“Innovation is taking two things that exist and putting them together in a new way.”

The world of Web3 has witnessed a remarkable evolution of intellectual property (IP) integration. From the iconic characters of the early days to the player-owned universes of today, the landscape has undergone a significant transformation. In Web2, IP was predominantly controlled by centralized entities, with licensing deals carefully managed to maintain brand integrity. However, the advent of Web3 has introduced a paradigm shift, redefining the dynamics of IP ownership and usage within the industry.

As a gaming layer 2 chain, Ancient8 is actively exploring ways to foster the growth of IP in the Web3 ecosystem. Our platform offers unique advantages for builders, creators, and gamers, enabling them to leverage IP rights and unlock new opportunities.

In this article, we will explore the intricacies of IP in Web3, examining how blockchain can facilitate the creation, ownership, and transfer of IP-protected assets, as well as the legal and ethical implications of this emerging field. We will also discuss how Ancient8 is positioned to contribute to the development of IP-related solutions in the Web3 space.

Introduction

According to Precedence Research, the global IP market was valued at USD 6.9 billion in 2023, and anticipated to reach US 20.3 billion by the end of 2036, at a compound annual growth rate (CAGR) of 8.4% during the forecast period. This significant figure underscores the critical role of IP in fostering creativity, competition, and economic development.

The gaming industry, in particular, has been a major contributor to the IP market. Web2 gaming has experienced tremendous growth, driven by the success of titles like Fortnite, League of Legends, and World of Warcraft. These games have generated substantial revenue through in-game purchases, merchandise sales, and licensing deals, solidifying the importance of IP in the gaming sector.

However, the Web2 gaming landscape has been dominated by a few major players, limiting opportunities for smaller developers and creators. Additionally, the centralized nature of Web2 has raised concerns about data privacy, censorship, and the potential for platform monopolies. As a result, there has been a growing interest in exploring alternative models that offer greater decentralization, transparency, and ownership rights for creators.

This is where Web3 comes into play. By leveraging blockchain, Web3 aims to revolutionize the gaming industry by empowering creators, fostering community-driven development, and enabling new forms of IP ownership and monetization.

Intellectual Property (IP) in Web3

1. Understanding Intellectual Property

Intellectual property (IP) refers to intangible assets that result from creative or intellectual activity. It provides legal protection for inventions, artistic works, and symbols that have commercial value. Common types of IP include:

• Patents: Protect inventions and processes.
• Copyrights: Protect literary, artistic, and musical works.
• Trademarks: Protect brands, logos, and slogans.
• Trade secrets: Protect confidential information that gives a business a competitive advantage.

In the context of Web3, IP takes on new forms and dimensions. Web3 IP can encompass:

• Non-Fungible Tokens (NFTs): Digital assets that represent ownership of unique items, such as art, collectibles, or in-game items.
• Smart contracts: Self-executing contracts with terms directly written into code, which can be used to manage IP rights and royalties.
• Decentralized Autonomous Organizations (DAOs): Collectives governed by smart contracts, which can own and manage IP assets as a community.
• Data and algorithms: The underlying data and algorithms used to create digital assets can also be considered IP.

Web3 IP offers unique opportunities for creators and businesses, as it enables new forms of ownership, distribution, and monetization. However, it also raises new legal and ethical questions that require careful consideration.

2. IP-NFTs

IP-NFTs are an innovative concept that combines the power of non-fungible tokens (NFTs) with the legal framework of intellectual property (IP). By representing IP rights on the blockchain, IP-NFTs offer a transparent, secure, and efficient way to manage and monetize digital assets.

How IP-NFTs work

1. Creation: An IP owner creates an NFT on a blockchain platform, embedding information about the IP and its associated rights.
2. Legal Framework: A legal agreement, such as a licensing agreement or copyright assignment, is linked to the IP-NFT. This agreement outlines the terms and conditions governing the IP's ownership, usage, and monetization.
3. Ownership and Transfer: The IP-NFT represents ownership of the IP, and it can be transferred between individuals or entities on the blockchain.
4. Monetization: IP-NFT holders can monetize their IP through various mechanisms, such as royalties, licensing fees, or direct sales of the NFT itself.

