Gaming blockchains dominate the industry, and their number will grow

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Gaming continues to be the main driver behind web3, accounting for nearly a third of the daily active audience of dApps. Its evolution is fueled by market demand: While millions of users are adopting GameFi, blockchain games are struggling to handle the load and creating new solutions like gaming-focused blockchains to meet the growing needs. This further simplifies UX and user engagement, and will inevitably attract a wave of new players and lead to further growth in the number and quality of gaming-focused blockchain networks.

How did the idea of ​​gaming blockchains come about?

Blockchain gaming is growing at a record pace. In May 2024, the number of daily unique active wallets in the industry reached a new all-time high of three million. Just two months later, GameFi’s dUAW reached a new ATH of four million. That’s about a third of the total daily users in the entire dApp market, which has reached 15 million.

It wasn’t always like this. In the early days of Ethereum (ETH), blockchain gaming was primarily a niche for curious geeks who were willing to put up with a lot of inefficiencies and poor user experience. Developers realized that the ecosystem couldn’t grow that way: constant congestion crises plagued GameFi, forcing users to wait hours for their transactions to be confirmed, sometimes paying fees in the tens of dollars. It became clear that gaming blockchains needed to become more scalable.

Another issue with building games on Ethereum L1 was the lack of control over the development process and the inability of the network to adapt to the needs of the games. This led game studios to the idea of ​​creating dedicated and GameFi-focused blockchains.

Game chain pioneers

One of the first blockchains built with scalability in mind was WAX. In 2017, it was initially designed to speed up e-commerce transactions, but later gained a strong gaming focus: today, WAX has entered the top ten gaming blockchains in terms of daily active wallets, with 132,000 dUAW, and has partnered with Amazon Prime Gaming and the Epic Games Store.

Since then, many GameFi-focused L1 blockchains have emerged, but one stands out: Ronin. In 2020, Sky Mavis, a company best known for creating the pioneering Axie Infinity game, shifted to building an L1 ecosystem rather than just a specific game title. The studio moved its flagship games Axie Infinity and Pixels to Ronin and focused on developing the network.

The team launched Ronin’s testnet roughly two years before Ethereum’s Merge, when scaling plans for the industry’s largest dApp network were still unclear. At the time, Ethereum was still leveraging the PoW consensus algorithm, so Ronin’s proof-of-authority and later delegated proof-of-stake were a breakthrough; they reduced energy consumption to almost zero and introduced faster block times and transaction fees below $0.001.

Ronin’s efforts have paid off. Today, the ecosystem offers 15 games, with promises of more to come. In June 2024, the number of daily active users on the network reached two million, surpassing all other blockchains, including Tron and Solana.

The launch of GameFi-focused blockchains has revitalized the industry but has not solved all of its problems. Building a private blockchain is time-consuming and costly, and does not allow developers to quickly integrate all the innovations that emerge along the way. Therefore, industry players have turned their attention to Layer-2 and Layer-3 infrastructure.

Exploring the potential of new layers to the game

Shortly after Ronin was launched, Ethereum began its scaling journey. Optimism, Arbitrum, and other L2s emerged, significantly reducing gas fees and increasing throughput in the Ethereum ecosystem. Some of these networks have taken steps to strengthen GameFi by tailoring their infrastructure for game developers.

The next step in this evolution was the emergence of L3 networks, and this is where it gets really exciting. They reduced block times to 100-300ms and achieved near-instant transaction finality, paving the way for thousands of transactions per second (compared to Ethereum L1’s 12-15 TPS). In addition to the reduction in block times and transaction fees, the simplicity and customizability of deploying L3s has created unique opportunities for game development within the Ethereum ecosystem.

Gaming-focused L3s leverage recent web3 innovations to take blockchain gaming to the next level. For example, PlayBlock, a GameFi L3 blockchain running on top of Arbitrum Orbit, uses account abstraction to remove multiple transaction confirmations, providing seamless gaming. Relayer technology enables the network to support users’ transactions, providing a completely gas-free experience for gamers. Self-custody wallet based on the ERC-4337 standard eliminates the hassle of seed phrase and private key management.

Simply put, players on the latest L3s don’t have to manage wallets, confirm multiple transactions, or pay gas fees. This removes all the complexity typically associated with blockchain gaming and makes it accessible to millions of web2 natives who were previously turned off by GameFi.

More gaming blockchains are coming

L2/L3 chains are a priority for GameFi-focused developers today because they provide unprecedented scalability and customizability. Another advantage is the speed of innovation they can accommodate: While large networks like Ethereum cannot quickly implement groundbreaking changes, smaller ecosystems have the flexibility to do so.

Companies are giving the sector another boost as some are entering gaming networks: Sony Group recently announced the launch of the Soneium blockchain, an Ethereum Layer-2 focused on security and user-friendly gaming. Considering Ubisoft’s web3 plans, it’s quite possible we’ll see similar blockchains from Ubisoft, Rockstar or Epic Games.

Compared to L1 solutions, L2s and L3s require much less effort to launch. For example, there are aggregation-as-a-service solutions that allow for the rapid launch of new customizable L3 networks. With the interest of large players and existing infrastructure, it is likely that we will soon see the birth of new gaming-focused blockchains, which will allow GameFi to enter the mainstream.

Yaniv Baruch

Yaniv Baruch, chief operating officer at Playnance, is a seasoned fintech professional who began his career in 2004. Since then, he has held key roles at reputable fintech and web3 companies such as Anyoption, Daweda Exchange, and Oobit, gaining valuable expertise in fintech, the GameFi industry, and the blockchain space.