How DAOs will boost the games industry by giving more power to players?

The concept of DAOs (decentralized autonomous organization) can be traced back to 2013 when Vitalik Buterin, the co-founder of Ethereum, introduced the idea. However, it was not until 2016 that “The DAO” gained real traction.The DAO was a pioneering attempt to create a decentralized venture capital fund that would allow investors to make decisions collectively. However, vulnerability in the initial smart contract led to a major hack that threw a stick in the wheels of progress.Notwithstanding, DAOs are still an integral part of many blockchain projects. This article explores what DAOs are, and their importance for the evolution of games and gaming communities.

A new context for games

Combining the principles of blockchain technology, smart contracts, and decentralized decision-making, DAOs essentially encapsulate an intentional transition of power from game creators and supporting systems to contributing players and other stakeholders.The most concise definition of what a DAO is comes from Ethereum. A DAO is…

“A collectively owned, blockchain-governed organization working towards a shared mission.”

This communitarian, bottom-up approach to managing and evolving complex systems has found a natural ally among Web3 game developers and gaming communities.

Enter Governance

Governed by proposal rather than individual or board decisions, which can be tampered with or manipulated, DAOs are designed to take seriously the thoughts and ideas of the community and, through voting mechanisms, encourage positive, democratic, and uncontested change.In gaming, what this means is that players move from the periphery of passive consumption to the centre where they become active participants in scaling games. BlockGames co-founder and CEO, Benas Baltramiejūnas said, “Traditionally, developers create, publish and market games. Users play those games, perhaps join online forums and follow their favorite influencers, and that’s been where the story ends.“With a DAO, similar to the one we’re establishing at BlockGames, players are much more involved in process. They help games to scale and, in return for that, are rewarded with credits, tokens, digital collectibles and more. Another key benefit is that they are able to stake their digital assets to increase their influence.”

DAOs as hotbeds of ideation

He added, “DAOs are still a new concept, but now that a new driving force exists beyond the silos of tradition, games can become open source and communities can contribute to their development.“Players can make proposals that, if they meet the quorum requirements, get tabled before the voting and decision-making process begins. So, crucial decisions are made by the community — whether that’s individually or collectively via some sort of guild — in proportion to how much value they have committed through the staking protocol. This is how many of the best ideas come to life in games.”

Let the players decide

What this means is that players can make proposals on anything, from in-game mechanics to pricing structures or even low-level, in-game elements such as what new weapon or potion should be created for a specific character, for example. From this perspective, DAOs move beyond the constraints of traditional customer feedback (that may or may not be acted upon) into the realms of genuine contributions that get actioned by developers.By fundamentally reshaping how gaming organizations function, secure funding, cultivate communities, and innovate in game development, DAOs are poised to revolutionize the gaming landscape via trustless consensus mechanisms.

Why a ‘trustless consensus’ is a good thing

Trustless consensus means that transactions are performed without the need for trust. Instead of two or more people agreeing on a handshake or promise that can ultimately be broken, consensus is reached through computational verifications enshrined in smart contracts.This allows things like sales of digital collectibles on marketplaces such as Opensea or Magic Eden to happen without the need for any sort of intermediary. With each transaction recorded on the blockchain, the need for validation from a centralized, human organization is bypassed. The consensus part is where multiple computers ‘agree’ and validate a transaction as being authentic. Because human ‘trust’ doesn’t come into the equation, the process is considered ‘trustless’.

More power to players

Gaming DAOs are about recognizing the power of players within gaming communities and leveraging their involvement through GameFi mechanics. In return for their engagement and contributions, players earn rewards and can secure greater voting powers. Neither people or centralized organizations count these votes because each one is validated on-chain via smart contracts.This means that end users can contribute to many facets of the gaming ecosystem, from establishing in-game policies through community voting to improving rewards mechanisms, functionality, gaming content, and more in a seamless and, as mentioned, trustless manner.This redistribution of game or ecosystem ownership to players is a transformative proposition that has the potential to dethrone traditional models where the main driver is to monetize players without giving anything of real value back. And this is where things get even more interesting.

A wealth of new monetization possibilities

Ultimately Web3 gaming leverages the unique properties of blockchain technology — things like digital scarcity, true ownership of in-game assets, and provable fairness — to create immersive gaming experiences that yield rewards with real-world value.On the topic of monetization, Benas said, “Economic empowerment for players through the redistribution of game ownership is the central tenet of DAOs. With this new model, there are plenty of ways to both monetize games and reward players. In fact, by rewarding players and incentivizing referrals in new ways, monetization for all participants is amplified through more intensive player engagement and viral growth through rewarded referrals. It’s something we’ve been planning at BlockGames for a while and we’ll be releasing more information about what we have in store to the BlockGames community very soon.”

What are the headwinds for DAOs?

Although DAOs are positively brimming with promise, and potentially spell the beginnings of a fair, free and equitable future for all, let’s face it — nothing is all peaches and cream. The biggest challenge? Most people don’t even know DAOs exist.According to a study by Momentive, based on a US poll, fewer than 1 in 5 (18%) of US adults have heard of a DAO. Surprisingly, this figure only rises by a further 8% for people who work in the tech sector. Awareness of DAOs increases moderately for younger generations, but is still below 25% for Gen Zers and Millennials at 21% and 22% respectively.Compare these figures to global knowledge of cryptocurrencies, which according to Toluna’s Decoding Crypto Report — the Future of Digital Currency, sits at more than 57% of the more than 10,000 people surveyed, and it’s easy to see why DAOs are still far from gaining the sort of traction that could lead to mass adoption.On a more positive note, however, of those people familiar with DAOs a far more impressive 63% are “confident that DAOs are able to improve how companies and organizations are run, but are unsure of who benefits from the technology.”In short, there’s still a long way to go.

BlockGames is the world’s first cross-chain, cross-game Player Network, accelerating user acquisition for games through instant referral and engagement rewards mechanisms for players. The first game on the Player Network is Shatterpoint, an action-packed RPG in the style of Diablo.