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# Catalysts for On-chain Games
With an increasing number of traditional video game publishers making their entry into on-chain gaming, it wouldn’t be surprising to see a wider range of tech stacks supporting the growth of various gaming categories on-chain.
From a fundraising perspective, it is also clear that there is huge interest in supporting the growth of on-chain games. For example, SHRAPNEL, a fully on-chain AAA competitive, first-person shooter game, has raised US$20 million in a Series A fundraising round led by Polychain Capital. Proof of Play has also raised a substantial amount of US$33 million in funding from investors such as a16z, Anchorage Digital among others. Evidently, the future of interoperable gaming metaverse holds great promise for the flourishing gaming industry.
As the industry forges towards greater adoption of on-chain games, we believe that there are several catalysts that could propel the growth of the industry.
**Catalyst 1: Engaging Gameplay with sustainable design mechanics**
While not a fully on-chain game, we have seen how the play-to earn model spurred the rapid growth of Axie Infinity, which has at one point recorded notable daily unique active wallets (“UAWs”) of more than 728K but now declined to 17.24K (17) as of 1 December according to DappRadar. The peak of the play-to-earn model has faded during the bear market and ultimately developers should focus on building an experience-based game by supporting elements like user-generated content, ownership permanence and sustainable tokenomics.
**An engaging gameplay experience should encourage a healthy growth in user-generated content** as this will not only help reduce development fees from the developers’ perspective but also create a more engaged audience which could lead to a higher retention rate. According to Frederick Reichheld of Bain & Company (18) , a 5% increase in retention rate could lead to significant increase in bottom line ranging from 25% -95%. A prime example of this would be Dark Forest which is also one of the pioneers in fully on-chain games that is launched in 2020. With the ability to mod the existing game, its community of more than 10,000 players have come around to organize competitions within the game, built marketplaces, tools that automate game functions and even bots to play the game themselves, resulting in a self-sufficient, constantly evolving gameplay experience that has lasted through the changing market environment.
**A sustainable game design should be one that prudently manages token emission and rewards the active players.** This is essential as on-chain gaming continues to deal with the issue of bots within the gameplay which reduces the incentives for other genuine gamers. Gameplay experience should also be fair for all players since that is one of the main appeals of having a fully on-chain game. Hence, we would likely see more adoption of technology such as Chainlink VRF that help introduce fairness and randomness in games.
**Catalyst 2: More investment into infrastructure technology to enable frictionless onboarding**
Current adoption for on-chain gaming is low due to factors such as having to create a eb3 wallet, purchase native gas tokens, steep learning curve and poor UI/UX. Getting the next leg up in adoption requires more than just having interesting gameplay. **Without a seamless gaming experience found in traditional gaming, the barrier to entry continues to deter new users from using on-chain games.** Infrastructure providers like Web3Auth that enable fuss-free wallet creation using Twitter or Google OAuth coupled with payment gateway solutions by service providers such as thirdweb are positive catalysts.
**Account abstraction** would likely see more innovations and investment since they are critical in easing the entry into on-chain gaming. Proof of Play creates a burner wallet for gamers on Pirate Nation, which is custodial and used to grant permissions to Proof of Play to pay for the users’ transactions, all the while still ensuring the security of their assets. Other **AA technology** likely to see more traction include bundled transactions and social recovery.
While ECS is currently the dominant architecture used to deploy games, that could change as new frameworks are introduced to improve game development. One example of this would be the ARC framework that was introduced by Jump Crypto to facilitate the development of fully on-chain games on the Solana network.
Instead of relying on EVM smart contract for on-chain logic and storage of game state, we could see new alternatives gaining traction such as Molecular Execution Machine (“MEM”) which is a serverless functions network that is chain agnostic, supports a wide range of languages, and is highly scalable with near-instant finality. MEM also has integration with Arweave to enable a permanent game state storage (19) .
**We could also see an increasing focus on L3s leveraging on the concept of fractal scaling on zk-rollups to further enhance scalability** of games, accommodating a wider range of games. Fractal scaling, a concept developed by StarkWare, refers to the growth of app-specific chains built recursively over L2s, boasting hyper-scalability and better control of tech stack while retaining security from the underlying L1.
**Catalyst 3: Interoperable Economies (Autonomous Worlds)**
We believe that interoperable game economies also known as “Autonomous Worlds” will be the next catalyst for on-chain game adoption. **Autonomous Worlds promise to usher in a more immersive gaming experience as gamers shift from the mentality of just achieving their goals and exiting the game to being an integral part of an ever-evolving virtual world**. The formation of an autonomous world also formalized interaction rules removing the need for privileged individuals to keep the world alive providing a permissionless, trustless, permanence guarantee. We are already seeing exciting developments in this area with Realms.World building an interconnected network of composable on-chain games where players are able to bring their assets from one game to another.
Figure : Ecosystem of an Autonomous World
*Source: IOSG Ventures, Binance Research*
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