Is Oasys the Oasis for Japanese Gaming Giants?

^{Translated by elcrto}

Content

1. Japanese Gaming Giants Are Coming on Board

2. Why Do Game Companies Choose to Come to Oasys?

3. The Oasys Ecosystem Is Still in Its Infancy

4. Key to Success: Onboarding Big-Name IPs

 

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1. Japanese Gaming Giants Are Coming on Board

_{<Leading South Korean and Japanese game companies joining the Oasys blockchain as validators | Source: Oasys>}

Recently, there was news SoftBank will be joining the Oasys blockchain as a network validator. The Oasys blockchain—although the name may not ring a bell for many—is a layer 1 mainnet that has prominent South Korean and Japanese game companies as validators. Launched in October 2022, Oasys has stirred a lot of anticipation as many game companies in Japan, a country that used to appear standoffish to blockchain, began participating in the network directly as validators. Oasys pulled $20M worth of investments from Nexon and Galaxy Interactive through a private token sale in July 2022.

Then, what is its appeal? What renders Oasys so promising for Japanese game companies? In this publication, we'll provide you with a walkthrough of the features and properties of the blockchain, ecosystem, and outlook for the coming years.

2. Why Do Game Companies Choose to Come to Oasys?

Initially, Oasys started off as one of double jump.tokyo’s projects. Founded in 2018, double jump.tokyo is a blockchain game developer, which SEGA and Gumi Inc. invested in and collaborates with famous Japanese game companies like Bandai Namco. In 2018, double jump.tokyo’s released a web RPG game called My Crypto Heroes and ran it on Ethereum and Polygon. Reckoning that the poor user experience on Web3 limits game operation and user onboarding, it set off to an independent game-specific blockchain, Oasys. Later spun off from double jump.tokyo, Oasys launched its mainnet in October 2022.

Oasys is a consortium blockchain with a Hub-Verse ecosystem, which comprises an Ethereum fork and Optimistic rollups. The Hub layer, a fork of Ethereum, is responsible for token issuance, bridge contracts, and data availability, whereas Verse, an Optimistic rollup, handles the game's transactions. In a nutshell, Oasys has a structure where optimistic rollups are added onto the forked Ethereum chain.

What Sets It Apart: A Blockchain Tailored to Japanese Game Companies

So, what makes Oasys different and why do game companies choose it? For starters, Oasys allows game companies to build their own Verse. The Verse is a private layer 2, where gaming companies that become builders of the Verse have control over which games are onboarded, similarly to Optimism's whitelist. The benefit is that game companies get to onboard only the games that have been vetted by their Verse.

To improve user experience, transaction fees in a Verse are paid by the builders of the Verse, and the 7-day withdrawal limit was removed from the Optimistic rollups. Instead of the 7-day withdrawal limit, transactions on Verse are verified by an Appointed Verifier of each Verse.

_{<v-tokens unique to Oasys, which help prevent IP leaks | Source: Oasys Docs>}

Lastly, vFT and vNFT on Oasys prevent leakage of intellectual properties of Japanese game companies in an open-source setting. Since Japan's IP policies demand active measures for IP protection, Japanese game companies tend to keep their IPs from exposure to public blockchains. Reflecting their needs, Oasys came up with the v-tokens that can only be used in the specific verse and are not allowed to be leaked to the Hub or other chains.

_{<The need for user confidence in Verse builders stated in the whitepaper | Source: Oasys Docs>}

All these are possible because Oasys is a web 2.5 blockchain. As the whitepaper notes, Oasys emphasizes the importance of users’ trust in Verse builders and content providers. Oasys believes that game companies will serve their Verses best, having their reputation at stake. Such belief was reflected in the lifting of the 7-day withdrawal limit as the project assumes there will be no company willing to mount malicious acts at the cost of its reputation. Put differently, Oasys is a Web 2.5 blockchain with some compromises with decentralization.

Limitations: Centralized Architecture of Verse and Costs of Developers

There are some limitations to the design though. First, game companies may become a single point of failure for their Verses in this architecture. If there is a problem with a game company and its reputation is at risk, or if the service is no longer available in that Verse, users will no longer be assured of stability of the service.

Another limitation pertains to profitability of Verse builders. Each Verse builder must make an initial deposit of 1 million OAS to build a Verse. What’s more, they also have to pay fees for transactions that occur in their Verses on behalf of the users. While the deposit is refundable after six months of building a Verse, ongoing transaction fees represent an ongoing expense for Verse builders. Although Oasys says builders can offset the expenses with revenues from issuing their own tokens and NFTs, Verse's costly structure will likely discourage game companies from joining the Verses.

