Galaxy: The Twilight Road to Web3 Games

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

It took much longer to reach the current stage than I originally expected. As early as when blockchain technology first entered the mainstream vision - the Bitcoin craze was in full swing and early NFT projects were all the rage - I firmly believed that the gaming industry would be the first field to embrace Web3 with all my heart. In my opinion, the concepts of real digital asset ownership, decentralized economic system, and seamless asset circulation are simply tailor-made for the game. After all, this is an industry that has long been accustomed to in-game trading, character customization and virtual worlds. Why not embrace the opportunity for players to truly control digital items at the first time?

But it turns out that I'm too optimistic. After years of trial, slow progress, and countless hype cycles that promised that the game revolution was coming, the real breakthrough for Web3 gaming has not yet arrived. Where are those AAA-level blockchain games? What about high-quality games that can rival Fortnite, FIFA or Final Fantasy , while seamlessly integrating tokenized assets and not letting players feel excluded?

Recently, things seem to have changed. After years of stumbling prototype testing and small-scale success, we finally ushered in the first truly high- quality blockchain games . These projects not only have a professional development team, a mature token economy system, a user-friendly experience, but most importantly, their gameplay is fun enough . From immersive open world NFT assets to on-chain card games that are comparable to Magic’s complexity, we finally see signs of an upcoming market.

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

Review of early hype and unfulfilled potential

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

One of the earliest success stories when NFT first attracted global attention was CryptoKitties . This game launched in 2017 allows players to “breed” digital cats on the Ethereum blockchain, which is innovative and extremely attractive. However, the craze quickly surpassed the technology itself: At one point, CryptoKitties' transaction volume accounted for more than 15% of the Ethereum network, causing severe congestion of the entire network and soaring transaction fees. Although it has received a lot of attention, it also exposed the scalability issues of blockchain games.

Subsequently, other early experiments followed one after another. Spells of Genesis and Rare Pepe Cards bring collectors into the concept of blockchain trading cards. But these games mainly attract hardcore encrypted players and have not entered the mainstream gaming circle. Even though the P2E mode later emerged, such as " Axie Infinity" , traditional players still don't buy it. Many criticized these early P2E games for being too simple to play, 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 trading volume exceeded $4 billion , shocking the industry. However, many traditional players still believe that the "gameability" of Web3 games still needs great improvement .

So, why has Web3 games been unable to achieve large-scale breakthroughs? There are several reasons:

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

• Encrypted 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 private key management, on-chain wallet and other technologies, resulting in extremely high thresholds.

• Regulatory uncertainty : Governments have different attitudes toward NFT and P2E economic models, which have led to policy risks for game developers.

• Resistance of traditional game companies : The giants in the game industry have become accustomed to the centralized in-purchase economy controlled by themselves and are wary of the decentralized model of blockchain.

Ultimately, these issues resulted in much lower-than-expected development of high-quality Web3 games, creating a years-long fault period from initial commitment to actual playable products.

Turning point: Advances in Layer-2 Solutions and Development Tools

Today, the Web3 game industry seems to have ushered in a key turning point, mainly driven by multiple factors, and first and foremost is the improvement of blockchain infrastructure. When CryptoKitties blocked Ethereum in 2017, it exposed the scalability bottleneck of blockchain games. Several solutions have emerged in the past few years:

• Layer-2 solutions : such as Polygon, Immutable X, Arbitrum , these layer two networks significantly reduce the cost of minting and trading game assets and reduce network congestion while still relying on Ethereum's security.

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

• Improvement of developer tools and SDKs: Blockchain technology is becoming easier 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 NFT or on-chain assets into games.

In addition, the wallet experience has also been greatly improved. Compared with the complex process of early players having 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 threshold.

High-quality Web3 games rise: market trends are changing

A batch of brand new blockchain games are pushing Web3 into the mainstream vision - these games are not just simple chain games, but through deep integration of blockchain technology, players can 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 watching, which showcase the industry's tremendous advances in production standards, brand collaboration and financial support , and prove that Web3 games are heading towards a more mature stage.

Mythical Game: NFL Rivals & FIFA Rivals

Mythical Games is one of the most representative teams in the studio dedicated to developing mainstream Web3 games. As one of the earliest professional game companies established in the Web3 field, Mythical has made its mark with Blankos Block Party . With the concept of " game experience as the core, blockchain technology is hidden behind the scenes ", it has created a game experience with both playability and blockchain characteristics. Today, they are leading the Web3 sports gaming market through partnerships with the NFL (NFL) and FIFA (FIFA) .

• NFL Rivals: NFL Rivals are officially licensed by the NFL, where users can collect, trade and manage NFT player cards and then participate in arcade-style football games. NFL Rivals **** It aims to attract not only cryptocurrency enthusiasts but also everyday sports fans by weaving the roster of authorized teams and real-world players into an easy-to-get-hand, play-as-you-can-eat form.

