On Flow and the Trajectory of Distributed Gaming.

  • Commentary
  • October 10, 2020

In recent months, the Smith + Crown team has taken a close look at blockchain-based entertainment, with a particular emphasis on digital collectible-centric blockchain games and the non-fungible token models underlying them. Though arising from a desire to understand the trajectory and conceptualize future instantiations of distributed gaming, our research thus far has nonetheless produced the following nonconclusion: the blockchain gaming sector currently exists at a point of uncertainty, possessing immense potential that has yet to, and may or may not, manifest in a successful use case or even a conceptualization thereof. Immutability, free tradability, and provable ownership of gameplay assets have captured the imaginations of venture capitalists and DLT-maximalists but hinder achievability of efficiency and functionality of gameplay required to entice avid players of contemporary centralized games. These features promise to add value to already liquid and efficient markets for centrally-stored in-game assets yet are undermined by blockchain games’ frequent reliance on off-chain platforms. While Smith + Crown recognizes the potential of blockchain gaming, it acknowledges the path realization thereof is yet undetermined.

Perhaps the most likely determinant of the blockchain gaming sector’s direction going forward is Flow. Developed by Dapper Labs, creator of Cryptokitties, the upcoming smart contract platform is intended to facilitate NFT-based gaming. The project’s potential to overcome the sector’s endemic problems and stagnation is twofold: technological innovations reportedly facilitate throughput and scalability such that a project experiencing high usage will not overwhelm the network a la Cryptokitties and Ethereum; and its partnerships with traditional, established entertainment entities suggests the possibility of Flow bridging the gap between crypto-gamers and gamers at large. Recent notable developments for Flow include:

  • 3Q19: Dapper Labs announces the completion of an $11M round to finance the development of Flow, with participation from Warner Music Group and Ubisoft, among other established entertainment industry players.
  • 4Q19: Dapper Labs releases three whitepapers outlining Flow and its novel ‘SPoCK’ proofs and separation of consensus tasks such that they can be performed in parallel.
  • 1Q20: Flow announces a partnership with mixed martial arts league Ultimate Fighting Championship.
  • 2Q20: Dapper Labs’ NBA Top Shot collectibles game enter a closed beta phase on Flow.
  • 2Q20: Flow enters a technology-sharing agreement with Facebook and integrates the Libra Virtual Machine.
  • 3Q20: Dapper Labs announces the completion of a $12M funding round with participation from several individual, active NBA players including Spencer Dinwiddie, who announced shortly thereafter the development of his Flow-based Calaxy social media platform.
  • 3Q20: Flow announces integrations with Samsung, Binance, Circle, Animoca and Blockparty.
  • 4Q20: Flow conducts token distribution on CoinList, becoming the largest such sale on the platform to date.

These developments demonstrate an emphasis on appealing to mainstream patrons of traditional entertainment platforms and establishments. While it is unknown whether Flow will meaningfully further the blockchain gaming space, its partnerships may result in increased clarity regarding the preferable positioning of blockchain-based entertainment relative to, or level of integration with, its centralized counterparts. Further, it’s architectural innovations in consensus and scalability may indeed eliminate technological barriers to NFT games’ success, of which Ethereum’s inability to support Cryptokitties during peak usage was arguably one.

An ideal—or perhaps idealistic—manifestation of blockchain gaming would be a project able to fully capture both the value conferred by an underlying blockchain (cryptographic immutability, provable ownership, etc.) and the attention of gamers irrespective of its blockchain integrations. However, the current state of blockchain gaming technology and logic necessitates the undertaking of tradeoffs in pursuit of a game embodying an ideal point on a theoretical spectrum therebetween. Thus, the possible trajectories of the distributed gaming sector are myriad. While there exists no certainty that Flow will find such an ideal balance, its prominence, relationships and technical capabilities stemming from novel architecture in the space make it likely to steer the direction of the sector as a whole, perhaps producing, enabling or influencing the sector’s yet unrealized ideal use case.