#1: The Largest Hack in Crypto History
Despite the Ronin hack being the biggest crypto theft in history (so far), Sky Mavis has pushed forward. As it’s uncertain if the funds will ever be recovered (or how much), Sky Mavis has instead raised funds to help reimburse users affected by the hack. The amount raised is only $150 million, but combined with funds from the community and team treasuries it will be possible to mitigate the damage done. It’s unclear what the terms of the deal were (although likely extra beneficial to investors given the circumstances), but the raise was led by Binance which runs the popular Binance Smart Chain. Other industry heavyweights like Animoca Brands, a16z, Dialectic, and Paradigm also joined the round. Binance is also supporting Ronin by providing ETH withdrawals and deposits to Axie Infinity players. This could be a hint of a future collaboration to come.
As a follow up to the deal announcement, Sky Mavis is also conducting a number of security improvements to prevent repeat trouble. First, the team is increasing the number of Ronin validator nodes to 21 over the next three months, and some of the new validators will include the investors (like Animoca Brands and Dialectic). The network bridge itself will also go through a full security audit and be upgraded over several weeks to address any other technical flaws or monitoring issues.
The timing is also important as Sky Mavis is looking to reassert Axie Infinity as the flagship P2E game through the long-awaited launch of Axie Infinity: Origin. After a week of events showing off Axie Infinity: Origin content and engaging with the community, the team successfully released the Axie Infinity: Origin Alpha on April 7th. It’s been stressed many times now that this Alpha is not meant to be a final representation of the game but rather a step in working with the community to establish the game’s next generation. The reception to the Alpha is not only likely to impact AXS and SLP prices, but it will impact the blockchain gaming community at large. Hack aside, everyone will be curious to know how Origin innovates and performs.
To listen to a great conversation that digs into all the nuance around the hack, check out our Crypto Corner episode specifically dedicated to this topic.
#2: Ghost Recon: Breakpoint is Over, Despite NFTs
This week Ubisoft announced that it will no longer supply updates to Ghost Recon: Breakpoint, which initially underperformed expectations, and all efforts since failed to turn the game around. This is a pivotal moment for Ubisoft’s NFT Digits project since Breakpoint was the only game it had released NFTs for. The game itself will still remain playable for the time being with the NFT integration persisting, but there won’t be much of a point to playing for much longer.
Part of the implicit promise of NFT ownership is the idea of possessing the NFT even after a game itself is sunset. That should continue to be the case here, but it’s hard to imagine a reason anyone would want to buy / own these NFTs with diminished utility. Of course, there wasn’t much demand to begin with; adding NFTs to a struggling late-stage game was not going to magically turn the ship around.
It is disappointing to see the announcement not be paired with news about supporting NFTs in another Tom Clancy game or even the inevitable next Ghost Recon game. The team did end the announcement with an indication that they plan to release NFTs for other games, but the NFT team has been rather silent lately. The Ubisoft Quartz platform that the Digits are released on is still kicking and will likely be used for another experiment in the future, but hopefully the team will be smarter about how to roll new projects out. It’s also possible that the platform will never gain meaningful traction since forcing NFTs into games that don’t benefit from them can be a tough sell, plus the fact that Ubisoft’s restrictions remove much of the benefits that come with owning most NFTs. We’ll watch and see what Ubisoft does next, as well as the other big publishers that are thinking through similar initiatives.
- The Sunflower Land open beta, the relaunch of what was Sunflower Farmers, started on April 7th. Link
- Ember Sword opened its tech test access for NFT holders on April 8th. Link
- Sorare is adding American Major League Soccer NFTs to its fantasy trading card game. Link
- My Neighbor Alice, a multiplayer farming game, announced its 2022 roadmap. Link
- Ledger, the maker of popular hardware wallets, is partnering with The Sandbox for a gamified educational initiative. Link
- DeFi Kingdoms successfully launched its Crystalvale expansion on an Avalanche subnet. Link
- Imperium Empires, a space metaverse game, released its pre-alpha game demo. Link
- MOBOX ran an alpha test for its upcoming MOMOverse on April 6th. Link
- Karmaverse Zombie, a match-3 game in the “Karmaverse,” released on April 6th. Link
- Nakamoto Games released a single player version of Naka Strike on April 8th. Link
- Battlebound, makers of web3 metaverse game Evaverse, raised $4.8 million in a seed round led by Andreessen Horowitz. Link
- Ready Player DAO raised $10.2 million at a valuation of $150 million led by The Chernin Group. Link
- Solana-based gaming marketplace Fractal raised $35 million in a funding round led by Paradigm and Multicoin Capital. Link
- Drunk Robots launched the IDO for its METAL token on April 7th. Link
- Community Gaming, a web3 community organizer, raised $16 million in an oversubscribed Series A led by SoftBank via its SB Opportunity Fund. Link
- Yield Guild Games introduced a subDAO specifically for Splinterlands. Link
- MetaMask announced that users can now buy cryptocurrencies on Apple Pay via an integration with SendWyre. Link
- The UK government announced plans to embrace a wide range of cryptoasset technologies, including stablecoins and NFTs. Link
- OpenSea partnered with MoonPay to allow NFT purchases with credit/debit cards and Apple Pay. OpenSea also just started listing Solana NFTs. Link
- Binance’s BNB Chain announced that it’ll launch sidechains to help scale the network. Link
- Polygon announced it’s zero-knowledge identity solution, Polygon ID. Link
Notable Market Moves
- Most of the crypto market saw a bit of a dip around April 5th. The exception was STEPN’s GMT, which stayed positive based on the hype from early earners. GMT shows many ponzinomic elements that put into question its long-term sustainability, but it may hold up ok in the interim. After all, earning GMT in the game requires Level 30 sneaker NFTs, which many players are still acquiring, and GMT is also required for higher level gem upgrades.
