Will 2022 be the first year of the application chain in gaming?

Original Author: 0x137, Rhythm BlockBeats

Recently, after the launch of the Avalanche subnet DFK Chain, the quiet "mining field" of DeFi Kingdoms has become lively again. It is not difficult to notice that games with a broad audience base, such as Axie Infinity and DeFi Kingdoms, have all established their own application chains. Why are application chains extremely important for the development of blockchain games? What application chain solutions are currently available?

DeFi Kingdoms: A Silent Gold Rush

In the eyes of many, DeFi Kingdoms (hereinafter referred to as DFK) has always been a game that is neither too hot nor too cold, not as mainstream as Axie Infinity, yet often mentioned by friends. However, this "game overlooked by mainstream narratives" has quietly cultivated a surprisingly large player base over the past few months.

If you are still not aware of the game's popularity, you can try searching for DFK on Google. You will find many phishing websites specifically targeting DFK. If a game does not have a sufficiently large audience base, scam groups would not go to great lengths to "customize" for it.

Currently, DFK far exceeds Axie Infinity in terms of daily active users, transaction volume, and transaction value, becoming a true leader in GameFi.

Data from Dapp Radar

If you are not familiar with DFK, you can think of it as a gamified DeFi. It is not just a simple game; it is also a DEX with liquidity pools and yield farming opportunities, as well as a utility-driven NFT marketplace.

These relatively dry DeFi concepts for gamers are vividly packaged by the team into "Marketplace," "Bank," "Garden," and other game elements.

Of course, in addition to the basic DeFi functions, DFK is also an NFT breeding game. The NFT heroes in the game have different genes and professions, gaining experience and rewards by completing various tasks.

JEWEL is the "universal currency" in DFK, used for DEX trading, liquidity mining, purchasing and upgrading NFT heroes, and restoring stamina in the game. Of course, there are already many detailed articles introducing DFK, so I won't elaborate further here.

A significant reason for DFK's renewed popularity recently is attributed to its new version Crystalvale on Avalanche and the launch of the Avalanche subnet DFK Chain. According to cross-chain bridge protocol Synapse, as Harmony users transferred assets to the DFK subnet, Synapse's transaction volume surged dramatically, reaching a record $330 million, accounting for 82.5% of the total transaction volume.

Data from Synapse

Crystalvale is a new territory opened up by DFK using Avalanche subnet technology, which, along with the previous Serendale, forms DFK's cross-chain world, introducing a wealth of new features and resources.

With a very attractive APY income, many DeFi veterans have been drawn to this pixel game filled with classical style.

Why did DFK choose to build a separate Avalanche subnet?

In addition to enjoying the development dividends in other ecosystems, there is a very key reason here.

Previously, as Serendale users gradually delved into the game experience, DFK exposed some significant issues. DFK is not just a DeFi game; when a player uses their NFT hero to complete tasks, they expect a relatively smooth interactive experience.

However, the reality is quite the opposite; players need to wait for confirmations on the chain for every step during tasks. Especially during the reward collection process, each reward needs to be collected individually, and sometimes this process can take over ten minutes. This situation is clearly detrimental to DFK's future user development.

The reason for such issues is that DFK shares the same computing power as other applications on the Harmony chain. However, considering the increase in network activity brought about by the development of DeFi, DAOs, and NFTs, it is evident that games should not continue to operate on the same network as other applications.

Games are very different from other applications, requiring high demands on both hardware capabilities and software experiences. For blockchain games with a large user base, choosing to share a network is clearly not ideal, as the gaming experience can easily be affected by other on-chain applications.

It is precisely for this reason that DFK chose to build its own network.

In fact, DFK is not the first game to make this choice.

Ronin: The Pioneer of Game Application Chains

The congestion issues on the Ethereum network have always been a significant pain point for Axie Infinity in maintaining its economic growth. Due to high gas fees and severe network delays, Axie Infinity's on-chain active users and transaction volume growth encountered bottlenecks, and its economy fell into stagnation.

Data from Dapp Radar

To further reach players' friends and family, the Axie Infinity team had to find a long-term solution to provide players with a better gaming experience.

Thus, in February of last year, the Axie Infinity team officially launched an Ethereum sidechain—Ronin Network, specifically designed to create a fast and inexpensive network for the Axie Infinity game and its community.