Advantages of IP-NFTs

• Empowering Creators: IP-NFTs give creators greater control over their work and enable them to monetize it directly without intermediaries.
• Facilitating Collaboration: IP-NFTs can facilitate collaboration between creators, as they provide a transparent and secure way to share and co-own digital assets.
• Promoting Transparency: The blockchain-based nature of IP-NFTs ensures a transparent record of ownership, usage, and transactions.
• Enhancing Security: IP-NFTs can help to protect IP rights by providing a tamper-proof and verifiable record.

IP-NFTs represent a significant advancement in the field of intellectual property. By leveraging the power of blockchain, they offer a new and innovative way to manage, protect, and monetize digital assets. As the technology continues to evolve, we can expect to see even more creative and impactful applications of IP-NFTs in the future.

3. IP Tokens

IP Tokens are digital assets that represent ownership and governance rights over intellectual property (IP) associated with IP-NFTs. They offer a decentralized and community-driven approach to managing and benefiting from IP.

How IP Tokens work

1. Creation: IP Tokens are created from IP-NFTs, representing a share of ownership in the underlying IP.
2. Governance: Holders of IP Tokens become part of a decentralized autonomous organization (DAO) that governs the IP.
3. Decision-Making: Token holders participate in voting on decisions related to the IP, such as licensing, funding, and development.
4. Benefits: Token holders may benefit from the economic value generated by the IP, such as royalties or profits from licensing.

Advantages of IP Tokens

• Decentralized Governance: IP Tokens empower communities to collectively manage and benefit from IP, eliminating the need for centralized intermediaries.
• Fair Distribution: IP Tokens can ensure a fair distribution of rewards and benefits among contributors to the IP.
• Increased Engagement: Token holders have a vested interest in the success of the IP, which can lead to increased engagement and participation.
• New Revenue Streams: IP Tokens can create new revenue streams through mechanisms like token sales, staking, and governance fees.

IP Tokens offer a promising new model for governing and benefiting from intellectual property. By combining the power of blockchain technology with decentralized governance, IP Tokens can create more equitable, efficient, and innovative ecosystems for creators and communities.

4. Case Study: Story Protocol

Story Protocol is a decentralized platform designed to facilitate the creation, ownership, and monetization of IP in the Web3 ecosystem. The project has earned significant attention and funding, recently raising $80 million in a funding round, bringing its total funding to $140 million.

Story Protocol's Architecture

Story Protocol's architecture is built on a dual-layered system:

1. Story Network: A general-purpose Layer 1 blockchain based on the Cosmos SDK. The Story Network provides the foundation for the platform's operations, ensuring security, scalability, and interoperability.
2. Proof-of-Creativity Protocol: A specialized protocol that verifies the originality and authenticity of IP assets. This protocol leverages cryptographic techniques to ensure that creators receive proper credit for their work and that IP rights are protected.

This dual-layered architecture offers a robust and flexible platform for IP management. The Story Network provides the underlying infrastructure, while the Proof-of-Creativity Protocol ensures the integrity and authenticity of IP assets.

Key Features and Benefits

• Empowering Creators: Story Protocol empowers creators by giving them greater control over their IP and enabling them to monetize their work directly.
• Transparent Ownership: The blockchain-based nature of Story Protocol provides a transparent record of IP ownership, reducing the risk of disputes and counterfeiting.
• Facilitating Collaboration: Story Protocol can facilitate collaborations between creators by enabling them to share and co-own IP assets.
• New Revenue Streams: Creators can explore new revenue streams through licensing, royalties, and the sale of IP-NFTs.

Monetizing IP with Story Protocol

Creators can use Story Protocol to:

• Create and mint IP-NFTs: Tokenize their intellectual property and sell or distribute it on the platform.
• Grant licenses: Allow others to use their IP under specific terms and conditions.
• Collect royalties: Receive royalties from the use or sale of their IP-NFTs.
• Collaborate with other creators: Create joint IP projects and share the benefits.

Story Protocol's innovative approach to IP management has the potential to revolutionize the way creators and businesses interact with intellectual property in the Web3 era. By providing a decentralized, transparent, and efficient platform, Story Protocol is paving the way for a new generation of IP-driven opportunities.

Web3 Gaming as a Key Avenue for IP Expansion

1. Intellectual Property as a Catalyst for Growth

Intellectual property (IP) plays a crucial role in the gaming industry. It encompasses everything from game characters and storylines to game mechanics and brand identities. IP is essential for:

• Attracting players: Iconic characters and franchises can draw players to games.
• Generating revenue: IP can be monetized through merchandise, licensing deals, and in-game purchases.
• Building a community: Strong IP can foster a passionate and engaged community around a game.

