How AI and Blockchain Are Transforming the Future of Gaming

The year 2024 marks a significant development in the web3 gaming industry. The main drivers are gameplay innovation, stunning graphics, and advanced AI integration.

After the fading heyday of play-to-earn games in 2021, we are now seeing a resurgence of the industry with the trend of mini-games and the anticipation of triple-A games launching. This era offers many exciting opportunities for gamers who also want to reap the benefits.

Gaming Token Market and Valuation: Toward a New Era Post-Bitcoin Halving

Key events, such as the US presidential Election and the prediction that Bitcoin will break above $100,000, are believed to significantly impact gaming tokens such as SAND, MANA, and GALA.

Large institutions are starting to show interest in high-quality gaming projects.

For example, FunPlus launched a liquid strategy with investments into Off the Grid’s Prime and GunZ (the token is yet to be launched), and RT Capital raised $20 million and holds the PIRATE token with their proof-of-play product.

The low float, high FDV trend was seen in tokens such as PIXEL, MAFIA, PORTAL, XAI, and SAGA.

Although the average value has decreased, some projects, such as Xbox, SEED, and SUPER, are trying new strategies.

On the other hand, projects like ZEN, PIXEL, PIXELMON, and AGE OF DO focused on traditional metrics, such as revenue and the number of active players. Interestingly, PIXEL can potentially transform into the first L2 ZKVM on the Ronin network.

The Scramble for Liquidity and Adoption: Challenges Facing Web3 Games

Despite the huge potential, web3 games still have to face several challenges.

One of the main ones is limited adoption. The number of Web3 game players is still far behind that of Web2 games. In addition, Web3 games must compete with established Web2 games with a large player base.

To overcome these challenges, some projects are taking innovative steps. For example, Parallel launched tokens on Ethereum and Base, minted NFTs on various networks, and even launched L3 on Arbitrum to diversify risks and expand the range of players.

Meanwhile, Ronin plans to open its ecosystem in Q1 2025 with games such as Cambria and Kuroro Base, which are expected to attract the gaming community’s attention.

The current distribution of Web3 games covers a wide range of platforms. Steam still prohibits blockchain games on PCs, while the Epic Games Store has a relatively limited reach.

On the other hand, mobile platforms are adopting more Web3-friendly policies, especially through Telegram on the TON network. This TON network can become a mini-game ecosystem with a wide distribution reach.

Launching Off the Grid on PlayStation and Xbox is a significant console achievement. This move is expected to attract a mainstream audience and elevate Web3 games to a higher level.

Moreover, major influencers such as Shroud and TimTheTatman promoted the game, creating huge hype among the traditional gaming community.

Bullish and Bearish Scenarios in 2025

Bullish Scenario: Hope and Optimism

In the bullish scenario, anticipated games such as Off the Grid and MapleStory Universe met players’ expectations.

This success will attract significant interest from the player community, driving wider adoption of web3 games.

Bearish Scenario: Challenges and Concerns

Conversely, in the bearish scenario, no major Web3 game achieves meaningful success. Off the Grid may fail to attract players, and mini-games like TON may struggle to monetize.

Additionally, platforms like Avalanche and Ronin may experience stagnation. These scenarios may fuel skepticism among Web2 gamers toward blockchain technology.

The Intersection of Gaming and AI: Toward a Future Full of Potential

The advancement of AI technology in the last six months, especially in the web3 space, has been significant. The emergence of AI agents and AI-based meme tokens is a testament to this.

How does this relate to the gaming industry?

The Role of Games as an AI Development Laboratory

Games can be viewed as virtual worlds with complex, data-rich systems. The data, collected from streaming platforms like Twitch and YouTube, makes games ideal for AI experimentation.

Even before the ChatGPT era, AI has shown its superiority against humans in various games. AlphaGo and OpenAI Five, for example, have won Chess, Go, and Dota 2.

Other examples of recent AI achievements in gaming include:

• DeepMind AI’s AlphaStar, which can compete in complex games like StarCraft 2.
• Alterra uses Piano architecture to simulate thousands of agents with human-like behavior, including democracy, religion, and culture.
• Cicero, an AI agent from Meta that excels in diplomacy games, is able to negotiate and adjust strategies intelligently.
• Pro Agent, which experiments with collaborative AI behavior and adapts to teamwork.
• Unbounded, which offers solutions for AI generative models to be more consistent in long-term simulations.

Three Major Categories of Gaming and AI Intersection

AI as a Game Development Tool

Since 2022, more than $370 million has been raised by around 30 companies focused on building AI tools for game development. These tools help game studios in various aspects, from production, quality control, distribution, and user performance.

In the web2 realm, we know Series Entertainment, Astrocade, Videogame.ai, Rosebud AI, and Hidden Door. In web3, GameGPT, Portals, and Alchemy AI allow mini-game creation without the need for coding skills.

AI to Improve Game Feature Quality

AI can significantly impact player behavior, storytelling, and more sophisticated NPCs (Non-Playable Characters) or bots. With a valuation of $500 million, Inworld AI has forged partnerships with tech giants such as Microsoft, Nvidia, and Ubisoft.

Dev Agent raised $56 million in funding for NPC AI development.

In the web3 sector, games like Avalon and Today the Games are starting to offer more realistic and interactive NPC AI features.

A key technology worth noting is Nvidia ACE (Avatar Cloud Engine), an NPC AI engine first showcased at GDC 2024 in the Match Chain Break game. However, this technology is criticized for its latency and lack of natural language.

AI for More Immersive Game Content and Experience

AI Dungeon was one of 2019’s successful pioneers in utilizing AI for game content and experiences, albeit limited at the time.

Now, we are seeing more rapid developments, such as autonomous AI simulations, from Wall, a Niantic production in partnership with Inworld Retail M, to Dead by AI.

AI in existing games, such as The Sims and Minecraft, is also gaining popularity. Thanks to Mayer’s API, AI activity in Minecraft has even become a hot topic of conversation.

Interesting Experiments in the Web3 Realm

Some interesting experiments to look out for in the web3 space include:

• Parallel Colony: The most anticipated AI simulator to date.
• SEED: An AI simulation game that received massive funding.
• Today the Games: Launched Limbo, an AI agent for Big Brother’s 3D live stream.
• Open source initiatives include Project Westworld and Eliza Framework, which is starting to expand into gaming with Unity and Unreal Engine integration.