Blockchain Gaming Part III: Protocol-led second-generation games

Quick Take

  • Part III: An overview of the current state of protocol-led second generation blockchain games, including: Ethereum, Enjin Coin, EOS, Loom, and Steem

This is Part III of a multi-part comprehensive series on blockchain-based gaming by Zane Huffman: Twitter @jeffthedunker

The series is a culmination of historical accounts and interviews with a number of blockchain and crypto based game projects, sprinkled in with opinions on the current state and opportunities within gaming.

Part II can be read here.

Blockchain Gaming Today

The current iteration of blockchain games represents a surge that commenced in December of 2017. If the first generation of games refers to “gen zero”, then the current field of blockchain and cryptocurrency games from December 2017 to now signifies generation one. The criticisms of blockchain games as pay-to-play cash grabs and infeasible at scale largely corresponds to mistakes and shortcomings of many projects and developments in this 2017-2019 era of blockchain gaming.


In today’s industry, Ethereum is the most popular blockchain in terms of game development. DappRadar reports that there are over 400 blockchain games registered on Ethereum, and hundreds more in different stages of development.

Despite widespread usage by developers, gaming activity on Ethereum has historically been quite underwhelming. There are, currently, less than 50 Ethereum games that see non-zero activity. Among those that are in production, total daily active users is less than 10,000. While there are Ethereum games that service a variety of genres: like strategy, fighting, and role playing games, there simply aren’t many players to enjoy these games. This is largely due to the reality that, in its current state, Ethereum is not equipped to handle gaming at scale. This reality was made apparent at the very start of the December 2017 gaming boom, with the advent of CryptoKitties.


The CryptoKitties Fiasco

Officially, CryptoKitties launched on Nov. 28, 2018. CryptoKitties is a crypto-collectible game on Ethereum where users breed and collect unique cats represented as ERC-721 non-fungible tokens. The entire scope of gameplay revolves around buying and auctioning cats to trade and breed.

On December 2, the first CryptoKitty, appropriately named “Genesis”, was sold in auction for over US$100,000. This sale broke global records for digital collectibles and garnered the attention of audiences across the world. What followed the Dec. 2 sale was a gold rush of individuals swamping the Ethereum network in order to breed and sell virtual cats.

This surge in activity dealt a crippling blow to the Ethereum network: the mempool of unconfirmed transactions ballooned to six times its previous size, and transaction fees increased exponentially. Much of this is because CryptoKitties players had massive incentives for their transactions to confirm first, and were able to continually pay more for their verification before others. Not only did this cause the network to slow down dramatically, it made activity outside of cat breeding almost impossible.

While the hype eventually died down and things went more-or-less back to normal, the introduction of CryptoKitties delivered proof that the Ethereum network simply wasn’t meant to handle games. Solidity is a contracting language built for secure communication of large amounts of data. Games require fast transaction of small packets of information. Therefore, the games that followed CryptoKitties saw best fit to incorporate a similar nature of high-cost collectibles to make it feasible for their players to spend a significant amount in gas in order to play the games.

CryptoKitties did have some very worthwhile takeaways, too. Most interestingly, CryptoKitties is now part of the larger “KittyVerse”, a collection of over two dozen DApps created by independent developers that utilize the ERC-721 kitties as assets for these separate games. This highlights a core metric of blockchain gaming: that gameplay can be made fluid across different virtual environments and development mediums.

Source: CryptoKitties

PoWH Network Takeover

Another interest advent in Ethereum gaming history took place within the Proof-of-Weak-Hands community. PoWH is a “transparent ponzi game” in which players can buy and sell POWH shares. Activity in the market pays dividends to existing holders, and each buy or sell adjusts the price of the shares accordingly. The market runs autonomously through the execution of smart contracts.

In the summer of 2018, the team behind PoWH introduced a new game, “Fomo3D”. In Fomo3D, players could purchase keys to the global pot. Every purchase went into the global pot and reset a timer to 24 hours. If that timer went to zero, the last purchased key wins the whole thing.

