Galaxy: The winding road of Web3 gaming

Author: Sam Englebardt Source: Galaxy Translation: Shan Ouba, Golden Finance

It has taken a lot longer to get to this stage than I initially expected. Back when blockchain technology first entered the mainstream view - when the Bitcoin craze was at its peak and early NFT projects were all the rage - I firmly believed that the gaming industry would be the first to fully embrace Web3. In my opinion, the concepts of true digital asset ownership, decentralized economic systems, and seamless asset circulation were simply tailor-made for games. After all, this is an industry that has long been accustomed to in-game transactions, character customization, and virtual worlds, so why not embrace the opportunity of players truly controlling digital items at the first time?

But it turns out that I was too optimistic. After years of experimentation, slow progress, and countless hype cycles promising that "the gaming revolution is coming", the real breakthrough of Web3 games has not yet arrived. Where are those AAA blockchain games? What about high-quality games that can compete with Fortnite, FIFA, or Final Fantasy, while seamlessly integrating tokenized assets and not making players feel excluded?

Recently, things seem to have changed. After years of stumbling prototypes and small-scale successes, we are finally welcoming the first batch of truly high-quality blockchain games. These projects not only have professional development teams, mature token economic systems, user-friendly experiences, but most importantly - their gameplay is fun enough. From immersive open-world NFT assets to on-chain card games that can rival the complexity of "Magic: The Gathering", we finally see signs that this market is about to explode.

So, now is the time to ask: “What’s next for Web3 gaming? How will the industry evolve in the coming months and years?”

Looking back at early hype and unrealized potential

To understand where things are headed, it’s important to look back at how Web3 gaming got to where it is today.

When NFTs first captured global attention, one of the earliest success stories was CryptoKitties. Launched in 2017, the game allowed players to “breed” digital cats on the Ethereum blockchain, which was both novel and addictive. However, the hype quickly outstripped the technology: At one point, CryptoKitties’ transaction volume accounted for more than 15% of the Ethereum network, causing severe congestion and skyrocketing transaction fees. While it gained huge attention, it also exposed scalability issues for blockchain gaming.

Other early experiments followed. Spells of Genesis and Rare Pepe Cards introduced collectors to the concept of blockchain trading cards. But these games mainly attracted hardcore crypto players and did not enter the mainstream gaming circle. Even when the P2E model emerged later, such as Axie Infinity, traditional players still did not buy it. Many criticized these early P2E games for being too simple to play, and even more like a "money-making task" than a real entertainment experience.

Even so, Axie Infinity's economic model has indeed achieved amazing success - in 2021, the game's transaction volume exceeded $4 billion, shocking the entire industry. However, many traditional players still believe that Web3 games "gameplay" still needs to be greatly improved.

So, why has Web3 gaming been slow to achieve a large-scale breakthrough? There are several reasons:

• High transaction fees: Early blockchain games relied on Ethereum, and Ethereum's transaction fees (Gas Fee) are often expensive and unpredictable.

• Crypto market volatility: The value of NFT assets purchased by players often fluctuates violently with the market, affecting the gaming experience.

• Complex user experience: Users need to master technologies such as private key management and on-chain wallets, resulting in extremely high barriers to entry.

• Regulatory uncertainty: Governments around the world have different attitudes towards NFT and P2E economic models, resulting in policy risks for game developers.

• Resistance from traditional gaming companies: Gaming giants are used to a centralized in-app purchase economy that they control, and are wary of blockchain’s decentralized model.

Ultimately, these issues have led to a much slower-than-expected development of high-quality Web3 games, resulting in a years-long gap between initial promises and actual playable products.

Turning point: Advances in Layer-2 solutions and development tools

Today, the Web3 gaming industry seems to have reached a critical turning point, driven by a combination of factors, first and foremost improvements in blockchain infrastructure, which exposed the scalability bottleneck of blockchain gaming when CryptoKitties jammed Ethereum in 2017. In the past few years, multiple solutions have emerged:

• Layer-2 solutions: Such as Polygon, Immutable X, Arbitrum, these second-layer networks have significantly reduced the cost of minting and trading game assets and reduced network congestion, while still relying on the security of Ethereum.

• Alternative Layer-1 public chains: Such as Solana, Avalanche, Polkadot, BNB Chain, provide faster transaction processing speeds and more stable fees, making them a popular choice for game developers.

• Improvement of developer tools and SDKs: Blockchain technology is becoming more easy to integrate. Today, many game development engines (such as Unity and Unreal Engine) already support Web3 integration, making it easy for game studios to embed NFTs or on-chain assets into their games.

