Here’s a glossary of key terms in Web3-blockchain gaming, emphasizing how blockchain technology impacts game design, ownership, and economics:
Airdrop
Airdrops refer to the distribution of free tokens or coins to a large number of cryptocurrency holders, as part of marketing strategy by blockchain projects and startups to promote awareness, reward loyal users, or decentralize token ownership. Claiming airdrops may involve completing tasks like sharing content on social media, signing up for a service, or holding a certain amount of a related cryptocurrency or NFT.
Blockchain
A decentralized digital ledger that records transactions across a network of computers. In blockchain gaming, it ensures transparency, ownership, and immutability of in-game assets and transactions.
Bridging
The process of transferring assets or tokens from one blockchain to another. In gaming, bridging allows players to move in-game assets across different blockchain networks, increasing flexibility and interoperability.
Burn Mechanism
A process where tokens are permanently removed from circulation, often used in blockchain games to reduce the supply of a token, thus increasing its scarcity and value over time.
Cross-Chain Compatibility
The ability for a blockchain game to function across multiple blockchain networks, allowing assets and tokens to be used seamlessly across different ecosystems.
DAO (Decentralized Autonomous Organization)
An organization represented by rules encoded as a smart contract that is decentralized and governed by its members. In gaming, DAOs can be used to allow players to vote on game updates, decisions, and the allocation of resources.
ERC-20
A standard for fungible tokens on the Ethereum blockchain. ERC-20 tokens can represent in-game currencies or utility tokens that players earn or spend in blockchain games.
ERC-721
A standard for non-fungible tokens (NFTs) on the Ethereum blockchain. ERC-721 tokens are typically used for unique in-game assets like characters, items, or collectibles.
ERC-1155
A multi-token standard on Ethereum that supports both fungible and non-fungible tokens. This allows for more efficient management of multiple types of in-game assets within a single contract.
GameFi
A combination of gaming and decentralized finance (DeFi), where players can earn, stake, or lend tokens in addition to playing games. It encompasses P2E mechanics and other financial features integrated into blockchain games.
Gas Fees
The fees required to execute a transaction on a blockchain, particularly on networks like Ethereum. In gaming, gas fees can affect the cost of minting NFTs, transferring assets, or participating in in-game activities on-chain.
Governance Token
A token that gives holders the right to participate in decision-making processes within a decentralized game or platform, often used in DAOs. Governance tokens allow players to vote on proposals related to game development and updates.
Initial Coin Offering (ICO)
A fundraising method where a blockchain gaming project sells its native tokens directly to investors in exchange for established cryptocurrencies like Bitcoin or Ethereum. ICOs allow game developers to raise capital for game development, in-game assets, or ecosystem expansion, often providing players early access to tokens that can be used for in-game purchases, governance, or rewards.
Initial DEX Offering (IDO)
A fundraising method where a game or project launches its token through a decentralized exchange (DEX), allowing projects to offer their tokens, ,which may grant access to in-game economies or governance, directly to players and/or investors without intermediaries. IDOs provide immediate liquidity, enabling users to trade tokens right after the sale, and emphasize decentralization and community participation.
Initial Exchange Offering (IEO)
A fundraising method facilitated by a centralized cryptocurrency exchange for blockchain gaming projects, where the exchange serves as an intermediary. IEOs enhance trust in the gaming project by allowing exchanges to vet the developers and their games, while also simplifying the token purchase process for players. Tokens acquired through IEOs can often be used for in-game assets, currency, or voting on game-related decisions.
Initial NFT Offering (INO)
A fundraising model where a game sells its NFTs to raise capital or distribute rare in-game assets before the game’s launch or major updates. INOs are similar to IDOs but focus on NFTs instead of tokens.
Interoperability
The ability for assets, tokens, or data to be used across different games or platforms. Interoperability allows players to transfer their in-game items or currencies between different blockchain games or virtual worlds.
Land Ownership
A concept in some blockchain games where players can buy, sell, or develop virtual land represented as NFTs. These virtual lands can often be monetized, customized, or used for various in-game purposes.
Layer 2 Solutions
Technologies built on top of a main blockchain to improve scalability and transaction speed. In blockchain games, Layer 2 solutions allow for faster and cheaper interactions, especially during gameplay.
Loot Boxes
Digital containers that hold random in-game rewards, which can be purchased or earned by players. In blockchain gaming, loot boxes may be tied to NFTs and smart contracts to guarantee transparency in their contents.
