mechanics instead of studios trying to force-fit big brands. That said, it’ll likely take another non-Pokemon hit or two for most any large developer to ever consider making an AR-based game, which is far easier said than done. And, frankly, as long as we continue to live in a world without AR-dedicated devices, the prospect of AR experiences will be held back.

The time for AR — including any new gaming experiences — is still some time away, but it’s thrilling to see the underlying architecture steadily improve and open up to developers. We’ll stay patient but in the meantime root for any and all progress and experimentation. (Written by Aaron Bush)

Content Worth Consuming

How Do Video Games Stay In Sync (Medium): “Have you ever wondered how real-time games can keep multiple clients in sync even when there are large latencies between users? How can you see other players reacting to your actions near instantly, in spite of the fact that the communication between your computer and the server is not instant? In one of my recent personal projects I made a game engine with real-time networking. In this article I’ll break down what I learned and what you’ll have to consider if you’d like to do the same.” Link

Designing Token Economies (Not Boring): “Sometimes, tokens function like equity in a company, and owning a token is akin to holding a stake in the project’s potential upside. Other times, tokens function like a “token-of-gratitude” and symbolize goodwill among close friends in the purest sense. The wide-ranging role isn’t a bug but a feature representing value in the most abstract sense, whose meaning is given by the system's very design. In other words, a token doesn’t necessarily have any intrinsic value but relative value. It’s the encapsulation of a unit of value universally recognizable and enforceable by a system.” Link

Why StepN’s Collapse is Inevitable (Medium): “The number of daily GST that a user can earn is based mainly on the number of sneakers owned per user but there are other factors as well such as sneaker level, rarity, attribute, type, attached gems, etc. The number of daily GST earned per user is capped by a daily energy limit. To sustain or grow the GST earnings, a user should constantly reinvest GST back into the ecosystem by buying inflationary sinks such as repairing shoes, increasing levels, buying gems, etc. — all with the expectation that they can earn even more — “If I buy this $10 gem now, I can make $30 more over the next 15 days” or “if I don’t repair the shoes now for $5 now, I will earn 20% less going forward”. These are textbook behavioral economics strategies to nudge users into making a buy decision.” Link

Niantic Lightship, An Interview with Niantic Founder John Hanke (Stratechery): “The strategic value of what Niantic is building is obvious: all of the big tech companies are currently working on AR glasses, and the ability to know precisely where you are at all times, and to place information accordingly — and for that information to persist not just for you, but for anyone else who visits that spot — will be tablestakes. Niantic has not only been thinking about this problem for over a decade, but also, thanks to Pokémon Go, has a big headstart in harnessing users to generate these maps on their behalf. This is an advantage the company is clearly looking to extend with the launch of the Lightship platform.” Link ($)