Autonomous Worlds: In-Depth Analysis of Fully On-Chain Games
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Autonomous Worlds: In-Depth Analysis of Fully On-Chain Games
In this article, 1KX will analyze the potential of on-chain gaming and how it can transform the gaming industry, including aspects such as game development, gameplay, community building, and business models.
Navigating Web3 tides with focused insightsWritten by: taetaehoho
Translated by: TechFlow
On-chain gaming is emerging as a highly anticipated field within new markets. The rise of on-chain games not only brings enhanced security and scalability but also introduces an entirely new gaming paradigm.
In this article, 1KX will analyze the potential of on-chain games and how they are transforming the gaming industry—covering aspects such as game development, gameplay mechanics, community building, and business models. Additionally, we will share our outlook on the evolution of on-chain games over the coming years and explore their broader impact on the entire gaming sector.
Historically, each new computing paradigm has unlocked a wave of new possibilities in gaming:
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Transistors, microprocessors, TVs — the concept of computer games;
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Personal computers — expansion into genres like strategy and simulation;
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The internet — multiplayer online gaming;
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Social networks — social network-based games;
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Mobile devices — casual gaming;
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VR — immersive experiences.
With each transformation, we've seen new teams succeed by embracing novel approaches and technologies—not established incumbents, but newcomers. Game designers have leveraged the unique features of each computing medium to invent entirely new experiences. This is also happening with dynamic Web3 gaming pioneers, each innovating in their own way.
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In 2017, Crypto Kitties created the first crypto game, allowing players to collect and breed digital kittens.
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In 2018, Axie Infinity moved assets on-chain as NFTs, creating an open and liquid SLP economy.
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In 2020, Dark Forest used zero-knowledge proofs combined with on-chain game logic to create the first permissionless, scalable on-chain game with incomplete information.
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In 2021, the Loot Project launched as a foundational IP layer that anyone could build upon without permission, spawning hundreds of games and derivative projects.
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In 2023, new fully on-chain games and autonomous worlds continue to evolve.
With every experiment in on-chain gaming, we discover entirely new experiences enabled by on-chain assets, game states and logic, permissionless extensibility, and composability—pointing toward autonomous worlds as the next-generation crypto platform. At 1kx, we believe we are at the cusp of developing the next generation of games—the "0 to 1" phase of on-chain gaming.
What Are Autonomous Worlds / On-Chain Games?
Let us borrow gubsheep’s definition of crypto games (abridged version).
An on-chain game is one where:
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All game logic and state (including assets) are implemented on-chain via smart contracts.
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The blockchain serves as the single source of truth for game data. Rather than being used merely as auxiliary storage or a mirrored copy of data stored on proprietary servers, all meaningful data (not just asset ownership) resides on-chain. This allows games to fully leverage the benefits of programmable blockchains: transparent, permanent, and permissionless interoperable data storage.
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Games are developed following principles of open ecosystems.
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Game contracts and (typically) accessible clients are open-source.
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Third-party developers can customize—or even fork—their own game experiences through plugins, third-party clients, interoperable smart contracts, or full re-deployments. This enables game developers to harness the creative output of the entire (incentive-aligned) community.
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The game is client-agnostic (i.e., independent of front-end interfaces).
A common conceptual model found in on-chain game literature is the idea of an “autonomous world” or equivalently, an “on-chain reality.” There are strong parallels between these terms:
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On-chain game state, where the blockchain serves as the definitive source of game data and the state of the “world” (think of any snapshot of positions over time).
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On-chain game logic defining how players interact with the game, analogous to physical laws governing how people interact with reality.
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Community and governance structures emphasizing open ecosystem principles and malleable underlying elements.
This world is “autonomous” because:
“A blockchain-based world is almost entirely self-governing: anyone can enforce introduced rules without compromising objectivity. The disappearance or betrayal of any individual does not harm the world: its narrative boundaries remain as solid as ever.” — “Lattice”
Autonomous Worlds as the Next Frontier
Two transformative shifts make autonomous worlds exceptionally exciting:
- By placing game state and logic on-chain—where actions carry real economic stakes—players attach greater meaning to their in-game behaviors, experiencing deeper immersion and unlimited risk tolerance. The censorship resistance of on-chain games allows this immersion to grow without platform risk. Running on public blockchains also means these games can persist indefinitely.
