Gamefi

The Use of Artificial Intelligence in Web3 Gaming and its Potential Benefits

Blockchain, Web3 game developers and Artificial Intelligence (AI)? Here is why!

As Artificial Intelligence continues to progress at a rapid rate, it is being utilized in various industries around the world. Its applications range from enhancing artistry, driving growth in renewable energy, creating blogs, composing music and poetry, and even in gaming. Industries that have not yet adopted Artificial Intelligence are gradually beginning to explore it. Blockchain gaming is no exception, with developers and senior executives currently testing the use of AI in the field. While AI poses certain challenges in generating game storylines, new innovations in the technology are poised to greatly improve the blockchain gaming experience, particularly in areas such as game art and narration.

AI in Blockchain Gaming

Blockchain gaming, also known as Web3 games, have been around for some time and experienced a significant surge in popularity in 2021. The incorporation of smart contracts and other Web3 elements in games has led to a new business model that aims to provide benefits for players. This model, which can take the form of \”play to earn,\” \”play and earn,\” or \”play and own,\” aims to give back to gamers. However, in 2022 the Web3 gaming sector saw a decline, but eventually rebounded by the end of the year. Many blockchain games experienced fluctuations in user engagement, player numbers, and transactions. Despite the highly volatile conditions, the sector has persevered and the future looks promising. Additionally, the incorporation of AI in Web3 games is likely to become increasingly common in the near future.

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Alex Connelly, the chief technology officer at Immutable, is a blockchain gaming executive who believes that AI will create new possibilities for Web3 games. Immutable is a major player in the blockchain gaming industry, being the developer behind the popular blockchain trading card game Gods Unchained and the Immutable X platform. Connelly advocates for the use of OpenAI, an American research laboratory focused on AI, to develop AI applications that can aid in various tasks. He believes that by utilizing AI, game developers can focus on creating original works and produce better art, powerful narration, and challenging opponents for an immersive and enriched experience for gamers in blockchain games.

How can AI help game developers and artists via art?

Alex Connelly stated that they are researching the use of AI in creating game art at Immutable, which will save time for video game artists by automating repetitive tasks. Specifically, many video game artists spend a significant amount of time creating multiple versions of the same image in various sizes and formats, which could be handled by AI software, thereby allowing artists and developers more time to focus on creating new and original content.

Player Skill Level and the Use of AI

Beyond its potential in game art, AI can also significantly enhance the player experience by adapting to the player\’s skill level. The AI will be able to dynamically adjust itself to the player\’s abilities, providing a challenging but enjoyable level of difficulty. By tailoring the difficulty level to each individual player, AI can create a more balanced and enjoyable learning experience for players, making games more fun and less overwhelming.

\”Finding that sweet spot where the game is challenging but not overwhelming is crucial for keeping players engaged,\” says Connelly. \”AI can help with that by customizing the difficulty level to each individual player, that\’s an amazing application of this technology,\” he added.

ChatGPT in Blockchain Games

Chat Generative Pre-trained Transformer (ChatGPT) is a well-known AI tool that has been used in the creation of trading bots, automating the writing of repetitive blog posts, and even composing new songs. Will this tool be used in blockchain gaming as well? Alex Connelly and his team at Immutable are currently considering the potential use of ChatGPT, particularly in AI narration. However, they have encountered some challenges while using AI for storytelling and narration in trading card games, as the AI generated spam content and did not contribute much to the gameplay.

\”However, when it comes to actually playing the game, the AI-generated content can be confusing or not align with players\’ expectations,\” Connelly notes. \”We\’re still trying to figure out the right balance between using AI to improve the game experience, while also avoiding the generation of irrelevant or unwanted content,\” he added.

It will be intriguing to see how and in what capacity blockchain game developers will incorporate AI into their games. Do check out our report on blockchain games surpassing Defi in Unique Active Wallets. You can also tune in to our YouTube channel to check out game reviews.

Gamefi and Blockchain Games Surpass Defi in Unique Active Wallets and Continue to Lead in 2023

It is true that the blockchain and the crypto industry as a whole suffered a lot in 2022. When compared year on year, the figures dropped dramatically. But Gamefi is one part of blockchain technology that continues to get investment, traction, and a big jump in the number of unique wallets that are active. The upward trajectory for the blockchain gaming sector was witnessed in Q4 of 2022. Also, it stays the same in the first month of 2023, but the question is whether or not the hype and traction keep going in this direction. On the other hand, we think that Defi applications and projects will take a big hit and keep getting worse until 2023.

By the beginning of 2023, the blockchain gaming industry will have more than twice as many unique active wallets as Defi. 

Blockchain Games Leading the Way

Blockchain gaming is a new area where people get paid for the time they spend playing video games. The rewards have a value in the real world and can\’t be used, so they can be traded for money. So, the main difference between traditional gaming and blockchain gaming lies in the model of business. In developing countries, particularly in Southeast Asia, the blockchain gaming industry has grown rapidly. It is the business model of \”play to earn\” or \”play and own\” that stands out. This is a big part of why these games still do well even though the Defi industry is still having trouble.

