Peter Huang, Founder of Egretia: My View on Blockchain Gaming

Egretia

3 O’Clock Entrepreneurship Discussion Group (三点钟火星财经创始学习群) invited Peter Huang, founder of Egretia, to give a talk on the topic of “Blockchain and Gaming — New Opportunity and Challenge.”

Guest introduction：

Peter Huang, the founder of Egretia is an entrepreneur who has devoted himself to the Internet and gaming industry for 18 years. In 2004, he founded 1D, the music community that was a Red Herring Top 100 Asia Winner. The Red Herring Top 100 award highlights the most exciting startups from Asia, Europe, and the Americas. In 2010, Huang joined Adobe as a platform technology manager and was responsible for Flash technology promotion and monetization over online traffic. Huang joined Egret Technology as a co-founder in 2014, focusing on HTML5 engine tools and platforms. He later founded Egretia at the end of 2017 and has since been working to combine HTML5 and blockchain technologies, leading current developers in the blockchain world, and working to create more blockchain applications for practical use.

Below is a summary of the group discussion

Peter Huang: Hello everyone! I am extremely honored to have this opportunity as a developer to share my thoughts on blockchain technology and the gaming industry. Thank you Mars Finance for providing this opportunity.

Let me give a brief introduction of myself. My name is Peter Huang. I have been working in the internet and gaming industry for almost 20 years. I have been doing coding for more than 10 years. In my early years I developed mobile games using Java and Symbian, and then later started creating web games using Flash.

I joined Adobe in 2010 and worked on promoting Flash technology, and projects that attempted to monetize over Flash online traffic. During my time with Adobe, I witnessed the development process from start to finish of Flash web games, and I also contributed to China’s web game development.

In 2014, I left Adobe as the world’s last Adobe Flash promoter to join Egret Technology and since then, I have been working on the development and promotion of HTML5 technology. I founded Egretia at the end of last year, and started combining blockchain technology and HTML5 technology.

Let me talk a little about why I started the Egretia project. I think “techy” people all have an intuition about new technology and trends. My team was one of the earliest teams to work on Flash and was also one of the very few teams that Adobe wanted to invest in. Starting from 2003–2004, I believed that the Internet needed an interactive media carrier. I have supported this stance for ten years. The same goes for HTML5. the development of the Internet has reached a particular stage, I can see how HTML5 will become the future for the internet. My team and I have also believed in HMTL5 for over four years, and this year HTML5 technology has finally taken off.

I founded Egretia, a company that focuses on blockchain technology, based on my judgment of future trends. There a long journey for technology on it’s path from creation, to application, and to finally to promotion. I believe that blockchain technology is the way of the future. As long as we put in enough time and energy, we will see a day in which blockchain technology is widely promoted and applied. I have also found that there are a lot of excellent blockchain projects with great business models, and they really should put their applications to large-scale practical use as soon as possible.

When blockchain technology and the ecosystem matures, there will be a massive demand in the market for DApps. There are many projects focused on public blockchains that need to find a practical use for their projects as soon as possible. The key to this is to acquire real customers by applying business models on a large scale. Where do apps come from? This is the very thought behind Egretia that has lead developers that we worked with before to enter into the world of blockchain.

Hanyu Liu: For the first question, what is the difference between traditional games and blockchain games? Are tokens necessary in gaming? Blockchain gaming is a pretty common application scenario for blockchain technology. There are also many companies internationally, including some listed companies, that are working on this as well.

Peter Huang: I am going to discuss blockchain technology and the gaming industry with you all from a neutral perspective. Many industry experts and related media have answered this question before, but here is my opinion.

When it comes to traditional games, first of all, the game rules are set and modified by the developers — developers are the “God” of the game. Secondly, game accounts are tied to developers’ servers, and the accounts cannot be moved. Game props are tied to the game accounts and cannot be transferred around. Thirdly, the props and virtual assets in games could suffer from inflation if developers and operators freely hand them out during events. It is entirely possible that a tool worth $1000 today would later only be worth $66. Many gaming circles suffer from inflation today.

The major advantages of blockchain gaming, which are frequently discussed, are the following：

1. The equality of the game. Game rules are written into smart contracts. They are transparent and fair, and developers cannot change the rules. Of course I can elaborate later on the feasibility of writing complicated game rules into blockchain at its current stage.

2. The circulation of value in games. Gaming accounts and virtual assets can be owned by gamers and can be transferred freely.

3. Ability to maintain the value of game assets. Virtual assets in games could be set to a fixed amount through smart contracts, which would preserve the value of these assets.

