Fully on-chain games (FOCGs) are emerging as a significant evolution in blockchain gaming, with the potential to reshape the industry. Unlike the majority of web3 games, which primarily use blockchain to track ownership of digital assets, FOCGs treat the blockchain as a decentralized computing platform. In this model, all game logic and state are recorded and updated on the blockchain, offering unique properties such as decentralization, permanence, and permissionless interaction.

However, FOCGs face significant technical challenges, such as slower processing speeds and higher costs compared to traditional server-based games. Despite these limitations, ongoing advancements in blockchain technology are reducing these barriers, making FOCGs a promising niche within the gaming world. This is the second article in a two-part series covering a report published by Bitkraft.

Understanding Fully Onchain Games (FOCGs)

Key Takeaways

• FOCGs utilize blockchain as a decentralized computing platform, unlike most web3 games that use it to track asset ownership.
• These games are decentralized, autonomous, and can potentially revolutionize game development and user-generated content.
• FOCGs represent a "hard form" application of web3 technology, facing early-stage challenges but with the potential for exponential technological growth.
• Improvements in blockchain infrastructure and development frameworks are making FOCGs more viable for the future.

Defining Fully On-Chain Games

FOCGs are distinct in that their rules, state, and entire game mechanics exist on the blockchain. This setup offers a level of permanence and autonomy previously unseen in gaming. These games, often referred to as "Autonomous Worlds," operate independently of centralized control and cannot be altered or shut down by a single entity. This decentralized nature introduces unprecedented opportunities for innovation in both gameplay and business models.

FOCGs also offer near-limitless potential for user-generated content (UGC), enabling players to create and monetize new features and experiences within the game world. Historically, UGC has played a major role in the success of games like League of Legends and Counter-Strike, and FOCGs take this to a new level by removing the restrictions imposed by traditional centralized game platforms.

50 Years of Video Game Revenue

New Business Models Meet Blockchain Gaming

Throughout its history, the gaming industry has experienced numerous shifts in business models, from the retail model to free-to-play (F2P) and beyond. These changes were often driven by new platforms or technologies. FOCGs, built on the web3 tech stack, are expected to continue this trend by introducing even more innovative monetization strategies.

With FOCGs, developers can integrate features like nano-transactions, mega-transactions, and fractionalized payments, opening up a vast array of potential business models. Players could rent or earn interest on digital assets, further enhancing the financial opportunities within these virtual worlds. Although some of these ideas may not succeed, the flexibility of the web3 platform encourages experimentation, which could lead to the next major evolution in gaming business models.

Utility vs Ownership

Fully On-Chain Games and Digital Asset Utility

FOCGs offer players decentralized and permissionless ownership of in-game assets. Traditional games rely on centralized servers, meaning players risk losing their assets if the game is discontinued or their accounts are banned. By contrast, FOCGs store ownership data on the blockchain, ensuring players maintain control over their items.

Importantly, FOCGs extend decentralization beyond asset ownership to asset utility. In fully on-chain games, the interaction between items and the game itself is decentralized, meaning no central authority can limit how or where these items are used. This approach removes the reliance on a game developer to maintain access to assets, adding another layer of trust and permanence to the gaming experience.

Soft-Form vs Hard-Form Applications

User-Generated Content in FOCGs

The concept of UGC is integral to gaming, with mods and player-created content contributing significantly to the success of many games. However, FOCGs take UGC to the next level by eliminating the limitations that traditionally restrict creators. FOCGs, being decentralized and open-source, allow players to build upon existing games in nearly any way imaginable.

The permissionless nature of FOCGs also enables creators to monetize their content through a variety of strategies, offering an unprecedented degree of creative and financial freedom. This environment is likely to lead to more diverse and innovative content, further driving the growth of fully on-chain gaming.

Pace Layering Explained

The Role of FOCGs in Building the Future Web3 Internet

Historically, video games have served as testing grounds for emerging technologies. From GPUs to AI, gaming has pushed the boundaries of tech development. FOCGs may similarly play a vital role in the advancement of the web3 tech stack, offering a proving ground for decentralized applications, privacy protocols, and new economic models.

Games, with their fast feedback loops and low-stakes environments, are ideal for testing web3 technologies that could later impact broader industries. Concepts such as decentralized privacy controls, for instance, could find their first practical use in FOCGs before being adopted in other sectors.

Final Thoughts

Fully on-chain games represent a unique opportunity for innovation in the gaming industry, offering decentralized ownership, unprecedented business models, and limitless potential for user-generated content. While the technology powering FOCGs is still in its early stages, ongoing improvements in blockchain infrastructure suggest that these games could shape the future of gaming—and potentially even the future of the internet. You can read the full report by Bitkraft here.