Also, some of the best minds and developers in the industry continue to work together to make AAA blockchain games. The introduction of AAA games, along with strong collaborations between artists, influential figures, and game developers, will result in mass adoption. There is a lot of activity going on in blockchain gaming when we look at the number of unique active wallets. However, Defi failed to bounce back after some of the unfortunate incidents that happened last year.

Defi Domain Struggles to Bounce Back

The year 2022 was filled with ups and downs. The war in Ukraine, the Terra Luna Crash, the Ethereum Merge, and then the FTX Crash were all big events that had a big impact on the crypto and blockchain industries. There were many Defi apps that had to head toward the exit. The blockchain gaming industry, on the other hand, aided decentralized apps in gaining some positives. 

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DappRadar

If we analyze the events of 2022, the decentralized space saw a gradual decline. The Terra Luna event impacted the space heavily, and the rest was done by the FTX collapse. The total value locked in Defi dropped dramatically. At the start of 2022, the TVL was almost $150 billion, which took a nosedive after the events and stood at almost $40 billion. The Terra Luna Crash saw Defi, as well as UAWs, decrease considerably. But UAWs improved at the end of the year, while Defi continued to suffer.

As early as January 2022, careful speculation was made by DappRadar’s executive about Defi apps. The executive told BeInCrypto that as many as 80% of Defi apps could exit the industry if the bear trend continues throughout the year, which it did.

Blockchain Games and Rising UAWs

Blockchain games sure did see a bit of a decline after the Terra Luna crash, but they didn’t deviate much from their trend. It still accounts for an average of 1.15 million daily UAW, showing a lot of activity in the blockchain gaming space.

Dapp Radar’s Pedro Herrera said, \”While [decentralized finance] and overall blockchain activity have been on the downside, the game of Unique Active Wallets (UAW) continues to rise, reaching almost 1 million daily wallets.\”

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Delphi Digital

When we compare the number of unique active wallets between Gamefi and Defi, gaming has more than twice as many as Defi. At the end of 2022, Defi had approximately 2.0 million UAWs, while Gaming had 5.0 million. Some of the top blockchain games that attracted new wallets in 2022 are: Splinterlands, which topped the chart with over 300,000 UAW over a week; Alien Worlds; Benji Bananas; Farmers World; Planet IX; Upland; and more.

If you want to read the key points of DappRadar, here we go:

Key takeaways DappRadar

  • The dapp (decentralized application) industry experienced a 50% increase in unique active wallets (dUAW) in 2022, rising from an average of 1.58 million daily dUAW in 2021 to 2.37 million in 2022 on average. However, the industry has been on a downward trend due to various events, including the war in Ukraine, the collapse of Terra Luna and the FTX situation. Despite these challenges, the dapp industry has demonstrated its resilience and maturity, while adoption of blockchain technology by consumers and businesses suggests that the future of the industry is bright.
  • In 2022, the DeFi industry faced challenges including the collapse of the Terra Luna platform and a decline in cryptocurrency prices, leading to a significant drop in the Total Value Locked (TVL) of 73.97% falling to $55 billion in December. Amidst these difficulties, the DeFi sector continued to expand and innovate, with smart contract financial apps and traditional financial institutions piloting or transacting using DeFi protocols.
  • Ethereum remains the dominant DeFi protocol with $32.12 billion in TVL, a 74.56% reduction. BNB Chain has reclaimed its position as the second-largest DeFi ecosystem, with a 62.50% decrease, reaching $6.5 billion. Layer-2 solutions appeared to be the least affected by the crypto turbulence, with Arbitrum falling 12.07% to $1.74 billion. Optimism’s TVL increased by 127.60%, hitting $669 million.
  • On-chain metrics for the NFT market this year seemed to be positive, as the NFT trading volume in 2022 increased by just 0.41% in comparison with 2021, with an average ETH price of $2,015. Looking further, the number of unique traders count increased by 876.89% compared to the previous year, reaching 10.6 million. The sales count is on the same upward trend, with an overall of 10.16% increase this year, reaching 68.35 million.
  • The NFT blue-chip collections have remained the most traded collections this year, and continue focusing on their roadmap. Azuki became the first NFT brand to appear on an F1 racing car. VeeFriends closed a $50 million seed round in July, while PROOF’s Moonbirds raised another $50 million in August to scale the brand further.
  • Yuga Labs continued to expand, acquiring CryptoPunks, Meebits and the NFT startup WENEW Labs. Its NFT collections dominated the NFT market cap in Q4, representing 55% of the top 100 most valuable NFT collections, which amount to $15 billion.
  • This year saw the entry of new participants into the NFT marketplaces industry. X2Y2 climbed the charts, becoming in a year one of the top 10 NFT marketplace by trading volume, making more than $1.5 billion in trading volume. On the same trend, Blur, which was launched in October, reached in two months the last place in the top 10 NFT Marketplaces by trading volume, in 2022, with more than $205 million in trading volume. However, Opensea has not lost its dominance and, even if sales volumes have dropped in the past month, still accounted for 73.1% of the whole NFT organic trading volume. 
  • Blockchain games in 2022 account for 49% of all dapp activity, with on average 1.15 million daily unique active wallets, and 7.4 billion in transactions count. Splinterlands remains the most popular game with 217,914 monthly unique active wallets in 2022, an 85.78% growth. Alien Worlds was second with 178,118 monthly unique active wallets, down 3.67%. 
  • In 2022, there were 312 crypto attacks, resulting in losses of $48.74 billion, the highest for any year. The Terra Luna scandal was the most significant of these attacks, causing losses of $40 billion. Excluding this event, the median loss per hack was $283k and total losses per month were $728 million. Centralized platforms were the most commonly targeted, with losses totaling $44.71 billion. The BNB and ETH chains were the most hacked, with rug pulls being the most common type of attack.
  • In 2022, there were significant developments in the regulatory landscape for cryptocurrencies and other digital assets, with the introduction of the first White House bill for crypto regulations and the MiCA regulation in Europe. These rules and laws aimed to establish a comprehensive framework for the regulation of cryptocurrencies and other digital assets, and demonstrated a recognition of the growing importance of blockchain technology

