Executive Summary

• The hypercasual genre in web3 covers close to 50% of total blockchain gaming wallets — with Gameta, Joyride, and Benji Bananas leading the pack.
• Gameta is a very ambitious project, and its goal is to attract billions of users to web3. However, just getting people to have on-chain wallets does not make them web3 users. There need to be sustainable systems that make engaging with on-chain features meaningful. The P2E mechanism is a step in that direction, but without robust loops for players to spend on-chain, there is a very high risk that Gameta players become net value extractors and not value creators (and therefore leading to unsustainability).
• Joyride takes a platform approach, and its success will primarily depend on how easy to integrate and value-additive it is for developers. The skill-based tournament model works for a limited set of games, and if Joyride wants to see success, it needs to create tools for a broader set of monetization models that can be implemented in a broader variety of genres.
• Benji Bananas seems sustainable on the surface, but due to a limited quantity of Membership Pass NFTs it’s ultimately not scalable. This is not a model for game devs to emulate as it seems to be one of the many experiments Animoca Brands is doing to increase on-chain players.
• Unfortunately, none of the games/platforms we examine in this multi-pronged deconstruction are truly future-looking, and it makes us question whether the hypercasual genre in general is truly a good fit for web3 mechanics. After all, hypercasual games naturally attract players with a low potential to pay and often monetize heavily through advertising. However, web3 — at least how most people view it today — requires some degree of economic investment for players to be able to interact with its systems, leading to a mismatch with player behavior. Maybe the solution is to operate more like web2.5 — operate like normal web2 games but with very minor web3 elements sprinkled in (if at all) — until a better business model emerges, if it emerges at all. But even then, mobile app store platforms (where hypercasual games most thrive) need to come around to being more web3 friendly, which is still an open question.

Introduction

Hypercasual games — which are instantly playable, boast lightweight mechanics, and are highly engaging in (typically) short sessions — have seen a lot of success in terms of reach on the web and (primarily) mobile. That trend persists even to this day, and the hypercasual genre has continued to grow and evolve despite multiple predictions of its demise.

In October 2022, total game downloads on mobile stood at 4.6B, and hypercasual games, with 1.29B downloads, accounted for close to 28% of the total. Hypercasual punches above its weight in terms of downloads on mobile, and it similarly does the same in the realm of web3.

According to DappRadar, as of the end of October, daily unique active wallets (UAW) stood at 923K. UAW is of course an imperfect metric for actual users — many active users might not interact with on-chain elements (and therefore get counted), some users may have more than one wallet, and it doesn’t filter out bots — but it’s the best we have, and we can still use it to track general game and network trends of where users are ebbing and flowing.

For example, when you take the top 100 blockchain games and sort those UAWs by blockchain, you get the chart below:

BNB (40%), Polygon (15%), WAX (15%), and Flow (10%) together represent 80% of the UAWs. Next, let’s break it down further and look at the top games by UAWs.

Top 10 games by UAWs. Source: DappRadar

The top 10 games contribute 81% of the UAWs. However, on closer inspection, 54% of all the UAWs are from hypercasual games. Gameta leads the race with 34%, Joyride is second with 10% (the sum of Trickshot Blitz (8%) and Solitaire Blitz (2%)), and Benji Bananas comes third with 8%. Naturally, the aggregate download numbers are still a minuscule fraction of the mobile web2 hypercasual equivalents, but it’s still a trend worth noting and exploring.

Overall, this trend isn’t shocking since hypercasual games also lead web2 gaming downloads, but downloads don’t paint the full picture. It’s true that the hypercasual genre has managed to onboard a decent amount of users on-chain, but we need to further understand what part of this userbase is actively engaging with the on-chain economies of these games, whether the games are actually any good, and how sustainable this whole “hypercasual web3” push really is. In order to figure that out, we will deconstruct Gameta, Joyride, and Benji Bananas. Each of these projects takes a different approach and holds unique lessons to learn.

Let’s dive in.

