Written by Issac Chew
Web 3.0 (‘Web3’) is commonly defined as the decentralised next generation of the internet. It describes the next evolution of the World Wide Web, the user interface that provides access to documents, applications, and multimedia on the Internet. To know more about Web3, read our previous article here.
In esports, Web3 and blockchain technology are set to transform how games are played, owned, and monetised. One of the most exciting developments is the use of NFTs (non-fungible tokens). These are unique digital certificates stored on the blockchain that prove who owns a particular digital item. Each NFT includes a unique ID and metadata that cannot be copied or altered.
Things like an in-game sword, a video highlight of a clutch play, or a rare digital trading card can become NFTs. The blockchain keeps a permanent record of who owns each item, even if the image or video itself isn’t stored on the blockchain.
This is vastly different compared to traditional gaming, where items exist on a game publisher’s servers and players do not truly own them. In Web3 games, players own their digital assets and can trade, sell, or use them outside the original game. Because these assets live on the blockchain rather than inside one company’s database, they can move across games and platforms, giving players more control and value than ever before.
Blockchain Roles in Esports
- NFT Collectibles and Tokens: Esports teams, leagues, and publishers are increasingly using NFTs as digital collectibles or access passes. For example, some teams have launched championship-themed NFTs. More broadly, NFTs can represent anything from iconic gameplay moments and digital trading cards to exclusive in-game items like weapons or skins. Fans often purchase these NFTs to own a piece of esports history or unlock special perks such as voting rights, VIP content, or other exclusive experiences.
- Smart Contracts: These are self-executing blockchain programs that automate agreements. In esports, smart contracts could govern tournament entry, automate prize payouts, or enforce performance conditions without intermediaries. For example, a smart contract might automatically distribute prize money the instant winners are confirmed, or verify tournament results on‑chain to prevent tampering.
- Decentralised Gaming Platforms: Entire esports games and platforms are being built on blockchain. For example, Axie Infinity is a popular blockchain-based game where players collect, breed and battle NFT creatures. Axie has its own token economy (AXS, SLP) and even runs global competitive seasons: in Season 9 2025, it offered over 35,000 AXS in prize rewards across leagues and daily mini‑tournaments. The top players then compete in an Axie World Cup.
- Decentralised Streaming and Rewards: Blockchain is used in streaming platforms and fan engagement. For example, Theta Network is a blockchain-based video delivery network. Esports organisations like Cloud9 have partnered with Theta to create decentralised streaming bots and reward viewers in crypto. Fan tokens and coins (in sports and increasingly in esports) allow communities to vote on team matters or earn collectible rewards.
Web3 Ownership and Monetisation Models
Web3 is reshaping the economics of gaming and esports by introducing true digital ownership and new ways to earn. Unlike Web2 games, where in-game items like skins are locked within the platform, Web3 games tokenise assets as NFTs, giving players full ownership. These items can be bought, sold, or traded on secondary markets, and even used across different games or metaverse worlds. For example, The Sandbox lets users own and trade virtual land as NFTs, build games on them, and earn real income. Similarly, in games like Gods Unchained, players can trade NFT cards that hold real-world value. Web3 models include:
- Play‑to‑Earn (P2E): Players earn cryptocurrency or tokens by participating. Axie Infinity popularised this model: players battle and earn smooth love potion (SLP) tokens, which have market value. P2E can reward skilled or time-investing players, effectively turning gaming into a source of income.
- Play‑and‑Own: Instead of one-off purchases, players might pay a one-time fee or subscription to permanently own assets. Future games may use this to sustain an economy without massive token speculation.
- Interoperability and Cross‑Platform Assets: Because NFTs are on shared blockchains, assets can, in theory move between games. A sword or character skin could be used in multiple titles, or sold on different marketplaces. This interoperability breaks the lock-in of Web2 games. Some projects are even building blockchain ‘bridges’ so that assets can move across networks (eg from Ethereum to Solana).
- Decentralised Governance (DAOs): Web3 also enables player communities to co-run games via tokens. A DAO (decentralised autonomous organisation) can vote on updates or allocate a community treasury. For example, in some Web3 games, players holding a governance token can vote on new content or balance changes. This turns fans into stakeholders and aligns game development with community interests.