The global pot quickly grew to a value of over US$3 million, and many speculated it was now “too big to fail”. There were reports of mining pools colluding to act as a cartel and blacklist new transactions into the game, in order to secure their personal last transaction as the winner. Bots were in place across the board to send in ETH when the timer got too low, but if miners refused to verify those transactions, the bots were rendered useless.

However, the miners didn’t end up winning. On August 22, 2018, an unnamed individual manually stole the pot buy forcing his own transactions to fill the entirety of multiple Ethereum blocks. After a week and roughly 50 ETH in testing and spending, the users won the pot by filling consecutive Ethereum blocks entirely with their own transactions. In doing so, they won the pot of over 10,000 ETH and occupied the entire network to do so. This highlights another bottleneck issue: under extreme circumstances, individuals or groups can pay to commandeer the entire Ethereum network.

Source: Fomo3D

Broader Initiatives

It’s been established that gaming on Ethereum in its current state is expensive, slow, and unscaling. Of course, that’s not to say it has to be this way, and the current DApps on Ethereum don’t account for the larger projects in development to flesh out infrastructure through which more practical and nuanced gaming on Ethereum can take place.


Is a virtual reality world predicated on the Ethereum blockchain. The map is represented by 90,000 ERC-721 NFTs that correspond to unique positions in a 300x300 parcel grid. Each parcel is a 10 meter by 10 meter square, and each parcel either represents a plot of land or road. In August of 2017, there was a US$24 million ICO for MANA, the currency that governs the Decentraland world, which sold out in just seconds. Initially, there were some criticisms of MANA, as just a handful of whales were able to buy up most of the tokens available through the ICO.

With the exception of special “plaza” spawn areas, each parcel of land was auctioned across two lots. This auction was done in a decentralized manner, and the MANA allocated for winning bids was burned in entirety. When tokens are “burned”, they are sent to an inaccessible location and, for all intents and purposes, out of reach for anyone to access, under any circumstances. Land owners can create their own scene through the Decentraland Builder tool and script different activities through the Decentraland SDK. Several groups have organized themselves as “estates” that pooled parcels of land in hopes to create themed districts. Some of the planned developments through existing estates include shopping districts, amusement parks, universities, and gambling districts.

Existing landowners can trade their parcels for MANA, with a percentage of each transaction automatically burnt. Of the roughly 2.6 billion initial MANA supply, over 1.5 billion tokens are already burnt or otherwise frozen. This aggressive burn mechanic has enticed speculators to hoard MANA as well as parcels of land in anticipation of further scarcity. The cheapest parcels of land are currently valued around 10,000 MANA, or about US$400. More attractive plots, such as central or roadside parcels, and groupings are commonly sold at ten times this rate and sometimes more. It is difficult to place a price tag on organized estates, although these larger districts are potentially worth hundreds of thousands or even millions of dollars.

As of now, the world map is not currently traversable for the general. Players can interact with individual parcels, but cannot travel the world and wander across districts. However, the “world explorer” feature is currently in closed beta and seems to be close to release.

The current market cap of MANA is well over US$40 million. Enthusiasts and speculators have placed a lot of emphasis into Decentraland for its unique approach to blockchain gaming. Decentraland stands out from existing, failed games on Ethereum in that Decentraland aspires to create something that relies on blockchain to be successful. An autonomous, virtual reality universe wholly owned and controlled by the players is a massive feat not currently possible within the bounds of the traditional gaming industry.

Decentraland is also receiving support from other players in the Ethereum gaming space. MyCryptoHeroes is giving out collectible gear for avatars to wear. Other Ethereum DApps have purchased their own parcels of land in hopes of forging some metric of interoperability when the World Explorer goes live.

Decentraland is most likely not a 100% blockchain game. So far, all the game assets, from currency to parcels of land to player names and avatars, exist as Ethereum assets. However, it is yet to be seen how the unifying “world explorer” will operate- though it’s safe to assume that every single input and interaction will not be recorded as an Ethereum transaction. Regardless, the team behind the VR world have shown to be working to keep Decentraland as autonomous and decentralized as possible, and the project has real potential for massive impact on blockchain gaming.