In addition, the wallet experience has also been greatly improved. Compared with the early complex process where players had to manually configure blockchain networks and store private keys, many self-hosted wallets, single sign-on, and seamless Web3 interaction solutions have greatly lowered the entry barrier.

The rise of high-quality Web3 games: the market trend is shifting

A new batch of blockchain games is driving Web3 into the mainstream vision - these games are not just simple blockchain games, but through deep integration of blockchain technology, allowing players to truly experience interesting and meaningful gameplay, and have enough market appeal to attract a wider audience. Here are a few high-quality Web3 games worth noting, which show great progress in the industry in terms of production standards, brand cooperation and financial support, and prove that Web3 games are moving towards a more mature stage.

Mythical Games: NFL Rivals & FIFA Rivals

Among the studios committed to developing mainstream Web3 games, Mythical Games is currently one of the most representative teams. As one of the earliest professional game companies in the Web3 field, Mythical has emerged with Blankos Block Party, and with the concept of "gaming experience as the core, blockchain technology hidden behind the scenes", it has created a game experience that combines playability and blockchain characteristics. Today, they are leading the Web3 sports gaming market through partnerships with the NFL and FIFA.

• NFL Rivals:NFL Rivals is officially licensed by the NFL and allows users to collect, trade, and manage NFT player card rosters, then compete in arcade-style football games.NFL Rivals aims to appeal not only to crypto enthusiasts but also everyday sports fans by weaving licensed teams and real-world rosters into an easy-to-pick-up, pick-and-play format.

• FIFA Rivals: Mythical Games recently partnered with FIFA to launch a game that applies similar mechanics to the world’s most popular sport. With the hype of the international competition, FIFA Rivals will feature player collectibles, fantasy-style team management, and gameplay that combines Web2 sports games (similar to FIFA Ultimate Team) with on-chain asset ownership. Mythical Games has adopted a "light blockchain" approach - ordinary players see an intuitive UI and simple steps to collect digital items, while the complex blockchain technology is hidden behind the scenes. This approach helps to eliminate the prejudice that many non-crypto users have against NFT games, making Web3 games more accessible to the public. Off The Grid: An attempt at a AAA-level shooting game Outside of sports games, first-person shooters (FPS) have always been one of the most popular game genres in the world. Gunzilla Games's Off The Grid is attempting to set a new benchmark for Web3 gaming in this highly competitive market.

  • Cinematic Production Value: Developed on Unreal Engine 5, Off The Grid features photorealistic environments and tense, narrative-driven quests. Early demos and trailers show AAA visuals on par with traditional console and PC shooters.

  • Tokenized Assets and Player Agency: Weapon skins, character gear, and other in-game items are minted on-chain. The team hopes that true digital ownership will create a thriving secondary market similar to off-chain economies (e.g. CS:GO, skins), but with greater transparency and scarcity guaranteed by blockchain technology.

  • Persistent World and Live Storytelling:Off The Grid promises a 24/7 evolving storytelling. Player decisions, faction warfare, and event outcomes can permanently change the map, bridging the gap between Battle Royale chaos and massively multiplayer online (MMO)-style persistence. Web3 is used to ensure event rewards and items remain truly scarce and uniquely identifiable. By fusing a beloved, competitive genre with carefully integrated NFTs,Off The Grid highlights how AAA shooters can appeal to both casual console gamers and hardcore cryptocurrency collectors—without sacrificing core gameplay.

  Illuvium: AAA RPG for Web3

  Illuvium is often hailed as an example of “AAA ambition” in Web3, blending the exploration of an open-world role-playing game (RPG) with an automated combat system. Players roam visually striking alien landscapes, capturing and training creatures called Illuvials, each represented by an NFT with unique properties.

  • Layer 2 Adoption:Illuvium is built on Ethereum but leverages Immutable X for fast, low-fee transactions, proving that second-layer solutions are essential for large-scale NFT games.

  • Competitive Gameplay:Automated battle arenas let Illuvials engage in strategic duels similar to Teamfight Tactics or Dota Underlords.This skill-based competition helps alleviate criticism that many blockchain games revolve solely around speculation.

  • Tokenized Ecosystem: Illuvium’s $ILV token manages staking, rewards, and community governance—a sophisticated economic design that seeks to avoid the boom-and-bust cycles seen in early P2E games.

  Star Atlas

  Star Atlas is a futuristic MMO built on Solana that has captured attention with its expansive vision of space exploration, territorial conquest, and a complex in-game economy.

  • High Production Values:Cinematic trailers and concept art hint at the near-AAA visual quality of the space sim, setting expectations high.

  • DeFi Integration:Players can stake in-game assets, build fleets, and participate in politics and commerce, embodying a meta-game that intersects with decentralized finance.

