Web3 Videogames Explained: The Brutally Honest Beginner’s Guide Every Techie Should Read First

Web3 videogames promise real ownership of in‑game items, tradable tokens and player‑run economies. But between token crashes, over‑hyped ‘play‑to‑earn’ schemes and angry gamers rejecting NFTs, it is hard to know what is truly innovative and what is just marketing. This beginner‑friendly guide breaks down how Web3 games work, why so many token economies blew up, the key risks beyond price volatility, and a step‑by‑step way to explore the space safely and with eyes wide open.

Welcome to Hoken Tech.

If you follow tech news, you have probably seen phrases like Web3 gaming, NFT games, or crypto videogames. Depending on who you ask, these are either the future of digital entertainment or over‑hyped scams wrapped in buzzwords.

This guide is for general tech readers who know what a normal online game is, but are not deep into crypto. It explains what Web3 videogames actually are, how they work at a high level, why some of them exploded and then crashed, and how to explore the ecosystem safely if you are curious.

In a traditional online game:

• The game runs on servers controlled by a company.

• Your items (skins, characters, cards) live in that company’s database.

• You might spend real money on those items, but you cannot legally sell them outside the game or take them into another game.

• If the company shuts the game down, you lose access to everything.

A Web3 videogame is still a game, but it connects to a blockchain. Some of its assets, currencies, or rules are stored and executed on a decentralized network rather than only on the company’s servers.

That connection enables new things:

• In‑game items can be NFTs that you actually own in a crypto wallet.

• In‑game money can be a token that you can send, trade, or sell outside the game.

• Some parts of the game’s logic or economy can run as smart contracts — programs on the blockchain that execute automatically when conditions are met.

This does not automatically make a game good, fair, or fun. It just changes the plumbing and possibilities.

When people discuss Web3 gaming, you will see the same handful of terms over and over. Here is what they mean in a game context.

Blockchain

A special kind of database that many independent computers maintain together. Everyone can verify the history of transactions, and no single company can secretly change it. In games, it is often used to track ownership of items and currencies.

Wallet

A piece of software (or hardware device) that lets you hold and use crypto assets. Think of it as your “account” for the blockchain. In games, your wallet might hold your game tokens and NFT items instead of (or in addition to) having a regular username/password account.

Token

A digital asset that exists on a blockchain.

• Fungible tokens are like game coins or points — each unit is identical (for example, a game’s main currency token).

• Non‑fungible tokens (NFTs) are unique items, like a specific character, card, or piece of land.

NFT (Non‑Fungible Token)

A unique token that represents a specific item. An NFT typically points to metadata describing that item (art, stats, attributes). In games, NFTs are often used for characters, rare skins, weapons, or land plots.

Smart contract

Code that lives on the blockchain and executes automatically — no human approval needed. In a game, a smart contract might define how a tournament pays out rewards, how trading of items works, or even implement core game rules.

DAO (Decentralized Autonomous Organization)

An organization governed partly or fully by token holders who can vote on proposals, rather than a normal top‑down management structure. Some Web3 games use DAOs to let the community vote on balance changes, new features, or treasury spending.

You can use the rest of this article without memorizing all of these — refer back as needed.

“Web3 game” is a vague umbrella term. Underneath it, there are several distinct flavors.

These look and feel much like normal online games:

• You download a client, log in with email, and play with familiar mechanics.

• The game may quietly use blockchain in the background for payments, rare items, or marketplaces.

Most players might not even realize they are using Web3:

• Rare skins or cards might be NFTs that advanced users can trade on external marketplaces.

• The game might use the blockchain to prove fairness or to allow secure trading without going through a centralized auction house.

This approach tries to keep the “fun first” UX of standard games while adding optional ownership or interoperability for the small percentage of players who care.

These games are built around crypto and the blockchain:

• Game logic and economies may run entirely or mostly in smart contracts.

• Playing often means interacting directly with on‑chain systems (signing transactions, paying gas fees).

• Design leans heavily into financial game theory, speculation, and composability with other DeFi (decentralized finance) protocols.

These games are usually targeted at experienced crypto users. They can be fascinating experiments — but they are also high‑risk and often feel more like financial products or puzzles than mainstream videogames.

GameFi is the intersection of gaming and decentralized finance. The most famous GameFi pattern is play‑to‑earn (P2E) — games designed so that:

• Players earn tokens or NFTs by playing.

• Those assets can be sold on external markets for real‑world value.