In games that use blockchain technology, tokens can guarantee that the game players’ assets cannot be tampered with. Virtual assets can be transferred and traded through tokens, which makes virtual assets in games more similar to real life assets. This is theoretically similar to the gaming world described in the movie “Real Player One,” and how most people see it nowadays.

People can understand blockchain’s value in gaming, but for now there are a lot of problems in actually utilizing blockchain technology and tokens in gaming. For example, games developed using ETH will incur a relatively high gas fee when sending a few commands in the game. For example, games like CryptoKitties cost a lot when interacting on the game — roughly $10 to play — and due to technology limits, for example,, it is impossible to interact within the game with quick response times.

Hanyu Liu: Which game developer is the best?

Peter Huang: I know that many developers are creating collection games and card games based on ETH and they are doing really well. I will share with you a little later the challenges that developers need to face. But generally speaking, current blockchain technology has a positive influence on gaming. For example, the trust between players is established through open-source smart contracts; data cannot be tampered with using blockchain technology. The process that players use in playing the game is transparent and can be traced. These features have opened up a new world for players across the entire gaming industry.

Xiaoshe Meng: I think it is reasonable that playing in a game costs $10. Playing requires money. However, I believe that the game rules could change. If I win, not only do I not need to pay the $10, but the loser will pay $100, and the party who initiates the challenge will share a portion of the $100. This is more reasonable than the traditional method of transaction where both the winner and the loser are required to pay a fee.

Hanyu Liu: Second question — what are the major stages when applying blockchain technology to games?

Peter Huang: Speaking of the development process, I think that history is always repeating itself, but it just changes stages. I think the steps are:

First of all, using tokens as a payment method in the game and designing game rules around blockchain technology features. These are two things that most game developers are already attempting to do.

2. Launch the core assets of the games on blockchain to, one, solve the issue of inflation that traditional games face, and, two, to preserve and increase the value of players’ virtual assets.

3. Launch the core game rules on blockchain using smart contracts, to make sure specific rules of the games are transparent and fair.

As for the efficiency of current public blockchains, when these three steps are implemented, a game is qualified to be called a blockchain game. Of course, in the long run, there are more steps like launching all of the game logic on the blockchain, creating a distributed storage of all game assets using IPFS, and more. But these long-term steps are too idealistic right now for our current situation.

Aben: In the past, games were frequently updated and changed to maintain a balance in the game. If game rules are written in smart contracts, should they be upgraded? If the smart contract is regularly upgraded, the fact that game rules cannot be tampered with using blockchain technology doesn’t seem quite as meaningful.

Peter Huang: That’s a good question. That’s why I mentioned basic game rules above, or rules that are related to virtual assets such as treasure boxes or props in the game. Simply put,.I think payment rules for tokens, with certain conditions, could be written into the smart contract. Also, it is up to the developers to decide how to design a game that is suitable for blockchain technology. When it comes to gaming, before e-games we would play basketball and football (both decentralized games) and people played these games for more than 100 years. For some types or models of games, it is not necessary to write the game logic into smart contracts. The key is whether or not the games rules are in line with the spirit of blockchain. So, for situations where continuous updating is necessary, we should put the updated content into the central server or the inside of the game, instead of writing that into smart contracts. And, of course, I am saying this all based on my current understanding of blockchain technology.

In the past, developers of PC games saw early-stage web games like Happy Farm and didn’t understand what the future might hold for web games. Developers of mobile games saw the early-stage HTML5 games like Catch the Crazy Cat and didn’t fully understand them either. So the entire industry is continuously developing and maturing.

Hanyu Liu: Third question — what is the difference between blockchain game players and traditional game players?

Peter Huang: Imagine that there are 500 members in this WeChat Group… I think all of them have a wallet, but have all of them played a blockchain game?

First, current blockchain players know somewhat about blockchain technology. They have token wallets, and after they acquire tokens, in addition to daily transactions, they also want token-based games and even more so than traditional game players.

Second, most blockchain users are not game players, which means they are more likely to be drawn to gaming. We categorize these users as inexperienced players who don’t know much about games, which means that overly complicated games are not suitable for these types of people.

Third, when blockchain users become game players, they are more likely to pay for games. Many blockchain games have a very high ARPPU.

Fourth, this kind of blockchain user often joins many community groups, so games that are more social in nature should be developed to target this group of people. HTML5 technology is very suitable for this group of people.

Fifth, blockchain users come from all over the world, so games targeted towards blockchain gamers are by nature a globalized product. This is very important to developers and operators.

For traditional players, the threshold for them to become a blockchain game player is quite high. To begin with, we have to educate traditional players about blockchain technology and tokens; of course, if the game provides an excellent user experience, the education costs would be reduced. The next step is to use significant promotion to help traditional players understand the features of blockchain games, such as the fairness of game rules and preservation of virtual game assets. This will help traditional players be more active in playing blockchain games.