To further amplify these benefits, gaming companies have increasingly turned to IP collaborations.

A study conducted by Newzoo revealed the significant impact of IP collaborations on the gaming industry. The report found that games featuring IP collaborations experienced a 11% increase in daily active users (DAU) on average. For premium games, this boost rose even higher to +19% during the same period. This suggests that collaborations can help to retain players and foster a more active and engaged community.

Moreover, IP collaborations can also play a crucial role in expanding a game's audience. By partnering with well-known IPs, game developers can reach new players who may not have otherwise considered the game. This can lead to increased market penetration and long-term success.

2. Strategic IP Integration Models

The Web3 gaming market has experienced explosive growth in recent years, driven by innovations in blockchain and the increasing popularity of dApps. According to DappRadar, the total value locked in Web3 gaming protocols surpassed $10 billion in 2023, indicating a significant shift towards player-owned and community-driven gaming experiences.

This shift towards decentralization and player ownership has profound implications for the integration of IP in Web3 games. Web3 offers several advantages over traditional Web2 gaming when it comes to IP:

• Decentralized Ownership: Web3 allows players to truly own their in-game assets as NFTs, giving them greater control and economic value.
• Enhanced Interoperability: Cross-chain compatibility in Web3 enables seamless transfer and integration of IP assets across different gaming platforms.
• Community-Driven Development: Web3 gaming often involves DAOs, empowering players to participate in governance and influence the direction of the game.
• New Revenue Streams: Web3 gaming introduces innovative revenue models, such as play-to-earn (P2E) and tokenomics, which can benefit both players and IP holders.

To capitalize on these benefits, game developers must carefully consider the strategic IP integration models that can enhance their games and attract players.

Fractional Ownership of IP

One of the most distinctive features of Web3 gaming is the ability for players to own a portion of the game's IP through NFTs or tokens. This fractional ownership model can significantly enhance player engagement and create a strong sense of community. By giving players a stake in the game's success, developers can encourage active participation and foster a more sustainable gaming ecosystem.

Time-Limited IP Events and Exclusivity

Web3 gaming platforms can leverage the concept of scarcity to drive player engagement and create a sense of urgency. By introducing time-limited IP events and exclusive content, developers can generate excitement and encourage players to participate in specific activities or purchase limited-edition NFTs.

Cross-Chain IP Collaborations

The interoperability of blockchain allows for seamless integration of IP assets across different networks. This opens up new possibilities for cross-chain collaborations, enabling developers to create interconnected gaming universes and offer players a wider range of experiences.

NFTs as a Vehicle for Unique IP Experiences

NFTs can be used to represent unique in-game items, characters, or experiences, providing players with exclusive access and ownership rights. This can create a sense of exclusivity and prestige, driving player demand and increasing the value of these NFTs.

Community-Driven IP Development

Web3 gaming often involves decentralized autonomous organizations (DAOs), which empower players to participate in governance and decision-making. This can lead to community-driven IP development, where players can contribute ideas, vote on features, and even create their own content within the game.

Dynamic IP Evolution

Web3 gaming allows for dynamic IP evolution, where the game's IP can evolve and adapt over time based on player feedback and community input. This can create a more engaging and long-lasting gaming experience.

By strategically integrating these models, Web3 game developers can create more immersive, engaging, and sustainable gaming experiences. These innovative approaches have the potential to revolutionize the way players interact with and benefit from IP within the gaming industry.

3. Case Studies

Nifty Gateway

Nifty Gateway, a leading NFT marketplace, has adopted a strategic approach to IP integration by leveraging the InterPlanetary File System (IPFS). IPFS is a decentralized storage and distribution network that ensures the longevity and security of digital assets.

Nifty Gateway utilizes IPFS to preserve the metadata associated with each NFT minted on its platform. By pinning NFT metadata to IPFS, Nifty Gateway ensures that this information remains accessible and immutable. This decentralized storage model eliminates the risk of data loss or corruption, providing collectors and artists with peace of mind.

By using IPFS, Nifty Gateway removes dependencies on its own hosted services, enhancing the platform's resilience and reliability. The distributed nature of IPFS ensures data replication and availability, further safeguarding NFT metadata and preventing data loss. This approach not only strengthens the security and durability of NFTs but also builds trust among collectors and artists.

MapleStory

MapleStory, a popular MMORPG developed by Nexon, has strategically integrated IP to enhance its business model and attract a wider audience. By leveraging blockchain, Nexon has created a more immersive and engaging experience for players while also exploring new revenue streams.