Source: Decentraland

Enjin Coin

Is the largest gaming project on Ethereum in terms of market cap, with a current valuation above US$80 million. Enjin Coin provides a suite of tools and resources for cryptocurrency gaming on Ethereum. The primary service and function of the ENJ token is the minting of non-fungible ERC-1155 tokens.

ERC-1155 tokens are NFTs specifically for gaming, and enable more efficient trade and transfer on the Ethereum network than is possible through ERC-721 alternatives. ERC-1155 assets embody some amount of ENJ, determined by the issuer. Holders can melt their items back to ENJ as they please.

It’s important to note that, beyond efficiency gains by the 1155 standard, Enjin’s offerings do not service blockchain games beyond what is already offered by Ethereum. Enjin utilizes clever terminology such as “blockchain-powered games” to mask this. Beyond standard Ethereum DApps that have elected to incorporate ENJ assets, the games that make up the Enjin ecosystem are cryptocurrency games, not blockchain games.

Enjin Coin was introduced as an extension of the Enjin forums, and it’s ICO raised roughly US$23 million between August and September 2017. Initially, Enjin Coin’s primary purpose was to provide a global, real-world unity of currency to be used across the numerous guilds and online servers whose communities were based on Enjin forums. The initial road map emphasized building out infrastructure for Enjin Coin to be adopted by private servers on games like Minecraft and Unturned. The breakdown of ENJ set aside a large percentage of the total supply to provide to “supporter servers” that pledged to use Enjin Coin.

However, as the project grew, and Enjin forum activity continued to dwindle, these efforts were largely abandoned. Earlier this year, Enjin Coin released a Java SDK alongside their Unity SDK to aid game developers to incorporate Enjin Coin, but did not build out the infrastructure for server owners to easily adopt ENJ. There is no evidence of any of the supporter fund being allocated to Enjin communities, or of any communities actively using Enjin Coin. The development team is working on a custom EnjinCraft Minecraft server, but this project does not translate to other, independent Minecraft servers.

Instead, these resources seem to have been instead used to onboard cryptocurrency games and Ethereum DApps to join the “Enjin Multiverse” of games adopting ENJ and ERC-1155 assets. There are currently several dozen games pledging to use ENJ currently in development, though mainnet activity remains minimal. Some developers have expressed concerns in creating decentralized games that rely on a centralized ENJ component. In response, a group of developers is working to fork the ERC-1155 standard as an alternative that eliminates the role of ENJ.


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Source: Enjin Coin

Loom Network

Is an incubator for blockchain games based on Ethereum. Loom Network has built a gamified sidechain network similar to Plasma (explained below) to enable Ethereum blockchain games as “DAppChains”, individual Loom sidechains for individual DApps.

On a DAppChain, users can interact with mainnet Ethereum assets and send resources in and out of the game via Plasma swaps. While on the DAppChain, transactions are verified and propagated independently by Loom nodes, and checked versus the Ethereum mainnet at regular intervals. In doing so, blockchain gaming on Ethereum is possible in a manner that is much faster and cheaper, and also plays no role in bloating or congesting the mainnet network.

The LOOM ICO ended in January of 2018 and raised just shy of US$46 million. Since then, the primary developments have focused on building out the Loom SDK for easy game development and deployment as a Loom DAppChain. They’ve also created CryptoZombies, a free-to-use online course on Solidity game development. Loom is also responsible for the Relentless TCG that currently operates in beta as a DAppChain. At time of writing, Relentless sees over three times the transaction volume as the most popular DApp on Ethereum (IDEX), and sees more transactions than any blockchain game with the exception of EOS games.

Much of the appeal for LOOM is its ability to host games that incorporate fee-less transactions for users. Instead of users paying for every input, game developers instead play a flat fee to Loom Network in LOOM tokens. There are roughly 10 active DAppChains, with more in development. This is the primary focus of the LOOM token, and speculators often suggest the tokenomics of LOOM aren’t strong enough to warrant accumulation by those not developing or playing on LOOM. Slightly down from ICO, the market cap of LOOM is currently around US$36 million.