Gameta

Currently, one of the top collections of hypercasual apps comes from Gameta whose aim is to introduce hypercasual web2 users to web3. At present, Gameta has 22 hypercasual games as separate apps, and they’re built on the BNB Chain.

Games

The games on Gameta are different variations of hypercasual runners and look to be self-developed. Gameta’s strategy is to take one engine and try different themes and mechanic tweaks to figure out what works.

More than 85% of Gameta’s downloads come from the top three games — Ghost Run, Invest Master, and Human Tower (yes, all runners). Though easy to build, runner games have very low retention and monetization metrics.

Assets

Gameta has three assets: Hippo (NFT), GDO (in-game token), and HIP (governance token).

Hippo (NFT)

Hippo NFTs can be used in all games. There are two types of Hippo NFTs:

• White Hippo: This is free, and all players get one when they log in.
• Common Hippo: This NFT has to be bought through an IAP and costs $3. Players will also have to pay 10,000 GDO (explained below) as the mint fee. This NFT is not yet tradable.

The NFTs within Gameta have three attributes:

• Health: Health is gradually depleted with use, and players can consume GDO to increase the health value.
• Stamina: Each level consumes stamina, and this affects players’ income limits. They can replenish stamina by consuming GDO.
• Efficiency: This determines how efficiently players can earn GDO and depends on the level of the Hippo NFT. The current version, however, does not yet support upgrading NFTs.

GDO (In-game Token)

Currently, GDO is Gameta's sole in-game token, and it’s applied to all games. There is no cap on the total amount of GDO. In order to earn GDO, players need to hold any Hippo NFT throughout a game level. Players can also earn GDO rewards by regularly checking in.

GDO can additionally be converted into USDC — and it’s worth noting that GDO and USDC maintain a relatively fixed exchange rate of 10,000:1 — but it is not listed on any exchange. Players can also use GDO to buy stamina and health so that they can complete more levels and earn even more GDO.

HIP (Governance Token)

HIP is Gameta's governance token, of which there is a total supply of 1B. Importantly, HIP is not yet released and cannot be earned from P2E. The plan is to officially release HIP tokens when Gameta reaches 1M DAUs.

Core Loop

Gameta’s core loop is pretty simple, as explained in the above diagram. The objective is to build a smooth web3 migration process with:

• An extremely low barrier to entry through a smooth onboarding process
• Automated creation of on-chain addresses
• Low gas fees
• Optional private key escrow

It is very easy to create an account on Gameta. However, if users don’t maintain their Secret Phrase, then they will lose all access. There is also an option for email login, but that is hidden inside the game.

With onboarding of new players to web3 being a common problem, having a seamless onboarding experience is a must-have, which Gameta solves for. Like in many other web3 games, getting an on-chain address is just the first step. After that, Gameta wants to enable its users to do things they couldn’t have done in web2 games, such as accessing DeFi protocols (so they can swap, lend, and do more with their assets) and receiving financial incentives when participating.

The wallet experience is similar to Stepn or Arc8, in which there is a separation between the Spending Wallet (centralized) for transactions within the game, like upgrading NFTs or game assets, and the Main Wallet (decentralized) through which the player can take funds out of the game.

In Gameta, players can trade GDO for USDC, but GDO is currently not listed on any exchanges. This begs the question: How does Gameta define the 1 USDC = 10,000 GDO conversion ratio?

This conversion ratio matters since it affects the earnings that players are able to make from the game. For example, if players collect 100,000 GDO from the game, then they can exchange it for 10 USDC, but it is unclear where this 10 USDC will come from. Gameta could share the revenue earned from the Hippo IAP and the ads with players as a way to fund conversions, but that revenue would be difficult for Gameta to predict. The most probable explanation is that if Gameta does not have enough revenue generated from ads and Hippo IAP sales, it will have to give this converted USDC from its own pocket. A definitive USDC:GDO conversion ratio seems to be unsustainable and may lead to value extraction rather than value creation if not careful.

