Let’s face it—when most people hear the term “Web3 gaming,” they envision clunky platforms. It usually does so with accompanying promises that would make a snake oil salesman blush with envy. If you dig a little deeper, you might be surprised to learn that something truly transformative is afoot—thanks in large part to the rise of cryptocurrencies. Forget the noise. Here’s why crypto is quietly but surely changing the financial underpinnings of gaming as we know it for the better.

New Game Economies Are Emerging

Think about traditional gaming. You buy virtual goods, and that money vanishes down a rat hole. You, the player, own nothing. Crypto flips this on its head. Now we’re witnessing the birth of player owned digital economies between virtual worlds that are enabled using blockchain technology. Take Axie Infinity, for example. It’s more than just a game. Today, it’s a true digital nation growing an independent economy supported by AXS and SLP.

Here's the unexpected connection: these in-game economies are miniature versions of real-world economies, complete with inflation, deflation, and speculative bubbles. This is where financial literacy becomes crucial. We can't just throw players into these complex systems without providing them with the tools to understand what they're doing. Imagine an inexperienced new player, intimidated, fearful and nervous. They fear being taken for all their savings because they don’t understand or can’t anticipate the market’s fluctuations. That's a recipe for disaster.

In this brave new world, Illuvium (ILV) is shaking up the very concept of how an in-game economy should be developed. It is a great example of how game developers explore new opportunities to enhance player experience and create dynamic virtual universes.

The potential of these economies rests on thoughtful design and management. It’s important to understand the successes and, just as importantly, the shortcomings of these early models so that we can develop truly sustainable and equitable systems. We won’t get into the nitty gritty of tokenomics here, but it’s critical that game developers understand tokenomics to build a sustainable ecosystem.

NFT Royalties Empower Game Creators

NFTs have received their share of criticism, with much of it justified. NFT royalties are the NFT space’s great equalizer for artists and content creators. Imagine you're an indie game developer. In that outdated model, large publishers would automatically receive 50% or more of your game’s profits. If you were fortunate, you’d merely get shorted a few percent back. With NFTs, you can bake new revenue streams like royalties directly into your assets. This arrangement makes certain that you get a cut of every future transaction involving your virtual items.

I’ve done some math on NFT royalties, and by all accounts the opportunity is mind-blowing. Now, picture a future in which artists and game developers can earn a sustainable living based on the things they create. They definitely can’t do it without the old traditional gatekeepers.

Here's the emotional trigger: This is about fairness and empowerment. We put creators in control of their own fate. Together, we’re all forging a strong creator economy focused on the boom of Web3 gaming.

The only challenge? Making sure that these new royalty systems are equitable and transparent. To ensure these efforts will be productive, we must earn trust and avoid exploitation. Beyond the technology, smart contracts are important, but they’re not a panacea. In addition to giving communities a share, we need real community governance and strong dispute resolution methods.

  • Problem: Ensuring fair and transparent distribution of revenue
  • Solution: Community governance and robust dispute resolution mechanisms

Financial Inclusion in Emerging Markets

This is where things get really interesting. Web3 gaming and crypto can offer huge promise in terms of financial inclusion and larger scale opportunities connected to it, especially in developing nations. Take for example my own personal context, which has the strongest connections to South Asia. While millions are cut off from mainstream banking, they do have access to a smartphone and the internet.

While problematic, play-to-earn models, at their best, offer these new entrants an additional lucrative way to earn a living. Here's the awe-inspiring connection: A young person in a rural village could potentially earn more playing a Web3 game than they could from a traditional job.

Decentraland (MANA) and The Sandbox (SAND) are the examples that uses cryptos for transactions and governance in their virtual worlds. Imagine the possibilities if we can harness this technology to empower marginalized communities and lift people out of poverty.

Let's be realistic. There are risks and challenges. We still have to tackle the challenges of volatility, security and financial literacy. We need to be vigilant to the potential for abuse. Let’s ensure that these pathways are accessible to all—regardless of race, ethnicity, wealth, or educational attainment. Scams and rug-pulls are real threats. We do need federal regulation, but not the variety that usually saps innovation. We should take a more nuanced, balanced approach between the two that protects consumers without stunting the industry’s growth.

  • Platforms: OpenSea (WETH) and Rarible (RARI) facilitate the exchange of digital assets using specific cryptos.
  • Blockchains: Ethereum (ETH) and Solana (SOL) are crucial for managing digital assets and executing transactions in Web3 games.

Playing with the future Web3 gaming—the future of gaming period—should be fun, engaging. It’s in line with an overall goal of creating a more equitable and inclusive financial system. It’s about letting creators create and empowering people to control their own digital assets. It’s a visionary and aspirational vision to be sure—one that I believe is worth fighting for. It calls upon us to be honest, prudent, and most importantly, fiscally savvy.