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#1: Sky Mavis Expands Ronin

Sky Mavis, the developer of Axie Infinity, made some important announcements this week regarding their Ronin network, an Ethereum sidechain designed to help its games scale. The first announcement was that Ronin had transitioned to Delegated Proof-of-Stake (DPoS), which is a more democratic form of Proof-of-Stake. This move is part of Sky Mavis' goal to progressively decentralize control of Ronin, especially after the previous bridge hack. Users can start staking $RON, the Ronin network token, on March 30th and will begin receiving rewards on April 12th.

Those who wish to help decentralize the Ronin network can now become validators, which requires a minimum of 250,000 $RON (approximately $262,500 as of writing). This investment comes with a risk as rewards are not guaranteed to hold long-term value, but risk is essential for staking to be an effective form of trust. However, this opportunity may not be significant if Ronin continues to be solely an Axie Infinity network. To address this, Sky Mavis has added five new game studios to the Ronin blockchain, including Directive Games, Bali Games, Bowled.io, Tribes Studio, and SkyVu.

Directive Games has been around since 2014 and developed VR and AR games like Ready Player One: Oasis, The Machines AR, and Super Kaiju. The studio is now developing upcoming web3 4x game Civitas and its staff includes veteran developers from studios like CCP Games, LucasArts, Square Enix, Ubisoft, and Tencent. The game being developed for Ronin is The Machines Arena, a top-down hero shooter that just launched in closed beta on the Epic Games Store. The closed beta currently requires some improvement, but it already has some promising features such as a decent tutorial, a PvP mode (although queue times can be lengthy), and a PvE roguelike mode which is similar in design to Supergiant’s roguelike hit Hades. 

Directive Games plans to launch the game with a primary focus on gameplay and gradually introduce community-oriented web3 features later, even though the game will be available on the blockchain-friendly Epic Games Store. Although the initial lack of web3 features may reduce interest, they hope that the Axie community will serve as a good starting player base. With the lack of solutions in the space and the emphasis on the game-first approach, a slower, community-driven approach seems to be a wise choice given Axie Infinity's rapid entry into the P2E space and the obstacles it encountered.

Tribes Studio also has team members with game development experience, including stints at studios like King, Scopely, Atari, and EA. The game being built on Ronin will be Tribesters: Island of Solas, a social-focused open-world MMO. Tribes is also looking to leverage the community Sky Mavis has built by launching a community engagement platform to incorporate player involvement into the title’s development roadmap. This involvement is less about incorporating the community into the game’s design but rather improving NPC lore and soliciting feedback regarding the art style. Unlike Directive Games, Tribes Studio doesn’t have much to show or detail about its game quite yet.

Bali Games is a South Korean developer composed of team members who worked on the successful Anipang series. The studio also has successful history with IPs like Disney Pop, Snoopy Puzzle, and BT21. Bali’s game will actually make use of Axie Infinity IP, unlike the others. The company is developing a Match 3 mobile puzzle game called Axie Champions: Match 3 League. The talent at Bali Games means the product may surpass the quality of other games in the Axie Builders Program, and Bali intends to expand Axie lore and involve the game’s community as well. 

Match 3 isn’t the most cutting-edge genre. But given how common it is to mash the genre with every IP under the sun, it only seems appropriate for Axie to have one as well. That being said, user acquisition for Match 3 mobile games can be prohibitively expensive. The game will have some interest from the Axie community, but it’s hard to imagine a large percentage of Axie players spending real money on it, and there’s even less of a chance that the mainstream players might get involved. Bali has also stated that it will incorporate Axie NFTs in some fashion, although it’s unclear how that might work. Axie Champions has a beta release scheduled for July 2023.

Bowled.io is a studio out of India that develops a social sports game platform based around cricket, but it plans to expand to other sports like basketball and soccer. With India now a growing target for the game industry and cricket the most popular sport in the country, Sky Mavis is hoping to tap into this audience for Ronin growth. The game platform currently isn’t web3, but Bowled is partnering with Sky Mavis to expand into blockchain technologies like NFTs. There’s no indication Axie IP will be involved, but there’s certainly an opportunity for unique crossover content.

Los Angeles-based SkyVu is the game and animation studio behind the popular Battle Bears franchise on mobile and PC. Its newest game in the franchise, Battle Bears Heroes, will use Ronin, although we don’t yet have details on what web3 elements SkyVu plans to incorporate. The game is shaping up to be a mobile top-down MOBA similar in style to Brawl Stars. There’s currently a beta signup list for community play testing. 