Metrics

More than half of Gameta’s downloads come from Southeast Asia, indicating a clear regional focus. This falls in line with the team’s goal of onboarding web2 users to web3 by incentivizing them with a P2E model. This initial onboarding works better in areas with lower average daily incomes, where the rewards from Gameta become more meaningful. Of course, Gameta’s P2E component has yet to be proven sustainable, as the only source of revenue for Gameta right now seems to be ads and Hippo IAP sales. Given the low CPIs and traditionally low ARPDAU in these geographies, sustainability looks difficult. All in all, it’s important to remember that anytime financial incentives are the main reason users play a game, it’s almost definitely going to turn into a net-extractor situation, which is always unsustainable.

Looking at the data, Gameta has been able to onboard close to 1.9M UAWs in the past month through its games. This translates to roughly 100K UAWs per day, which is an encouraging number, but what completely remains to be seen is whether these players will retain and monetize. We’re skeptical.

Roadmap

Gameta’s roadmap focuses on user acquisition via getting more games online. There is also mention of a medal system, which we suspect is targeted towards retention efforts. However, there seems to be a lack of features for monetizing these on-chain players (apart from ads and the singular Hippo IAP).

There is also mention of forming a Gameta DID (Digital ID) based on users’ on-chain behavioral data in order to profile their characteristics and preferences. The aim is for users to not just communicate but also cooperate, build relationships with each other, and propose and vote on Gameta's development. Gameta ultimately plans to become a multi-chain platform with a thriving creator economy (although the details on this remain slim). This step seems very ambitious and requires a lot of investment, tooling, and frankly much more traction to pull off successfully.

Conclusion

Gameta appears to be on a single-minded quest of transitioning web2 users to web3, and it’s managed to amass significant UAWs through its games. However, traditionally hypercasual games have not had high retention or monetization on web2, especially for the SEA markets. It is difficult to expect drastically different behavior on web3 just because of the promise of P2E. There needs to be more focus on:

• Creating a more diverse set of games (beyond runners)
• Implementing an overarching retention model across the games
• Successfully deepening the monetization of NFTs through progression and upgrade loops

Gameta is a very ambitious project with a(n unreasonably lofty) goal to attract billions of users to web3. Of course, just getting people to have on-chain wallets does not make them web3 users; there need to be sustainable systems that make engaging with on-chain features meaningful. The P2E mechanism is a step in that direction, but without robust loops for players to spend on-chain, there is a very high risk that Gameta players become net value extractors and not value adders. This project has a tremendous amount to prove if it ever hopes to turn its leading downloads into a leading business.

Joyride

Joyride is a web3 publishing platform for game creators backed by leading blockchain partners such as SuperLayer, Coinbase Ventures, Dapper Labs, Solana Ventures, OpenSea, and KuCoin Ventures. Optimized for the Unity ecosystem, Joyride allows game developers to build and launch blockchain-powered casual, esports, and social games on iOS and Android. These are all different apps and not part of a single app, like Arc8 (which we deconstructed previously).

Joyride’s technology includes NFTs, a fungible token economy, and blockchain wallet support, along with market-leading publishing and live operations capabilities. The company has already announced initial titles Solitaire Blitz and Trickshot Blitz, and the Tennis Champs Genesis NFT collection sold out in 30 seconds on its debut. Omar Siddiqui, The CEO of Joyride Games, says, “We see the broader market need for accessible, fun experiences large audiences can enjoy anywhere - that’s why we are building the casual game publishing platform for the web3 era. With investors and partners like KuCoin Ventures, Joyride has the long-term support and strategic backing to build for the long-term.”

Developer Services

Joyride provides the game and social features developers might need to take an entertaining core mechanic and make it viable as a full-featured, blockchain-based game. Developers can integrate, customize, and configure the Joyride SDK to avoid months of development work to launch their games at scale with token and NFT features.

Alongside these features, developers also get the proven tools they need to operate at scale without years of proprietary development and numerous software integrations. The feature and tool set that Joyride Games provides is robust and has a full live-ops package that would definitely help new developers save a lot of time.

