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Web3 Gaming: On- and Off-Chain Considerations

Ray Chen
Product Manager
May 2, 2023
Web3 Gaming: On- and Off-Chain Considerations
Since this post was written, Hyperledger FireFly has reached 1.0. Learn more here!

Gaming today is already very robust with a variety of different game types and experiences. But blockchain shows potential to revolutionize how we build games and online experiences. This includes player ownership of assets and interoperable games.

If you want a full overview on how blockchain can improve the games we build, start with this article on blockchain gaming use cases. It'll give you a sense of where blockchain works and where it doesn't, and the pros and cons of using blockchain to build games.

In this article, however, we're going to go a layer deeper and start talking about on- and off-chain considerations, what parts of the game live on-chain and what lives off-chain. This article assumes you've settled on blockchain as a tool you'd like to use and now want to move into the design phase. It's meant to start a dialogue about how we can build experiences that work for your business and users—when we use the chain correctly.

As a game developer, designing how and when you game interacts with a blockchain is one of the most important aspects to get right. It’s the key between success and failure and one of the biggest headwinds facing web3 gaming is the gameplay. In a survey conducted by the Blockchain Gaming Alliance, 37% of respondents cited poor gameplay as the biggest challenge facing the blockchain gaming industry, ranking second to accessibility of the games. Properly sorting on- and off-chain functions gets us closer to fixing gameplay issues. It also moves blockchain development closer to realizing some of the easy-to-use web2 experiences that exist in the gaming world today.

On- and off-chain considerations in gaming

The first thing to think about is why is blockchain being used. There are a few distinct advantages of blockchain, namely verifiable ownership, decentralization, immutability, and incentivization. There are also hurdles for blockchain, namely scalability, user experience, and potential regulatory uncertainty.

On-chain refers to everything that happens on the blockchain while off-chain refers to everything that happens outside of the blockchain. In the following sections, we’ll explore implications for game logic, synchronizing on and off chain transactions, asset management, and user experience. Let's take a closer look at some of the most important on-chain considerations for blockchain gaming.

Game Logic

Game logic refers to the rules and mechanics that define how a video game operates, such as movement, combat, AI, and graphics. It is responsible for the core gameplay mechanics and is implemented through software programming. Good game logic is crucial for creating an engaging and immersive gaming experience. Some examples of potential on-chain game logic include:

  • Token transfers and ownership management
  • Random number generation for game events
  • Game asset creation, exchange, and storage
  • Determining the outcome of in-game events and matches
  • Managing player stats and achievements
  • Distributing rewards and incentives to players
  • Implementing game rules and governance through smart contracts

While everything in a game could technically be on-chain, there are significant trade offs of computational resources, data storage, execution times, and potential gas fees. Developers must consider the type of transactions their game will have. Will there be a large volume of transactions or a low volume? Which transactions happen on-chain? Is every in game asset tokenized or only the high value ones? How many validator nodes are needed? Who can be a validator? Developers must consider the design of the game and choose a blockchain, consensus mechanism, and protocol that can handle all the different transactions.

Kaleido provides solutions for this by allowing you to stand up your own dedicated sidechain with full control over who has access to it, consensus mechanism, protocol support, and more to ensure that you have a blockchain network customized and dedicated to your game.

Smart Contracts

In addition to setting up a blockchain network for a game, developers must also think about smart contracts. On-chain game logic is run on smart contracts which are programs that self-execute when certain predefined conditions are met. Once executed, it becomes a permanent and immutable part of the blockchain. Smart contracts may define game logic and govern the interactions between players and the game on-chain.

Thus, it is important for a game developer to also think about what’s codified in a smart contract. While one of the biggest features of blockchain is immutability, smart contracts need to be designed in a way for easy updates and modifications. Additionally, there needs to be careful consideration on what is processed via smart contract versus off-chain. Too much on-chain activity can lead to a poor user experience and high gas fees depending on the chain you are running on.

Kaleido provides out of the box smart contract management and smart contract upgrading for your blockchain network ensuring security and ease of use.

Screenshot of Kaleido's smart contract management
Kaleido makes it easy to build smart contracts from templates or input from exertnal sources, and manages the full lifecycle of contracts through regular upgrades.

Asset Management

Asset management is another critical consideration when developing a web3 game. Players expect to have full control over their gaming assets, including the ability to trade, sell, and use them in other games. As such, developers need to decide what types of gaming assets should be tokenized. For instance, tokenizing rare items, characters, skins, and achievements are not too big of a departure from existing Web 2 games but others might be entirely new concepts.

