Proof Of Skill Might Finally Tokencentivize Gamers
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E3 2018 (the Entertainment Software Association’s annual video game trade show) is taking over downtown Los Angeles, and if you’re anything like us, you’re curious whether blockchain and cryptocurrencies will be prominent subjects. ESA CEO Mike Gallagher has definitely heard discussion building.
Back in March 2018, we researched AllMine, a blockchain-based video game where players mine a cryptocurrency called Jewelz by playing the game. While a novel idea, the platform uses a proprietary crypto that’s only used in that one game. Gamers want more, and Signal Zero founder Tobias Batton thinks he brought the answer to E3 2018 with Loot.
The Loot Protocol is the world’s first Proof-of-Skill blockchain platform that uses a universal crypto to reward players for their skill levels in a variety of games. Trendy Entertainment’s Dungeon Defenders II is the most recent game to commit to the platform (in public anyway), and Batton is meeting with the top developers and publishers at the Los Angeles Convention Center and L.A. Live seeking to strike even more deals.
There’s certainly interest among both players and publishers. The video game industry generated $108.4 billion in 2017 alone, and it’s continuing to grow with the rise of AR, VR, eSports, free-to-play, and video game streaming content.
But, as much the 1.2 billion gamers around the world love them, video games aren’t without their flaws. Microtransactions are scorned by gamers, who are tired of paywalls making games unplayable without their wallets being drained. Loot boxes are taking microtransactions even further by randomizing what in-game items you’re even paying for. Many regulators consider these boxes a form of online gambling.
The video game industry is at a turning point, and, should Batton secure the partnerships he’s seeking this week, the blockchain may be its savior. I spoke with Batton in the week leading up to E3 to determine his company’s odds of beating this game. Here’s what I learned.
Game Over – Continue?
Unlike MyDream, which developed and published its own blockchain-based video game, Signal Zero isn’t developing games. Instead, it developed three gaming rewards platforms. Tokenwall is a gamer rewards platform where people buy in to compete and win rewards based on game skill. Tap Rivals is a similar platform designed specifically for eSports.
Loot is the third iteration. The protocol tracks gamer skill in third-party games to bring this reward-based system to the blockchain. Keep in mind, this platform is still in its early stages, although it’s certainly well ahead of most crypto launches we see go by our desks.
The difference between the platforms is Tap Rivals and Tokenwall rely on entry fees from its 800,000 monthly active users and advertiser support to fund rewards in the form of gift codes for Amazon, Steam, and Xbox, along with fiat cash and crypto rewards. With the Loot Protocol, a proprietary crypto reward called Loot will replace the current point systems and be tradable for these prizes.
The rewards platform has had over 10 million users sign up in the past 4 years, which makes it approximately the same size as Coinbase.
On an economic level, this stabilizes the value of the Loot coin. Being able to cash out on Signal Zero’s digital marketplace provides a currency value most cryptocurrencies don’t have upon launch. Steem tokens, for example, may be worth over $2, but you’d be hard pressed to find a business willing to accept them as payment.
The ability to play games to earn a living (or at least fund your gaming habit) creates a sustainable economy that expands well beyond the single-game crypto-concepts we’ve seen to date.
Proof of Skill
When discussing the Loot Protocol, one of the most pressing questions is how skill is determined and validated. How does the Proof-of-Skill concept compare players from a game like Tetris to games like Battlefront, or League of Legends?
The answer is that gamers are compared against each other within the scoring rules of each game. All that’s necessary, according to Batton, is any type of counting integer, such as points in Tetris, kills in Battlefront, wins in League of Legends, etc.
Loot works as an add-on to the existing game structure. Publishers/developers host the software on their own servers, creating a node. The Loot Protocol collects scoring data from blockchain oracles on players’ machines to graph all player “scores” against each other and determine mining and payout percentages. Scores are validated by game masters elected through stake voting, and both players and publisher/developers receive Loot payouts.
From a player perspective, this setup is seamless. System resources aren’t dedicated to processing blockchain transactions (a big relief, especially in the PC gaming world, where computing power can make the difference between winning and losing).
From a developer perspective, Loot represents a new way to monetize games without over-relying on annoying freemium paywalls. Video game companies have long struggled to open monetization channels, and the success of games like Candy Crush (whose paywall is notorious among gamers) drove the industry beyond creative boundaries gamers are typically used to.
Whether Batton and Signal Zero can secure top-tier partnerships to be integrated into popular games like Fortnite: Battle Royale, PUBG, Overwatch, Smash Bros, and Call of Duty remains to be seen. But the concept of Loot is already proven in the company’s earlier projects, which is already the traditional market standard.
Gamers have long reviled the current freemium system, and Loot promises to bring the industry to the next level as early as next year.
Editor’s Note – the writer of this article holds no stake in the Loot Protocol, though he may hold other cryptos.