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I think the warping was just an example of something that can only be done with ray tracing. It could just be a straight line or whatever.

Maybe such a line could indicate distance mapped in a color scale (e.g. viridis)

The information provided by the warped part of the screen is the directionality of it similar to Renegade Ops' Dynamic Splitting as discussed in the article.

Maybe OP could integrate similar gameplay ideas from the other games. E.g., the "squished" space can be traversed more quickly by game objects since it occupies less screen space.

Not sure if you can actually create a whole game out of that mechanic, but it's a start.

I think the demo is lacking myself, what does it look like if the two players are further apart? Is more of the in between space represented in the split line?

The other jarring thing is that it seemed like a binary on/off thing, whereas it looks like it would be possible to make it a smooth and slow transition depending on the distance between players, make it a bit more surreal.