The web3 gaming trilemma

NFTs and the web3 gaming trilemma

The ‘blockchain trilemma’ refers to the believe that blockchains can provide only two of three ingredients that are necessary for a healthy network: security, decentralization and scale. Blockchains have to compromise on one of them. By moving towards part of the triangle that’s strong on two of the aspects, you distance yourself from the third.

A similar trilemma exists in web3 games, and it exists by the entrance of a new user into the gaming arena: The investor.

Games have traditionally had two stakeholders: game developers and game players. Occasionally a judge enters the fray, but the relationship between developers and players has been the fulcrum of games. Up until web3 where a new ‘player’ enters the gaming world and shifts things up dramatically. This isn’t to say that the ‘investor/trader’ player type hasn’t existed in traditional games. Traders and investors have taken part in some huge gaming franchises such as Magic the Gathering (a trading card game) or more recently in online games such as Runescape and Eve Online.

But while trading and in-game economies are core to these games, this has still been a fringe game movement. Most gamers have never encountered owning and trading mechanics as a core part of the game or more importantly, the ownership economy that enable interoperability with the rest of the financial world that are a core primitive in web3.

The Investor gamer

The investor and trader gamer is a new kind of gamer. One who’s interested in the ownership economy, ROI and speculation. They also might be gamers and love to play, but at their core they get their kicks from trading and winning. For them, the financial aspect IS the game. ‘Cool!’ you might say. Wasn’t managing finances a core part of Rollercoaster Tycoon? Yes…but. The big ‘but’ is that the web3 investor gamer archetype has the capacity to ruin the game for the regular gamers, making the trilemma look less like a triangle, and more like a broken seesaw.

Where traditionally the players and developers had a direct relationship, in web3 investors have become the dominant user type in the middle. With just a little weight on either side, they can throw the entire seesaw out of balance.

This has played out time and again. Investors bid up the price of different web3 gaming assets, making the game expensive to play, boring to play and sometimes when blockchains become congested, even impossible to play. All the things gamers have come to abhor in a ‘free to play’ world.

In game characters, land and items get bought up by early speculators and real gamers never get involved. This is a topic I’ve covered in depth here. So why do developers keep on falling into the same trap and how can we solve the trilemma and fix the seesaw?

The web3 gaming trilemma solution!

The problem has been that game makers in web3 tied investors and players together to raise money for their games. The need to stop. They need to raise money the traditional way, or raise it from those same investor whales when their game can justify it. But they need to stop making playing dependent on investors.

Instead they need to separate capital raising for the game development with the game itself. The solution is to separate the two activities and players. Let players play. Let investors and traders invest and trade. You can’t have a successful early stage game build out a product that works for both investors AND gamers. One always comes at the expense of the other. If you’re looking to build a game, develop a game and later on when you’re thinking about monetization add in the financial layer.

This isn’t to say remove the ownership economy from the game. Not at all. That’s the core differentiation point web3 games have to offer. Just remove the financial aspect from it. Make it free to own and free to play in the early days. Limit fund raising activities to that — raising capital for game development. Keep them out of the game dynamics. Then, later on, when it becomes relevant — add monetization.

The positive is that web3 whales probably have a MUCH higher LTV than web3 ones (simple example: iOS limits in app purchases to $100. What was the last price point for a BAYC? Much much higher), so there’s plenty of upside in monetizing a successful game.

If you want to have your cake and eat it too, the solution is to have a game that’s built around trading and investing. Make THAT the game.

It’s just another kind of game: Rollercoaster Tycoon built entirely around real finance. That could be a cool — but that’s a different kind of game, with a different player profile than World of Warcraft.