The other primary critique of Loom lies in the centralized nature of its platform. While Loom games can still leverage qualities of Ethereum to take on some of the benefits of blockchain gaming, the nature of DAppChains as wholly propagated and governed by internal Loom nodes can be worrying from an ideological perspective. This should not distract from the massive progress Loom Network has made in making blockchain gaming on Ethereum more accessible and enjoyable.



If Ethereum’s role in gaming has been underwhelming, then Bitcoin’s is best categorized as dismal. Where the throughput and contracting capabilities of Ethereum make gaming expensive, slow, and limited in complexity, that of Bitcoin makes gaming at any capacity near impossible.

Prior to the CryptoKitties craze, there were a handful of projects leveraging Counterparty assets on Bitcoin for crypto and blockchain games, in the same vein that Spells of Genesis came to be. However, as Bitcoin has become increasingly infeasible for microtransactions, these projects largely migrated to other chains or ceased operations completely. Sci-fi RPG Age of Rust is one such example- which migrated assets from Counterparty on Bitcoin to ENJ ERC-1155’s on Ethereum.

There are some holdouts, either due to development inertia or unwavering faith in Bitcoin. Bitcorn and Mafia Wars are both games utilizing PEPECASH assets (a tertiary layer on top of Counterparty) that launched last year, but the activity on both is negligible. Rare Pepe Party is TCG/RPG mashup leveraging PEPECASH that is still in pre-alpha development since the first half of 2017.

Gaming on Bitcoin isn’t yet completely doomed, thanks to the increasing prevalence of Lightning Network (explained below).



In terms of activity, EOS outpaces Ethereum and all others for blockchain gaming. EOS doesn’t blow Ethereum gaming out of the water, but top EOS games have roughly double the daily active players versus top ETH games, and transaction volume on EOS is magnitudes higher.

EOS role as the current most active gaming blockchain is rooted in cost and throughput superiorities specifically for gaming activity. The EOS network operates through a Delegated Proof-of-Stake (DPoS) consensus mechanism, where an elected governance system of 21 nodes work together to validate transactions and propagate the network, rather than working against one another independently in a Proof-of-Work system, like Ethereum or Bitcoin.

This governance model enables higher transaction throughput- studies estimate mainnet transactions per second capacity of EOS is somewhere in the 50-250 ballpark (though it is alleged that the network can eclipse 3,000 tps). Ethereum, on the other hand, sits at roughly 15 tps. EOS blocktimes are also much faster: two blocks per second versus Ethereum’s average of 13 seconds per block.

Beyond this, EOS also makes gameplay more feasible for the average player by shifting activity costs to DApp operators. By default, EOS transactions are fee-less. For activities that require some amount of computational resources (like smart contract execution for games), the developer is responsible for supplying units of RAM to pay for the costs of the network to perform these actions.

Development on EOS is also compatible with C++. C++ is a far more common language in the game development world than Ethereum’s Solidity. Alas, as a result of faster and cheaper transactions and a more accessible environment for game developers, EOS is taking on more and more of the gaming market share.

EOS mainnet launched in the end of May 2018 after a record-breaking year-long US$4 billion ICO. EOS Knights, which launched in the last week of August 2018, was the first major game on the network. To date, EOS Knights remains the most popular game on EOS and competes as the most popular blockchain game across all networks. At time of writing, there are roughly 2,500 daily players and close to 400,000 transactions each week.

EOS Knights is an idle RPG. Players purchase characters which are sent out to fight enemies, level up, and find loot along the way. The characters reward players with various in-game currencies and items that can be used to beef up the characters or traded on the marketplace back to EOS. The game was initially built as a mobile game and is currently available on the Google Playstore, as well as on Chrome and Mac as a browser game.

Other popular games include Prospectors, a massively multiplayer online real-time strategy (MMORTS) where players play the in-game economy to mine virtual gold ingots and build out their mining expedition and EOS Dynasty, a Player-versus-Player roleplaying game where players lead their group of fighters into turn-based battles to collect items and upgrade their characters.