• FIFA Rivals: Mythical Games recently entered into a partnership with FIFA to launch a game that applies similar mechanisms to the world's most popular sports. Under the hype of international competitions, FIFA Rivals will launch player collections, 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 – what ordinary players see is intuitive UI and simple digital item collection steps, while complex blockchain technology is hidden behind the scenes. This approach helps eliminate the bias of many non-encrypted users towards NFT games, making Web3 games more accessible to the public.

Off The Grid: An attempt at AAA-level shooting game

Beyond sports games, first-person shooter (FPS) has always been one of the most popular gaming genres in the world. Gunzilla Games ' Off The Grid is trying to set a new benchmark for Web3 gaming in this highly competitive market.

• Movie production value: " Off The Grid " is developed based on Unreal Engine 5, with a realistic environment and intense and narrative tasks. Early demos and trailers showcase AAA-level visuals comparable to traditional consoles and PC shooters.

• Tokenized assets and player agents: Weapon skins, character equipment and other in-game items are all minted on the chain. The team hopes that true digital ownership can create a thriving secondary market similar to off-chain economy (such as CS:GO, skin), but blockchain technology can guarantee higher transparency and scarcity.

• Lasting World and Real-Time Storytelling: Off The Grid promises to deliver 24/7 Evolving Storytelling. Player decisions, factional wars, and event outcomes can permanently change the map, bridging the gap between Battle Royale chaos and Massive Multiplayer Online (MMO)-style persistence. Web3 is used to ensure that event rewards and items remain truly scarce and uniquely recognizable. By blending the beloved, competitive genre with carefully integrated NFTs, Off The Grid highlights how AAA shooters attract casual console gamers and hardcore cryptocurrency collectors – without sacrificing core gameplay.

Illuvium: AAA-level RPG representative in the Web3 field

Often known as the example of “AAA Ambition” in Web3, Illuvium blends the exploration of open-world role-playing games (RPGs) with automatic combat systems. Players roam in visually striking alien landscapes, capturing and training creatures called Illuvials, each represented by NFTs with unique attributes.

• Layer 2 adoption: Illuvium is built on Ethereum, but leveraging Immutable X to enable fast, low-cost transactions proves that Layer 2 solutions are crucial for large NFT games.

• Competitive gameplay: Automatic Battle Arena brings Illuvials into strategic showdowns similar to Teamfight Tactics or Dota Underlords. This skill-based competition helps alleviate criticism that many blockchain games revolve around speculation only.

• Tokenized ecosystem: Illuvium’s $ILV token is responsible for managing equity, rewards, and community governance—a complex economic design designed to avoid the boom and bust cycles that emerged 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 complex in-game economy.

• High Production Value: Movie trailers and concept art suggest that space simulation games are close to AAA-level visual quality, setting high expectations.

• DeFi Integration: Players can pledge in-game assets, build fleets, participate in politics and commerce, reflecting metagames that intersect with decentralized finance.

• Long-term roadmap: With years of development plans, Star Atlas has become a touchstone for whether gamers will invest in Web3 projects similar to large traditional MMOs, where expansions and content will be launched over time.

Guild of Guardians

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

• Mobile-first approach: The project takes advantage of the huge mobile gaming market, aiming to reduce wallet friction and invite mainstream, busy gamers into the NFT space.

• Cooperative games and guild systems: Players form guilds, launch raids, and share loot, creating a social and team-oriented environment that is very suitable for the on-chain economy.

• Accessible monetization: NFT heroes and equipment come in all kinds of rarity, but developers prevent “paid win” dynamics when designing and notes strong opposition that sometimes plagues blockchain games.

Why did it take so long? Realistic considerations

Even now that high-quality Web3 games are emerging, people still ask: Why can’t we get to this point earlier? Making a high-level game—whether it involves blockchain or not—is a huge project. Traditional AAA games usually take 3 to 5 years (or even longer) to develop. Coupled with the integration of elements on the chain, the development cycle will be further extended.

In addition, early investors mainly invested their funds in the P2E model and NFT market, chasing short-term hype and fast profitability rather than focusing on in-depth gaming experiences. When the novelty of NFT gradually fades and mainstream players are skeptical of it, the industry realizes that adjustments must be made. Studios that are about to launch high-quality blockchain games are usually teams that choose to hire experienced game developers, optimize the token economy system, and ensure that the gameplay itself is attractive enough.

User acceptance is also an obstacle. Many mature game manufacturers are worried that if they introduce NFT, they will be strongly opposed by the player community. When large manufacturers such as Ubisoft and Square Enix tried small-scale blockchain integration, many players resisted, with reasons including " krypton gold win" mechanism, speculative market, and environmental impact . Until recently, these concerns have begun to fade away after multiple proof of concept and significant improvements in infrastructure.

From playing and earning to playing and owning

One of the core debates in Web3 games is P2E (play and earn) vs. P &E (play and earn) vs. P2O (play and own) .

