On-Chain vs. Off-Chain Gaming: Building the Next Generation of Web3 Games

Move beyond the hype! Learn how to leverage on-chain & off-chain strategies for long-term success in your Web3 gaming project.


What separates off-chain games from on-chain games

With the use of web3 and blockchain technology, the on-chain gaming industry is a dynamic and quickly developing field that is revolutionizing game design, digital ownership, transparency, and new revenue streams.

The main methods of revenue generation for off-chain games are expansions or microtransactions, such as in-game merchandise. These exchanges typically have a monetary value exclusive to the game's community. Think back to the days of classic multiplayer games like World of Warcraft or Fortnite, when player payments for things like game accounts or cosmetics only benefit publishers and studios. Players are compelled to enter dangerous and unauthorized ecosystems by other open marketplaces that function as gray markets where they may buy things or characters.

However, the expanding genre of games that run entirely—or at least partially—on blockchain networks is known as "on-chain gaming." When a game or gamified experience runs and stores some of its game mechanics on the blockchain, it's referred to as being on-chain. For commercial and technological reasons—which we shall address in more detail later in this piece—just a select few games, such as Dark Forest, can be regarded as completely on-chain today.


Recognizing whether aspects of game design are often off-chain or on-chain

In short, everything that takes place on the blockchain is referred to as being "on-chain," while anything that occurs off the blockchain is referred to as being "off-chain." On-chain games provide players the option to partially own and administer the game, allowing for more creative gameplay and revenue prospects than off-chain games, which are fully managed and centralized by your development team.

Off-chain games 

  • Centralized and under developer control.
  • The game's ecology is the only place where these things may be used and exchanged.
  • Approach to monetization: extensions or small-scale deals

On-chain games 

  • Utilize blockchain technology in part. Open, immutable networks are used for storing and operating game systems.
  • Exchanging in-game goods outside of a game's community
  • The development and roadmap of the game are frequently more in the hands of the players. 


To get you started, let's explore the game design components that are commonly associated with web3 integration.


Objects seen in games: The introduction of digital tokens that signify ownership of in-game objects, characters, or artifacts is one of the fundamental principles of on-chain gaming. The fact that these digital goods are identifiable and indivisible ensures that players actually own them. With tokens, gamers may quickly purchase, sell, trade, and record any transaction for in-game goods on web3 markets. Tokens create new possible revenue streams and set the foundation for player-led economies in the process.


Authority: Blockchain technology makes it possible to create decentralized governance models like DAOs through smart contracts and tokens. This could democratize gaming and promote a strong sense of community engagement by allowing players to influence the game's development direction, economic policies, and updates.

And these are the components of the game that usually live off-chain:

Mechanics of games : The basic structure for on-chain game logic pieces is provided by smart contracts; however, the complex or elaborate interactions, AI actions, and physics simulations required for games are usually handled off-chain.

Users Interfaces:   Off-chain components are the user interfaces that let players access menus, inventory displays, settings, and other features. These interfaces are not directly saved on the blockchain, even if they may show on-chain data (such a player's digital collection).

Playtime:  Gameplay requires off-chain processing due to its dynamic nature. Off-chain game servers allow users to travel, interact, and take part in fast-paced gameplay without any hiccups. Furthermore, participants don't need some elements—like tournament results—to be housed on a blockchain in order for them to be sufficiently verifiable. Most players have faith in developers when it comes to these factors' outcomes.


Choosing which web3 game design features to create off-chain or on-chain

A number of considerations, including as the game's intended audience, technological needs, and development objectives, will determine whether to create a totally on-chain game or integrate specific web3 capabilities. A pragmatic strategy frequently entails maintaining most components off-chain and just adding certain functions onto the blockchain.


Community and target audience

It's critical to comprehend the primary community and target audience for your game. While some players may not be aware of these systems or care at all, others may be very interested in confirming interoperability, real ownership, and tournament outcomes.

The fact that on-chain features are frequently presented and sold with a focus on technology rather than the advantages they provide to every participant is one of the main obstacles you will encounter while implementing them. You can explore and adopt web3-powered features without running into community backlash by tailoring your messaging to these insights.


Technical aspects

The ability of blockchain networks to manage transactions and the execution of smart contracts varies. It is important to assess if the blockchain you have selected can manage the anticipated amount of transactions, particularly if the game has a lot of in-game activities, item transfers, or marketplace exchanges. Scalability might not be the main problem in some genres, such as turn-based strategy games or collection games with modest transaction rates. 


Monitoring performance using both on-chain and off-chain metrics

Daily active users (DAU): The total number of distinct players who log in to the game each day.

Costs associated with advertising and acquiring new users: If you want to know if recruiting new players by marketing and advertising is a successful onboarding strategy for your game, compare the cost of those players against their lifetime value (LTV).

Player reviews and ratings: You may gain more insight into the opinions of the general public about your game by monitoring user reviews, ratings, and comments on social media and app stores.

Player Retention: Player retention is the proportion of players that stick with the game for an extended length of time.

Lifetime Value:  Lifetime value (LTV) is the total amount of money a project anticipates making from a player over the course of their partnership.

ARPPU (average revenue per paying user) and ARPU (average revenue per user): The mean income earned by every participant and participant who pays.

Conversion rate: The proportion of gamers that subscribe to premium features or make in-game purchases.

Other web3-specific success metrics, albeit secondary and monetization-focused, include:

Transaction volume: The total quantity and value of all the game's blockchain transactions.

Holders of tokens or things: The total number of participants on the blockchain who possess tokens or items used in-game. This measure may be used to gauge how well-liked the game is as well as how much of its merchandise may be traded on online marketplaces.

Secondary market statistics: Secondary market data include secondary sales, pricing, volume, and information on third-party websites used, locations where players trade, what they do with their assets, and what the community is doing around the game environment.


Creating the web3 game of the future: it all begins with you

The choice to include blockchain technology in your game design should be in line with your overall goals, the kind of experience you want players to have, and the unique advantages that web3 can provide.It takes a significant effort to start developing web3-powered experiences. It's important to remember, though, that the web3 ecosystem has evolved significantly and steadily over time, offering complete web3 solutions that eliminate the difficulties involved in creating a game.When you're ready to take the leap into web 3-games, reach out to DappsFirm for guidance.


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