"Black Myth: Wukong" sparks reflection on the development of blockchain games (GameFi)

Author: Hippo Investment Research

Recently, the domestic AAA game “Black Myth: Wukong” can be said to have caused a global frenzy among game players, successfully attracting a large number of domestic and foreign players to follow, and at the same time, it has sharply driven related stocks in the Capital Market to rise. The success of “Black Myth: Wukong” is largely due to its deep Chinese traditional cultural background and innovative storytelling, which to some extent also reflects the current game market’s desire for high-quality content. It has also sparked our reflection on the development of Blockchain games (GameFi). GameFi games can draw on some characteristics of this game in their development, by combining specific cultural backgrounds or unique storytelling to attract players. For example, building a virtual world based on Blockchain technology, allowing players to experience culture and history while exploring, enhancing the immersion of the game.

How does GameFi break the circle of blockchain games?

1. Improve the quality of the gaming experience

The success of “Black Myth: Wukong” is not only due to its cultural background, but also its high-quality visual effects and smooth gaming experience. For a GameFi project to be successful, it must first ensure that the game itself is interesting and attractive enough. This means that developers need to invest more time and resources in gameplay, rather than just relying on blockchain technology hype. This is also one of the core issues of blockchain gaming: how to provide similar high-quality experiences in a decentralized environment, improve game performance by optimizing smart contracts, increasing blockchain throughput, and dropping transaction costs, ensuring that players do not drop the gaming experience due to technical limitations when using blockchain games.

2. Sustainable Economic Model

GameFi typically relies on the ‘Play-to-Earn’ model, where players earn Crypto Assets or Non-fungible Token assets through in-game activities. However, we have experienced that many blockchain game products have deeply understood that relying solely on such mechanisms may lead to the unsustainability of the economic system. Drawing inspiration from the design concept of ‘Black Myth: Wukong’, blockchain games can design more complex and diversified economic models, such as introducing non-monetary reward mechanisms or reward systems based on contribution and participation, ensuring the stability and sustainability of the economic system. Many blockchain games in the past have focused on TOKEN rather than the game itself. I believe that TOKEN should not be the core driving force of the game, but should be used as a value-added service or reward mechanism. Games that overly rely on the value of TOKEN often lose balance when the TOKEN value falls, leading the entire game into a death spiral.

3. Community and User Depth Participation

Behind ‘Black Myth: Wukong’ is a passionate player community, which is one of the key factors for the game’s success. Chain game developers should focus on community building, encourage player participation in the game development process, or empower players with governance rights through DAO (Decentralized Autonomous Organization) and other forms to enhance user stickiness and engagement. However, the prerequisite is that the game itself must be good enough and worthy of long-term player investment. Many development teams focus more on short-term profits and returns when starting a project because of the inherent risks and uncertainties in the encryption market, and they are reluctant to make long-term investments. This is also one of the reasons why it is difficult for GameFi to produce a phenomenal product like Wukong.

4. The Depth Fusion of Blockchain Technology and Game Design

Currently, many blockchain games simply add a token economy to traditional casual games and enter the encryption market without putting too much thought into the game itself. The success of ‘Black Myth: Wukong’ can remind blockchain game developers that game design and blockchain technology need to be deeply integrated in order to create a unique gaming experience. For example, it can explore mechanisms for cross-game asset interoperability based on blockchain, decentralized game world generation, and a truly player-driven economic system, using blockchain technology to achieve innovations that traditional games cannot. Blockchain technology can provide irrefutable asset ownership and transaction transparency, but if the implementation of these technologies leads to a decline in gaming experience (such as high latency, complex operations), it will not be worth it. GameFi needs to find a balance between technological innovation and user experience.

5. Binding Depth to Players

In ‘Black Myth: Wukong’, the characters and stories are designed and owned by the developers, while in blockchain games, players can truly own in-game assets through Non-fungible Tokens and Smart Contracts. Blockchain game developers can learn from the importance of IP in ‘Black Myth: Wukong’, empower players with the creative and control rights to game assets, enhance players’ sense of belonging and creativity, and thus create a more attractive and sticky ecosystem.

Clash of Perspectives

Taken from:

Taking inspiration from this KOL’s article, I would like to express my opinion: The essence of games is entertainment, not making money. If the priorities are reversed, there will only be demise!

