In-Depth Research on Full-Chain Games: Core of Native Encryption, Bubble or Revolution?

1. Introduction: What is a Full-Chain Game?

Recently, the Pass card of the full-chain game Sky Strife gained 21,000 ETH in FOMO on the testnet, causing many non-full-chain game players to marvel at the magic of this track. Since the release of "Pong" in 1972, the gaming industry has been on a wild ride, from classic 8-bit games like "Super Mario" and "The Legend of Zelda" to today’s highly complex and socially interactive online games like "Fortnite" and "League of Legends". Games have long ceased to be mere entertainment. The social, competitive, and immersive experiences these games provide have surpassed our past imaginations.

With the rise of blockchain technology and the development of encryption currencies, the gaming industry is reshaping our experiences in unprecedented ways. From innovative works like Axie Infinity, which closely integrates gaming with the encryption economy, to projects like Stepn, which are centered around social interaction and innovation, blockchain games are gradually being seen as a hope for Crypto Mass Adoption. People are also beginning to explore new ways to combine gaming and blockchain. Besides asset on-chain, is it possible to put more elements on-chain? This has led to the birth of full-chain games.

So what is the difference between blockchain games and traditional games?

In traditional games, all game logic, data storage, digital assets, and game states are stored in centralized gaming companies. For example, when we play Honor of Kings, Genshin Impact, or Dungeon & Fighter, all game content, including in-game assets, is owned by centralized companies.

The subsequent asset on-chain games (commonly referred to as Web2.5 games), such as Axie and Stepn, put assets on-chain. On one hand, players can have ownership of the assets, while on the other hand, it can enhance the liquidity of the assets. However, when faced with the closure of a game, the game assets will still confront the dilemma of losing circulation value. The relationship between asset on-chain games and traditional games is more of a supplement rather than a replacement, akin to the relationship between food delivery and dining establishments. Similarly, Web2.5 games are also facing competition from both Web2.5 peer games and traditional Web2 games.

Recently, the highly discussed full-chain games have brought all interactive behaviors and states of the game on-chain, including the game logic, data storage, digital assets, and game states mentioned earlier, all processed by the blockchain, thereby achieving truly decentralized gaming.

To facilitate everyone's understanding, I have summarized the characteristics of blockchain games into the following four points:

1. The authenticity of the data source is ensured by the blockchain. The blockchain is no longer just an auxiliary storage for data, but the real source of game data; it is not limited to just a record of asset ownership, but rather the storage center for all key data. This approach fully leverages the characteristics of programmable blockchain, achieving transparent data storage and permissionless interoperability.

2. The logic and rules of the game are implemented through smart contracts. For example, various actions in the game can be executed on-chain, ensuring the traceability and security of the game logic.

3. Game development follows the principles of an open ecosystem. Game contracts and accessible game clients adopt an open-source model, providing a vast creative space for third-party developers. They can creatively output content and share it with the entire community by using plugins, third-party clients, and interoperable smart contracts, or even redeploy and customize their own gaming experiences.

4. The game is independent of the client. This is closely related to the previous three points, as the key to truly encrypted native games lies in the fact that even if the core developer's client disappears, the game can still continue. This depends on the permissionless storage of game data, permissionless execution of logic, and the community's ability to interact independently with the core smart contracts without relying on interfaces provided by the core team. This truly achieves decentralization.

2. Why do humans need full-chain games?

Before understanding why we need a full-chain game, let's first take a brief look at the current situation and operating model of the traditional gaming industry.

The essence of on-chain games is also games, and understanding the operational model of traditional games is very important and necessary for us to understand and analyze the future of on-chain games.

1. Current Status of the Traditional Gaming Industry

With the development of the gaming industry, many excellent Web2 games have emerged during our growth. Whether it's FPS games like Counter-Strike and CrossFire, RPG games like Dungeon Fighter and Dragon Nest, MOBA games like League of Legends and Honor of Kings, or card games like Onmyoji and Hearthstone, games have accompanied the growth of our generation and occupy a very important part of our entertainment life.

According to data from Fortune Business Insights, the global gaming market was valued at $249.55 billion in 2022, expected to exceed $280 billion in 2023, and to surpass $600 billion by 2030. In comparison, the global market size of the film and entertainment industry was $94.4 billion in 2022. It can be seen that gaming, as part of the entertainment and leisure industry, occupies a very important position in economic development. There are many aspects worth exploring in terms of the depth of commercialization and the breadth of types, making it the crown jewel of the leisure industry.

