By looking at crypto prices, you’d think that everyone has fled all the blockchain projects people were so excited about just months ago…
But in the New Digital World, there are passive investors, and then there are active users of the platform. The latter are much more important to its long-term success. And one group seems to be retaining users surprisingly well: the NFT games.
That’s not necessarily what I would expect in a bear market! After all, if you’re playing to earn crypto – and, often, to turn a profit on the NFTs players need – then there’s not as much motivation right now. Your efforts simply aren’t paying off as much as they were before November.
And yet…the new “Blockchain Games Report” from DappRadar tells a different story:
Usage has been remarkably stable for the crypto games, in comparison to other types of decentralized apps (dapps).
Since November, dapp usage is down roughly 25% overall, from nearly 3 million to 2.22 million unique active wallets (UAW) per day. But crypto games have held steady around 1.15 million UAW per day.
So…why are NFT games “proving to be a true survivor during this bear market” (as the DappRadar analyst concludes)?
“We are on the cusp of finally seeing a good amount of blockchain games with truly immersive game mechanics that take entertainment to the next level,” the report goes on.
And going forward, this certainly won’t hurt:
The NFT Industry Just Won $130 Million of Venture Capital
Like OpenSea and other NFT marketplaces, Magic Eden is best known for selling profile pictures – with collectors paying up to five, six…even seven figures.
But since March – when its Series A closed at just $27 million, by the way – Magic Eden “introduced Eden Games [and] launched 50+ games.”
Also on Tuesday, one of the Magic Eden co-founders, COO Zhuoxun “Zedd” Yin, appeared on The Block’s podcast to talk about the “category expansion” they plan to do with their new $130 million.
And gaming is the main initiative there for Magic Eden.
Their first four hires for Eden Games brought a background from YouTube, professional “League of Legends” teams, and Tencent Holdings (OTCMKTS:TCEHY). Now, Magic Eden is “actively hiring more for this team,” Yin said on the podcast yesterday.
Aside from launching NFT collections for “the best games,” Yin says they’re also looking to provide “all the buy, bid, sell functionality that you would need [for] Magic Eden [to] power your in-game marketplaces.”
“If we can stand that up over the next three to six months, we’ll be in a good spot,” said Yin – who also reports that Magic Eden plans to branch out from Solana to Ethereum (ETH-USD) and probably Polygon (MATIC-USD), to follow “where development is going.”
Those game developers will be “in a good spot,” too, by utilizing their infrastructure – if the high quality of Magic Eden itself is any indication.
The Elephant In the Room
Of course, not everything is sunshine and rainbows in the crypto/NFT gaming space right now.
A couple weeks ago, Bloomberg published an absolutely brutal chronicle of what’s happened with Axie Infinity (AXS-USD), the “Pokémon of the blockchain,” since crypto prices have slumped and its Ronin (RON-USD) blockchain was hacked for $625 million.
“A Billion-Dollar Crypto Gaming Startup Promised Riches and Delivered Disaster,” Bloomberg’s headline blares.
And even the much more sympathetic analyst at DappRadar reports that “Axie’s on-chain activity has shrunk -39% from April,” even if that’s “still 55% higher than May 2021.”
To me, it’s apparent early in Bloomberg’s piece just why Axie’s heyday seems to have lasted less than a year:
“Even many Axie regulars say it’s not much fun.”
When crypto isn’t heading “to the moon,” you need a little more than greed to keep people around. And Axie Infinity hasn’t offered much of that:
When the Bloomberg tech reporter interviewed a full-time Axie player from Florida, he found: “Compared with the massively multiplayer games that he usually played, Axie Infinity was remarkably simple.”
If other Axie regulars are anything like the player featured in Bloomberg, they’ve turned more to “breeding” Axie NFTs than…actually playing.
Last summer, NFTs of the cute little Axies were a business where “you would be making 300%, 400% on your money in five days,” the Florida man told Bloomberg.
These days…not so much, I’m guessing. From 2.7 million daily active users at its peak, Axie Infinity is at less than 450,000 today.
That peak was mid-November – which lines up perfectly with the “crypto winter” and bear market.
The Ronin blockchain’s finances illustrate this, too: Ronin’s total value locked (TVL) fell from $1.5 billion in December to $50 million today! Even just as crypto prices collapsed further this past month, Ronin’s -47% decline in TVL is notably worse than the bigger, more well-rounded chains.
I’ve written before that Axie’s publishers, Sky Mavis, have big ambitions to build more of a metaverse – and, not long ago, they had the users to do it!
But is this whole concept of “play-to-earn” really ready for prime time? Axie Infinity was pretty primitive, by 2020s standards, which was supposed to be nostalgic – and ended up becoming a liability.
Bottom line: Developers and investors in these games need to focus on gameplay – so the game doesn’t tank when the crypto markets do.
Better NFT Games to Watch
MapleStory from Nexon (OTCMKTS:NEXOY) is one that a couple of my InvestorPlace colleagues – who enjoy (actually) playing games – tipped me off to a couple of weeks ago.
That’s when Nexon announced that it will launch “MapleStory N,” a crypto version of its game that’s already been around since 2005.
MapleStory N is “a blockchain powered MMORPG where players can earn in-game items that can be turned into NFTs and traded with other players for a fee. Players can earn these items by killing monsters and completing challenges,” reports MMOS.com.
Plus, there will be MOD N, “a sandbox style game.” It’s similar to Roblox (NYSE:RBLX) – except that you use NFTs to create the “minigames” within the platform. Those can be NFTs from MapleStory itself – or from anywhere else on the blockchain!
The whole foundation of MapleStory as a massively multiplayer online role-playing game (MMORPG) sounds a lot like what Bloomberg’s source normally played (before getting caught up in Axie)…
And also a lot more like Star Atlas (ATLAS-USD).
Built on Solana, Star Atlas is an NFT game where you’re purchasing spaceships for “A grand strategy game of space exploration, territorial conquest, political domination, and more.”
Below we see a “showroom” in Star Atlas where you can view the spaceship NFTs to buy:
Star Atlas is having its growing pains, too:
As of CoinDesk’s review in May, “the gameplay of Star Atlas’s SCORE only involved players buying ships, enlisting them to their faction’s fleet, earning ATLAS and resupplying ships with in-game resources.”
Even dedicated players admit that “Star Atlas is not yet a Play-2-Earn game, as there is not really much playing involved.”
Until the current SCORE module gets replaced by one called SCREAM “in a few months,” Star Atlas’ 95,000 user base is going to be hampered by these limitations – not to mention the downtime/congestion on the Solana network.
Star Atlas’ next upgrade does seem promising. Next up, developers say, “players can use their ships to fight for the future of their faction with fun, active, repeatable, on-chain gameplay with earning potential.”
There’s a lot of things you can earn (and, presumably, trade as NFTs): fuel, tools, ammunition and other supplies, aside from the spaceships. And confronting other “factions” as part of a space crew does sound a lot more fun.
It’ll be interesting to see if they branch out from Solana to “multi-chain,” like Magic Eden and the games it’s looking to partner with.
In any event… The DappRadar analyst has it right:
Crypto gaming needs to “complete the transition from play-to-earn to play-and-earn” – which strikes me as a lot more sustainable, long term. To do so, I expect it’ll need to find a way to win over gamers (in general), who are notably skeptical of anything crypto/NFT.
In the meantime, it’s nice to actually find a bright spot in this dark time for the New Digital World. Going forward, keep an eye on those crypto/NFT games with the best gameplay.
On the date of publication, Ashley Cassell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. To have more news from The New Digital World sent to your inbox, click here to sign up for the newsletter.