However, the question remains if this trend will continue this year for blockchain games. With the number of AAA games under development and some launching this year, the trend may as well continue to ride the bull. Keep visiting us for more on blockchain gaming news, and check out game reviews on our YouTube. One of the most promising MMORPG AAA blockchain games under works is Mirandus.

What Can We Expect from Gamefi in 2023? 

The crypto industry, blockchain projects, and Gamefi took a solid right jab to the face in 2022. It didn’t bode well for crypto and all its related domains when we compared them to 2021. To take a broad view of all domains, Web 3.0 had more than a trillion dollars in revenue at the start of 2021. However, 2022 was a miserable failure. How about 2023? What should we expect from Gamefi in 2023? Will we see further collapses like Terra, FTX, and Axie Infinity? Or will 2023 see a shift in both Gamefi and cryptocurrency? Let’s try to analyze what we can expect this year in Gamefi and subsidiary projects.

The 2022 Hard Fall and the Ripple Effect in Crypto and Gamefi 

The FTX collapse was the largest of all collapses in 2022. Once celebrated, Sam Bankman-Fried is now under harsh criticism and facing arrest. The lies, deceit, leverage, and loans have done nothing better for crypto as a whole. It not only led to more rules from the government, but it also hurt cryptocurrency as a whole because of the bad news. Now, in 2023, the investigation will continue from the ruins of FTX and could lead to rules for all other crypto domains, especially Gamefi.

Gamefi, Axie Infinity, and the Regulation Debate

Gamefi is a domain where financial rewards meet gaming. Players participate in games to earn digital assets such as cryptos, tokens, and NFTs that have real-world value. It is the only crypto domain that hasn’t faced any kind of regulation or investigation. The only limitation is that gambling laws prohibit games from offering monetary rewards. So, GameFi is still up for regulatory debate. However, Gamefi wasn’t immune to the frostbite of the raging crypto winter in 2022. Axie Infinity, the apple of the eye gamefi, suffered a massive collapse due to a variety of factors, including hacking, the crypto bearish trend, and the collapse of its own financial system. 

Consequently, the investors, especially those who got in late, lost every single dime. As it stands, Axie Infinity was down more than 90% when 2022 was coming to an end. So, we may see regulations hitting the gamefi, but how soon? What about the gamefi? 

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Gamefi and crypto regulation

Gamefi Regulation in 2023?

According to the majority’s opinion, gathered by Forbes, the regulations won’t come for Gamefi coins anytime soon. Also, the people who make blockchain games and the people in charge of them don\’t like regulation. The idea is simple if you want to keep out the speculators from the games: make games fun, challenging, and rewarding for gamers only. So, the majority of the tokens and in-game digital assets will be held by gamers only and not by speculators. The game model needs to be changed so that the focus moves from tokens to fun gameplay.

However, whenever finance makes it to a new market, investors need transparency, fairness, and a fair bit of protection. So, the gaming community, trade, finance, and online safety may as well join hands to create a better place in blockchain gaming. Also, governments all over the world have tightened the rules around crypto, and Gamefi will be no different. There were, are, and always will be people who will exploit the absence of regulations. Such entities may be filtered out of gamefi by regulators. If that is the case, then the regulations in gamefi aren\’t as bad as they sound; they won’t cripple the gamefi march.

Gamefi\’s Current Standing and Expectations in 2023

Gamefi didn’t do well in 2022. Those game-related projects that haven\’t released their games yet and are still looking for funding are on the safe side. While the majority of the game-related projects that have launched their games haven’t made considerable profits, The most difficult challenge is still developing a working tokenomics or financial model for in-game tokens. However, there are several game-related projects that are putting a lot of effort into developing AAA games.

In 2023, such AAA sci-fi projects with a strong emphasis on gameplay rather than tokens or a quick cash grab scheme may enter the market. There are games coming in from the likes of Gala Games, Animoca Brands, and several other big names that will roll out solid game-related projects in the near future. Check out some of the promising blockchain games and their reviews on our website. Some of the promising game-related projects, that we covered some, are Medival Empires Ertugrul, Spider Tanks, Apeiron, Illuvium, Alien Worlds, Angelic, and many others.