The poster child was Axie Infinity, a game where you collected NFT creatures (“Axies”) and battled them. At its peak:

• Players could earn significant daily income (especially in lower‑income countries).

• A plot of in‑game land sold for roughly $2.3 million.

• There were around 2.8 million daily active users.

But as later academic and industry analysis shows, Axie’s economy was not sustainable:

• Rewards depended heavily on constant growth and new players buying in.

• The game’s tokens inflated in supply.

• When growth slowed, token prices cratered, and the “earnings” collapsed.

This boom‑and‑bust pattern has repeated in many P2E projects, which is why there is now skepticism about “play‑to‑earn” as a long‑term model.

Under the hood, Web3 games plug into the same technologies you might know from crypto in general.

A legendary sword might be an NFT. If you own it in your wallet, you can:

• Use it in the game (because the game checks your wallet).

• Sell it to another player through a marketplace without asking the game company’s permission.

A game might have:

• A soft in‑game currency off‑chain (normal virtual gold).

• A hard currency token on‑chain that you can buy, trade, or earn.

Some games also use separate governance tokens that grant voting rights over changes to the game or treasury.

Smart contracts are like tamper‑resistant rulebooks:

• A contract might say “whoever wins this tournament receives X tokens” and enforce it automatically once it has proof of results.

• A marketplace contract might allow users to list, bid, and trade NFT items with rules that cannot be silently changed by the operator.

In extreme cases, entire games are “fully on‑chain,” meaning all state and logic are managed by smart contracts. This is still niche but growing among hardcore crypto developers.

Some projects organize development and economics via a DAO:

• Token holders can vote on upgrades, balance changes, or how to spend community funds.

• This can, in theory, make games more community‑driven.

• In practice, governance can be dominated by large holders or be too slow and complex for fast‑moving game design.

Tokenomics is a mash‑up of “token” and “economics.” It covers how a game’s tokens are created, distributed, and used.

At a simple level, any game currency needs:

• Sources (emissions): ways tokens enter the system

• Rewarding players for play time or achievements

• Allocations to developers, investors, and marketing

• Sinks: ways tokens leave or are locked up

• Spending tokens on fees, upgrades, cosmetics

• Burning tokens when used for certain in‑game actions

Many early P2E games got this balance wrong:

• They rewarded players with large amounts of tokens for routine play.

• Those tokens could be immediately sold on exchanges.

• There were too few compelling reasons to spend or lock up tokens in the game itself.

As long as new players were pouring in and buying tokens, prices stayed high. But once growth slowed:

• Selling pressure increased (players cashing out).

• Prices fell, making rewards worth less.

• Many players left, accelerating the downward spiral.

That is why analysts and designers now stress:

• A Web3 game token must be useful inside the game, not just a speculative chip.

• Rewards should be sized so that they do not rely on endless new players.

• It is okay (and often healthier) if a game does not promise income to most players.

If Web3 gaming is so innovative, why does so much of the gaming community hate it?

Several reasons come up again and again:

Many early NFT game pitches looked like low‑effort projects whose main feature was “buy our token.” Gamers saw monetization with little gameplay.

Earlier blockchains like Bitcoin and Ethereum (before its move to proof‑of‑stake) consumed significant energy, and NFTs were seen as wasteful. Newer systems are more efficient, but the negative association remains.

High‑profile frauds and failures in the wider crypto space spilled over into perceptions of NFT games.

Major publishers experimented with NFT integrations and received intense backlash. For example, when Ubisoft announced a new NFT‑enabled card game (Might & Magic Fates) after earlier unpopular Web3 experiments, reactions were overwhelmingly negative. Many players view these moves as cash grabs and reject the claim that “Web3 gaming is inevitable.”

Managing wallets, gas fees, and private keys is alien to most gamers, who are used to frictionless purchases via app stores or credit cards.

The result: “Web3 game” is, for many, a red flag. Any new project must work hard to prove it is fun and fair on its own terms, rather than just a vehicle to sell tokens.

If you are a general tech reader who is simply curious, here is a conservative way to explore.

Ask yourself:

• Are you mainly interested in new gameplay ideas, or in financial upside?

• How comfortable are you with risk and technical friction?

If you just want to see how ownership works or try something new, focus on games that are fun‑first with optional Web3 features, not on high‑risk GameFi experiments.

Because there is no single app store, you need other signals:

• Look at data dashboards like DappRadar’s gaming section to see which games actually have active users and on‑chain activity.