- By allowing anyone to extend or modify the game, on-chain games encourage modding, better align incentives between modders and developers, empower players to control their experience, and pave the way for a new vision of interoperable metaverses.
On-Chain Game State and Logic (and Open Source)
On-chain game state and logic enable:
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Permanence and fault tolerance as inherited properties of the underlying network. In-game actions, asset ownership, and earned credentials are immutable, belong to you, and remain yours permanently. Both the game and its surrounding ecosystem are censorship-resistant.
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Game assets inherently possess monetary value due to tradability. State transitions require gas fees. Participating in on-chain games carries real economic consequences and often leads to unbounded economic growth.
“We must remember that transactions cost money. Therefore, the most efficient way to perform any transactional action in a game is to make it strategic. This means you should maximize the intellectual effort per transaction.” — Bohdan of Mithraeum
As a result of these interacting traits, we hypothesize that players in on-chain games will form deeper, more immersive relationships with autonomous worlds (AWs), because they have:
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Stronger sense of ownership over in-game assets and achievements. We’ve already observed individuals constructing digital identities around on-chain actions and accomplishments—such as degen scores, wallet analytics, and leaderboards. This mirrors what we see in high-economy Web2 games, where players spend thousands of hours and tens of thousands of dollars acquiring rare items and forming communities around them. True ownership of assets and achievements amplifies this emotional connection. As evidence, we’ve seen Dark Forest NFTs—awarded for winning rounds of Dark Forest—sell for significant prices despite having no functional utility.
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Greater mastery over the game to attain high-value assets and prestigious titles. We’ve observed “Dark Forest” players building bots, monitoring tools, and custom clients to climb leaderboards. Similarly, we see Web3 communities deeply attached to their pfps (profile pictures), especially high-value ones.
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No fear of platform risk: In Web2.0, numerous mod platforms have been shut down by parent companies citing IP or digital distribution policies. Beyond regulatory arbitrage, the censorship resistance, permissionless deployment, and permissive open-source culture of blockchain ensure that on-chain games and their ecosystems cannot be arbitrarily terminated.
In summary, we posit that due to the implications of on-chain state and logic, Web3 games will offer significantly deeper immersion and longer lifespans compared to Web2 games.
Autonomous Worlds as Permissionless Platforms
The history and evolution of gaming are closely tied to mods (modifications). Many era-defining games and genres originated as mods of popular titles. There's ample evidence that players want to participate in the development of games they love—and often end up creating experiences others enjoy (e.g., Roblox, Minecraft).
However, a downside of mod popularity is that while they may boost visibility, they can also cannibalize DAUs of the main product. Due to this fact and the desire for tight IP control, strong End User License Agreements (EULAs) and enforcement actions have suppressed mod growth and monetization over the past two decades.
More recently, user-generated content (UGC)-based games have emerged as a solution, capturing some of the value created by communities. Studios provide creator tools and limited creative freedom to make it easier to build new experiences. Yet, Web2 UGC still suffers from restrictive EULAs, high revenue shares, and inflexible monetization models.
Autonomous worlds represent a stronger solution than Web2 UGC because they allow permissionless extension and modification:
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By default, on-chain game logic exposes every public aspect of the base game for modification and expansion. Any developer can create a set of smart contracts that interact with the game state and logic—without requiring the game studio to grant limited creative freedoms (e.g., ability to create custom maps). This could manifest as games reading and using raw game state, games whose outputs control inputs in the base game, games directly invoking original logic functions, multiple games sharing state, modular components, etc.