- Revenue Sharing and Royalties: NFTs can encode royalties, meaning original creators get a cut every time the NFT is resold. In esports, this could help teams or event organisers earn ongoing revenue from collectible sales. For example, if a Dota 2 highlight NFT is resold on an open market, some proceeds could automatically return to the content creator or rights holder.
- Sponsorship and Advertising: Web3 opens new sponsorship models. Brands can embed interactive NFTs that fans can own. Blockchain tracking also allows precise attribution of engagement, potentially changing how sponsors value esports viewership and in-game promotions.
Esports Competitions
Major tournament organisers like ESL and DreamHack continue to dominate the Web2 esports scene, running massive LAN and online events for games like Counter-Strike, Dota 2, League of Legends, and Valorant. These events attract huge global audiences. For instance, The International from Dota 2’s premier championship is known for its record-breaking, crowdfunded prize pools, peaking at over $40 million in 2021.
Other flagship tournaments, such as League of Legends Worlds and the PUBG Mobile Global Championship, regularly feature multi-million-dollar prize pools. Malaysia has also hosted high-profile events like ESL One Kuala Lumpur 2023 and the PUBG Global Championship 2024, placing it on the global esports map.
On a national level, leagues like Malaysia’s MPL (Mobile Legends: Bang Bang Professional League) follow a more traditional model, relying on sponsorships, media rights, and government support, such as official backing from the Ministry of Youth and Sports.
However, Web3 tournaments are shifting focus toward participation and blockchain integration. Unlike traditional pro circuits, these events often involve open qualifiers, NFT rewards, and community voting.
For example, the Proof-of-Frag Counter-Strike 2 tournament, co-hosted by Polkadot and Heroic, featured a $5,000 prize pool, DAO-driven features, and was streamed on Twitch. Polkadot used the event to connect gaming and crypto communities.
Other events, like The Sandbox Metaverse Challenge, let players stake NFTs to enter competitions. Even crypto betting platforms are hosting their own esports tournaments, paying winners in cryptocurrency.
In summary, traditional esports events remain dominant in scale and prize money, but Web3 tournaments are emerging as parallel events. They tend to be smaller in prize but experiment with new formats such as, blockchain verification of results, tokenised rewards, and integration with decentralised communities.
Malaysia’s Esports and Blockchain
Malaysia has been actively supporting the growth of esports and blockchain gaming through both policy and investment. In 2023, the country officially recognised esports as a legitimate sport by amending its Sports Development Act. The Ministry of Youth and Sports (‘KBS’) has laid out a strategic plan for 2020–2025 focused on developing esports infrastructure, talent, and tournaments.
In 2024, the government allocated RM20 million to boost the industry. National bodies like the Malaysian Esports Federation (MESF), work closely with KBS to ensure fair play and support the scene. Major leagues like the Mobile Legends Professional League Malaysia (MPL MY) even list KBS as an official partner. Malaysia also sends national esports teams to compete in multi-sport events like the SEA Games and Asian Games.
Alongside its esports push, Malaysia is positioning itself as a regional hub for blockchain gaming. The Malaysia Digital Economy Corporation (‘MDEC’), a key government agency, has launched several initiatives to attract Web3 talent. In October 2024, MDEC partnered with crypto venture firm EMERGE Group and blockchain startup CARV to promote the local Web3 gaming ecosystem. This collaboration, announced at the IOV2055 Symposium, led to the formation of the Malaysia Web3 Gaming Council, bringing together industry players like CARV and Avocado DAO to shape the national strategy. CARV is helping introduce decentralised ownership models and secure data infrastructure into Malaysian gaming, as part of a broader effort to drive innovation, creativity, and economic growth in the blockchain gaming space.
Conclusion
In short, Malaysian authorities are actively supporting the growth of esports and blockchain gaming, with agencies like MDEC and KBS backing the industry in a clear, pro-growth direction. At the same time, they’re starting to address potential risks. In the coming years, we can expect new regulations that specifically cover NFT-based games and esports sponsorships, alongside continued efforts to strengthen Malaysia’s dynamic and fast-growing gaming ecosystem.
Published on 2 July 2025