Galaxy: The Twisted Path of Web3 Games

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

Reaching the current stage has taken much longer than I initially expected. Back when blockchain technology first entered the mainstream spotlight—when the Bitcoin craze was in full swing and early NFT projects were all the rage—I was firmly convinced that the gaming industry would be the first to wholeheartedly embrace Web3. In my view, concepts like true digital asset ownership, decentralized economic systems, and seamless asset circulation are tailor-made for gaming. After all, this is an industry that is already accustomed to in-game transactions, character customization, and virtual worlds; why not seize the opportunity for players to truly control digital items right away?

But it turns out I was too optimistic. After years of experimentation, slow progress, and countless cycles of hype promising that the “gaming revolution is coming,” the true breakthrough for Web3 games has yet to arrive. Where are those AAA blockchain games? Where are the high-quality games that can compete with Fortnite, FIFA, or Final Fantasy, while seamlessly integrating tokenized assets without making players feel excluded?

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

So, it’s time to think: “What is the next step for Web3 games? How will this industry evolve in the coming months and years?”

Review of Early Speculation and Unfulfilled Potential

To understand the future development direction, we must first review how Web3 games have come to this point today.

When NFTs first attracted global attention, one of the earliest success stories was CryptoKitties. Launched in 2017, this game allowed players to “breed” digital cats on the Ethereum blockchain, with a novel and highly appealing concept. However, the craze quickly transcended the technology itself: at one point, the trading volume of CryptoKitties accounted for over 15% of the Ethereum network, leading to severe congestion and skyrocketing transaction fees. While it garnered tremendous attention, it also exposed the scalability issues of blockchain games.

This was followed by other early experiments. Spells of Genesis and Rare Pepe Cards introduced collectors to the concept of blockchain-traded cards. However, these games mainly attract hardcore crypto players and do not make it into the mainstream gaming circle. Even when P2E models later emerged, such as Axie Infinity, traditional players still didn’t buy it. Many have criticized these early P2E gameplay for being too simplistic, or even more like a “money-making task” than a truly entertaining experience.

Even so, Axie Infinity’s economic model has indeed achieved remarkable success—in 2021, the game’s trading volume exceeded $4 billion, shocking the entire industry. However, many traditional players still believe that Web3 games ‘gameplay’ needs significant improvement.

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

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

• Volatility in the Crypto Market: The value of NFT assets purchased by players often fluctuates dramatically with the market, affecting the gaming experience.

• Complex user experience: Users need to master private key management, on-chain wallets, and other technologies, resulting in a very high threshold.

• Regulatory Uncertainty: Governments around the world have varying attitudes towards NFTs and P2E economic models, resulting in policy risks for game developers.

• Resistance from Traditional Game Companies: Industry giants in the gaming sector have become accustomed to the centralized in-game economy they control and are wary of the decentralized model of blockchain.

Ultimately, these issues have resulted in the development speed of high-quality Web3 games being far below expectations, creating a gap of several years between the initial promises and the 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 several factors, the first and most important being the improvement of blockchain infrastructure. In 2017, CryptoKitties clogged Ethereum, exposing the scalability bottleneck of blockchain games. In the past few years, multiple solutions have emerged:

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

• Alternative Layer-1 Public Chains: Such as Solana, Avalanche, Polkadot, BNB Chain, providing 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 integrable. Nowadays, many game development engines (such as Unity and Unreal Engine) already support Web3 integration features, allowing game studios to easily embed NFTs or on-chain assets into their games.

In addition, the wallet experience has also seen a significant improvement. Compared to the complex process in which early players had to manually configure blockchain networks and store private keys, many self-custody wallets, single sign-on, and seamless Web3 interaction solutions have greatly lowered the entry barrier.

The Rise of High-Quality Web3 Games: Market Trends are Shifting

A new batch of blockchain games is driving Web3 into the mainstream - these games are not just simple chain games, but through deep integration of blockchain technology, they allow players to truly experience fun and meaningful gameplay, and they possess enough market appeal to attract a wider audience. Here are several high-quality Web3 games worth paying attention to, showcasing the industry’s significant advancements in production standards, brand collaborations, and financial support, also proving that Web3 games are moving towards a more mature stage.