A sidechain is an independent blockchain that is compatible with Ethereum, having its own consensus mechanism while still running parallel to the Ethereum mainnet. In the case of Ronin, it uses a PoA (Proof of Authority) consensus mechanism based on a relatively centralized reputation system, allowing for faster transactions.

By transferring game assets to a sidechain network dedicated to gaming services, Axie Infinity running on Ronin can achieve fast and even seamless transactions while significantly reducing users' gas fees. Additionally, by using Ronin's custom wallet, Axie not only optimized the gaming experience for existing users but also simplified the onboarding process for new users.

However, the potential risks of asset cross-chain on the Ronin network have also exposed the drawbacks of using an Ethereum sidechain as an application chain. Essentially, sidechains are similar to L1 public chains, so asset transfers across chains still require cross-chain bridges, which lays the groundwork for various incidents of fund loss and theft (Rhythm note: detailed in “Is Cross-Chain Dead? The Future of Multi-Chain Only Has Two Directions”).

Of course, we all know that the issues with the Ronin cross-chain bridge are no longer "potential risks." Recently, the most severe theft in crypto history occurred. Rhythm previously reported that due to the invasion of validation nodes, five out of nine nodes in the Ronin network were controlled by hackers, resulting in over $600 million in assets being stolen.

Stolen assets transferred to FTX

In the future, for blockchain games to achieve larger-scale popularity, scalability and security are two key issues that must be addressed. Clearly, the idea of application chains relying on "one chain serving one product" is feasible for solving scalability, but the challenge lies in how to ensure the security of the network and assets while enhancing scalability.

Polkadot and Cosmos, Are They Suitable for Game Application Chains?

After recent security issues frequently emerged with cross-chain bridges, the happiest group of people must be the users of Polkadot and Cosmos. As leaders in Web3 interoperability, these two projects provide extremely high security for cross-chain asset transfers within their ecosystems while addressing their network scalability in different ways. So, are the Polkadot and Cosmos ecosystems suitable for game application chains?

Polkadot

Polkadot is one of the creators of the concept of interoperability, with a vision to connect various parachains through a relay chain, forming a large network with high scalability and interoperability.

Compared to Ethereum sidechains and Cosmos SDK chains, the biggest advantage of Polkadot parachains lies in security; all parachains connected to the relay chain slots enjoy the same security guarantees. The nodes of the entire Polkadot network are randomly assigned during validation, making it impossible for hackers to predict which parachain a node will validate next. The more parachains there are, the more secure the network becomes.

However, for most small and medium-sized development teams, the opportunity cost of launching a parachain on Polkadot is simply too high. First, while Polkadot's Substrate is very mature, it has a high entry barrier, which means longer development cycles. Second, obtaining a relay chain slot consumes a lot of time and effort.

This is not an ideal choice for the gaming industry, which has high ecological demands and rapid development. Although Polkadot has a long history, due to the aforementioned limiting factors, its ecological development is relatively slow, making it currently unsuitable for the growth of games. Thus, it may take some time to cultivate mature blockchain games in the Polkadot ecosystem.

Cosmos

Cosmos is the origin of the application chain concept. By using the Cosmos SDK, developers can create blockchains optimized for specific fields. Projects like Terra for finance and Juno for smart contracts demonstrate the potential of "specialized" blockchains.

For application chains using the Cosmos SDK, Cosmos's value also lies in IBC and Cosmos Hub. With the support of IBC, various application chains can form a comprehensive ecosystem with strong interoperability, filling their ecological gaps and achieving a collective warmth effect.

Thanks to IBC, the application chains within the Cosmos ecosystem have very low risks when transferring assets, providing reliable security for the influx of new game users and the cross-flow of game assets.

However, we know that chains within the Cosmos ecosystem do not share security. The biggest difficulty in building a Cosmos SDK chain is not the technical barrier but rather the need to launch and expand the validation nodes of its own network. This is also why many Cosmos projects choose to start their networks through airdrops, using economic incentives.

For projects like Terra, Osmosis, and Juno, which have strong teams and broad business scopes, this may not be a big issue. But for game developers, this may not be the best choice. After all, game developers are not skilled in designing consensus mechanisms, and if mishandled, it could lead to catastrophic events like Ronin.

In contrast, Celestia, also built using the Cosmos SDK, may provide a better answer.

Celestia

Celestia is an L1 public chain built using the Cosmos SDK (Rhythm note: detailed in “Is Evmos Just the Beginning? How Cevmos Ignites Cosmos's Scalability”), simply put, it is a consensus layer that provides data availability for top settlement layers and execution layer rollups.

