The main problem(s)

• Challenging regulations, laws and litigation: In the world of Web3 gaming, developers create innovative experiences and digital economies using tokens and NFTs. This presents regulatory challenges as these assets are not just collectibles or game accessories. Game developers managing these assets are subject to regulations. If a game allows asset exchange, it may also be subject to financial regulations, such as anti-money laundering laws. It is important for game developers to realize that their games could attract financial regulators, even if they assume regulators focus on larger entities or are unaware of the need to comply with regulations.

• Game economies and loot systems: To build a web3 games economy and loot system, it is important to follow a specific approach. If the system is based on randomness, it can be considered a lottery and may be subject to regulations, possibly leading to a visit from regulators. To avoid this, the system should be designed to be skill-based, which eliminates the risk of being classified as a lottery.

• Scalability: Blockchains still face challenges with scalability and transaction confirmation delays, which can impact the immersive experience of web3 games. For instance, if a transaction takes more than 1 second to complete, it disrupts the gameplay immersion. Now, imagine games with millions of players simultaneously interacting with the blockchain. However, it's important to note that the need for scalability varies depending on the type of game. For example, a card game may require less scaling compared to a massively multiplayer online role-playing game (MMORPG).

• UI/UX: The user interfaces and user experience still need improvement. Currently, managing wallets requires remembering your seed phrase. If you lose it, all your assets will be lost. Additionally, setting up a wallet and connecting to different blockchains can be challenging for non-native blockchain users and so on. Regular gamers won't play web3 games until the UI/UX difficulties are solved.

• Fragmentation: As a game developer, your focus should be on creating a great game. You don't want to deal with multiple platforms, SDKs, and APIs to build your game and connect it to the blockchain of your choice. Currently, the market is fragmented, with different companies offering SDKs for specific chains, wallets for a few chains, and other services you may need. As a game developer, it is preferable to use as few platforms and SDKs as possible to minimize the risk of compatibility issues between different SDKs.

• Ownership: Ownership is a significant issue. On most chains, you don't actually own the asset because it is not physically stored on the chain. It may be stored on a decentralized IPFS server, but it is not directly on the chain. What you truly own is a receipt of purchase. To address this issue, the assets must be stored on the chain itself. Of course, this may vary depending on the type of asset, but in the case of digital items, we believe that the asset must be stored on the chain for you to truly own it.

• Scams: Scams are unfortunately a significant aspect of the industry due to its relative newness. Until this issue is adequately addressed, many gamers will continue to feel hesitant about playing web3 games. It is crucial for the industry to prioritize the development of robust security measures and effective enforcement mechanisms to safeguard the interests and trust of players. By implementing stringent verification processes, conducting thorough audits, and fostering transparency, we can create a safer environment that encourages gamers to confidently engage with web3 games, ultimately driving the growth and adoption of this emerging sector.