Mythical Games: NFL Rivals & FIFA Rivals

Among the studios dedicated to developing mainstream Web3 games, Mythical Games is currently one of the most representative teams. As one of the earliest established professional game companies in the Web3 field, Mythical rose to prominence with Blankos Block Party, creating a gaming experience that combines playability and blockchain characteristics with the philosophy of “game experience at the core, blockchain technology hidden behind the scenes”. Today, they are leading the Web3 sports gaming market through collaborations with NFL (National Football League) and FIFA (Fédération Internationale de Football Association).

• NFL Rivals: NFL Rivals is officially licensed by the NFL, allowing users to collect, trade, and manage NFT player card lists, and then participate in arcade-style football games. NFL Rivals aims to attract not only cryptocurrency enthusiasts but also everyday sports fans by weaving licensed teams and real-world player rosters into an easy-to-learn, play-to-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. Amidst the hype of international competitions, FIFA Rivals will introduce 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 adopts a “light blockchain” approach—ordinary players see an intuitive UI and simple digital item collection steps, while complex blockchain technology is hidden behind the scenes. This method helps to eliminate many non-crypto users’ biases against NFT games, making Web3 games more accessible to the general public.

Off The Grid: An Attempt at an AAA Level Shooter

Outside of sports games, first-person shooter games (FPS) have consistently been one of the most popular game genres worldwide. Gunzilla Games’ Off The Grid is attempting to set a new benchmark for Web3 games in this highly competitive market.

• **Production Value: ** Off The Grid is developed on Unreal Engine 5, featuring realistic environments and tense, narrative-driven missions. Early demos and trailers showcase AAA-level visuals that rival traditional console and PC shooting games.
• 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 can create a thriving secondary market similar to off-chain economies (such as *CS:GO, *skins), but blockchain technology can ensure greater transparency and scarcity.
• Persistent world and real-time storytelling: Off The Grid promises an ever-evolving narrative 24/7. Player decisions, faction wars, and event outcomes can permanently alter the map, bridging the gap between battle royale chaos and the persistent nature of large-scale multiplayer online (MMO). Web3 is used to ensure that event rewards and items remain truly scarce and uniquely identifiable. By merging beloved, competitive game genres with carefully integrated NFTs, Off The Grid highlights how AAA shooters can attract both casual console gamers and hardcore cryptocurrency collectors—without sacrificing core gameplay.

Illuvium: A Representative AAA RPG in the Web3 Space

Illuvium is often hailed as a prime example of “AAA ambition” in Web3, merging exploration of an open-world role-playing game (RPG) with an automatic battle system. Players roam visually stunning alien landscapes, capturing and training creatures known as Illuvials, each represented by an NFT with unique attributes.

• Layer 2 Adoption: Illuvium is built on Ethereum but utilizes Immutable X to enable fast, low-cost transactions, demonstrating that Layer 2 solutions are crucial for large NFT games.
• Competitive Gameplay: The auto-battle arena allows Illuvials to participate in strategic duels similar to Teamfight Tactics or Dota Underlords. This skill-based competition helps alleviate many criticisms of blockchain games that revolve solely around speculation.
• Tokenized Ecosystem: Illuvium’s $ILV token is responsible for managing rights, rewards, and community governance—this is a complex economic design aimed at avoiding the boom-and-bust cycles seen in early P2E games.

Star Atlas

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

• High Production Value: The movie trailer and concept art suggest that the space simulation game is approaching AAA-level visual quality, setting high expectations.
• DeFi Integration: Players can stake in-game assets, build fleets, and participate in politics and commerce, reflecting a metagame that intersects with decentralized finance.
• Long-term roadmap: With years of development plans, Star Atlas has become a litmus test for whether gamers will invest in Web3 projects similar to large traditional MMOs, where expansions and content will be released over time.

Guild of Guardians

Guild of Guardians originates from Immutable, the same platform behind Gods Unchained. Guild of Guardians focuses on cooperative dungeon exploration and RPG team building - optimized for mobile devices.