Key elements of MapleStory's IP strategy:

• Blockchain Integration: Nexon has integrated blockchain technology into MapleStory Universe, allowing players to own and trade in-game assets as NFTs. This provides players with a greater sense of ownership and control over their digital possessions.
• User-Generated Content (UGC): MapleStory encourages players to create and share their own content, fostering a strong sense of community and enriching the overall gameplay experience.
• Extended Ecosystem: Nexon has expanded the MapleStory ecosystem to include various games, user-generated content, and developer tools. This creates a more interconnected experience for players and ensures that NFTs and other digital assets have utility beyond the primary game.
• Community Engagement: By leveraging blockchain, Nexon aims to maximize user rewards and participation. This strategy helps to maintain a loyal player base and attract new users who are interested in the benefits of blockchain gaming.
• Sustainability and Scalability: Nexon's approach to integrating blockchain with MapleStory is designed to ensure long-term sustainability and scalability. This includes continuous updates and expansions to keep the game fresh and engaging for its large user base.

Illuvium

Illuvium has built its own original IP, featuring a unique world and characters. This approach has allowed Illuvium to establish a strong brand identity and differentiate itself from other Web3 gaming projects.

By creating its own IP, Illuvium has complete control over its narrative and can develop a cohesive and engaging storyline. This has attracted players who are drawn to the game's unique universe and immersive gameplay. Moreover, Illuvium's original IP can be leveraged for merchandise, licensing deals, and other revenue streams, providing the project with long-term sustainability.

Gala Games

Gala Games, a Web3 gaming platform, has adopted a hybrid approach, combining both original IP and licensed IP. The platform has developed its own games, such as Town Star and The Legends of Galahad, while also exploring partnerships with external IP holders.

This strategy allows Gala Games to maintain control over its core gaming ecosystem while also benefiting from the popularity of established IP. By offering a diverse range of games and experiences, Gala Games can attract a wider audience and cater to different player preferences.

Sorare

Sorare is a fantasy football game built on the Ethereum blockchain that allows players to collect, trade, and manage digital cards featuring real-world soccer players. Each card represents a specific player and their performance in real-world matches. Players can use their cards to create teams and compete in weekly tournaments, earning points based on the performance of their players in real-life matches.

Sorare's successful integration of IP has been a key factor in its growth and popularity. By obtaining official licenses from major soccer leagues and clubs, Sorare has gained access to real-world player data and the rights to use player images and likenesses. This has allowed Sorare to create a more authentic and immersive experience for players, as they can collect and trade digital cards featuring their favorite soccer stars.

The limited supply of Sorare cards has also contributed to their value and desirability. By creating a sense of scarcity, Sorare has encouraged players to collect and trade cards, driving up demand and prices. This has created a thriving marketplace for Sorare NFTs, generating significant revenue for both the platform and its users.

Intellectual Property Challenges in Web3 

The decentralized nature of Web3 introduces unique challenges for protecting and managing intellectual property (IP) rights. While Web3 offers exciting opportunities for creators and players, addressing these challenges is crucial for ensuring a sustainable and thriving ecosystem.

1. Fundamental Challenges

• Decentralized Governance: The lack of a central authority in Web3 makes it difficult to enforce traditional IP laws and regulations. This can lead to challenges in identifying and addressing IP infringements.
• Global Reach: The global nature of Web3 means that IP disputes can span multiple jurisdictions, making it complex to determine applicable laws and enforce legal remedies.
• Pseudonymity and Anonymity: The use of pseudonyms and anonymous identities in Web3 can make it difficult to trace IP infringers or resolve disputes.

2. Challenges Related to NFTs

• Ownership and Transfer of Rights: The ownership and transfer of rights associated with NFTs can be complex, especially when it comes to copyright and trademark issues. Determining who owns the underlying work and the rights associated with an NFT can be challenging.
• Licensing and Royalties: Establishing fair licensing terms and royalty mechanisms for NFTs is crucial to ensure that creators are compensated for their work. However, this can be difficult due to the decentralized nature of NFT marketplaces.
• Fair Use Considerations: The application of fair use principles to NFTs can be contentious, as the boundaries of fair use in the digital realm are still evolving.
• Counterfeiting and Piracy: The ease of creating and distributing digital assets in Web3 makes it susceptible to counterfeiting and piracy. This can undermine the value and authenticity of NFTs.