- Axie Infinity’s governance token, AXS, hasn’t experienced huge movements lately (up or down), which is a bit surprising given the hack. However, while the hack is bad, AXS wasn’t comprimised, and the Origin Alpha release may drive more optimism in the near-term. Keep in mind, the new Sky Mavis funding and Origin release are both positives, but neither solve Axie Infinity’s core sustainability issues.
- WAX (#9) also managed to switch places with Render Token (#10) this week. Both were down about the same and hold nearly identical (non-diluted) market caps of $596M, but the continued growth of Blockchain Brawlers on WAX probably gave it a slight advantage this week. Of course, without some more significant releases of interest WAX may not be able to hold its current spot for long.
- As always, who knows what will happen over the next week, but all of the building going on points to clear long-term growth and inevitable churn in the top 10 list.
Content Worth Consuming
- The way forward for NFT-based game economies - “Most play-to-earn games to date have been financed by the inflow of new players which has proven to be unsustainable as the dual token system collapses once new player demand & growth slows and players/investors mostly sell the tokens once they have earned them. There are countless examples of unsustainable game economies which have collapsed and have failed the participants in the ecosystems that had asymmetric information and bought in too late. As a general rule in the long run, sustainable economies cannot pay out more value in rewards to players than the value that is brought into the game from players and external parties.” Link
- Understanding Guilds and Economy (Misoblog) - “Instead of blockchain-gaming guilds being just extractors and leveraging the burden of sustaining the economy on the entire community, Solarbots-guilds can be seen as the supply to fuel the entire game. Their potential profit don’t come from extracting yield tokens, but directly incentivise their burn and purchase from guilds by passing marketplace fees and asset production to them. This massively shifts the dynamic as they no longer compete with the community for the same assets which are created infinitely by a smart contract. Instead, it creates a symbiotic relationship in which the community supplies guilds with the resources required to then supply the community with goods they require in their journey.” Link
- A Framework for Analyzing L1s (Jump Crypto) - “The properties outlined above provide a taxonomy for evaluating L1s but do not really offer a way to effectively assess the relative merits of different networks. We introduce a set of key tradeoffs that discuss the relationships between these various terms. Framing this analysis in terms of tradeoffs provides a clear approach to understanding which chains could best serve a particular use case.” Link
- Web 3 & The Curse of Solutionism (Jason Choi) - “Before putting together your pitch deck to raise at $100M pre-money + pre-product for the 30th self-rebasing totally-not-a-ponzi pseudo-dollar, block out a weekend to reach out to 100 potential users. Interview all of them. Don’t try to convince them to use your product; instead, listen to what they want to use. Many first-time founders don't have a first-principles framework around this and resort to reason by analogy - i.e. by forking protocols that have achieved product market fit.” Link
- Interoperability in the web 3 gaming "metaverse" (Evolution of Web3 & NFT Gaming) - “The biggest challenge to interoperability is the lack of incentive to actually integrate another IP’s NFT into your ecosystem. Everyone wants to create a NFT that is used across the ‘metaverse’ (this is one of the go-to pitches of many projects). Very few people want to actually integrate someone elses NFT. Part of the reason is technical (see below - basically it’s easier to work with a common NFT standard than to accommodate a new standard). Part of the reason is also financial - usually both primary and secondary revenue flows to the project selling the NFT rather than the project integrating it. Why would a project give up $x million in potential revenue and use another project’s NFTs?” Link
- How Yuga Labs NFTs became a dominant force with an $8.1B market cap (DappRadar) - “Before acquiring the IP rights of CryptoPunks and Meebits, which Larva Labs formerly owned, Yuga Labs was in control of one of the most influential names in the entire crypto space: Bored Ape Yacht Club (BAYC). The BAYC consists of 10,000 NFTs synonymous with the NFT avatar movement. The project was widely embraced by the NFT community and was quickly sought out by renowned NFT collectors. Most importantly by Hollywood, sports, and music celebrities. The high celebrity involvement gives the collection a sense of exclusivity similar to luxury brands in the physical world.” Link
- Chatting with Ryan Wyatt, CEO of Polygon Studios (The Crypto Arcade by Polygon Studios) - “Eldar and Dan sat down with Ryan Wyatt, CEO of Polygon Studios for a more relaxed chat about video games and the games we grew up with. Come for the Ocarina of Time nostalgia, stay for the Halo throwbacks.” Link
- Governance in Web 3 Games (DeFi Vader) - “We shouldn’t reinvent the wheel - we can’t directly vote for what the central banks should do and we probably shouldn’t. Having direct voting is extremely dangerous. Having some sort of panel just like in real life could work. Real-life governance is not always fun but we have to protect real-life assets. We need a similar panel or council in the virtual world. EVE Online has a council method, similar to Illuvium. There are 10 council members who have a tenure of 1 year and they get paid. They represent the community, aggregate data, and share it with the devs. It’s up to the devs to listen to it or not. There are different models where council members have the ultimate voting power, representing their electors. This creates the problem that council members can easily be corrupted - on-chain transactions can be tracked but what if the corrupted member is paid off-chain.” Link