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I also thought about oauth, but oauth if I remember correctly still requires https (at least for the most basic username and password approach). The problem is not the authentication protocol. It's the transport itself (which kryonet is providing) which is vulnerable.
As for the login server and service server being under the same control, yeah I would assume they are in the same lan and they can trust each other. We can even simplify the example and assume they are the same server and that there is a load balance infront of the game server that just redirects traffic to the different app servers.
Nate has recommended manipulating bytes as they go over the line.
You'd have to code all the asymmetric and session key management yourself, or use the library functions exactly right, and you'd still have a high chance of overlooking something and opening your software to attacks. IOW I strongly disagree that that's a viable approach.