Charoning Consumers through the Chain Cornucopia

When talking about Web3 gaming, I habitually remind people to not mix up game NFTs and classic NFTs. I’ve been trying to come up with a pithy saying to convey this, but I’m ashamed to say that the best I could do was: “A chair is not just a shrunken table” (Using the real name for backless chairs would make it even more silly). Maybe “interface follow function” captures the idea a bit better, but since those terms are overloaded in our industry, it’s probably even less clear. If Web3 gaming will supplant Web2 gaming, as I believe it will, what must be true about how players interact with Web3? I think the answer is that they will interact in a chain agnostic manner. 

The average gamer shouldn’t have the faintest clue about the cornucopia of chains she is interacting with. Total chain agnosticism. In a world of a single gaming chain to rule-them-all, this wouldn't be a concern, but for the foreseeable future, we don’t live in that world, if we ever will. All the large smart contract chains (I’m lumping layer >1 chains with their base layers here) are currently trying to attract game developers with either subsidies or promises of white glove service. Statistically, we can expect at least one gaming project on each chain to gain significant traction. This means that the universe of game NFTs will be fragmented across different chains. This wouldn’t be a problem if we expected gamers to silo themselves into separate chains, but that seems like a strange assumption to make. 

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In my opinion the solution is some sort of virtualization layer, for both markets and wallets. This brings up the issue of private key management, and which party is doing it, but I think that issue can be resolved by application of ZKP technology. Check out this article to see where I’m coming from. I’d like to highlight how this proposal differentiates classic NFTs from game NFTs. The risk-reward of this virtualization layer for your $10,000 Angry Antelope NFT is completely lopsided, but for game NFTs, where the name-of-game is low friction, it makes perfect sense. 

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A virtualized marketplace introduces a number of interesting design challenges. An obvious one is having to track assets across multiple chains. Naively, this would require having a node per chain, but Web3 data providers have become fairly mature for this use case, 3rd party providers should be sufficient. There are scenarios for game NFTs where speed would be important, e.g. some rare item being resold, less benignly someone trying to corner the market for a particular strategy by buying up all strong counter-items. But since the stakes aren’t as high as they are for classical NFTS, where price appreciation is important, ultra-low latency is a nice-to-have, rather than a strong requirement, at least for the majority of users. 

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In terms of the execution method, the virtualization illusion would be ruined if users had to have balances in all potential listing currencies ahead of time. The question is whether the marketplace should allow users to pay with whatever balances they have, or with a marketplace currency. For fast execution, the marketplace would probably have to facilitate the purchase of the NFT with the target currency out of its balances, but managing balances changes due to both unexpected inflows and outflows, introduces unnecessary complexity, so a dedicated marketplace token seems like a better approach. This is especially true if payment and purchases are done using atomic swaps, since only N swap combinations are deployed.

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Overall, getting the details right would take a lot of trial and error, but I fully believe that virtualization will eventually be seen as the correct solution to address market fragmentation in game NFTs.

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