• Mobile-First Approach: The project leverages the vast mobile gaming market, aiming to reduce wallet friction and invite mainstream, busy gamers into the NFT space.
• Cooperative Games and Guild System: Players form guilds, initiate raids, and share loot, creating a social and team-oriented environment that is highly suitable for on-chain economy.
• Accessible Monetization: NFT heroes and equipment come in various rarities, but developers design to prevent a “pay-to-win” dynamic and are mindful of the strong opposition that can sometimes trouble blockchain games.

Why did it take so long? Real considerations

Even though high-quality Web3 games are beginning to emerge today, people still ask: Why couldn’t we have reached this point earlier? Creating a high-level game—regardless of whether it involves blockchain—is a massive undertaking. Traditional AAA games usually require 3 to 5 years (or even longer) for development. Coupled with the integration of on-chain elements, the development cycle will be further extended.

In addition, early investors primarily directed their funds towards P2E models and the NFT market, chasing short-term speculation and quick profits, rather than focusing on deep gaming experiences. As the novelty of NFTs gradually fades and mainstream players become skeptical of them, the industry realizes that adjustments must be made. Studios that are about to launch high-quality blockchain games are typically those that choose to hire experienced game developers, optimize token economic systems, and ensure that the gameplay itself is engaging enough.

User acceptance is also a barrier. Many established game developers worry that if they introduce NFTs, they will face strong opposition from the player community. When major companies like Ubisoft and Square Enix attempted small-scale blockchain integrations, many players boycotted, citing issues such as “pay-to-win” mechanics, speculative markets, and environmental impact. Only recently, after multiple proofs of concept and significant improvements to infrastructure, have these concerns begun to gradually dissipate.

From playing to earn to play to own

One of the core debates in Web3 gaming is P2E (Play-to-Earn) vs. P&E (Play and Earn) vs. P2O (Play-to-Own).

The early P2E model was promoted as a wealth opportunity for players: “Buy NFTs, play games daily, earn tokens!” Although appealing to some players, these models often rely on a continuous influx of new players to maintain token prices. Once this economic model collapses, player interest declines as well.

Today, most visionary developers emphasize a balanced game ecosystem rather than relying on the infinite appreciation of token value. They advocate for P&E (Play and Earn), where the main attraction of the game lies in the gameplay itself, and earning tokens or NFTs is merely a supplementary reward. This approach aims to reward skills, time, or creativity, rather than turning the entire economic system into a speculative market. Meanwhile, an increasing number of games are adopting token sinks, deflationary economic models, and more refined 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 truly belong to the players, rather than solely pursuing economic returns. Similar to collecting rare digital cards, some assets may appreciate in value, but the core motivations are fun, a sense of achievement, and in-game utility, rather than speculative trading.

Integration with Traditional Games

One of the key factors for the future development of Web3 games is how to integrate with the traditional gaming industry. After all, large developers like EA, Activision Blizzard, and Nintendo have huge user bases and budgets in the billions of dollars. If one of them makes a significant transformation, it will greatly accelerate the entry of Web3 into the mainstream market.

Currently, there are some signs of integration:

• Cooperation and Acquisition: Established developers like Square Enix are beginning to explore NFTs, while some small game studios are being acquired by companies in the Web3 space to expand their product offerings.

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

• Big Companies Testing the Waters: Ubisoft plans to experiment with NFT items in “Ghost Recon Breakpoint” through Quartz, indicating that large companies are willing to experiment with Web3 games, although they remain cautious about player feedback.

As user experience improves, the boundaries between “Web2 games” and “Web3 games” may gradually blur. In the future, players may be able to log into games and enjoy the rights of truly owning game assets without having to pay attention to the underlying blockchain technology. When the technology becomes sufficiently invisible 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 ahead:

• Regulatory Uncertainty: Different countries have varying approaches to the regulation of NFTs and in-game tokens, with some tokens potentially classified as securities. In the absence of a global unified framework, developers and publishers need to proceed with caution.

• Player Doubts and Resistance: Many players view NFTs as scams or exploitative “pay-to-win” models. To break this stereotype, genuine innovation, transparent communication, and reasonable monetization models are needed.

• Environmental Issues: After Ethereum transitioned to the PoS mechanism, energy consumption has significantly decreased, but some players still believe that cryptographic technology wastes energy. In the future, more projects will rely on energy-efficient Layer-2 solutions or alternative Layer-1 public chains to mitigate this concern.