  • Long-term Roadmap:With a multi-year development plan, Star Atlas serves as a litmus test for whether gamers will invest in a Web3 project similar to large, traditional MMOs, where expansions and content are rolled out over time.

  Guild of Guardians

  With its origins in Immutable, the same platform behind Gods Unchained, Guild of Guardians focuses on cooperative dungeon crawling and RPG team-building - optimized for mobile devices.

  • Mobile-first approach:Taking advantage of the massive mobile gaming market, the project aims to reduce wallet friction and invite mainstream, on-the-go gamers into the NFT space.

  • Cooperative Play and Guild System:Players form guilds, launch raids, and share loot, creating a social, team-oriented environment that is well suited for on-chain economies.

  • Accessible Monetization: NFT heroes and gear come in a variety of rarities, but the developers designed them to prevent “pay-to-win” dynamics, mindful of the backlash that sometimes plagues blockchain games.

  Why did it take so long? Reality check

  Even with high-quality Web3 games starting to emerge today, people still ask: why didn’t we get here sooner? Making a high-quality game — whether it involves blockchain or not — is a massive undertaking. Traditional AAA games typically take 3-5 years (or even longer) to develop. Add in the integration of on-chain elements, and the development cycle is extended even further.

  In addition, early investors primarily put money into P2E models and NFT markets, chasing short-term hype and quick profits instead of focusing on deep gaming experiences. As the novelty of NFTs wore off and mainstream players became skeptical, the industry realized it had to adjust. The studios that are currently about to launch high-quality blockchain games are usually those that choose to hire experienced game developers, optimize the token economic system, and ensure that the gameplay itself is attractive enough.

  User acceptance is also a hurdle. Many established game companies are worried that if they introduce NFTs, they will face strong opposition from the player community. When large companies such as Ubisoft and Square Enix tried small-scale blockchain integration, many players resisted, citing issues such as "pay to win" mechanism, speculative market, environmental impact. Only recently, after multiple proofs of concept and significant improvements in infrastructure, these concerns have begun to fade.

  From Earning While Playing to Playing and Owning

  One ​​of the core debates in Web3 games is P2E (earning while playing) vs. P&E (playing and earning) vs. P2O (playing and owning).

  Early P2E models were promoted as wealth opportunities for players: "Buy NFTs, play games every day, and earn tokens!" Although attractive to some players, these models usually rely on new players to continue to join in order to maintain the token price. Once this economic model collapses, player interest also declines.

  Today, most visionary developers place more emphasis on a balanced game ecosystem rather than relying on infinitely rising token values. They advocate P&E (Play and Earn), that is, the main attraction of the game lies in the gameplay itself, and obtaining tokens or NFTs is just a bonus. This approach aims to reward skills, time or creativity, rather than turning the entire economic system into a speculative market. At the same time, more and more games are beginning to adopt token sinks, deflationary economic models and more sophisticated governance structures to ensure the sustainability of the game economy.

  A more player-centric model is P2O (Play to Own). This model emphasizes that assets are truly owned by players, rather than simply pursuing economic returns. Similar to collecting rare digital cards, some assets may appreciate in value, but the core motivation is fun, sense of accomplishment and in-game use, rather than speculation.

  Integration with Traditional Games

  One ​​of the keys to the future development of Web3 games is how to integrate with the traditional game industry. After all, large developers such as EA, Activision Blizzard, and Nintendo have a huge user base and a multi-billion dollar budget. If one of them makes a major transformation, it will greatly accelerate the entry of Web3 into the mainstream market.

  Currently, there are some signs of integration:

  • Partnerships and acquisitions: Old developers such as Square Enix have begun to explore NFTs, and some small game studios have been acquired by companies in the Web3 field to expand their product portfolios.

  • Hybrid games: Some games introduce optional NFT assets (usually skins, decorations, etc.), but do not force all players to use blockchain. This approach allows traditional players to gradually accept digital asset ownership.

  • Big companies test the waters: Ubisoft tried NFT props in "Ghost Recon: Breakpoint" through the Quartz plan, indicating that large companies are willing to experiment with Web3 games, although they are still cautious about player feedback.

  As the user experience is optimized, the boundaries between "Web2 games" and "Web3 games" may gradually blur. In the future, players may be able to log in to the game and enjoy the rights of real ownership of game assets without having to pay attention to the underlying blockchain technology. When the technology becomes invisible enough and the actual experience brings substantial benefits, the acceptance of mainstream players will also increase significantly.

  Obstacles to overcome

  Despite the rapid development of Web3 games, there are still many challenges:

  • Regulatory uncertainty: Different countries regulate NFTs and in-game tokens differently, and some tokens may be classified as securities. In the absence of a global unified framework, developers and publishers need to proceed with caution.