The reason is simple. If playing games can make money (not referring to game boosting), who would go out and work like a horse? Wouldn’t it be more comfortable for the people of the country to lie at home every day, blowing Airdrops and playing games to make money? Even for games like Fantasy Westward Journey and Dungeon & Fighter that we played in our childhood, which can indeed make money through over-the-counter trading of virtual game assets, it must be a negative economic model where the input time cost is greater than the output profit that can make the game go for a long time. This is because the essence of the game is entertainment, which requires the team to focus on the development of the game’s playability, so as to retain users. If you want to attract users by gold farming, a large number of gold farming studios will immediately drag the game into a death spiral through scripting. As for how the game development team can attract players, I think it can start from two aspects: the playability of the game itself and the uncertain wealth effect. The playability needs no further explanation. The uncertain wealth effect can be understood as not every player can make a profit in the game, but they have the opportunity to get high returns, just like why the MEME market is so popular, mostly because of its high leverage wealth effect. The core logic of this point can also be integrated into the game by the development team of blockchain games.

So the question is, why should games be put on the chain?

Web2 games are not on the same level as blockchain games in terms of graphics, controls, user experience, and the gaming experience. Isn’t it better for everyone to play Web2 games? Why bother with blockchain games? First of all, I believe that putting games on the blockchain can solve the pain points of traditional Web2 games:

1. Ownership of Game Assets is Determined: In traditional Web2 games, virtual items (such as skins, weapons, characters, etc.) purchased by players actually belong to the game company, and players only have the right to use them. If the game is closed or the player’s account is banned, these assets will disappear. Through the Non-fungible Token (NFT) technology, Blockchain allows players to truly own digital assets in the game, which can be bought, sold, and transferred outside of the game, and the ownership records are transparent and tamper-proof.

2. Realization of game asset realization capability: Traditional game asset realization has many problems, including but not limited to Compliance, fund security, the influence of factors such as the uncertainty of Over-the-counter Trading platforms, which makes it inconvenient to realize virtual game assets. Block can solve this problem very well.

3. Solved the problem of interoperability of game assets: In Web2 games, players’ assets are usually unable to be transferred or used across different games. Blockchain can achieve interoperability of assets across games, allowing players to sell assets in one game and transfer them to another, or even freely trade between different game ecosystems. This interoperability can greatly increase the value and efficiency of player assets.

4**. Improve the game mechanism for transparency and fairness:** The game mechanism and randomly generated rewards or drop systems in Web2 games often lack transparency, and players may question their fairness. Blockchain, through smart contract technology, can make the execution process of the game mechanism transparent and ensure fairness. All operation records can be viewed and verified on-chain, thereby enhancing players’ trust in the game.

**5.**Preventing Cheating and Hacker Attacks: Traditional Web2 games face serious cheating and Hacker attack issues, especially those involving virtual economies. The decentralized nature of blockchain can effectively prevent single point of failure, while the automatic execution and immutability of Smart Contracts can reduce cheating behavior. For example, the automatic execution of rewards distribution and competition results through Smart Contracts can reduce the possibility of manual manipulation and cheating.

6. Governance and Decision-making of Decentralization: In Web2 games, all decision-making power is held by the development company, and players’ opinions usually have little direct impact on the direction of game development. Blockchain introduces the DAO (Decentralized Autonomous Organization) model, where players can participate in voting by holding game tokens, collectively deciding on key decisions such as game updates and rule modifications. This governance method of decentralization can increase player participation and loyalty to the game.

The problem with blockchain games is that the development teams tokenize the game instead of the players. The reason is that the development teams see tokens as the most important source of revenue in the long run, allowing them to generate substantial profits, rather than focusing on providing players with a great gaming experience and replayability. This leads to issues with the logic of the game. Take the game ‘Wukong’ as an example: the development team invested a significant amount of resources in creating this product, which carries a great risk. However, their main source of profit is simply selling game registration codes. Unlike game developers of games like League of Legends, who can make money by selling skins, Wukong and similar single-player games have limited additional sources of revenue. The success of games like League of Legends lies in their high quality and replayability, which naturally attracts the market. There is a demand for high-quality games in the market, and it doesn’t require extensive market education. This is something that blockchain game development teams should deeply consider.

Summary

Finance and games themselves are the two products that are most easily implemented on the Blockchain, and games themselves have a high user stickiness, which can easily trigger viral spread. By combining the successful experience of ‘Black Myth: Wukong’ with the advantages of Blockchain technology, GameFi chain games can provide high-quality game experiences while achieving innovative and sustainable economic models and continuously iterating chain game products, thereby promoting the further development of the entire industry.