Additionally, creating experiences around tokenized assets may not be straightforward. Should users be able to trade or sell their achievements and progress or should these be account bound? Perhaps ownership of certain achievements could be entry passes for exclusive content. Or if games are interoperable, perhaps different achievements across games could be the unlocking mechanism for exclusive content. Developers could also track player activity in the real world as well. Imagine players getting exclusive NFTs for attending eSport events or buying merchandise that can unlock in-game experiences. The possibilities are endless and the implications are non-trivial.

Another thing to consider is security. Since assets may now be directly owned by players, it is essential to ensure that smart contracts and on-chain transactions are secure and free from vulnerabilities. Any flaws in the smart contract code could result in players losing their assets, game progress, or even real money.

Finally, there may also be regulatory and legal considerations such as intellectual property rights, data privacy, money laws, and more. For instance, depending on your token design, in game assets may need to be categorized as convertible or non-convertible currencies. Non-convertible virtual currencies are what most games are today and intended to be used within a closed system (i.e. in game). As such, non-convertible currencies are not subject to strict regulation as it is seen as a non-money transmission. Convertible virtual currencies, on the other hand, may be subject to regulatory scrutiny because they transcend beyond the game and could be used as a substitute for real currency. Details such as these are outside the scope of this article though they are important to be aware of.

Kaleido offers web3 and NFT APIs that make it easy to create, mint, and transfer tokenized assets. Additionally, Kaleido also makes it easy to index assets across chains through Hyperledger FireFly. Hyperledger FireFly has a built-in indexer for tokens, that maps every token mint/burn/transfer/approve operation that happens on the blockchain into a private database that you own for fast query. Just specify which tokens you’re interested in, and FireFly takes care of the rest.

Syncing On- and Off-chain Transactions

Another point of focus is synchronizing what happens on-chain with game state. This is important to ensure integrity of the game and transactions. If done wrong there may be data breaches to users’ assets, duplicated items, or a variety of other problems. As an example, let’s imagine a scenario where there are two players, Player A & Player B. Player A wants to trade 20x of IGG (in-game token) for Player B’s unique sword that is represented as a NFT. An example of what the on and off-chain synchronization might look like is:

  1. Player A & Player B agree to transact 20x IGG for the unique sword in game
  2. Transaction begins on chain and digital assets are released to an on-chain escrow contract
  3. The game queries on-chain data for activity
  4. Game state is changed based on on-chain activity
  5. Game activity managed, items updated in off-chain database, and transaction appears in each player’s gaming account
  6. Escrow contract releases on-chain digital assets to respective wallets of Player A and Player B

As seen here, there are a variety of steps for communication between the blockchain and off-chain data stores, much of which needs to happen instantly.

Kaleido offers seamless on and off-chain data synchronization through FireFly, a fully open source middleware layer developed by Kaleido. This is done through an event-driven programming model whereby FireFly coordinates events on the blockchain and off-chain payloads.

Kaleido is here to help you get your ideas live

To design a successful web3 game, careful consideration of on- and off-chain factors is essential. Blockchain technology offers several advantages such as verifiable ownership, decentralization, immutability, and incentivization, but there are also challenges such as scalability, user experience, and regulatory uncertainty.

Critical aspects of game development include game logic, smart contracts, and asset management. Developers must determine the type of transactions their game will have, what is codified in a smart contract, and which gaming assets should be tokenized. They must also consider the security and legal implications of tokenized assets.

Finally, selecting the appropriate on-chain technology stack is crucial. Kaleido provides a one-stop shop for all your web3 gaming needs. These include a dedicated and customized blockchain for your game, middleware layer, smart contract management solutions, token APIs and indexers, bridging capabilities, wallet integrations, and more so that you can focus on the actual game design. With the right approach, developers can create an engaging and immersive gaming experience for players. If you're ready to bring your web3 game to life, schedule a talk with one our solutions architects and we'll get you started.

Try our NFT Platform

Our solutions architects are standing by to help you manage on- and off-chain considerations to get your game live.

Request a Demo

Try our NFT Platform

Our solutions architects are standing by to help you manage on- and off-chain considerations to get your game live.

Request a Demo
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Interested in Blockchain?

Start learning blockchain and creating enterprise solutions today with a free Kaleido account!

Create Free Account

Try our NFT Platform

Our solutions architects are standing by to help you manage on- and off-chain considerations to get your game live.

Request a Demo

Try our NFT Platform

Our solutions architects are standing by to help you manage on- and off-chain considerations to get your game live.

Request a Demo

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