• Balancing Gameplay and Economics: How to ensure the game remains fun while providing economic incentives is a challenge. Overemphasis on the economic system may undermine the entertainment value of the game and even lead to an economic collapse.

• Maturity of Infrastructure: Despite progress, wallet integration, cross-chain interoperability, and large-scale concurrency need further improvement to support a smooth experience for tens of millions of players.

Key Trends

Looking ahead, the following trends may influence the next phase of development for Web3 games:

• Cross-Game Asset Interoperability: Achieving cross-game asset sharing remains the ultimate goal of Web3 gaming. To achieve true interoperability, standardization of asset formats and cooperation agreements between developers are required. Although this is extremely challenging, its impact could be revolutionary.

• Metaverse Interaction: The gaming environment may evolve into a center for social, commercial, and community activities. The ownership mechanism of Web3 allows players to truly own virtual avatars, land, and other digital assets.

• DAO Governance: Decentralized Autonomous Organizations (DAOs) are influencing game development, and players holding governance tokens may participate in voting to decide on game expansions, balance adjustments, or the use of community funds, enhancing players’ sense of belonging.

• Esports and Competitive Gaming: The transparency of blockchain could fundamentally change the management of esports events and prize distribution. For example, “Gods Unchained” and “Skyweaver” have begun to experiment with on-chain esports, and in the future, more mature esports projects may join Web3.

• More Mature Token Economy: Game economists and designers are building more sustainable models, which may adopt more advanced token burn mechanisms, stablecoin trading models, and reward systems that enhance player engagement in the future.

Recommendations for Developers and Investors

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

• Gameplay First: No matter how complex the tokenomics model is, it cannot compensate for a mediocre gaming experience. High production standards and engaging gameplay are the keys to long-term success.
• Optimize User Experience: Lowering the entry barrier is crucial. Whether it is a custodial wallet, single sign-on (SSO), or integrated trading marketplace, efforts should be made to minimize user obstacles, allowing Web2 players to smoothly transition to Web3.
• Building a Sustainable Economy: Avoid traditional “Pump-and-Dump” models. A healthy gaming economy should have a balanced mechanism of earnings and consumption, rather than solely relying on new player investments.
• Focus on Compliance: Closely monitor regulatory trends and ensure that token sales, governance systems, and market trading designs comply with future regulatory requirements.
• Collaboration and Innovation: The Web3 culture emphasizes open collaboration. Work with other teams to explore the possibilities of cross-game asset interoperability and quickly iterate and optimize game design.

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

Conclusion: The Future of Web3 Games

We are at a critical turning point. The player ownership, decentralized economy, and cross-game interoperable virtual worlds promised by Web3 games are now more feasible than ever. This industry has evolved from the early NFT collectible hype and basic P2E models into a more mature form.

Thanks to studios like Mythical Games, Gunzilla, and projects such as Illuvium, Star Atlas, Guild of Guardians, Ember Sword, we are gradually moving towards higher quality, sustainable Web3 games—these games not only have high production values but also playability, and the ability to operate in the long term.

Indeed, this process has taken longer than expected—longer than many initially imagined. Technical bottlenecks, market hype, and cultural resistance have collectively slowed the development of Web3 games. However, amidst these challenges, a group of developers who truly understand game design and can reasonably apply blockchain technology has gradually emerged.

Today, high-profile sports IPs (NFL, FIFA), AAA-level shooting games (Off The Grid), immersive MMOs (Star Atlas, Illuvium), and mobile RPGs (Guild of Guardians) are all entering the Web3 space. When well-known brands, user-friendly gaming experiences, and reasonable token economies come together, the likelihood of Web3 games entering the mainstream market has greatly increased.

Next, we may see more in-depth game mechanics, higher production standards, community-led ecosystems, and more widely accepted digital asset ownership. Ultimately, these developments may redefine the concept of virtual worlds—players are not just game users, but true shapers of the economic system, stories, and communities, with blockchain providing the technological support for all of this.

The wait has been long, but now Web3 games seem to finally be realizing their enormous potential. It has all been worth the wait.