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Open-source culture and the anonymity possible in smart contract deployment make enforcing traditional Web2 EULAs practically impossible, thereby preventing suppression of mod monetization and ownership. Mods and extensions deployed on-chain can freely define value accrual parameters (e.g., function call fees) and contract ownership—if decentralized, either owned by no one or governed by decentralized entities. This allows mods to accumulate value freely and avoids EULA enforcement.
Due to outdated legal precedents and restrictive EULAs, mod creators cannot claim copyright over their work, struggle to monetize their creations, lack control over usage, and face challenges preventing theft by bad actors. Even absent most EULA restrictions, mods are generally considered derivative works outside fair use. While mod authors are typically allowed to create and distribute mods for free, they cannot legally claim ownership or profit from their creations without infringing on the base game’s copyright.
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Incentives between original creators and modders become better aligned—or even merge. While mods in traditional games may exist as standalone software, on-chain mods can channel value flows back through the core game logic of the base layer. The more mods and extensions built atop a base game state, the higher the value of its assets and achievements, or the more value accrual it receives from activity in supporting applications. This mirrors incentive structures in NFT IP and Layer 1 blockchains, where developers are incentivized to build new experiences for NFT holders to increase IP value, or to create dapps that drive demand for block space.
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In on-chain games, every content addition results in multiplicative expansion of playable content. Economic players and resource accumulators can exploit imbalances introduced by new content for financial gain. For players who simply want to play, there’s more content available. For builders who want to modify or expand the game, there’s another layer to build upon.
Regarding permissionless expansion in on-chain games, we anticipate:
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Explosive growth in game mods and expansion modules (on-chain downloadable content or DLC).
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Each extension creates more “fun” opportunities for different player archetypes.
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As long as there is an active community, this cycle continues. Within any community, there will always be a group of builders.
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This leads to truly long-term player engagement.
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Over time, nested expansions—mods of mods—will become commonplace. The game ecosystem itself becomes an evolving entity.
For players’ actions in a game to feel meaningful, there must be real positive and negative consequences. The feeling of having meaningful skin in the game is more immersive than any VR experience. In The Citadel, we want there to be stakes, something worth striving for, and ways to fight for it. We envision a world driven by economic, political, and military conflicts arising from scarce resources. The initial game loop centers on economic competition, but over time, new forms of risk and competition will emerge.
AWs: The Current State of Autonomous Worlds
As evident, numerous teams are building on-chain IPs, infrastructure to streamline AW development, publishing platforms, and other on-chain experiments.
Why Are We Excited About AWs?
Early-stage foundational systems—there are many similarities between today’s vibrant ecosystems (like Ethereum) and current on-chain games:
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New types of applications built using technologies distinct from existing platforms—applications that previously didn’t exist.
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An extremely strong community rallying around a shared vision or ideology—often aligned with the technological differentiators.
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An initial developer ecosystem built via points 1 and 2 attracts early builders to the foundational layer.
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Widespread skepticism about the commercial viability, practicality, or user-friendliness of these new experiments.
Repeatedly observing this pattern, we see the same flywheel:
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Initial communities leverage the computational features of the base layer to build cool, innovative protocols.
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Other builders join the community upon seeing these products.
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Among thousands of experiments, a few highly successful applications eventually emerge.
Autonomous worlds are in the very early stages of this cycle.
Autonomous Worlds in the Next Three Years
Here’s what we foresee in the coming years:
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A surge in the number of on-chain games, leading to community-driven development built atop popular titles. Games with the strongest communities will see multiple alternative clients, bots, and plugins developed, but also pioneering experiments in modules, extensions, and mods that are not forks, but interoperable expansions of the base game. At least one of these mods will surpass the original game in popularity.
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Permissionless UGC experiments—including games whose outputs serve as inputs to other games, games sharing state across multiple titles, custom frontends indexing subsets of game components, and systems. We’ll see rapid progress driven by the availability of open-source implementations of game elements (components and systems).
Conclusion
We believe on-chain games mark the beginning of a new paradigm that will eventually permeate mainstream consciousness. We see in them the traits of past successful networks: a radical departure from the status quo, unique value propositions, and an astonishing builder community.
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