Why Community Treasuries Fund Riskier, More Innovative Games

The Problem: Creating a fully on-chain, real-time strategy game with hidden information (fog of war) was considered impossible due to data transparency. The Solution: A community-funded experiment using zk-SNARKs to prove moves without revealing location data, creating the first cryptographically enforced fog of war. Pioneered the fully on-chain autonomous world genre.

• Key Innovation: zk-SNARKs for private state transitions.
• Community Role: Gitcoin Grants and player donations funded core development, bypassing VC pressure for monetization.

The Problem: Top-down game design is slow, expensive, and risks misalignment with player desires. The Solution: A minimal, composable on-chain primitive (just text lists of gear) funded by its community. It inverted development: the assets were released first, empowering the community to build games, lore, and tools around them.

• Key Innovation: Bottom-up, permissionless world-building.
• Funding Model: Initial NFT sale to community treasury (~$8M+), which then funded ecosystem grants for builders, not a central studio.

The Problem: Building a AAA-quality TCG requires ~$50M+ and years of development—a massive risk for a web3-native model. The Solution: A continuous, community-aligned funding runway via its PRIME token treasury. Instead of a single VC round, development is funded through a transparent treasury model, allowing for long-term R&D on AI opponents, advanced physics, and cross-IP integration.

• Key Innovation: Sustained treasury funding for multi-year AAA development cycles.
• Governance: Token holders vote on budget allocation for high-risk features like AI and immersive tech.

The Problem: Building fully on-chain games (FOCG) requires reinventing the wheel for physics, logic, and execution, creating massive developer friction. The Solution: Funded by Ethereum's Protocol Guild, The Arena is a general-purpose on-chain game engine. It provides a standardized framework (like Unity for blockchains) for FOCGs, dramatically lowering the barrier to entry for experimental game devs.

• Key Innovation: Public good infrastructure for autonomous worlds.
• Funding Source: Retroactive public goods funding from the ecosystem treasury, aligning incentives with broad developer adoption, not a single game's profit.

VCs are agents for LPs seeking safe, 3-5x returns. A DAO treasury is the principal, with a long-term mandate to grow its own ecosystem's value. This aligns capital with existential, not incremental, growth.\n- Capital is Patient: No 7-year fund lifecycle pressure.\n- Success is Aligned: A hit game boosts the treasury's native token, creating a virtuous flywheel.

Treasuries hold volatile native tokens (e.g., ARB, OP). Deploying them into high-risk, high-reward games is a strategic hedge. A successful game creates new demand sinks and utility for the token, directly appreciating the treasury's core asset.\n- Portfolio Theory in Action: A single breakout hit can offset dozens of failures.\n- Token Utility > Cash Flow: Value accrual is measured in ecosystem growth, not EBITDA.

Builders can compose with existing DeFi primitives (Uniswap, Aave), NFT standards (ERC-6551), and account abstraction wallets. This reduces development time and cost for experimental game mechanics, allowing treasuries to fund more prototypes.\n- Rapid Prototyping: Test in-game economies and asset ownership in weeks, not years.\n- Composability as Moat: Games become native to the chain, increasing stickiness and fees.

Treasuries like Optimism's RetroPGF are designed to fund positive externalities. A groundbreaking game is a public good that attracts users, developers, and liquidity to the entire L2. Funding it is a direct investment in network effects.\n- Subsidize Adoption: Fund user onboarding and gas fees to overcome cold-start problems.\n- Signal Ecosystem Commitment: Large grants attract top-tier talent away from safer Web2 studios.