3. The Oasys Ecosystem Is Still in Its Infancy

Currently, there are only a few games available on the Oasys ecosystem. This is likely due to the closed nature of the Oasys mainnet. As I mentioned earlier, Oasys requires permission from builders of each Verse before games can be onboarded. Much like how Optimism's ecosystem was slower to bloom than Arbitrum's in its early stage, the slower growth of the Oasys ecosystem is attributable to this structure.  

Looking at the ecosystem, there are five Verses on Oasys as of this writing with a total of 11 games available. However, it's still early days for the Oasys mainnet, and most of the games are simple, web-based games that are not necessarily of very high quality. Most of the games currently available on Oasys are Japanese games initially onboarded to other mainnets, e.g., Polygon, and no games have yet been developed specifically for the Oasys mainnet since its launch. Moreover, the level of engagement with the existing games is low, with transaction numbers typically coming in triple digits.

_{<NFT project OASYSX will come with various offerings, i.e., game passes and PFPs | Source: OASYX>}

 

OASYX is Oasys’ NFT project minted on the Hub layer. OASYX is available for trading on ToFuNFT, Oasys' only NFT marketplace. OASYX will evolve to game passes and PFPs in the Verses on Oasys over time. While OASYX is currently the most active project on Oasys, other projects besides OASYX are not yet as vibrant, given the numbers of holders on Oasys Explorer.

_{<OASYX is currently the most active project by the number of holders | Source: scan.oasys>}

What’s more, Japanese gaming giants have not announced the onboarding of their core IPs. Currently, only Gumi and SEGA appear to have onboarded or are planning to onboard their games to Oasys. Gumi released Brave Frontier Heroes on March 10, and SEGA will be onboarding Sangokushi Taisen, a trading card game based on the Three Kingdoms IP, to Oasys. However, judging by the quality of already-onboarded Brave Frontier Heroes, it seems that even the games brought to the chain by big names are far from the triple-A games they have released.

As noted in Asia: Blockchain Gaming Deepdive, Japanese game companies appear to be hesitant to onboard their games onto blockchain platforms most likely because of the not-so-impressive revenue generated from blockchain games and concerns about potential risks to their core IPs. Another reason may be the stability of the mainnet that has yet to be proven beyond the six months it has been out.

4. Key to Success: Onboarding Big-Name IPs

In the end, Oasys' success hinges on onboarding core IPs of Japanese gaming heavyweights. Japan has a massive gaming market, ranking third in the world in 2022, and the core IPs of gaming giants, namely SEGA, Square Enix, and Bandai Namco, are globally popular. These Japanese games and IPs have been highly anticipated for their potential to ride on the NFT boom, but strict regulations on crypto in Japan have often been a challenge for such business.

It is also these strict regulations that have kept the Japanese crypto industry free from the fallouts of the Luna and FTX crashes last year. The regulations made the listing of Luna difficult in Japan and introduced the regulatory segregation between trading, brokerage, and custody that allowed FTX Japan's funds to be safely returned to the customers. As other countries are only now talking about the need for regulation, some view the Japanese crypto space as better positioned to take off given all necessary regulations already in place.

There has also been a noticeable change in the mood in the Japanese political circle towards Web3 from 2023 onwards. As part of this year’s election campaign strategy targeting Japan's millennials and Gen Z, Prime Minister Kishida stated that he would support DAOs and NFTs to promote “Cool Japan” along with active adoption of blockchain. Japanese game companies hailed the initiative with Square Enix, in particular, reaffirming its commitment to blockchain gaming multiple times and announcing plans to release a number of blockchain games this year.

Whether Oasys will be able to onboard big-name IPs, keeping in step with the changes in the mood towards Web3 in the Japanese government and game companies, will be pivotal to Oasys’ success.

Unlike South Korea, where quite a few companies, e.g., Klaytn, Line Link, WeMix, and XPLA, are in the mainnet business, there are no mainnets in Japan except for Astar and Oasys. While this can be a positive for Oasys’ IP onboarding, seeing that Square Enix’s first blockchain game, SYMBIOGENESIS, chose to go live on Polygon instead of Oasys, Japanese game companies will likely keep weighing their options between other established mainnets and Oasys.