Celestia uses the Optimint consensus mechanism, allowing developers to create separate settlement layer rollup chains and execution layer rollup chains (i.e., application chains) on the Celestia consensus layer. This means that game development teams can focus on creating high-quality game content and experiences without worrying about settlement and consensus mechanism issues.

Additionally, because rollups built on the same consensus layer inherently have interoperability, game chains built on Celestia do not need to worry about asset cross-chain issues.

In terms of security, Celestia uses light nodes (which can be users' computers) to verify data availability. When a user performs a transaction, they can download the relevant data and verify its availability. This means that Celestia's security and scalability come from the number of light clients; the more light clients there are, the larger the verifiable blocks, which translates to higher security and throughput.

However, since Celestia is still in its early stages, its ecological development is not mature. While it has great potential in the long run, it is also currently unsuitable for the growth of game applications.

So, which ecosystem is currently the most suitable for game application chains?

Avalanche Subnet: The Future Gaming Hub?

In fact, we find that many popular games today, whether DFK or Crabada, have chosen to build their own subnets within the Avalanche ecosystem.

Recently, at the Avalanche Barcelona Summit, many games and subnets made their appearances. The Avalanche Foundation subsequently announced its $290 million ecological incentive plan to promote the development of subnets.

Avalanche Barcelona Summit

In the context of the increasing popularity of subnet technology, Avalanche now seems to have become a hub for gaming incubation.

The scalability logic of Avalanche subnets is very simple: by "renting" part of the mainnet nodes, subnets optimize for their specific use cases and different consensus mechanisms, with each subnet capable of achieving 4500 TPS. For a game deployed on its own subnet, it can not only achieve such high throughput but also does not need to compete for network resources with other platforms, protocols, or competitors.

The biggest features of subnets are security and customizability.

First, Avalanche subnets share security with the mainnet; to become a validation node for a subnet, one must first become a validation node for the mainnet, providing the first layer of security for the network itself.

Second, the network can impose specific requirements on its "rented" nodes, such as GPU performance metrics or nodes owned by specific companies. For enterprises that wish to use blockchain technology but require privacy, this means that subnets can create a "private blockchain" for them.

For blockchain games that may run on virtual machines in the future, this means they will exist in a high-performance gaming application chain network, allowing for greater improvements in content, graphics, and smoothness.

So, besides DFK, what other games and subnets on Avalanche are worth paying attention to?

Crabada

Crabada is a highly popular P2E game originally on the Avalanche mainnet, often referred to as Axie Infinity on Avalanche. Players can use their NFT hermit crabs to engage in mining, raiding, and breeding activities.

Shortly after Crabada went live, it became one of the highest gas-consuming applications on the Avalanche mainnet, accounting for about 16% of the network's gas consumption. To help players reduce gas costs and enhance the gaming experience, the Crabada team launched its own subnet, Swimmer Network.

On Swimmer Network, the original game token TUS will serve as gas to power the network. By removing the participation of the underlying L1 token, players' experience costs will be significantly reduced. Additionally, according to the team, the TUS used for network fees will be burned at a certain ratio, expanding from the initial 25% to about 80%.

Another interesting aspect of Swimmer Network is the fee coverage mechanism. One of the biggest headaches with cross-chain transactions is running out of gas tokens on the target chain, but with Swimmer's coverage mechanism, new players can enter the ecosystem without gas tokens.

Moreover, in the future, Swimmer Network will not only serve Crabada but the team also hopes to build or introduce more blockchain games based on it.

Ascenders

Ascenders is an open-world action RPG game where players can embark on adventures, clear dungeons, and build cities on their NFT properties, while also trading equipment, heroes, skins, and animal companions as NFT resources.

According to the team, they aim to make Ascenders the first true AAA crypto game in terms of graphics and quality, accelerating the mainstream adoption of crypto in gaming.

The Avalanche subnet can help the team flexibly build its own game execution environment, set custom gas fee structures, and design various token types to support the game economy, allowing Ascenders to ensure a multiplayer experience with low latency without incurring high gas fees.

Security and scalability are among the biggest challenges facing the crypto space, and this challenge also applies to blockchain games. Avalanche provides a potential solution to this problem in the form of subnets, and the scalability possibilities offered by this unique architecture will allow for the rapid integration of various in-game asset interactions and transactions, giving developers more time to focus on game building.

Perhaps we have already entered the "application chain era" of crypto games.