Early P2E modes were advertised as players’ wealth opportunity: “ Buy NFTs, play games every day, and earn tokens! ” Although attractive to some players, these modes usually rely on new players to continue to join in to maintain the token price. Once this economic model collapses, player interest will also decline.

Today, most visionary developers place more emphasis on a balanced gaming ecosystem than relying on unlimited rising token value. They advocate P &E (play and earn) , that is, the main attraction of the game lies in the game itself, and getting tokens or NFTs is just a bonus. This approach is designed to reward technology, time, or creativity rather than turning the entire economic system into a speculative market. At the same time, more and more games have begun to adopt token destruction mechanisms (Token Sinks), deflationary economic model and finer governance structures to ensure the sustainability of the game economy.

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

Fusion 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 huge user bases and billions of dollars in budgets . If one of them makes a major transformation, it will greatly accelerate Web3's entry into the mainstream market.

Currently, there are some signs of integration:

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

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

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

As the user experience is optimized, the line between "Web2 Games" and "Web3 Games" may gradually blur. Players may be able to log in to the game in the future and enjoy the rights to truly own game assets without paying 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 be greatly improved .

Obstacles to be overcome

Despite the rapid development of Web3 games, they still face many challenges:

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

• Player questioning and conflict : Many players view NFT as a scam or exploitative "krypton gold win" mode. To break this stereotype, true innovation, transparent communication and a reasonable monetization model are needed.

• Environmental protection issues : Energy consumption has dropped sharply after Ethereum switched to PoS mechanism, but some players still believe that encryption technology wastes energy. In the future, more projects will rely on energy-saving Layer-2 solutions or replace Layer-1 public chains to reduce this concern.

• Balance of gameplay and economy : How to provide economic incentives while ensuring that the game is still fun is a difficult problem. Overemphasizing the economic system may weaken the entertainment value of games and even lead to economic collapse.

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

Key Trends

Looking ahead, the following trends may affect the next phase of Web3 gaming:

• Cross-game asset interoperability : Realizing cross-game asset sharing is still the ultimate goal of Web3 games. To achieve true interoperability, standardized asset formats and cooperative agreements between developers are required, and although extremely difficult, their impact can be revolutionary.

• Metauniverse linkage : The gaming environment may develop into a social, commercial and community activity center. Web3's ownership mechanism allows players to truly own virtual avatars, land and other digital assets.

• DAO Governance : Decentralized autonomous organizations (DAOs) are affecting game development. Players holding governance tokens may participate in voting to determine game expansion, balanced adjustments, or community funding use to improve players' sense of belonging.

• Esports and competitive games : Blockchain transparency may revolutionize esports events and bonus 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 economy : Game economists and designers are building more sustainable models, which may adopt more advanced token destruction mechanisms, stablecoin trading models, and reward systems that increase player participation.

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 the mediocre gaming experience. High production standards and fun gameplay are the key to long-term success.

• Optimizing user experience : It is crucial to lower the barrier to entry. Whether it is a hosted wallet, single sign-on (SSO) or integrated trading market, user usage barriers should be minimized and Web2 players can successfully transition to Web3.

• Building a sustainable economy : Avoid the traditional "Pump-and-Dump" model. A healthy gaming economy should have a balanced revenue and consumption mechanism, rather than relying solely on new players’ investments.

• 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 openness and collaboration. Work with other teams to explore the possibilities of cross-game assets and quickly iterate and optimize game design.

Patience is crucial for investors. Like the traditional gaming industry, the best return on investment usually comes from projects with strong teams, mature technology and long-term vision , rather than short-term hype.

Conclusion: The Future of Web3 Games

We are at a critical turning point. The promised player ownership, decentralized economy, and virtual worlds across games are now more feasible than ever. This industry has evolved from an early NFT collection hype and basic P2E model to a more mature form.

Thanks to the promotion of studios such as Mythical Games and Gunzilla , as well as projects such as Illuvium, Star Atlas, Guild of Guardians, Ember Sword, etc., we are gradually moving towards higher quality and sustainable Web3 games - these games are both highly produced, playable and capable of operating for a long time.

Indeed, the process was longer than expected – longer than many people initially thought. Technology bottlenecks, market hype and cultural boycott have jointly slowed down the development of Web3 games. But in these challenges, a group of developers who truly understand game design and can reasonably use blockchain technology are gradually emerging.

Today, high-profile sports IP (NFL, FIFA), AAA-level shooting games (Off The Grid), immersive MMO (Star Atlas, Illuvium), and mobile RPG (Guild of Guardians) are entering the Web3 field. When well-known brands, easy-to- use gaming experiences and a reasonable token economy 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 real shapers of economic systems, stories and communities, and blockchain will provide technical support for all of this.

The wait is long, but now Web3 games seem to finally realize its huge potential . All of this is worth waiting for.