I think the most critical factor is to resolve the operability of the wallet, or whether we can make token-based transactions as convenient as transactions in traditional games. I think the thing of utmost importance is to simplify the wallet creation and payment process and find a way that it can be divided into steps during the game. We are now largely accustomed to mobile payment and generally don’t carry our wallets with us, however, Alipay and WeChat had to put a lot of time and money and effort into this process. Whoever can simplify this step will undoubtedly increase the popularity of blockchain games.

Aben: The game King of Glory uses less than 5,000 servers and 40,000 container processes. With this level of input and output processing… current blockchain technology can barely create a Happy Farm game.

Peter Huang: Haha, right, so we have to meet the current capabilities of blockchain games head on… we won’t be able to completely perfect it just yet.

Yifei Qin: Can current blockchain technology support complicated games?

Peter Huang: The current Ethereum platform cannot support them, so we’ll have to wait for another public blockchain that is more suitable for gaming.

Hanyu Liu: How should token and blockchain technology be combined with games? Or how can developers create games that are suitable for blockchain technology?

Peter Huang: I think the main thing is to have a simple operational process or user experience. For example, when you are enjoying the game and want to make a purchase, and you don’t have your wallet, there is a pop-up dialog box asking you to remember 20 mnemonics, and when this happens I think users lose interest and we ultimately lose users.

How to design blockchain games:

1. Based on the characteristics of blockchain players that I have mentioned before, I think more trendy card games are naturally suitable for blockchain.

2. As virtual assets exist uniquely in blockchain games, the work of designing the value and economic system for games are new and challengeable. Designing a good game to traditional game designers is challenging but with great opportunities. I think running smart contract as a rule on card games is totally fine, as it will be supported by current blockchain technology, and it works very well now. 3. Go back to old games. Like what I said before, in real life football and basketball are decentralized games with a constant set of rules and a large number of players. These games have been popular for years. It is very likely that in the future, a blockchain game with a constant set of rules like football, basketball, and Gomoku will take the gaming world by storm.

Addtionally, the profit model of games should not only be to sell props; it should be more oriented towards the player and community. Developers can benefit by organizing events, just like real-life organizers of football games. Early-stage blockchain players benefitted mostly from communities, so that’s why I am so positive about games like Crypto Kitties that are easy to spread among communities and can create social interactions..

Hanyu Liu: How can we motivate developers to more actively create blockchain games?

Peter Huang: This industry needs more developers to utilize their creativity and create more game content becasue DApp is the way for blockchain technology to be put into practical use, acquire customers, create value, and move the entire industry forward. I think this can be divided into the following steps:

1. Educate and guide current game developers to switch to developing blockchain games. and help them understand the future value of blockchain games. We need to help them understand what blockchain is, what the features of blockchain are, and how to create games suitable for blockchain. I think just like what happened in the past, small to medium-sized teams will be the first to make the move.

2. Provide developers with tools and solutions that can increase their productivity and efficiency. Increasing productivity means developers can save money, and the cost of trial-and-error will be lowered. It is Egretia’s mission and vision to provide developers with convenient tools and simple SDKs so that developers can quickly develop blockchain-oriented games using their current level of knowledge. We will integrate the HTML5 workflow that we’ve spent the past four years developing into blockchain technology, and we will continue innovating, debugging local node servers and carefully and smoothly releasing our tools so that developers will be able to focus more on the product itself.

3. In addition to providing tools, we should provide developers with service and support that falls outside of the development process. For example, with the DApp store for blockchain games, operators should not share in profits, or they should at least share fewer profits from the games so that developers can benefit more. The whole industry should support game developers in their early stages; otherwise, without content blockchain games will not progress. We should all work together to create more content and channels for blockchain games in order to avoid the bottleneck issue that VR and AR games are facing right now.

4. Industry pioneers should help to incubate blockchain game developers

Aben: Do console games have the chance to integrate blockchain technology? It would be a pity if Xbox and PS4 couldn’t be used in mining.

Peter Huang: When I was in LA just recently, I saw the original arcade game, ATARI. This is something they are working on right now. They have issued a token, and they are back in the game industry now.

Aben: Arcade games in amusement parks are essentially made for mining.

Peter Huang: Yes, however, I think mining is used to motivate game players to be online, but what ultimately attracts them is the content of the game.

Yifei Qin: Lianliankan (连连看) is getting ready to partner with Zenimax.

Peter Huang：I am not specifically referring to a company. I mean, generally, VR and AR games are restricted by the popularity of the hardware involved and they are facing an issue of profitability. This results in fewer developers venturing into the industry.

