Ethereum and Esports: Can Blockchain Revolutionize Competitive Gaming?

As esports has become one of the world’s fastest booming industries, fans watch in the millions as their favorite players take on each other in League of Legends, Dota 2, Fortnite, and much more. As competitive gaming continues to gain mainstream attention, a new technology has the potential to take it to the next level: blockchain.

For instance, Ethereum, the leading blockchain platform for decentralized applications, could change the future of the esports industry. Ethereum’s blockchain technology holds great promise for competitive gaming with transparent tournament governance, decentralized prize pools, and player ownership of in-game assets.

Prize Pools and Payouts Decentralized

Decentralizing prize pools and payouts is one of the most exciting applications of Ethereum in the arena of esports. In traditional esports tournaments, sponsorship or organizing body control of what prize money is awarded can result in delays in payouts, a lack of transparency and even disputes. These issues can be solved on the basis of Ethereum-based smart contracts, which will automate the distribution of prize money in a fair, instant and transparent way.

That is where Ethereum comes in as tournament organizers can create smart contracts that automatically hold prize money escrowed, which is released to the winners if their criteria is met. One of the nice things about smart contracts is that they are self-executing and give players their rewards straight after the tournament without the need for middlemen or complex processes. Due to this decentralization, the risk of fraud, delays and disputes is minimized and the environment becomes more trustworthy for competitors.

Furthermore, Ethereum could facilitate more community-run tournaments where fans and players buy tokens or NFTs (non fungible tokens) associated with the event to contribute to the decentralized and crypto prize pools. Further stimulation of the ecosystem could come from these community funded tournaments which, once completed, could incentivize greater participation.

Transparency and Fair Governance

Controversies about rule changes, cheating scandals and conflicts of interest over esports governance have long been debated. Transparent governance systems can be introduced by the adoption of Blockchain technology, especially Ethereum.

Decentralized autonomous organizations (DAOs) can be one way Ethereum brings transparency to esports. DAOs are blockchain based entities where the code governs them, and they were built using smart contracts. Specifically, in regard to esports, a DAO could be formed to regulate tournament rules, referee decisions, and even player bans. This would ensure that all decisions are made transparently and democratically so that there is less chance of corruption or biased judgments.

Let’s take an example: if the player is accused of cheating, the DAO can examine the evidence, and token holders (from fans through the player up to the organizers) can vote for the penalty or ban. This system is decentralized, it does not depend on a single governing body and everything is made fairly and openly.

In-Game Asset and NFT Ownership

NFTs are also transforming how players interact with in game assets and are bringing real ownership to the blockchain. In most traditional esports games, we don’t own the items or skins we obtain. The game developers control these assets and players could lose access to them if the game’s servers shut down or they are banned from an account.

By leveraging Ethereum's blockchain, Esports players can own their in-game items as NFTs, unique verifiable digital assets stored on the blockchain. What that means is even if a game’s server shuts down, players still own their items, items that can be traded, transferred and sold on numerous marketplaces.

Additionally, the NFT market could generate new revenue streams for esports organizations. Some of this was going to be able to be tokenized, such as teams tokenizing their own brand, their own merchandise, and even special fan experiences, allowing fans to be able to go and purchase exclusive content directly with their favorite teams and players.

Cross Border Payments and Sponsorship Deals

Esports is a global industry with players, teams, and sponsors located all over the world. But sponsorships, salaries, and winnings, traditionally, are slow and expensive because of international transfer fees and currency conversions. This problem is solved by Ethereum’s blockchain through fast, cheap, and borderless payments.

Paid in Ether (ETH), the native cryptocurrency of Ethereum, frees teams to skip the traditional banking system and to pay players instantly. Just as sponsors from various countries can send ETH directly to tournament organizers and teams, regardless of exchange rates or high transaction fees.

This payment flexibility will also make Ethereum a great tool for international esports organizations in regions where beginning banking is difficult or costly. If Ethereum continues to be adopted by more teams and sponsors for payments, it might end up building a more efficient financial ecosystem for esports.

Fan Engagement and Play-to-Earn

The popularity of play-to-earn (P2E) models is already seeing Ethereum waves run through the broader gaming industry and the players are being rewarded with cryptocurrency for their in-game efforts. This model can easily be extended to esports, creating new incentives for amateurs and professionals alike.

To illustrate, these smaller tournaments can be played to make ETH, or challenges can be completed inside of the games themselves. Fans also have a way to earn tokens by watching games, predicting results, or social media interaction with their favorite teams. These tokens could be spent on merchandise, entered into raffles and even be used to vote on team decisions.

The power of Ethereum would allow increased fan engagement to make the atmosphere in esports much more interactive and rewarding for everyone, from players to spectators.

Conclusion

With competitive gaming evolving in the gaming world, Ethereum’s role in the industry will be on the rise. Ethereum could be the base for the next generation of esports with decentralized governance, real ownership of DApps and new monetization opportunities. Ethereum is going to have a big impact on esports and is likely to change the future of competitive gaming by making it fairer, creating thriving player-driven economies, and through instant payouts.

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