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Macro Research

When AI Sparks into Web3 Games & Metaverse

Latest updates: Jan 02 2023

Key Takeaways

  • Artificial Intelligence (AI) is a branch of computer science that leverages computers and machines to mimic the problem-solving and decision-making capabilities of the human mind. Advancements in Machine Learning and Deep Learning are creating a paradigm shift in virtually every sector of the tech industry.
  • Incorporating AI into web3 game production is a key step towards making them more responsive, adaptive & challenging experience. Increasing complexity in games with AI also helps to ensure gamers enjoy and get hooked on the game.
  • The Metaverse will contain a vast amount of data generated by AI. By combining AI with other technologies like AR/VR and blockchain, the Metaverse can construct secure, scalable, and realistic virtual worlds on a persistent, always-on platform. Avatar creation, digital humans and multilingual accessibility are significant AI-powered elements in the metaverse.
  • There are still some challenges and bottlenecks while implementing AI in the Metaverse like ambiguity around ownership and copyright structure of AI-generated content, AI bias in analyzing and processing data, transparency in a space where fraud can run rampant in the form of deepfakes or other fraud, etc.


Along with the massive growth of the Internet from the 1990s until now, various innovative technologies have been created to bring users breathtaking experiences through virtual interactions in cyberspace. Among such technologies, Artificial Intelligence (AI) has come to play an important role in processing big data to enhance immersive experience in our everyday lives over the last decade.

Since the dawn of computers, video games have continuously evolved to become more and more intriguing and complex, but remains focused on delivering fun, creativity, and engagement to players worldwide. According to Forbes, the gaming market could be worth over USD 200 billion by 2023. As our world continues a rapid shift towards digital mediums, AI will make games more interactive and smarter than ever before. Now, as we head into the uncharted waters of Web3 and the Metaverse, an important question remains: How will AI help us transcend from the physical world into the virtual?

What is Artificial Intelligence?

Artificial Intelligence (AI) is a branch of computer science that leverages computers and machines to mimic the problem-solving and decision-making capabilities of the human mind. This can be done in several ways, but advancements in Machine Learning and Deep Learning are creating a paradigm shift in virtually every sector of the tech industry.

Machine learning (ML) is a subset of AI that exhibits different algorithms requiring structured data to build ML models which are used to train a machine to accomplish a given task. The goal is to enable a machine to learn automatically from its experience and make a corresponding prediction.

Deep learning is a more advanced form of machine learning that can create algorithms resembling the neural connections of the human brain called Artificial Neural Network to learn from data without any human interference. The algorithms have many levels, each presenting a different understanding of the data. These networks can learn to perform tasks such as image recognition and language processing.

The Story of Pac-Man

Pac-Man is a classic single-player arcade game in which the player gobbles up dots with a hungry yellow circle while trying to avoid four colorful ghosts. Released by Namco in 1980, Pac-Man sold 400,000 gaming cabinets to arcades around the world and made $3.5 billion in lifetime sales by 1990 as Pac-man became one of the most iconic video games of all time. As simple as it may seem, Pac-man was actually one of the earliest games to successfully implement AI.

Four colorful ghosts in the game are InkyBlinkyPinky and Clyde. Each of the four ghosts had names, different personalities and behaviors, a bespoke algorithm that dictates how they attack the player, thanks to the AI.

It was the pathfinding algorithm implemented using AI that helped Pac-Man to dominate the gaming industry during its time. But after so many years of advancement in the field, how does the nascent web3 gaming industry now leverage AI?

AI in Web3 Game Development

AI is used in gaming to create a more responsive, adaptive & challenging experience while playing on a virtual platform. Up to this point, we have seen a large number of web3 games lacking the depth and sophistication required to attract and retain a loyal fanbase in the long run.

Incorporating AI into web3 game production is a key step towards making them more interactive than ever. Increasing complexity in games with AI helps to ensure gamers enjoy and get hooked on the game.

AI Art Generation & NFTs

NFTs have been all the rage for the last two years and play a significant role in the emergence of web3 and the Metaverse. NFTs will continue to evolve from static images to more dynamic, useful, and intelligent collectibles, and AI will likely be the key to unlocking this next wave.

Embedded with a Generative Pre-trained Transformer 3 (GPT-3) language model prompt, AI NFTs can come with many properties like animation, interactivity, and other generative capabilities that are still emerging. Injecting AI capabilities into NFTs has the potential to open the doors for unique and personalized experiences in a way that other technology has not been able to achieve thus far. Today, more and more apps for generating NFTs are hitting the market that allow users to create unique works of art and potentially profit from their sale.

