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Well, if I was to guess I'd say that they are tracking which water
triangles intersect the near clip plane and then drawing alpha blended
triangles on the near clip plane below the water line. Since the Unreal
engine does all of its own transforms and clipping it should be relatively
simple for them to track which water triangles intersect the near clip
plane and generate the new vertices every frame. If you're using OpenGL or
D3D's transforms then you will want to take a pass through the water
geometry, find where it intersects the near clip plane, and then use that
to draw the triangles.
Response provided by Tom Hubina
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