Games

Though Joyride has taken a platform approach, it has launched two games — Solitaire Blitz and Trickshot Blitz — to showcase its capabilities. Two other first party titles — Carrom Blitz and Tennis Champs — are in beta phase currently.

Solitaire Blitz was the first game to be launched and has already garnered 1.3M downloads.

Solitaire Blitz downloads by country. Source: Data.ai

More than 90% of the downloads come from Bangladesh, India, and Philippines. Though the target region of Southeast Asia is similar to Gameta’s target audience, in the case of Joyride, it is much more concentrated in the top three countries.

Solitaire Blitz is in DappRadar’s top 10 list when it comes to UAWs, but the number has come down from a daily high of 64K to 10K where it sustained for most of October. Also, the Monthly Transaction Volume : UAW ratio stands at $2.5.

Similarly, Trickshot Blitz is a single-player version of pool in which players aim for the best score during their turns.

Trickshot Blitz was launched 2 weeks after Solitaire Blitz, peaked at a daily UAW of 88K, and is currently at 33K. There has been an uptick in its numbers since October 2022, and this growth is fueled by the company’s UA budget switching focus away from Solitaire Blitz to Trickshot Blitz. Here, the Monthly Transaction Volume : UAW ratio stands at $0.93, less than half that of Solitaire Blitz.

The future games slate above gives strong Miniclip vibes. Also, in order to best work with a tournament structure, these games usually have the following characteristics:

• Primarily skill-based
• Repeatable without getting boring
• Easy to learn but hard to master
• Use familiar mechanics
• Have enough scoring variation as to avoid ties on a leaderboard with multiple players
• Should be able to be played asynchronously
• Technically lightweight

These can be made by third-party developers once Joyride opens up its systems. However, there are RPG games like Legendary Heroes and Battle Champs further down the pipeline. This is an interesting strategy of targeting games with breadth as well as depth.

Roadmap

Joyride is focused on its platform approach with the goal of achieving scale. It aims to do so through two main steps:

• Onboard users by making the service available on multiple chains
• Onboard users by launching many new games

In terms of monetization features, there seem to be two paths:

• Enable staking to achieve token price stability
• Launch RPG games with deep monetization mechanics

Assets

NFTs

There aren’t any NFTs in Solitaire/Trickshot Blitz, but the Tennis Champs Genesis Collection contains 3,333 unique 3D animated video clips and PFPs that live on the Ethereum blockchain. When the Tennis Champs 3D mobile game launches, players will be able to access premium opportunities to play using their Genesis NFTs. These NFTs are identified by their urban dance moves, mythical racquets, flaming crowns, and the benefits they will provide in-game and across the Champs ecosystem.

These NFTs were launched in March 2022 and sold out within a day. To date, they amount to 1,000 ETH — not a huge business driver.

Tokens

Joyride allows games to operate across multiple blockchains, including Flow, Solana, and Ethereum. The robust features include bridging to support withdrawals to diverse consumer wallets as well as the ability to buy NFTs and engage with gameplay across the Joyride game network. The Joyride Wallet manages AML, KYC, and other regulatory issues for convenient and easy consumer onboarding. And, in the future, integrated analytics will allow developers to monitor and manage the economies of their games for optimal tuning and results.

Currently, Joyride uses the $RLY token in Solitaire Blitz and Trickshot Blitz. There have been no updates regarding Joyride’s own token, so unfortunately there’s not much to say!

Core Loop

Joyride’s core loop follows the Skillz model and is tournament-based. Players enter multiple types of skill-based tournaments for a cost. Players level up by playing games, which unlocks more tournaments with higher entry costs and higher prizes.

Tournament Types

Tournaments can be classified into two broad categories: contests and events.

Contests require an entry fee, and the same amount is distributed among the winners after Joyride takes its 10% to 20% cut. The entry cost can be an on- or off-chain currency. There are multiple types of contests based on the number of players participating and the entry costs.

Events, on the other hand, typically involve multiple players at the same time. One way that they differ from contests is that the reward is not dependent on the entry costs; it is fixed. Players need to pay an entry cost, but they can pay it multiple times to improve their scores.

