Attorney Shao Shiwei | Reflections on Black Myth: Wukong's Rise in the Crypto World: Whither Blockchain Games and GameFi?

Looking Forward to the Crypto World's Black Myth

Special Statement: This article is an original work by Lawyer Shao Shiwei and represents only the author's personal views. It does not constitute legal consultation or legal advice on any specific matter. For article reprints | legal consultation | business exchanges, please add: sswls66

Introduction:

As China's first AAA game title, Black Myth: Wukong has recently gone viral, flooding major social networks. Even the response from the Ministry of Foreign Affairs made it onto trending searches.

According to National Business Daily, as of the evening of August 20, Black Myth: Wukong had sold more than 3 million copies on Steam. Including the WeGame, Epic and PS platforms, total sales exceeded 4.5 million copies, with total revenue exceeding RMB 1.5 billion.

As a traditional Web2 single-player game, this originally had nothing to do with the crypto world. However, in recent years, meme coins in the crypto world (meme coins, whose value depends to a large extent on speculative trading, with high price volatility and high risk) have frequently ridden on hot topics and triggered sharp price surges. According to market data from the decentralized exchange Raydium, $Wukong is currently a Wukong meme coin with relatively large trading volume, with intraday trading volume reaching USD 177,000 and a market capitalization of USD 145,000.

The wave of enthusiasm surrounding Black Myth: Wukong, while injecting new vitality into the cryptocurrency field, has also prompted us to reflect on the future development of blockchain games/Web3 games. The blockchain game market occasionally has some explosive moments, but overall it has remained lukewarm. According to statistics[i], in 2023 the trading volume of the blockchain game market fell sharply by 83.8% compared with 2022 (from USD 20 billion to USD 3.2 billion).

The fact that Black Myth: Wukong has become popular in the crypto world also prompts us to consider: what problems exist in blockchain games? And how can blockchain games develop better in the future?

Author | Lawyer Shao Shiwei

01 Blockchain Games and Black Myth: Dopamine VS Endorphins

Blockchain games (GameFi) have currently gone through the 1.0 and 2.0 eras, but whether the slogan is play to earn or play and earn, in the final analysis, the core of blockchain games is still all about earning money by playing. What you play is not important; what matters is that you can make money.

The core of blockchain game projects lies in the design of the economic model. Whether it is a single-token or dual-token economic model, the design mainly considers how to curb inflation, enable the platform to withstand users' selling pressure, avoid falling into the "death spiral" of token price declines, and retain users for as long as possible. Whether the economic model is reasonably designed, how to extend the game's life cycle and profit cycle, and so on, are the stories that blockchain game project teams need to tell investors. Meanwhile, how the game makes money, how long the payback period will be, and the appropriate timing for entry and for selling tokens are the issues players consider when choosing a blockchain game.

From this, it can be seen that with respect to blockchain games, everyone thinks about the issue in terms of 'making money.' No one cares whether a blockchain game is fun or what its storyline is like.

Of course, this cannot be blamed entirely on blockchain game investors, project teams, or players. In the early days, when the value of cryptocurrencies was growing rapidly, some investors and participants achieved enormous returns as a result. Such rapid wealth-growth stories attracted a large number of new participants into the crypto space, hoping to replicate these successes. As a result, the entire crypto ecosystem is filled with a restless, get-rich-quick atmosphere. Beyond blockchain games, many projects in the crypto space are built around one word: "fast." From project initiation, publishing a white paper, marketing, launch, token issuance, and exit scam, the entire process may take only a few months.

In the process of making quick money, everyone can experience short-term pleasure related to immediate rewards, which is like dopamine. The happiness brought by endorphins, however, is a 'bitter first, sweet later' compensation mechanism; its production often requires a certain intensity and time, or even pain.

Black Myth: Wukong, an action role-playing game produced by the Chinese game developer Game Science, was initiated in 2018. From project initiation to its official launch on August 20, 2024, the entire project took approximately six and a half years.

Feng Ji, founder of Game Science, said in an interview that producing just one hour of game content requires a development cost of 15 million to 20 million yuan. Product first, benefits later, with investment regardless of cost and without the timely feedback of dopamine in the short term; before the final market launch, no one knows how the result will be—it may receive an enthusiastic response, or it may lose everything.

This is not only a craftsman spirit that people in the crypto space cannot understand, but also a business model that most Web2 game companies and investors would not choose.

In fact, Feng Ji wrote an article in 2007 titled 'Who Murdered Our Games' (pictured below), recording his thoughts at the time on game development and the game industry. The related issues mentioned in the article still seem to be industry pain points today.

(Excerpt from Feng Ji's 'Who Murdered Our Games')

For example, items 1, 2, and 5—blockchain games are of course also facing these issues. Especially item 5, because blockchain games cannot avoid the issue of cashing out. Lawyer Shao mentioned in a previous article, 'Why Can You Make Money Playing Blockchain Games?', that whether it is the Supreme People's Procuratorate's approach to identifying gambling software or game law, game companies are prohibited from providing services such as converting game coins into cash or property in a disguised form.

02 How can blockchain games develop better in the future?

Why, when traditional Web2 games can already provide users with an ultimate gaming experience, do we still look forward to the continuous development of Web3 games? This brings us to the core advantage of Web3 games: users' ownership and control over game assets.

Web2 game users typically do not own in-game assets; these assets are bound to the user's account, and if the account is deleted by the game company or the game service is terminated, these user assets will also be lost.

In contrast, Web3 game users truly own in-game NFTs and tokens through blockchain technology and can freely trade or sell these assets even if the game itself ceases to operate.

In addition, Web3 games encourage players to participate in the governance and development of the game, enabling players to directly influence the game's future development. Moreover, Web3 games typically have active communities in which players can have a say in the direction of the game's development and can even participate in decision-making through DAOs (decentralized autonomous organizations).

Therefore, decentralized Web3 games have their own unique advantages and appeal.

In the case of blockchain games that issue tokens, given domestic policy restrictions, they have no soil for development in China because of their financialized attributes. Lawyer Shao also noted in a previous article, "Can Blockchain Games Operate in China? What Are the Legal Risks?", that anyone wishing to operate blockchain games in China can only offer a "censored version"; that article also discussed the risks of blockchain game projects in China and recommendations for addressing them. If Chinese nationals go abroad in person to operate blockchain games, then while complying with the laws and regulations of the host country, they must take care not to provide services to users in mainland China.

As a lawyer focusing on the Web3 field, I remain full of expectations for the future development of blockchain games.

The gaming industry is naturally suited to the implementation of blockchain technology. If, beyond economic models, blockchain games can devote more effort to ensuring compelling storytelling and appeal, create high-quality gaming experiences, realize an economic system truly led by players, enhance players' leading role and control, and continuously innovate and improve, we are confident that the blockchain gaming industry will achieve long-term and steady development in the future.

[1] Blockchain Game Overview: Reviewing 2023, Looking Ahead to 2024 | Dengchain Community | Blockchain Technology Community https://learnblockchain.cn/article/7278