Ben Wei: Which company currently has the best public blockchain for games?

Peter Huang: I think any public blockchain that is stable and can support games to run smoothly is great.

Aben: So, your smart contracts are developed across blockchains?

Peter Huang: Yes, in my future set of tools, HTML5 developers only need to create one type of smart contract, and the back side will solve the problem of connecting public blockchains. We are currently discussing and exploring this with a few partners.

Yifei Qin: I bet that after Egretia comes out, a lot of projects that are working on incentivizing community tokens will die out. Because the game’s financial calculations are more complicated than the community’s financial calculations, Egretia can completely take over the scope of these projects.

Hanyu Liu: Which steps are of utmost importance in promoting the application of blockchain technology in the gaming industry?

Peter Huang: This is a good question, here are some points:

1. Soft advertisement. This industry needs development tools and solutions that focus on blockchain games. Of course Egretia is one part of this.

2. A public blockchain that focuses on games. Ethereum, being the mainstream blockchain that it is, has an extremely limited ability to support current blockchain games. The creation of EOS and Hyberledger is exciting for the industry, however, it takes time to launch them and verify their capabilities. Theoretically, any public blockchain out there could support gaming. We cannot say that there are no good games from the 2G Internet era, right? I think developers have unlimited creativity and they can figure out what types of games are suitable for the current bottleneck situation. I don’t agree with people who always voice their concerns about how high the TPS (transactions per seconds) rate is to develop blockchain games and public blockchains for game developers, nor do I agree with people who always voice their concerns about how much data is needed for game transfers.

I also don’t agree with people who claim to have 10w-100w TPS and want to solve the problem mentioned above by using TPS. We should know that TPS is affected by different conditions and application scenarios. What I want to express here is that the industry needs to have more content and demand to promote the development process of blockchain technology.

3. The industry needs to come up with a game payment solution that would provide users with a good experience.

4. This is my personal opinion, although it is contrary to the idea of decentralization. This industry, just like the traditional Internet industry, places its focus on site traffic and users. Communities, platforms, site traffic, and users are the core. In fact, we will see large channels for these in the future. And presently, the media and community all play a meaningful role in acquiring customers and promoting blockchain games.

Hongliang Zhang: All blockchains that have sufficient TPS and a low gas fee are suitable for gaming. Also particularly in beginning stages, we don’t put all logics online, but only the core logic.

Peter Huang: Yes, Hongliang is right, this is both a challenge and an opportunity for developers. For young gamers nowadays, they are unable to imagine a previous time when Java games on mobile devices only had 100k and this 100k included both picture and sound.

So, let’s not focus on the current capacity of public blockchains. It requires real talent to develop useful products that can run smoothly within the current situation.

Yifei Qin: Is it necessary to develop a simple payment tool for games?

Peter Huang: As I have been emphasizing over and over again, the game payment experience may produce a change in the flow of operation. It may also be a technical solution that would allow an easy set-up for wallet and token payment and could move the whole industry forward. To make it alive, the item does not have to be a specific tool. It could be an unique experience or a product model. If you think about it, for example with existing wallets, the best solution is actually to do built-in payment.

Hanyu Liu: How can we promote a token ecosystem in the gaming industry?

Peter Huang: This question is actually our vision for the future. To make tokens valuable, we not only need to trade them in token exchanges, but we also need tokens to be circulating throughout the whole ecosystem.

For players, we can provide them with a decentralized virtual asset transaction platform which will increase the activity level of players. For developers, we provide them with a blockchain game distribution center or customer acquisition channel so that developers can acquire more players and players can discover more fun games. Meanwhile, we can also provide an advertising system based on token mechanism where developers could attract more players and players could earn more tokens by clicking on advertisements.This system can let tokens play a role outside of the gaming world as well. The other thing is that industry experts can start more token-based game crowdfunding platforms and incubators in order to get more players engaged in the game development process, which would help to create truly entertaining games. Ecology is the synergy and complementarity of various roles in the industry.

Finally, let me post a paragraph that I prepared beforehand. Our attitude towards blockchain games should not be restricted by our thoughts about traditional game models and our current circumstances. This can be compared to how PC game developers viewed web games and how mobile game developers viewed HTML5 games. People in a stand-alone gaming era couldn’t have ever anticipated the Internet game era. The 2G network environment was incapable of the same type of function that can be realized under a 4G bandwidth. New things will eventually find their proper place and profit models. We just need to be patient, and not try to grow an industry all in one step, but instead give sufficient time for the new blockchain technology to evolve and develop in the gaming industry.

Mai Niu: How can we avoid pitfalls with complicated contracts in games?

Peter Huang: Disassembling, and disassembling as much as possible.