What is web3 gaming?

Web3 gaming is a style of video game that uses a blockchain for parts of the game, such as items, currencies or the rules themselves. Instead of a studio's database deciding who owns a sword or a character, ownership is recorded onchain where anyone can check it. The term comes from web3, the broader idea of apps where users hold their own assets.

How do NFT games work?

In most blockchain games, in-game items such as characters, equipment, cosmetics or virtual land are NFTs. Each item has its own token ID on a blockchain and is tied to the player's wallet address. Because that record is public, players can trade items on existing NFT marketplaces outside the game, and buyers can check that an item is genuine by looking at the contract it came from.

Games differ in how much actually lives onchain. In fully onchain games, the logic, rules and game state sit in smart contracts, so the game can keep running even if the original developer stops. Hybrid games use the blockchain only for some functions, such as item ownership, while the rest runs on ordinary servers. ethereum.org advises checking how much of any given "web3 game" really runs onchain.

Every onchain action costs a gas fee, which can put new players off. Many games therefore run on layer 2 networks or gaming-focused chains such as Ronin, Starknet, Abstract and Base, which offer faster confirmations and lower fees. Some developers also pay gas on behalf of players or use session keys so players do not have to approve every move.

What are play to earn games?

Play-to-earn (P2E) is a model where players receive cryptocurrency or NFTs for playing, which they can then trade or sell. Coinbase describes it as an early-stage idea and lists its risks. If a game fails to attract players, the items people earned may lose value, and rules for these games are still developing. The wider mix of games and decentralized finance is often called GameFi, where in-game economies are built on tokens and smart contracts. Coinbase notes that keeping these economies balanced is hard and that market swings are a risk.

Some newer games use "risk-to-earn" designs, where players stake assets and can gain or lose them, so real losses are possible.

What are the risks of web3 gaming?

Players usually need a crypto wallet, and some newer chains need manual network setup. Trading between players has led to scams, so the usual wallet safety rules apply. Games also concentrate value in a few places. In March 2022, about $620 million in Ethereum was stolen from the Ronin bridge used by Axie Infinity, a well-known play-to-earn game, and the FBI later attributed the theft to North Korean state-backed hacking groups.