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Wallets with joysticks
This week, we look at the challenges in identifying unique players in web3 games and discuss some of the ways this can be mitigated
One of the unique challenges faced by web3 games has been the trade-off between transparency and anonymity, which is exemplified by the difficulty of accurately measuring the number of players in a web3 game. While blockchain technology offers transparency by enabling anyone to view public transactions, the ability to create almost unlimited wallets on demand creates pseudo-anonymity. Ideally, each player would be represented by a single wallet address, and every wallet address interacting with a game would correspond to a unique player. However, in reality, this is not the case, making it challenging to monitor web3 games as a whole and individual game performance.
User identity in web3
Typically, most games on platforms are somewhat tied to hardware driven accounts, such as Steam/Epic on PC, Xbox/Playstation gamer IDs on console, and Apple/Google accounts on mobile. In contrast to the these platforms, web3 games lack a distinct native platform and typically rely on wallets as the primary means of user identification. However, since nearly all assets are transferable between wallets, this is not strongly tied to any specific platform. This situation is unlikely to continue indefinitely as the demand for simpler onboarding and accessibility is likely to drive the linking of wallets to platforms or social accounts. We anticipate a combination of self-custodial linking and custodial creation to proliferate, as game developers will likely lean towards easy onboarding middleware or simpler-to-use wallets, such as Sequence.
Why tracking true player numbers is ambiguous
If a wallet is not linked to a game or platform account, there is a high possibility that a single player may be using multiple wallets, especially with digital wallet providers such as Metamask making wallet creation incredibly easy. This is particularly concerning for free-to-play games as players can create unlimited, free accounts, which also invites bots. While email-based signups are susceptible to this issue too, especially with domain names featuring catch-all forwarding, in web3, the absence of a dedicated platform account system and the potential financial gains from operating multiple accounts exacerbate the problem. This makes it difficult to track the number of actual players in a game, but also enables easy inflation of tradeable NFTs or tokens that are given away to accounts. The absence of a distinct hardware identifier or IP address, along with the presence of bots makes it challenging to determine the number of unique human players a game has.
Balancing web3 anonymity
One way this issue can be alleviated is by using a combination of KYC and soulbound tokens/NFTs that link a unique real world identity to a specific wallet in a way that prevents identity duplication. We recommend this podcast episode as a great introduction to the issues on KYC/AML in web3. While this approach may contradict the anonymity-based ethos of web3, it can assist with government regulation. Governments already have the forensic capability to trace individuals to wallet addresses through bank or real-world transaction involvement, so this change is not significant. This “non-privacy” approach also goes against the trend set by Apple, which made efforts to prevent unique user device identification on iOS, and similar moves that are expected to come from Google.
KYC can mitigate bot activity
Financial incentives are expected to encourage players to overcome their privacy concerns, as demonstrated by Animoca Brands' push for KYC through the Otherdeeds sale and Benji Bananas reward claims. Games can easily require KYC for taking tokens or NFTs out of the game, citing regulatory concerns. However, we need to establish KYC soulbound standards and on-ramp providers are in a good position to help by linking players to the bank accounts used for on-ramping. This approach does not eliminate bots, as identity fraud and the sale of KYC'd identities are possible, but it can significantly reduce the number of bots, as a unique human identity is still required per bot.
On-chain transactions vs. gameplay data
Another issue with using wallets as a proxy for unique players is the way wallet activity is tracked. Popular sites for analytics like DappRadar and Dune are only able to track contract interactions and the associated wallet addresses, rather than actual gameplay data, unless it is entirely on-chain. This leads to two major problems: First, only select transactions are captured as gameplay, which becomes more prevalent as more "web 2.5" games are released that offer optional web3 integration. Second, transactions that are purely financial in nature and not related to gameplay are lumped together with play-related transactions, making it difficult to distinguish between investors and legitimate players. Mobile games with web3 features will likely link wallets to Apple/Google accounts, providing game developers with more accurate player and wallet information. However, transparency for others will be more challenging. Sites like DappRadar do not differentiate between different types of players and track all contract interactions towards Unique Active Wallets.
Understanding user behavior is key to success
Understanding user behavior and acquisition is crucial for the future of web3 gaming, especially in terms of marketing and advertising. In the mobile game industry, tracking and acquiring players is essential, and game developers cannot afford to waste resources on acquiring bad users. With better analytics, game developers can incentivize good economic player behavior and reduce their reliance on advertising campaigns targeted at the wrong audience. While web3 games are currently targeted at a web3 native audience, as the industry grows, it will be important to expand beyond this user base, and understanding user behavior and acquisition will be key to success.
Wallet activity is not sufficient
By only tracking wallet transactions, we not only miss out on understanding player behavior, but we also run the risk of confusing true players with bots, investors, or duplicate players. Fortunately, some of the systems previously mentioned, such as KYC, linking to less temporary account types, and soulbound F2P content, can help with this issue. However, data.ai and Sensor Tower have not yet shown any interest in finding ways to work with web3 specifically and instead are focused solely on mobile gameplay analytics. While this approach may work to some extent, it misses out on the bigger picture of incorporating both gameplay and on-chain interactions to fully understand player and economic behavior. Ultimately, both web2 and web3 data must work together to truly understand players, not just wallets.
Thanks for reading this piece of our weekly series “Nami’s Nexus”, where we look to decode web3 gaming and dive into the various areas and nuances of the industry and beyond. Don't forget to subscribe to our blog and follow us on Twitter to receive more web3 gaming content.