Marketplace
A platform where players can buy, sell, or trade in-game assets, typically NFTs. Marketplaces can be centralized or decentralized, and they facilitate the exchange of virtual items for cryptocurrency.
Metaverse
A collective virtual space that is often persistent, allowing for digital interactions, economies, and social experiences. In blockchain gaming, the metaverse can involve interconnected virtual worlds where assets and identities are interoperable.
Minting
The process of creating new tokens or NFTs on the blockchain. In gaming, minting can refer to the creation of new characters, items, or other assets that are represented as NFTs.
NFT (Non-Fungible Token)
A unique digital asset representing ownership or proof of authenticity, often used in blockchain games for items like characters, weapons, or virtual land. Unlike cryptocurrencies (which are fungible), each NFT has distinct properties and cannot be replaced by another token.
NFT Floor Price
The lowest NFT price in a given collection and/or for given traits in that collection. It offers players a baseline for assessing the market value of in-game assets and helps guide decisions on asset purchases and trades. It may be calculated collection-wide, disregarding unique traits or rarity (e.g. price of the cheapest NFT in a collection), and/or trait-wide, taking account of traits and rarity (e.g. price of the cheapest NFT with a given trait).
Play-to-Earn (P2E)
A gaming model where players can earn rewards (often in the form of cryptocurrency or NFTs) through gameplay, which can then be traded, sold, or used within the game ecosystem or externally. However, the term “play-to-earn” is often loosely defined and does not guarantee significant profits relative to the time and/or money invested. So far, most P2E games don’t appear to be profitable for gamers, and their viability is often limited to players in low-income countries where earnings may hold comparatively higher value.
PFP (Profile Picture)
In the context of Web3 games, PFP refers to an NFT (Non-Fungible Token) used as a player’s avatar or in-game identity. These PFPs often provide additional benefits, such as exclusive in-game items, access to special features, or enhanced status both within the game and in associated online communities.
Proof of Ownership
The concept that players own their in-game assets (e.g., NFTs) on the blockchain, allowing them to freely transfer, sell, or trade them without the game developer’s intervention.
Rarity
The scarcity or uniqueness of an in-game asset or NFT. Rarity often influences the value of an asset in blockchain games, with rarer items typically being more valuable or desirable.
Sidechain
A separate blockchain that runs in parallel to a main blockchain (like Ethereum) and is designed to alleviate congestion and reduce transaction costs. Sidechains are often used in blockchain games to scale up and handle large volumes of transactions more efficiently.
Soulbound Token (SBT)
A non-transferable token used to represent credentials, achievements, or personal traits. In gaming, SBTs can signify a player’s history, reputation, or participation in special events, and unlike NFTs, they cannot be sold or traded.
Smart Contract
Self-executing contracts with the terms of the agreement directly written into code. In blockchain games, smart contracts govern the rules of transactions, ownership, and rewards.
Staking
Locking up a certain amount of cryptocurrency or tokens (including NFTs) in a protocol to earn rewards, often in the form of more tokens or in-game benefits. Some blockchain games allow players to stake tokens for special privileges or assets. The primary purpose of staking is to support the operation and security of a blockchain network per the nodes owned through staking. It also incentivises long term holding, thereby alleviating selling pressure during the lock period. Staking can also carry the risk of a net loss if the value of the staked token decreases significantly during the staking period, outweighing the staking rewards earned.
TGE
A Token Generation Event (TGE) is a specific where a new cryptocurrency or token is created and distributed to the public or to investors. It usually occurs after a successful initial coin offering (ICO) or initial exchange offering (IEO), where funds are raised to support a project.
Tokenomics
The economic model and incentive structure of a blockchain game, usually involving how tokens are distributed, used, earned, and burnt within the game’s ecosystem.
Wallet
A digital tool that allows players to store, send, and receive cryptocurrencies and NFTs. Wallets are essential for interacting with blockchain games, as they hold the tokens and assets players use in-game.
Whitelist
A list of pre-approved wallets or participants allowed to mint NFTs or participate in exclusive events. In gaming, being on a whitelist may give players early access to new content or in-game items.
Yield Farming
The process of earning rewards by lending or staking tokens in decentralized finance (DeFi) platforms. Some blockchain games incorporate yield farming as a way to incentivize players to participate in the game economy.