It is surprising that Sky Mavis took this long to pull games over to Ronin given the aggressive nature of other blockchains like Polygon, Immutable, and Avalanche in both financial and technical assistance. Sky Mavis had a strong position initially with Axie Infinity's success, but after Axie's economic downturn and the Ronin bridge hack, it seemed indecisive on next moves. At first, there was a slow and clunky push to expand the ecosystem with Axie IP through the builders program, but that resulted in little outside of Defenders of Lunacian Land, leaving Sky Mavis falling behind. However, with the realization that the Ronin chain cannot survive on fan-made games alone, this next step helps establish the chain as more than just Axie. 

Sky Mavis' main selling point to the participating game studios is likely the large "install base" of Axie Infinity, which boasts more than 400,000 daily active users, that these new games can tap into. The broad range of genres, platforms, IP integration, and development experience of the five new studios they've brought on board suggests that Sky Mavis is taking a broad approach in their effort to strengthen Ronin as a game chain. Sky Mavis has mentioned having a decent war chest from Axie's initial success and a clear interest in making Ronin more viable as a game chain after the DPoS shift, so we can expect more announcements of games being developed for Ronin later this year.

We’re eager to see how the Axie Infinity IP and tokens like $SLP, $AXS and $RON will be incorporated into these new games and end up working in Sky Mavis’ favor. However, since the roadmap for these games sounds quite scattered, it may take some time before we can determine if Sky Mavis’ approach here is a viable one. While The Machines Arena is in closed beta and Axie Champions is going into beta this summer, many of the other web3 elements in these partnerships remain ambiguous. This strategy depends on current Axie players expanding to other games, as well as these new games piquing interest in Ronin as a platform. We also recommend listening to Naavik’s recent interview with Kathleen Osgood, Director of Business Development at Sky Mavis, for further insights into the Ronin expansion and the company’s broader strategy. 

#2: Champions Re-Ascends

One of the quirkier aspects of web3 games compared to traditional ones is the focus on whitepapers, now a hallmark of most modern crypto projects, and the more open, community-integrated development process that accompanies these initiatives. Generally, game developers don’t publicly release design documents or other crucial internal information outside of curated press releases, interviews, and select gameplay reveals. One major reason for that is that in-development projects are not static; games can change drastically throughout this process and studios often do not want to promise or disclose elements of the game they may not ultimately deliver in the final product.

Developing web3 games can be even more challenging due to the novelty of blockchain technology and open economic design that is often the focus of whitepapers. However, some developers, such as Plai Labs (formerly part of Jam City), understand this and have released a heavily revised version 2 of the Champions Ascension whitepaper. The company is calling it a "living document" because it will be continually updated based on new learnings. Instead of trying to identify all the specific minor changes in this extensive document, it’s worth revisiting the game’s overall design and economy as presented in the whitepaper v2 with a fresh perspective.

With the shift away from play-to-earn (P2E) in games, it's a good idea to focus on the play-to-own and free-to-play aspects. The game is an MMORPG that heavily relies on Champion NFTs for battling in various PvP and PvE modes. However, these NFTs are not free. To ensure that the game remains free-to-play to some extent, Plai Labs made the player avatar character, called "Maestro," free to use and participate in some parts of the game without requiring a Champion NFT.

Plai Labs aims to make the game accessible to F2P players by allowing them to potentially earn a Champion through the Battle Pass system or rent/borrow one from another player in exchange for a portion of resources earned. However, this approach still has elements of P2E. To address some of the token-related issues associated with P2E, Plai Labs has made the currency type resources in the game primarily off-chain and instead focused on NFTs.

The game has a complex resource and economy system, with three main currency types: Gold, Bone, and Essence. Gold is the most important currency and can be obtained through tournaments or by purchasing it through regulatory-compliant on and off ramps provided by Forte, using fiat or cryptocurrency. However, obtaining Gold may be fairly limited, so Plai Labs is also offering free Gold to the owners of limited Prime Eternals genesis NFTs, as well as purchase discounts.

Gold is necessary for actions that mint or modify NFTs, such as crafting gear, breeding Champions, resurrecting dead Champions, and “upcycling” unneeded gear. This approach is effective in reducing the play-to-earn elements by ensuring that players have to contribute value to the system before they can extract value. Axie Infinity attempted something similar with AXS tokens, but Plai Labs' approach of using fiat and cryptocurrency to off-chain currency is a more strategic move than using a volatile governance token.

Bone and Essence are two types of resources that can be earned in the game. Bone is obtained by playing PvE modes, while Essence is earned by playing PvP modes. Both resources are tied to Champion NFTs, and each Champion has a daily earning limit determined by their level, which can be upgraded. The circular nature of earning and leveling up with Essence can be a bit confusing, but players can earn Essence by playing mini-games and harvesting it from dead Champion NFTs.