Along with contests and events, there are many other features like Daily Rewards and Challenges with their own reward mechanisms that includes on-chain currencies. These rewards can be considered as the cost of acquisition since they don’t have an entry fee.

Conclusion

Joyride has seen some success with the games it has published. Its long-term vision appears platform-centric, and its initial success will hopefully motivate third-party developers to build on it.

Currently, Joyride’s focus is on achieving scale. However, compared to other on-chain hypercasual games, Joyride seems to be trending in a positive direction when it comes to its monetization metrics. The decision to use an existing token ($RLY) and not create a new one is also smart, as it will give the team time to figure out its own tokenomics, which have not been defined even after the launch of two games.

Going forward, Joyride will need to focus on value accrual to its Champs NFT series through self-published games like Tennis Champs and the other RPG titles, which would add depth to its monetization.

It’s fair to have skepticism around how well Joyride itself can develop successful titles across multiple genres, but since the platform is the main product, its success will primarily depend on how much value it adds to developers. The skill-based tournament model only works for a limited set of games, and if Joyride wants to see success, it needs to create tools for a broader set of monetization models that can be implemented in different genres.

Benji Bananas

Benji Bananas is a physics-based mobile game launched in 2013 as a casual arcade side-scrolling title similar to Jetpack Joyride. Since its launch, it has continued to have a strong userbase, amassing over 50M downloads across the Apple App Store and Google Play Store with a DAU of 80K at the time of writing. It was developed by Animoca Brands, and the project’s current goal is to connect the Benji Bananas playerbase with the possibilities of web3 through tokens and NFTs. It has achieved this by rewarding players who hold its Membership Pass NFT with native tokens based on their leaderboard score in the game. These native tokens can be exchanged for the APE token through a collaboration with BAYC. This is an interesting implementation of P2E where only the NFT holders are rewarded with on-chain rewards while the F2P players can continue playing the old version of the game.

Assets

PRIMATE (Token)

PRIMATE is at the core of the play-to-earn system being added to Benji Bananas. Players will be able to earn PRIMATE tokens when playing the game, which will be swappable for other fungible tokens in the Animoca Brands ecosystem (including SAND, REVV, TOWER, GMEE, QUIDD, PROS, and BONDLY). The main PRIMATE pairing will be with ApeCoin (APE) — the ERC-20 token issued by the ApeCoin DAO and used by the ecosystems created by Yuga Labs and the Bored Ape Yacht Club.

Membership Pass (NFT)

The Benji Bananas Membership Pass is an ERC-1155 token on Ethereum that is purchasable exclusively using APE. During the first sale event, a total of 5K 1st Edition Membership Passes were made available for purchase. A Membership Pass is required to participate in the Benji Bananas P2E ecosystem and receive any PRIMATE earned through play. Only Membership Pass holders are eligible to receive PRIMATE by playing Benji Bananas. Players can hold more than one pass (there are reward multipliers attached to it).

APE coins received from the sales of the Membership Pass are used to seed the liquidity pool for APE/PRIMATE. The amount of APE allocation decreases over time with each sale, although the total amount of Membership Passes increases. The result is that the earliest adopters and most regular players will enjoy the highest play-to-earn yield.

The PRIMATE earnings are based on the players’ leaderboard scores. The top performers are defined based on four parameters with different weights to each of them:

• Average Bananas/Game (40%) — the average number of bananas collected per game during the event phase
• Average Distance/Game (40%) — the average distance achieved per game during the event phase
• World High Score (10%) — the highest score players achieved in a single game during the event phase
• Distance High Score (10%) — the furthest distance players achieved in a single game during the event phase

Players owning multiple Membership Passes also get a multiplier on their earnings.

• Players holding 1x Benji Bananas Membership Pass and at least 5K $PRIMATE will receive a 1.1x multiplier on $PRIMATE rewards earned during the event phase.
• Players holding 3x Benji Bananas Membership Passes and at least 10K $PRIMATE will receive a 1.2x multiplier on $PRIMATE rewards earned during the event phase.
• Players holding 5x Benji Bananas Membership Passes and at least 20K $PRIMATE will receive a 1.5x multiplier on $PRIMATE rewards earned during the event phase.

