Every year, my company Emfarsis partners with the Blockchain Game Alliance (BGA) to conduct an industry-wide survey of blockchain gaming professionals. And every year, the overwhelming majority of respondents agree that digital asset ownership is the biggest benefit that blockchain can bring to gaming; This year was no different, with 71.1% ranking it number one. Even with more people joining the industry (in 2024 we had three times as many respondents as in the inaugural 2021 survey), it is always ownership of digital assets that is revealed to be the undisputed north star of the industry.
But while we hail digital asset ownership as the defining feature of blockchain games, most blockchain games today are free to play and do not require asset ownership at all. On top of that, the much-publicized promises that are based on the premise of digital asset ownership remain largely unfulfilled. Apparently, blockchain gaming professionals have found themselves in a curious bind where the best proposition they have for players is the same one they are making excuses for.
Digital asset ownership has always been central to blockchain gaming, offering players true digital property rights to own, trade, and monetize game assets in the form of tokens and NFTs. Going back to the heyday of play to win in 2020-21, digital asset ownership was the way to differentiate between a blockchain game and a traditional game. Early games required players to purchase one or more NFTs in advance. But this created a barrier to onboarding, as many couldn’t afford NFTs or simply weren’t excited about having to buy an asset in a game they didn’t even know they liked yet.
Of course, these NFTs weren’t simply old game assets, they generated yield. Buying an NFT in a blockchain game was more like investing in a tool you need to do a job, a job that pays in cryptocurrency. Some of the more entrepreneurial-minded NFT owners began renting out their assets to potential players, in exchange for a portion of their profits. It was a striking demonstration of the kind of decentralized, permissionless innovation made possible by blockchain: a community-led alternative solution developed by gamers, not game developers.
As surprising as it was, the rental system that was popular in early blockchain games like Axie Infinity, Pegaxy, CyBall, and others, didn’t actually solve the onboarding problem. Limited asset availability and high entry costs created a bottleneck, so rental demand could not be met, thus perpetuating friction with top-of-funnel user acquisition.
By 2022, in an effort to reduce barriers and attract a broader audience, blockchain games had begun to adopt the free-to-play model. With this, the game’s blockchain-based features were treated as optional enhancements rather than a prerequisite for playing the game. Players could purchase assets later or put in the time and effort to earn them, but only if they wanted to. There was no explicit requirement to do so.
The move came at a time when blockchain games were being pressured to focus less on financialization and more on fun. And it was deemed necessary if they wanted to get a piece of the big, juicy $220 billion traditional gaming market, made up of billions of gamers who probably wouldn’t set up a crypto wallet, much less pony up cash for an NFT.
This contradiction, where ownership of digital assets is both a defining characteristic and a major barrier, reflects the complexities of the evolution of blockchain games. On the one hand, ownership is what makes blockchain games special; On the other hand, requiring it deters players. To attract traditional gamers, who are not familiar with Web3, the developers have prioritized accessibility.
Findings from the 2024 BGA State of the Industry Report support this. When asked about the biggest challenges facing the industry, more than half (53.9%) cited onboarding challenges and a poor user experience, while another 33.6% said blockchain concepts are not supported. they completely understand. Therefore, without clear and tangible benefits, the effort and cost of becoming a digital asset owner is not justified. This reveals a major problem for developers trying to sell newbies on a clunky tech stack that feels more like a chore than a choice, so you can see how they came to the decision not to force it.
But this begs the question: how much blockchain can a blockchain game skip, before the blockchain game is no longer a blockchain game?
This half-hearted approach to adopting chained experiences means that potentially transformative innovations native to Web3, such as the promise of interoperability, where players could use a sword from Game A in Game B, remain largely theoretical. Some progress has been made, such as allowing NFT profile picture (PFP) collections to become playable avatars, but this primarily caters to existing web3 communities rather than offering any tangible benefit to appeal to the Web2 gaming masses. .
True interoperability requires collaboration across the industry, both technically and economically, which is still fragmented across chains and ecosystems. Meanwhile, developers are sweeping Web3 under the rug, treating it as a layer in the technology stack rather than a defining feature. So for most players, the “Web3” part is hidden, optional, and has about as much impact as a collectible spoon in a cereal box.
Frankly, the notion of “ownership” in Web3 is hugely overrated and largely unsupported by any substantial product-market fit. Web3 ownership, as it is often sold, is a mirage. The reality is: even if you “own” an NFT, its usefulness and value often depend entirely on the centralized infrastructure and ongoing operations of the developers. What Web3 offers is greater agency over your assets, allowing for faster, frictionless sales. But the real property? Not so much.
In reality, there is little evidence to suggest that Web3 ownership has driven sustainable demand. That said, the ability to exert greater control over your digital assets is undeniably valuable, but not the “true ownership” that is often claimed.
That said, there have been some very promising experiments with fully on-chain games and creative catalysts like the Loot NFT collection. Its composable structure allowed developers to create derivative projects, games, and economies around it without needing approval or input from the original creators.
Other recent innovations born in the realm of digital asset ownership include the Ethereum standards ERC-6551, ERC-4337, ERC-404, and soulbound tokens (SBT). ERC-6551 introduced token-linked accounts, allowing NFTs to act as their own wallets. ERC-4337 delivered account abstraction, enabling customizable wallets that improve security and usability without relying on centralized custodians. ERC-404 combined the features of fungible and non-fungible tokens to offer flexible ownership of unique and divisible digital assets. SBTs provided us with non-transferable, identity-linked assets that represent credentials of trust and reputation.
While still early in the adoption curve, these advancements allow players to unlock experiences that would never have been possible without digital ownership rights. And the results of BGA’s annual survey confirm that the appeal of digital asset ownership remains strong: it provides players with agency, control and value.
The challenge now is to allow players to experience the fun first and discover the value of the property organically. But we should not be ashamed to stand up for what we truly believe. If we want others to join our vision, we must develop experiences that demonstrate the benefits of digital asset ownership from the beginning.
Otherwise, we’re not doing anything special. Are we?
Thanks to Nathan Smale, Duncan Matthes and Owl of Moistness for their review of this article.
The author owns several cryptocurrencies, including Web3 game-related tokens such as YGG, RON, and SAND, and is an angel investor in over 15 Web3 startups.
