Gaming is one of the fastest-growing subsectors of the web3 industry and its most resilient verticals, with funding remaining buoyant despite the unremitting bear market. Over 60% of the $7.1 billion raised by web3 startups in 2022 was funneled into web3 gaming. And 2023 looks to be the year this capital comes good, bringing with it a Cambrian explosion of high-quality games and another level of adoption.
But for web3 games to truly gain critical mass and unlock their full potential, they must overcome one of their biggest technical challenges yet — scaling.
Fortunately, the notion that web3 games can’t scale for mass adoption is rapidly changing thanks to the development of Zero-Knowledge (ZK) technology. Beyond scaling, this revolutionary tech’s introduction provides numerous gaming-changing transformations, including enhanced security, privacy protection, improved game mechanics, trustless gameplay, and new revenue streams.
True Ownership Hits The Wall of Scalability
Today, robust in-game economies are an increasingly important part of popular AAA titles like League of Legends, Fortnite, Call of Duty, Overwatch, World of Warcraft, and countless more. As proven repeatedly, there is a steady demand for in-game customization, exemplified by the skins market becoming a $50 billion industry in 2022.
Unable to sate the appetite for such items, game developers offer many in-game assets, ranging from character and weapon skins to small virtual accessories and avatar frames. Consequently, many players own tens, hundreds, or even thousands of in-game items, typically across several titles — all of which they can never truly own, sell, or trade.
Traditional web2 gaming assets have always been a one-way street, where funds flow from gamers to developers and publishers. This is one of the biggest web2 anachronisms that web3 aims to disrupt — by opening in-game economies up and allowing players to become full-fledged participants of these markets, enabling them to take those custom digital assets between different games, turning gaming into an interoperable, immersive ecosystem.
For this to happen, however, web3 gaming must be prepared to sustain the same scale at which web2 titles currently operate, and that’s no easy task. Giants like League of Legends and Fortnite attract millions upon millions of players, and each can have numerous in-game items on their accounts. To compete with such a massive flow of in-game assets, especially when players can also truly own and freely trade and exchange them with each other, web3 games need to be able to process tens of thousands of transactions simultaneously.
Meanwhile, Ethereum, the go-to blockchain for everything web3 related, can only process up to 30 transactions per second (TPS) on average today — and that’s a problem.
For ZK, Scaling Is Just The Beginning
Fortunately, a fundamental paradigm shift is already underway. The development and imminent launch of ZK technology natively compatible with Ethereum will change how all game development, not just web3, is created. Dubbed zkEVM, this innovative rollup brings all of the benefits of asset ownership to users on a global scale while also unlocking a wide array of improvements that stand to revolutionize web3 gaming.
First off, scalability. One of the primary benefits of zkEVM technology is the ability to attain global scale without sacrificing security. It allows large batches of transactions to be bundled together and validated off-chain, with only the final proof being transmitted to the main network — reducing burdensome transaction data on the mainnet.
This increases throughput by approximately 600x compared to the Ethereum mainnet while significantly lowering fees. This functionality is essential in games where millions of high-volume, low-cost transactions occur daily.
Next, interoperability. Instead of being isolated walled gardens, these new titles will operate more like an ecosystem. Assets, avatars, profiles, and more can seamlessly move across different platforms and games, allowing users greater liquidity and access.
Additionally, the process of purchasing, selling, or transferring items will be streamlined to just one or two clicks instead of needing to set up and manage an entirely separate wallet application. Through this overarching compatibility, all titles and services can now become seamlessly interoperable in ways never before possible with traditional gaming.
Building interoperable assets to transfer between games is an incredibly compelling way to increase the longevity of the underlying economic value of gaming titles. It helps developers create a composable gaming universe where any fan of one game quite literally has “skin in the game” for others in the same universe. Not only does this create the opportunity for long-term monetization, but perhaps more importantly, it gives game devs a chance to take more creative risks, safe in the knowledge that there’s already an audience out there who will pick the game up.
Another benefit is the way that ZK can enhance gameplay and utility. zkEVMs, in particular, enable compatibility with smart contracts, unlocking more sophisticated gameplay mechanics and vibrant economies within the Ethereum ecosystem.
Functionality like asset staking offers the possibility of passive earnings and can bring real value to the items acquired inside a game. Furthermore, crafting new items has new meaning when they come as an NFT that the player truly owns and can be traded or transferred at their will.
What’s more, all assets can be nested. For example, a player’s avatar can be an NFT with multiple accessory NFTs. These assets can be linked and transported or sold together, or they can be broken down into their constituent parts. It’s entirely up to the player.
There are also some profound upsides for developers. Utilizing a zkEVM and drawing from a library of vetted smart contracts can significantly streamline the development process, cutting costs and allowing the creators to focus on the fun gameplay elements that will set their product apart. There’s no need to reinvent the wheel; any studio can quickly begin fleshing out innovative web3 titles.
This technology even stands to make games more secure than ever before. zkEVMs not only boost transaction throughput and reduce fees, but they also preserve the robust security and decentralization of Ethereum.
Additionally, leveraging ZK-powered IDs or gamer tags means only the individual connected to the account can interact with it. Exploitative or malicious activity can be monitored and addressed without even necessarily needing to reveal the real identities or data of anyone involved. This stands to overhaul how moderation is handled, ultimately making these environments safer for everyone.
The Future Is Already Here
zkEVMs are already being developed, and any gaming studio can now tap into the benefits afforded by this technology.
Whatever the need, there are now web3 tools that are up to the task of delivering the most cutting-edge and empowering experiences for gamers everywhere. Developers are no longer shackled by limitations, and they can truly bring their creative visions to life.