• Search for independent reviews, community discussions (e.g., Reddit, Discord), and security audits.

Be cautious if:

• The project focuses more on token sale than gameplay.

• There is little real footage or hands‑on preview of the game.

• Promises of earnings dominate the marketing.

Most Web3 games require you to connect a wallet.

Beginner‑friendly option:

Some games integrate embedded or custodial wallets. You sign up with email or social login, and the game holds keys behind the scenes. This is easiest but gives you less direct control.

Non‑custodial wallet (more control, more responsibility):

• Install a reputable wallet app or browser extension.

• Write down your seed phrase on paper and store it offline.

• Never share your seed phrase or private key with anyone — no support team ever needs it.

If you are new, start with small amounts of value so that a mistake is a cheap lesson rather than a disaster.

Some games let you play for free and only require crypto when you want to trade items or access advanced features. If you need funds:

1. - Buy a small amount of the relevant cryptocurrency (for example, via a regulated exchange in your country).

2. - Transfer it to your wallet address.

3. - If the game uses a different network, you may need to use a bridge — a service that moves assets between blockchains. Bridges add complexity and risk, so beginners should prefer games on mainstream, well‑supported networks when possible.

Again: only use money you can afford to lose. Treat this as paying for an experimental hobby, not an investment.

• Go to the official game site — double check the URL and avoid links from random DMs.

• Connect your wallet when prompted and carefully read any transaction pop‑ups before approving.

• Start with free or low‑cost modes. Get a feel for the game and its economy before committing time or money.

If a game quickly pushes you to buy expensive NFTs or tokens to “get in early,” step back and reconsider.

When people think of risk, they usually think of price volatility. In Web3 games, risk is broader.

As the Axie Infinity example shows, if a game’s economy is built around constant growth and large token rewards, early gains can vanish when the market turns. Even if you never speculate, the value of your items can drop sharply.

• Smart contracts can have bugs or vulnerabilities.

• Projects can be hacked or “rug pulled” (developers disappearing with funds).

• If you sign a malicious transaction, you can lose assets instantly and permanently.

The added friction of wallets, gas fees, and on‑chain interactions can make games clunky or intimidating. Mis‑clicks are costly.

Laws around crypto, tokens, and digital assets are evolving. Some regions may restrict or scrutinize certain game models, especially those that look like gambling or unregistered securities offerings.

Combining real money and entertainment can amplify addictive behavior. Watching a portfolio while playing can make a hobby stressful instead of relaxing.

Understanding these risks does not mean you must avoid Web3 games altogether. It simply means you should treat them as experimental, not as guaranteed income or safe investments.

No one can say with certainty how Web3 gaming will evolve, but some trajectories are becoming clearer.

Many experts expect:

• A large segment of games where blockchain is just infrastructure — used for ownership, marketplaces, and interoperability, mostly invisible to players who do not care.

• A smaller, highly experimental niche of crypto‑native, financialized games for people who actively want that risk and complexity.

Projects are working on:

• Social logins with embedded wallets.

• Gas‑less or fee‑abstracted transactions.

• Clearer safety prompts and permission systems.

The industry has learned painful lessons from P2E crashes. Future designs are likely to:

• Emphasize fun and retention over raw token yield.

• Use tokens more conservatively and tie them to real in‑game utility and revenue.

• Limit the idea that every player should earn significant money just for playing.

Major publishers will probably keep experimenting, as Ubisoft is doing, but they face intense community scrutiny. Over time, successful examples that feel like “good games that happen to use Web3” rather than “tokens with a game wrapper” could soften attitudes.

Putting it all together:

• A Web3 videogame is a game that uses blockchain for some part of its economy or logic — often NFTs for items and tokens for currency.

• This enables new forms of ownership, trading, and funding, but introduces complexity, risks, and plenty of room for abuse.

• Early play‑to‑earn experiments generated huge hype and equally large crashes, showing that unsustainable tokenomics can turn games into unstable financial schemes rather than entertainment.

If you are curious as a tech‑savvy reader:

• Approach Web3 games as experiments, not as guaranteed paths to profit.

• Prefer projects that feel like solid games on their own, with Web3 as an optional layer.

• Start small, secure your wallet properly, and take time to understand the economy before putting serious value at risk.

With this mindset, you can explore the space with open eyes — appreciating what is genuinely new and interesting, while avoiding the pitfalls that have burned so many early adopters.