On the surface, this is an initially sustainable P2E approach, with the proceeds from the sale of the Membership Pass being distributed among the engaged players. However, with a limited amount of passes being sold, it does not appear to be scalable.

Gameplay

Benji Bananas is a physics-based action platformer/runner in which players help Benji (the monkey) swing from vine to vine through the jungle while collecting fruits and similar items to unlock upgrades. Upgrades include cosmetic items such as new skins, as well as play upgrades such as abilities and power-ups, including a jetpack, speed boost, eagle ride, and others. It’s very similar to Jetpack Joyride and its score of clones that have appeared. It’s not an AAA game by any standard and seems like an experiment to try out web3 implementation.

Eligibility for On-chain Rewards

Though Benji Bananas is a free game, not all players are eligible to earn tokens. Players have to do the following actions in order to be able to earn tokens:

• Hold Benji Bananas Membership Pass(es)
• Link their Apple ID or Google Play account to their wallet that contains the Pass
• Complete the Blockpass KYC verification process

This is a lot of friction for players to come on-chain, which, combined with the limited number of Membership Passes sold, will undoubtedly affect the game’s scale.

Tokenomics

The total supply of PRIMATE is 2.06B tokens, all of which will be minted at once. All of the tokens will be minted directly to the four allocations listed below (and the tokens in the Reserve Treasury are moved to the other allocations as required).

• Play-to-Earn: 235M
  • When a Benji Bananas Membership Pass sale is in effect, an equivalent amount of PRIMATE is moved from the Reserve Treasury to the Liquidity Allocation, and an equivalent amount is sent to the Play-to-Earn Allocation. It is this Play-to-Earn Allocation of PRIMATE that will be earned by players, with this pool increasing with every primary sale of Benji Bananas Membership Passes.
• Liquidity: 625M
  • An allocation of PRIMATE is made available for each Benji Bananas Membership Pass sale and Play-to-Earn event cycle. Event cycles are the time between the current Membership Pass sale and the next one. During this period there will be Earning Events to allow Membership Pass holders to earn PRIMATE tokens.
  • Membership Passes are purchased using APE, and the APE tokens received in this manner serve as the foundation for the APE/PRIMATE pool on SushiSwap. With each sale, an equivalent amount of PRIMATE is moved from the Reserve Treasury to the Liquidity Allocation. This Liquidity Allocation is then used to set up a pair or add liquidity after the initial creation of the pool.
• Treasury: 1B
  • The Reserve Treasury is where all of the PRIMATE supply is held until it is needed for liquidity pool setup or for the distribution of play-to-earn rewards. After the initial minting of PRIMATE, funds are never added back to the Reserve Treasury.
• Marketing: 200M
  • An allocation of PRIMATE is made available for marketing and community-building events and activities. This allocation will be used to reach and engage the active community, broaden the exposure of Benji Bananas and the PRIMATE token, and grow organic engagement and exposure.

In a nutshell, the revenue generated through the sale of the Membership Pass is distributed back to the players. This is sustainable as a model but does very little for scale, especially if the number of Membership Passes is limited to 5K.

One suggestion here would be to treat this as a monthly battle pass and distribute rewards to holders of that month’s battle pass. Along with this, Benji Bananas would need to share part of the revenue from ads and IAPs so that it feels like the rewards are meaningful. Otherwise, for most players, it will be a negative sum game (even though as a system it’s a zero sum game.)

Metrics

Just like Gameta and Joyride, most of the downloads come from SEA, with Philippines, India, Indonesia, and Thailand accounting for almost 90%.

According to Data.ai, the September MAU for Benji Bananas was 900K.

And in late-October, monthly UAWs were 432K, according to DappRadar.

There are only 5K Membership Passes available, which 2,845 people own. Also, according to the list of requirements, to be eligible to earn PRIMATE tokens, players would need to hold the pass, link their account, and complete KYC. This definitely affects the scale of the project.