3. Challenges For Digital Artists

• Proving Originality and Authenticity: In the digital world, it can be challenging to prove the originality and authenticity of a piece of art. This can impact its value and marketability.
• Reproducibility and Distribution: The ease of copying and distributing digital art can lead to unauthorized reproduction and distribution, infringing on the rights of creators.

Addressing these challenges requires a multifaceted approach involving a combination of legal frameworks, technological solutions, and community-driven initiatives. By working together, creators, businesses, and policymakers can create a more secure and equitable environment for IP in the Web3 era.

Ancient8's Approach to IP: A Decentralized Hub for Creators and Builders

Ancient8, as a gaming Layer 2 chain, is dedicated to fostering the growth of IP in the Web3 ecosystem. Our platform offers a unique set of advantages for creators, collectors, and gamers, including:

• Co-building and publishing titles with reputable gaming studios: We collaborate with industry leaders to amplify IP exposure and monetization.
• Incentives for creators and IPs: Our platform provides incentives to encourage participation and foster creativity.
• Monetization opportunities: Creators can monetize their skills and existing IPs through derivative NFTs and in-game assets.
• Interoperability: Our platform enables seamless integration of IP-based assets into games, opening up new avenues for collaboration and monetization.

Ancient8 aims to be a leading platform for IP owners and creators seeking to distribute and monetize their assets in the gaming world. We believe that by providing a decentralized and user-friendly environment, we can unlock the full potential of IP in Web3 gaming.

Key Focus Areas

• IP Derivative NFTs: We will foster the creation and trading of IP derivative NFTs, providing creators with new opportunities to monetize their skills and fans with unique collectibles.
• Interoperable Layer for In-Game Assets: We are developing an interoperable layer that allows game developers to seamlessly integrate IP-based assets into their games. This will enable creators to reach a wider audience and monetize their assets across multiple platforms.
• IP Incentive Layer: We are implementing incentives to encourage creators and game developers to participate in our ecosystem. These incentives may include grants, rewards, and other benefits.

Benefits for IP Owners, Creators, and Gamers

• Increased Exposure: Our platform can help IP owners and creators reach a wider audience and gain visibility within the Web3 gaming community.
• Monetization Opportunities: Creators can monetize their IP through the sale of NFTs, licensing agreements, and other revenue streams.
• Community Building: Our platform fosters a strong community of creators, gamers, and collectors, providing opportunities for collaboration and networking.
• Enhanced User Experience: By integrating IP into games, we can create more engaging and immersive experiences for players.

Zone Nine: Leading the Way in IP Integration on Ancient8

Zone Nine, the first game on the Ancient8 Chain, serves as a prime example of how our platform can be utilized to foster IP growth and innovation. As a pioneering Web3 game IP ecosystem, Zone Nine offers a unique blend of immersive gameplay, community involvement, and technological advancements.

• Hyper-realistic gameplay: Zone Nine's AI-powered NPCs and Unreal Engine 5 graphics create an unparalleled level of immersion, transporting gamers into a world so real they'll forget they're playing a game.
• Infinite content generation: The game's AI-powered NPCs generate endless possibilities, ensuring that every playthrough is unique and exhilarating.
• Modular development: Zone Nine's modular design allows for constant expansion and evolution, ensuring that the experience never gets boring.
• Community involvement: The "Build in Public" approach encourages collaboration and feedback, fostering a strong and engaged community.
• Zk-VRF powered economy: Zone Nine's economy is built on a secure and transparent blockchain foundation, ensuring fair and verifiable transactions.

Ancient8, with the promising development of Zone Nine, is well-positioned to become a leading platform for IP integration in Web3 gaming. By leveraging our unique advantages and focusing on key areas like IP derivatives, interoperability, and incentives, we aim to create a thriving ecosystem that benefits creators, developers, and gamers alike.

Closing Thoughts

As the Web3 landscape continues to evolve, the role of intellectual property will become increasingly significant. The decentralized nature of this ecosystem offers new opportunities for creators and collectors to leverage IP rights and unlock new value.

Key trends to watch for include the growing adoption of NFTs, the development of new IP protection mechanisms, increased interoperability between different blockchain platforms, the integration of AI and machine learning, and the growing emphasis on community-driven governance. By addressing the challenges and seizing the opportunities presented by Web3, creators, collectors, and businesses can drive innovation and shape the future of IP in the digital age.