Source: EOS Knights


EOS Network Criticisms

While EOS has seen the most success in terms of blockchain gaming in the past year, that doesn’t spell it as the long term “winner” in the niche or the overall best blockchain. EOS, along with other networks that were introduced as the “Ethereum killer”, took on various specifications to make it more easily accessible to the masses.

The EOS approach is highlighted by the elected government of 21 block producers. Many have argued that 21 BPs does not provide for sufficient decentralization and security to protect the network from hackers and bad actors. There has been significant concern regarding potential collusion between BPs and even allegations of bad acting from within the governance system. 

The DPoS consensus mechanism isn’t battle-tested in the same manner as it’s PoW alternative, and there were several incidences in the first months of EOS mainnet regarding funds being usurped and accounts being blocked. Block Producers have the capacity to freeze and even revert transactions and blacklist accounts. If a major game producer on EOS also acted as a Block Producer, these possibilities are no different than a traditional game developer might hold over its players on their online game.

With time, EOS will continue to harden and grow further impervious to attacks. But as a newer player and one that cut corners in terms of distribution, some of the qualities of blockchain gaming ensured through Bitcoin or Ethereum are diminished on EOS.

Another major criticism that is even more pertinent to gaming is the account system. Unlike Ethereum, where users connect to games directly through their wallet addresses, activity on EOS requires a registered account. EOS accounts require a non-zero amount of RAM, so first-time gamers on EOS will need to pay money through the game or independently to fire up their account. Games aren’t really free-to-play when upfront costs are required.


Steem is an interesting blockchain to analyze in that it was created for a specific utility which is not gaming. Steem is the blockchain that powers the Steemit social media network, through which block rewards are allocated as content payouts for well-received activity on the network. In some regards, Steem is somewhat of a predecessor to EOS. Both came from the mind of Dan Larimer, who left Steem to create EOS (after leaving BitShares to create Steem), and Steem also utilizes a DPoS consensus mechanism.

Steem and Steemit launched in March of 2016, and took the space by frenzy as top blogs on first launch were earning hundreds and even thousands of dollars worth of Steem and Steem Dollars (the Steem’s take at a stablecoin). Housewives, makeup artists, and travel bloggers all flocked to Steemit in what was the first major adoption of a cryptocurrency application by the general public. Steem and Steemit saw a lot of criticism early on for unfair distribution mechanisms and balance of power issues in dictating user earnings, but the network underwent many forks to settle at a sustainable model.

As the Steem community continued to grow, community members took on a number of projects to build Steem out into an ecosystem of tools and products. Developers can interact with Steem via JavaScript, one of the most widely understood and used languages in today’s coding scene.

Spurred by the endured shortcomings of Ethereum, the Steem community began to work on several games. The most prominent of these was Steem Monsters, which continues to be the most popular game on Steem. Steem Monsters is a trading card game. There are several features of the game that includes daily quests, ranked ladders, and PvP tournaments. The activity of Steem Monsters, at over 2,000 daily users, rivals EOS Knights and the other most popular blockchain games.

Beyond the games themselves, the interesting component of the Steem blockchain gaming scene is the manner in which it came to be. The $4 billion EOS warchest can fund the incubation of all kinds of different developments on the network. Tron’s gaming scene is fueled by their $100 million blockchain gaming fund reserved for Ethereum DApps that switch over to Tron. The rise of Steem gaming came about 100% organically, where passionate Steem supporters simply build out their ambitions on the network they are most excited about.

Up Next:

Part IV - The Road Ahead

About the Author

Zane was first exposed to Bitcoin in 2013 through a gaming community that utilized Bitcoin. Since then, he's followed gaming closely while immersing himself further in the cryptocurrency space. In 2015, he began working as a freelance writer for several crypto news blogs, and today continues to work as a freelance writer for various projects and websites in the space, primarily focusing on educational and technical content. His pinpoint area of focus within cryptocurrency continues to be gaming.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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