1) Why do humans love to play games

According to data from Statista, the number of gamers worldwide has exceeded 2.5 billion, approaching 3 billion. So how does gaming manage to attract more than one-third of the global population? The core reason can be summarized as meeting human needs and weaknesses from multiple aspects.

1. Escape reality and restart life: The game provides a place to escape the pressures and challenges of daily life. In the game, people can free themselves from the troubles of reality and immerse themselves in a virtual world, having a second life.

2. Burden-free socializing: For multiplayer online games, the game provides a platform for social interaction and is relatively friendly for socially anxious individuals. Players do not have to worry about the gazes of others in real life, allowing them to do what they want and build relationships with others.

3. Rewards for Timely Feedback: Unlike the daily struggles of students and workers in real life for their studies and jobs, the charm of games lies in the rich reward systems and timely reward mechanisms they provide. After putting in effort, leveling up by defeating monsters, and completing challenges, players quickly gain new skills, unlock new levels, or receive new items. This incentive mechanism can inspire people to continue moving forward.

4. Low-cost freedom of exploration: Many games offer rich virtual worlds that allow players to explore unknown realms, interact with NPCs and other players, and drive the plot forward, satisfying humanity's inherent desire for adventure and exploration. In the real world, however, due to constraints of money, energy, time, and geographical location, the cost of exploration is significantly higher compared to the game world.

5. Pursuing achievements and self-realization: By completing a series of tasks and goals, people can fulfill their desire for success and recognition, whether it is leaderboard rankings or achievement points. In the game, people can more easily achieve self-challenge and character growth.

By targeting certain, or even multiple, human weaknesses, games can cleverly meet the diverse needs and preferences of different users, enabling them to perform well both in terms of audience coverage and providing a Depth of immersive experience.

2) Current Status and Development of Traditional Games

Next, let's briefly understand the current situation of the traditional gaming industry.

In traditional games, they can be roughly divided into game types such as Shooter, Adventure, Role Playing, Battle Royale, Strategy, Sports, Puzzle, Action, and Simulation.

According to Newzoo's data, role-playing and adventure games perform excellently on PC, mobile, and console platforms, ranking in the top five. In addition, shooting and battle royale games are very popular on PC and console platforms. On mobile, it is slightly different, as puzzle and idle games are also quite favored by users.

2. The Dilemma of the Traditional Gaming Industry

However, traditional games are currently facing two major challenges: first, game distribution is restricted by licensing numbers, and second, the pre-release costs of games are too high, leading to a slow return on investment and potential hidden costs.

1) Game distribution is subject to license number restrictions

A game version number refers to the specific license issued by the government that is required to release games in certain countries or regions. This system aims to regulate game content, ensuring that games comply with the laws, culture, and values of the respective country or region, to protect minors from inappropriate content and maintain social stability.

For example, Germany has strict content review for games, with particular attention to content that may have a negative impact on young people; South Korea and Japan have a game rating system that is evaluated and issued by relevant national agencies.

In China, the impact of game licensing numbers is even greater. China implements a strict game licensing system, which is overseen by the National Radio and Television Administration. Games must obtain a license number before they can be released in the Chinese market.

After the release of 87 version numbers on July 22, 2021, there was a long period of stagnation, which gradually began to change starting in April 2022. In April 2022, 45 version numbers were released, followed by another batch announced in September and December. However, during the period of stagnation in version number approvals from 2021 to April 2022, only a few large companies managed to survive, while a large number of small and medium-sized companies faced closure. According to data from the Tianyancha App, over 14,000 small and medium-sized companies (with registered capital below 10 million) were deregistered from July to December 2021.

As the world's largest gaming market, China has over 500 million people playing video games. However, the issuance of licenses has become a pain for countless Chinese companies. Even with the resumption of license approvals, the contraction or constant adjustment of licenses has become a sword of Damocles for every game project team. In the days without the arrival of license approvals, one can hear countless sighs from project teams without a funding chain facing closure.

2) The cost before issuance is too high, and it is easy to incur a lot of sunk costs

In the development model of Web2 games, it is necessary to bear the initial human resources and infrastructure costs during the game development stage, and there are idle time costs during the waiting period for the game approval number, only after waiting for