Let’s take Midjourney for instance. Midjourney is an AI image creator that uses Machine learning to create pictures based on text inputs. Anyone can interact with the bot by typing a description of the image they want to see; the bot will then reference other images based on that description and combine them into a brand new piece of art in a unique and creative way.

Art created using Midjourney

The value of AI-generated NFTs will soon expand beyond just generative art into more advanced ways of producing and delivering content, reaching new audiences or detecting trends. Web3 game projects can utilize AI to generate their game character / avatar NFTs with endless variations before rendering them into playable 2D or 3D models.

Graphics Enhancement

Game character gives the player the original attraction and feels; inattentively created characters lack visual appeal and user interest. But 3D video game character creation is a challenging process. Human eyes have evolved over hundreds of thousands of years to become acutely skilled at detecting each others facial expressions (essential both for communication and survival), which makes the job of replicating even simple gestures and expressions in a convincingly realistic way extremely difficult. AI offers great potential for facilitating this. The most advanced image enhancement AI algorithms can convert high-quality synthetic 3D images into real-life-like depictions. Deep learning even helps game characters and environments to further mimic real ones.

These algorithms can also help inform character actions, voices, and dialogue. Plus, applying AI to Virtual or Augmented Reality opens new ways to add realism to virtual experiences. The result is an immersive experience that gamers will never forget.

Delysium is one of the first web3 open-world, player-owned games that uses AI-generated content and characters as the foundation of its own metaverse. In Delysium, AI-powered MetaBeing characters have a complete neural brain system that drives their lives in the virtual world. These MetaBeings are also able to hold their own assets, automatically participate in game modes and earn cryptocurrency incomes as human players do.

Render of a Delysium MetaBeing

Game Level & Content Generation

Game level generation or Procedural Content Generation (PCG) is a set of methods that use advanced AI algorithms to generate large open-world environments, new game levels, and many other game assets. This is considered one of the most promising applications of AI in game design. Open world or open map games include some of the most popular games to date. These games allow players to explore vast landscapes. Creating such games is very time-consuming from both the design and development perspectives. But AI algorithms can build and optimize new scenery in relation to the game’s status. We haven't seen any web3 games apply these algorithms yet, but take No Man’s Sky for example. It is a game that uses AI to generate an infinite number of new levels on the fly while gamers play.

No Man’s Sky

Apart from level generation, AI can be used to generate stories and scenarios. Most often, AI is used to create an interactive narrative. In this kind of game, users create or influence a dramatic storyline through their actions or selected dialogue. The AI programs then use text analysis and generate scenarios based on previously learned storylines. AI Dungeon 2 is one of the most famous examples of this application. The game utilizes a state-of-the-art open-source text generation system built by OpenAI and trained using the Choose Your Own Adventure books.

Generate game content with AI Dungeon 2

Developing a game requires a lot of time and money, and the developers aren’t even sure how well the game will be received. Thus, using AI algorithms can significantly reduce the cost of creating content and provide users with a fully real-world gaming experience.

Non-player Characters (NPCs)

In most current games, especially in first-person shooters and strategy games, the opponents are pre-programmed non-player characters (NPCs), and AI has the potential to control the behavior of these NPCs. Traditionally, gaming AI was based on real-time analysis of user actions and opponents’ reactions to these actions. However, using techniques like Pattern Recognition and Reinforcement Learning (RL), NPCs can now evolve by self-learning from their own actions in order to adapt to the user’s actions and anticipate them. This helps games to become more adaptive and realistic by interpreting and responding to the player’s actions as well.

In addition, AI allows NPCs to get smarter and respond to in-game conditions in novel and unique ways as the game progresses. Utilizing this technique will profoundly reduce the development time of NPCs, as hard coding their behavior is a tedious and lengthy process. This is especially important for web3 games that are building as fast as they can to keep their communities interested and engaged.

Object Detection

Deep learning is the latest technology involved in object detection. Modern games that incorporate this technique in their visuals offer a highly immersive gaming experience. While navigating an in-game universe, characters will stumble upon in-game objects. Users can detect objects pretty easily. However, in-game characters are just pieces of code that may struggle to identify objects in their environment. AI is making intelligent in-game characters that are more likely to correctly identify objects and their variations. Intelligent tools like TensorFlow help provide excellent object detection in video games.

