Zero-fraud security is still a challenge in web3 gaming

One of crypto projects’ most significant concerns and criticisms, particularly in blockchain-based games, is the threat of scams, frauds, and cyberattacks. Several scams and vulnerability exploits in web3 gaming projects have reinstated the security emphasis on the industry this year. In October, a popular web3 game allegedly pulled an exit scam worth $1.6 million in user funds, according to a recent report from blockchain security platform CertiK. In fact, a recent survey of active web3 gamers found that 41% of gamers are concerned about potential scams and fraudulent activities in the sector.

These rising concerns have driven more investment in blockchain security solutions. In October alone, $103 million was raised by blockchain gaming startups, with the largest funds going to security-focused projects, such as Blockaid, a startup specializing in advanced crypto security. Going forward, security will be the primary driver for user adoption and funding in the web3 gaming space as the drive towards zero-fraud becomes more prominent. However, why is security still a stumbling block in the web3 arena?

Global VR gaming content revenue worldwide | Source: Statista

The primary risk in trading and internet gaming industries

To effectively address critical security concerns in the sector, web3 gaming projects must first understand what they’re up against. The primary risks in the blockchain gaming sector manifest in two distinct forms: direct scams, such as stealing deposited money, and hidden fraud, where trust is built before precipitating a loss.

The hidden risks are often more subtle and insidious, manifesting in mechanisms that tilt the odds against the user. Developers often use discreet algorithms in the backend that skew game outcomes, leading players to believe they are simply facing a string of bad luck. These algorithms can allow malicious developers to manipulate win-loss ratios and keep the users engaged for a long time while systematically reducing their chances of success. The prevalence of such deceptive practices undermines user trust and jeopardizes the entire ecosystem’s integrity.

However, these issues aren’t beyond the scope of blockchain technology. At its core, blockchain introduces two critical factors that drastically reduce the likelihood of fraud: the rigor of smart contract execution and the full transparency of all actions and transactions. Many of these security concerns can be diminished if smart contracts are leveraged effectively in web3 gaming projects.

Smart contracts and independent auditing

Smart contracts, once deployed, are immutable, ensuring that game rules are set in stone and cannot be altered to favor specific outcomes or parties. This immutability offers certainty and fairness that was previously unattainable. Also, being distributed across multiple nodes in the blockchain, smart contracts reduce the risk of centralized control and manipulation. We’ve also leveraged this at Playnance, where all rules of the game are secured with a smart contract for both consumers and our partners.

However, smart contracts are not infallible. If not appropriately deployed, they can lead to major vulnerabilities. For instance, slight deviations from the ERC20 standard can result in non-functional methods, leading to trapped funds and blocked contracts​​. Also, contracts reliant on timestamps can be manipulated, as miners may alter timestamps, affecting contract outcomes.

Web3 gaming projects must balance functionality with secure deployment to mitigate these risks. While functionality is crucial, it should not compromise security. Blockchain networks like Ethereum and EOS enable robust smart contracts, but developers must be cautious not to introduce critical flaws​​. Also, developers need to be sensible in their programming language choices. Using languages like C++ or JavaScript allows the creation of complex contracts but also poses significant security risks. Simpler languages like Scilla, used for Zilliqa smart contracts, help reduce the likelihood of programming errors.​

Most importantly, the role of independent and trustworthy web3 auditing firms is crucial. These firms meticulously examine the smart contracts to validate their security and reliability. An inspection by a reputable web3 auditor serves as a seal of trustworthiness, indicating that the game operates precisely as intended, without any hidden loopholes or mechanisms that could be exploited for fraudulent purposes. 

Enhancing security through transparency and web3

Blockchain gaming projects should continuously explore innovative web3 solutions to keep their security protocols updated and fresh. For any firm, security should never be treated as a tick-box activity. It should be a continuous business process, integrating new policies, strategies, and solutions on an ongoing basis to increase the resiliency of the platform.

Non-custodial wallets, for instance, offer a significant enhancement. In contrast to traditional gaming and iGaming, where funds are deposited on the platform, these wallets allow players to retain control over their funds, approving transactions only when necessary. It minimizes the risk of platform-based fraud.

Modern web3 sign-up solutions like Web3Auth and fiat bridges streamline the process of creating and funding crypto wallets, enhancing both adoption and security. They enable quick, smooth transactions while securing the player’s funds and are effective enough that they are already in use in several projects. This combination of transaction transparency and innovative web3 tools presents a formidable barrier against fraud, ensuring that blockchain gaming is not only immersive and engaging but also secure and trustworthy.

The future of fair play in web3 gaming

Zero-fraud is an essential and ambitious concept, especially in dynamic sectors like blockchain gaming. It is achievable using a suitable business model and security practices and is particularly potent in peer-to-peer gaming models. In environments where players compete against each other rather than the platform, the incentive for developers to incorporate fraudulent mechanics is significantly reduced, if not entirely removed. Shifting towards player-versus-player formats underpinned by transparent, secure blockchain technology can promise a future where fairness is an aspiration and a built-in feature of the gaming experience.

Overall, as blockchain gaming continues to evolve, it stands as a testament to the possibilities of a secure, equitable digital gaming world, where the risks of fraud are not just mitigated but rendered obsolete by the very architecture of the technology. The vision for web3 gaming projects should be to free users from the shadow of fraud and deception. Ensuring transparent development, integrating robust security measures, and embracing security monitoring and audits will help to achieve this.