Image Source: KGEN

Table of Content

1. How Web2 Publishers Dominate the Gaming Industry’s Value Chain

2. KGeN: A Web3 Publishing Platform for a Fair and Transparent Gaming Ecosystem
2-1. Establishing a fair reward system with the PoG engine
2-2. A dual-tokenomics strategy for long-term sustainability
2-3. Rapid multi-chain experience and seamless UX

3. Challenges Ahead for KGeN’s Success
3-1. Securing major game IPs remains a key hurdle
3-2. Addressing reward system challenges to ensure new user growth

1. How Web2 Publishers Dominate the Gaming Industry’s Value Chain

In the Web2 gaming industry, publishers sit at the core of game operations and revenue structures. They typically take between 50% and 70% of a game’s revenue while maintaining exclusive ownership over the play data generated by users. For instance, data on which games users play the most, their peak activity hours, and their spending behavior is recorded on centralized servers controlled by publishers, making it difficult for developers or users to access and utilize this information directly.

This centralized model presents two key issues.

First, publishers extract a disproportionate share of the value, leaving developers and users with relatively little. Developers must surrender a significant portion of their revenue to publishers, who dictate favorable revenue-sharing terms due to their control over marketing, distribution, and platform operations. Likewise, users actively contribute to the game ecosystem by generating data and engagement but receive no compensation in return. Publishers leverage this data to optimize advertisements and maximize revenue, yet users neither retain rights over their own data nor receive any rewards for their participation.

Second, a lack of transparency in game operations and data usage often leads to user dissatisfaction. Players have no visibility into how their data is utilized, and publishers frequently operate without clear disclosure. Elements such as item drop rates, gacha mechanics, and in-game economies are often opaque or subject to unilateral adjustments by publishers. This lack of transparency fosters skepticism about the fairness of these systems, potentially eroding trust among users.

As a result, the Web2 gaming market has become increasingly monopolized by major publishers. While a diverse range of mid-sized publishers once existed, market share has now consolidated around a few dominant players. According to 2024 data from Udonis, the top 10 game publishers accounted for 78% of total industry revenue, out of a total of 46 publishers. This trend underscores how the Web2 gaming industry is shifting toward a publisher-centric model, putting developers and users at a growing disadvantage.

2. KGeN: A Web3 Publishing Platform for a Fair and Transparent Gaming Ecosystem

This raises a fundamental question: Is this system truly fair? One project working to build a developer-friendly and transparent Web3 gaming ecosystem is KGeN. KGeN is a platform operated by the India-based Web3 gaming startup Kratos, which has secured $30 million in funding from investors such as Accel, Prosus Ventures, and Aptos. As of February 17, 2025, KGeN recorded 4.72 million active users over a 30-day period, the highest among Web3 gaming applications.

Source: DappRadar

KGeN is designed to give users full ownership of their data while offering a more equitable reward system. Through KGeN, users can participate in various game quests and campaigns and receive direct rewards proportional to their contributions. This represents a fundamental departure from the traditional model, where publishers act as intermediaries extracting value from the system. The following section explores how KGeN achieves this transformation.

Source: KGEN

2-1. Establishing a fair reward system with the PoG engine

The PoG (Proof of Gamer) Engine plays a critical role in tracking and verifying user activity within the KGeN ecosystem. It enables users to take ownership of their gameplay data on-chain, a stark contrast to the Web2 gaming model, where publishers monopolize such data. With the PoG Engine, users can record and manage their gaming data directly on the blockchain, ensuring that their data remains intact even if a game is discontinued or altered.

The PoG Engine evaluates user activity based on five key components: Proof of Human, Proof of Play, Proof of Skill, Proof of Commerce, and Proof of Social Network. These metrics collectively generate a verifiable on-chain user profile, culminating in a P.O.G Score (Proof of Gamer Score), which transparently reflects a user’s engagement and credibility.

Users can leverage their P.O.G Score across multiple games, gaining additional rewards and benefits. For example, players with high scores may receive early-stage bonuses in new games, acquire rarer NFT items, or gain privileged access to in-game activities traditionally controlled by publishers, such as clan management, tournament participation, and special event invitations. Unlike Web2 games, where progress and rewards are tied to centralized servers, KGeN stores user activity and reward data on-chain, ensuring that players retain ownership of their assets regardless of game shutdowns or policy changes. By decentralizing data ownership, the PoG Engine empowers users with tangible rewards and control over their gaming data.