Can AI make games?

AI has played a huge role in developing video games and fine-tuning them to the preferences of players. But AI cannot make an entirely new game from scratch without any previous knowledge or human direction on how the game is supposed to be. But by feeding and training data, through Machine learning, AI can learn from a lot of games, create approximate representations of the games, and then proceed to recombine the knowledge from these representations and use conceptual expansion to create new games. At the moment, we haven’t seen any games that are completely made by AI, but AI is helping developers create games at a much faster rate than before.

Let’s have a look at this interesting game that was made entirely from AI-generated images. In August 2022, an independent developer "Nao_u" released a short 2D shooting game they made using only AI-generated art. He built the title, called Shoon, over three days to see if Midjourney could create art for a game. Nao_u made a single level for a horizontal shoot-'em-up while generating the background, the player's ship, and the enemies with AI. Nao_u built the ship models by feeding Midjourney text prompts related to Star Wars and Armored Core. The game itself isn't very remarkable but shows some of the advantages and limitations of using AI to create art for a game.

AI is Building the Metaverse

As we move into an increasingly digital world, the line between our physical and virtual lives continues to blur and the emerging Metaverse promises to merge these two realities even further. The Metaverse will undoubtedly contain a vast amount of data generated by AI. By combining AI with other technologies like AR/VR and blockchain, the Metaverse can construct secure, scalable, and realistic virtual worlds on a persistent, always-on platform.

  • Avatar Creation: This is one of the most interesting and often referenced concepts of the Metaverse. People expect fully-customizable avatars with eye-catching features that carry with them across virtual worlds in order to fully express themselves. AI will help facilitate this with the ability to analyze 2D images or 3D scans to create a high-quality render for the user’s profile. It will also continue to improve physical and emotional characteristics like facial expressions and body language, further making avatars an extension of the self.
  • Digital Humans: Like NPCs in video games, digital humans in the Metaverse may be 3D chatbots that can react and respond to users’ actions in a VR world. Digital humans are built entirely with AI technology and will be an important element in the construction, utility, and immersion of the Metaverse.
  • Multilingual Accessibility: Language processing is another important manner in which AI will improve the Metaverse. Natural Language Processing (NLP), one of the most powerful and widely used consumer-facing applications of AI, will recognize natural languages like English, convert them into a machine-readable format, and process the results into another language. Hence, AI helps to facilitate real conversation in real time, allowing users from all over the globe to can interact.

Challenges of Artificial Intelligence

Web3 gaming and metaverse concepts are still at an early stage. Hence, there may be some challenges and bottlenecks while implementing AI in the Metaverse:

  • Existing deep learning models have a massive amount of parameters, which incurs a high burden for resource-constrained mobile devices to deploy learning-based applications.
  • Ambiguity around ownership and copyright structure and determining who is allowed to profit from AI-generated content.
  • Highly realistic and AI-generated photo and video deepfakes have begun to flood the internet. The issue of deepfakes and user transparency will be a challenge in the Metaverse. As the quality of deepfakes and digital humans continues to improve, it remains to be seen how users will be able to see through deepfakes in order to avoid fraud and deception in digital spaces.
  • The ability to generate high quality art with a computer program is going to put many graphic designers out of work. There are many other such positions that currently require humans that will eventually be replaced by machines and AI.
  • Bias in analyzing and processing data: AI bias refers to the tendency of algorithms to reflect human biases.; Based on the training data, AI can create or reinforce gender biases like giving better credit scores to men than women, discriminate against ethnicities etc.

Final Thoughts

A new era driven by AI is emerging. It offers major advancements and changes in the gaming world, and its growth is expected to increase by leaps and bounds. New possibilities such as autonomous character evolution, learning, and adaptation will soon be in reach. We can expect to see more games, both traditional web3, using AI in the near future. It helps create more challenging and engaging games, and more meaningful virtual experiences. Nobody knows what the next generation of web3 games or the Metaverse will be like in the end, but the fusion of AI and other advanced technologies in the Metaverse has the potential to change the way we live, revolutionize the way we work, and eventually blur the boundaries between the physical and digital worlds.

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  • Key Takeaways
  • Intro
  • What is Artificial Intelligence?
  • The Story of Pac-Man
  • AI in Web3 Game Development
  • AI is Building the Metaverse
  • Challenges of Artificial Intelligence
  • Final Thoughts