  • Player skepticism and resistance: Many players view NFTs as scams or exploitative "pay to win" models. To break this stereotype, real innovation, transparent communication, and a reasonable monetization model are needed.

  • Environmental issues: Ethereum's energy consumption has dropped significantly after switching to the PoS mechanism, but some players still believe that encryption technology wastes energy. In the future, more projects will rely on energy-efficient Layer-2 solutions or alternative Layer-1 public chains to reduce this concern.

  • Balance between gameplay and economy: How to ensure that the game remains fun while providing economic incentives is a difficult problem. Over-emphasizing the economic system may weaken the entertainment value of the game or even lead to economic collapse.

  • Maturity of infrastructure: Despite progress, wallet integration, multi-chain interoperability, and large-scale concurrent processing still need to be further improved to support a smooth experience for tens of millions of players.

  Key trends

  Looking forward, the following trends may affect the next stage of development of Web3 games:

  • Cross-game asset interoperability: Achieving cross-game asset sharing remains the ultimate goal of Web3 games. To achieve true interoperability, standardized asset formats and cooperative agreements between developers are needed, which is extremely difficult, but its impact may be revolutionary.

  • Metaverse Interconnection: The gaming environment may develop into a center for social, commercial and community activities. Web3's ownership mechanism enables players to truly own virtual avatars, land and other digital assets.

  • DAO Governance: Decentralized Autonomous Organizations (DAOs) are influencing game development. Players holding governance tokens may participate in voting to decide game expansion, balance adjustments or the use of community funds, which will increase players' sense of belonging.

  • Esports and Competitive Games: The transparency of blockchain may completely change esports events and prize management. For example, "Gods Unchained" and "Skyweaver" have begun to try on-chain esports, and more mature esports projects may join Web3 in the future.

  • More mature token economics: Game economists and designers are building more sustainable models that may adopt more advanced token burn mechanisms, stablecoin trading models, and reward systems to increase player engagement in the future.

  Developer and investor advice

  If you are developing a Web3 game, please keep the following points in mind:

  • Gameplay first: No matter how complex the token economic model is, it cannot make up for a mediocre game experience. High production standards and interesting gameplay are the keys to long-term success.

  • Optimize user experience: Lowering the barrier to entry is critical. Whether it is a custodial wallet, single sign-on (SSO) or integrated trading market, user barriers should be minimized to enable Web2 players to smoothly transition to Web3.

  • Build a sustainable economy: Avoid the traditional "pump-and-dump" model. A healthy game economy should have a balanced revenue and consumption mechanism, rather than relying solely on new players to inject capital.

  • Focus on compliance: Pay close attention to regulatory trends and ensure compliance with future regulatory requirements when designing token sales, governance systems and market transactions.

  • Cooperation and innovation: Web3 culture emphasizes open collaboration. Work with other teams to explore the possibility of cross-game asset interoperability and quickly iterate to optimize game design.

  For investors, patience is crucial. As in the traditional gaming industry, the best returns on investment usually come from projects with strong teams, mature technology, and long-term vision, rather than short-term hype.

  Conclusion: The Future of Web3 Gaming

  We are at a critical inflection point. The promise of player ownership, decentralized economies, and interoperable virtual worlds of Web3 gaming is now more viable than ever. The industry has evolved from the early NFT collection hype and basic P2E model to a more mature form.

  Thanks to studios like Mythical Games, Gunzilla, and projects like Illuvium, Star Atlas, Guild of Guardians, Ember Sword, we are gradually moving towards higher quality, sustainable Web3 games - games that are both highly produced, playable, and able to operate for the long term.

  Indeed, this process has taken longer than expected - longer than many initially thought. Technical bottlenecks, market hype, and cultural resistance have combined to slow down the development of Web3 games. But amid these challenges, a group of developers who truly understand game design and can properly use blockchain technology have gradually emerged.

  Today, high-profile sports IP (NFL, FIFA), AAA shooters (Off The Grid), immersive MMOs (Star Atlas, Illuvium), and mobile RPGs (Guild of Guardians) are entering the Web3 space. When well-known brands, accessible gaming experiences, and reasonable token economies are combined, the possibility of Web3 games entering the mainstream market has greatly increased.

  Next, we may see deeper game mechanics, higher production standards, community-led ecosystems, and wider acceptance of digital asset ownership. Ultimately, these developments may redefine the concept of the virtual world - players are not just game users, but the true shapers of economic systems, stories, and communities, and blockchain will provide technical support for all of this.

  It’s been a long wait, but now Web3 gaming finally seems to be fulfilling its huge potential. It’s been worth the wait.