KGeN also delivers significant advantages to game developers. Traditionally, game studios must allocate 50–70% of their revenue to centralized publishers for marketing, distribution, and operational support. However, with KGeN, developers retain 100% of their revenue, paying only a nominal subscription fee for platform services. This dramatically improves profitability and, in turn, allows for higher rewards to be distributed to players, fostering a more sustainable ecosystem. Moreover, developers can leverage P.O.G Scores to personalize user experiences, optimize engagement strategies, and refine game mechanics based on verified player behavior.

Ultimately, KGeN’s approach redistributes value from publishers to developers and users, enhances operational transparency, and lays the foundation for a sustainable gaming ecosystem.

2-2. A dual-tokenomics strategy for long-term sustainability

To ensure long-term viability, KGeN adopts a dual-token economic model, utilizing both $KGEN and $KCash.

$KGEN serves as the governance and utility token within the platform, used for governance voting, platform fees, and marketplace transactions. A portion of the platform and marketplace revenue is redistributed to the user reward pool, fueling a flywheel effect:

1) Reward distribution → 2) Increased user participation → 3) More games onboarded → 4) Further reward distribution. Currently, $KGEN is pre-TGE (Token Generation Event) and is expected to be airdropped to users who engage with the KGeN platform and accumulate K-Points.

$KCash is an inflationary in-game utility token that users earn through gameplay and activity-based rewards. It can be spent on in-game assets, services, and tools within the ecosystem.

Given the numerous failures of Play-to-Earn (P2E) dual-token models, KGeN’s tokenomics will face rigorous market stress testing. A key challenge will be ensuring that tokens remain actively utilized within the ecosystem rather than being offloaded into sell pressure. KGeN’s long-term sustainability hinges on designing mechanisms that drive organic demand for tokens within the gaming economy.

2-3. Rapid multi-chain experience and seamless UX

KGeN has aggressively expanded its multi-chain support, accelerating its growth trajectory. The platform now integrates with nine EVM chains, including Ethereum and Base, as well as the Aptos (MOVE) chain. This rapid expansion has fueled a 50x increase in active users throughout 2024.

Despite this fast-paced expansion, KGeN prioritizes a frictionless user experience. Players can sign up using social login, with an auto-generated multi-chain wallet assigned upon registration. This eliminates the complexities of wallet creation and connection, allowing users to seamlessly access the platform without prior blockchain knowledge or manual setup.

3. Challenges Ahead for KGeN’s Success

3-1. Securing major game IPs remains a key hurdle

KGeN’s current structure offers clear advantages in acquiring game IPs and expanding its user base. One of its most significant differentiators is the elimination of the 50–70% publisher fee, allowing developers to operate independently while retaining a greater share of their revenue. This model presents an especially compelling alternative for small to mid-sized developers and indie studios seeking to maximize profitability and maintain creative control. Additionally, KGeN’s on-chain data management empowers developers to directly utilize player data, enabling more precise user analysis and personalized gaming experiences, ultimately enhancing game quality. The platform’s token-based incentive structure also plays a crucial role in attracting users. In the Web3 ecosystem, tokenized rewards serve as a powerful mechanism for user engagement, driving early adoption and creating a bootstrapping effect within in-game economies. If KGeN successfully fosters an active user base in its early stages, this could send positive signals to developers, making it easier to attract and secure game IPs.

However, despite these advantages, acquiring major game IPs remains a critical challenge. Leading Web2 game publishers benefit from strong network effects, established brand recognition, and extensive user bases, which they continuously leverage to expand their market dominance. Even among major publishers, the competition to secure high-value IPs is fierce, making it difficult for an emerging platform like KGeN to establish a competitive foothold.

3-2. Addressing reward system challenges to ensure new user growth

KGeN’s current reward structure may create entry barriers for new users. Since user credibility and influence accumulate across games, long-standing players (so-called "veteran" users) naturally gain a competitive edge. Higher P.O.G Scores grant these users greater rewards in new games, potentially widening the gap between early adopters and newcomers.

This poses a fundamental challenge for KGeN’s long-term growth. If new users perceive the gap as insurmountable, they may disengage from the platform, leading to user distribution imbalances and reducing the overall appeal of the ecosystem. Ensuring a fair and inclusive reward structure that mitigates disparities while maintaining engagement for veteran players will be a key determinant of KGeN’s sustainability and future expansion.