According to the Benji Bananas website, the top 100 leaderboard currently has only 65 players. So, it‘s a fair assumption that 65 players are actively engaged in the on-chain gameplay of Benji Bananas.

Even if we ignore the MAUs for the game (900K), we have 432K on-chain players of which only 65 are actively engaging with the on-chain version of the game. That is 0.015% of the on-chain userbase. If accurate, this means that although Benji Bananas boasts a very high UAW number, the percentage of wallets actually engaged with the on-chain version of the game is negligible (because of a limited number of passes, onboarding frictions, and poor in-app instructions).

Conclusion

As we mentioned, Benji Bananas is not an AAA mobile game by any standards. Although Benji Bananas has been able to convert UAWs from the existing off-chain playerbase, these UAWs cannot be treated as on-chain players, as very few of them engage in on-chain activities. The tokenomics is sustainable, but due to the limited quantity of Membership Pass NFTs, it’s ultimately not scalable. This is not a model for game devs to emulate, as it seems to be one of the many experiments Animoca Brands is doing to increase players on-chain.

Final Insights and Conclusions

The hypercasual genre in web3 is trying to find its way to scalability and sustainability. Currently, the leading teams appear to be trying to achieve scale by targeting players in the SEA region where CPIs are low and earnings can be more meaningful. However, compared to the hypercasual genre on web2, its state in web3 is still in its infancy.

Games

Looking at the above three projects, the games do not inspire confidence in their quality. In order to attract a new set of users or convert existing web2 users over to web3, the quality of the games will matter. There also seems to be very little implementation of the best practices from web2 like smooth onboarding and deeper progression mechanics to improve retention. Since these games will primarily be monetized through ads, conquering retention should be the main focus, which the current games seem to ignore.

The P2E Model

Early web3 hypercasual games seem to lean toward the P2E model, which completely ignores the major lessons from blockchain gaming’s short history. If games attract players just through the incentive of earning, they will become net value extractors and not value creators. Yes, there are exceptions — like the tournament model or how Benji Bananas funds short-term earnings via its NFT sales — but these methods work on only a small selection of games and aren’t scalable.

Platform Policies

We’d be remiss to not note that Apple recently announced new App Store policies around NFTs, and they definitely pose a threat to the market. The rules significantly reduce the scope of possible solutions that can be tested and implemented. NFTs as an entry criteria for unique features are no longer possible (unless they are sold on Apple after paying the 30% cut).

Final Thoughts

Even though web3 hypercasual still pales in comparison to its web2 predecessor, it’s encouraging to see the high levels of UAWs. However, the Transactions : UAW ratio does not paint a very optimistic picture of monetization, and it seems like free registrations played an outsized role in the number of on-chain wallets. This is similar to Google+ — everyone had an account but very few interacted with it.

Unfortunately, none of the games we looked at today — despite their leading UAW numbers — are truly future-looking. They’re not (yet) high quality, don’t piece together compelling economics, aren’t very scalable, and largely should not be replicated by other game developers. It also makes us question whether hypercasual really has a place in web3 games. After all, hypercasual games typically attract low spenders (and heavily monetize through ads), which is the antithesis of what web3 gaming stands for so far. Web3 gaming has been much more about economic alignment (and often economic buy-in), and so far it’s unclear if or how hypercasual would adapt to fit that mold. For now, we expect that web3 hypercasual games (despite their download numbers) won’t become leading businesses, and essentially all hypercasual teams should stick to web2 for the foreseeable future. Perhaps there are ways to lightly sprinkle in web3 elements — essentially operate as a web2.5 game — but what those elements are remains unclear, and Apple as a storefront isn’t particularly friendly to NFTs and tokens. We’ll of course keep track of ongoing developments and are very much open to changing our minds, but we’ll need to see tremendous innovations and business model improvements for us to do so.

A big thanks to Karan Gaikwad for writing this deconstruction. If Naavik can be of help as you build or fund games, please reach out.