Essence is a critical resource in the game as it is used in breeding and crafting, along with Gold. One interesting feature of Essence is that it can be minted into Essence Crystal NFTs for Gold, making the resource tradable. This provides another layer of value and a way to gate earning extraction.

Since it costs Gold to mint to NFTs, the game also provides some bonuses when using Essence Crystal NFTs instead of the off-chain Essence, which include better control over which stats increase when your Champion levels up. There are also some crafting recipes requiring specific Essence Crystals, which increases the overall Gold cost of crafting. It’s worth noting that Champions themselves have specific Essence types, which forms the basis of the game’s rock-paper-scissors combat balance while also determining the kind of crystals that can be minted. 

Bone is a resource that can be more easily earned through PvE activities and has a more limited use in the game. Its primary use is in repairing and crafting Gear, which requires a cost in Gold. Unlike Essence, there is no NFT or on-chain version of Bone. This is a smart approach as PvE earning can be more problematic for open economies.

Since the game revolves heavily around Champion NFTs and allows players to breed them, it's commendable that Plai Labs has implemented some measures to control the supply by introducing elements related to Champion death. Permanent death for character NFTs was originally promised by CryptoRaiders, but it proved challenging to implement due to the strong reluctance around losing NFTs. However, the developers found a way to incorporate it in their recent CyberStadium project.

Champions Ascension assures players that any mode or activity that could result in Champion NFTs dying will be clearly marked with known risks and rewards before players participate, although details beyond that are scarce. It's also stated that the risk of a Champion NFT dying will be tied in some manner to the supply of these NFTs, which is a prudent approach to regulating supply and preventing the type of uncontrollable breeding that plagued Axie Infinity.

When a Champion NFT dies, it transforms into a Corpse NFT, and players have a limited time to resurrect it using a special resource called "Writs of Ascension." These resources are primarily gained from tournaments along with some Gold. If a player chooses not to resurrect the Champion NFT, they can harvest some Bone and Essence from the Corpse NFT, which burns the NFT. However, we anticipate that the game will face similar issues around loss aversion that CryptoRaiders experienced, and the rewards for risking death will need to be substantial enough to compensate for potentially expensive NFTs being burned.

To control the supply of Gear NFTs, the developers of Champions Ascension have introduced a new way to burn them through potential "upcycling.” The system works by allowing players to trade in multiple similar Gear NFTs along with some Gold for a new piece of gear with random traits. This essentially acts as a sink for unnecessary duplicate Gear, especially from dead Champions, with a bit of a gamble attached. To incentivize the use of this burn mechanism, certain Gear traits can only be attained using this system and not craftable on their own.

Both this system and Gear crafting, in general, are likely to be a strong Gold sink as Gear may be a faster way of improving the power of Champions than simply leveling up. The NFT supply sink for Gear is expected to see more use than Champion death, and it is hoped that the Gold costs are not set too high, making it a more sustainable use for Gold than breeding, as there isn’t truly an equivalent system for Champions.

Champions can be upgraded through a tier system which is directly related to breeding. There are five different tiers of Champions: Challengers (the lowest), Gladiators, Eternals, Elemental Eternals, and Prime Eternals (the highest). The Prime Eternals NFTs were originally sold in the genesis NFT sale and represent the investors in the game, both in terms of cost (current floor is $685) and benefits.

Elemental Eternals were given away in a tiered free mint (current floor is $33) with a capped 10,000 supply. (No more will be minted.) The remaining three lower tiers are not available yet and represent the core tiers of Champion that will be played in the game. Only the lowest tier, Challengers, are unable to breed, but players can upgrade or "ascend" to Gladiator and Eternal tiers when they reach the level cap for a tier.

Champions Ascension uses a typical breed count system that limits how many times a given NFT can reproduce, but interestingly upgrading to the next tier will reset the breed count. However considering Challengers (Tier 1) can’t breed and Champion NFTs can’t ascend higher than Eternals (Tier 3), this essentially means a player can only really reset the breed count once when going from Gladiators to Eternals (Tier 2 to Tier 3). Ascending tiers has a function other than just for breeding, as not only does it result in upgraded stats and higher levels, but it also unlocks new features that require the higher-tier Champions to access.

There’s a lot more detail in the updated whitepaper, including some interesting details around land and “partner” benefits for Prime Eternals holders. In general, the economy design is a good improvement on past unsustainable play-to-earn designs. The decision to keep things off-chain and restrict minting through the use of Gold should help prevent excessive extraction of value and establish minimum pricing for NFTs. However, it is unclear whether the Gold costs will remain fixed or fluctuate based on other factors, as no specific figures have been provided.

The breeding system is similar to Axie Infinity and could benefit from additional controls related to supply, rather than relying solely on the death system. Although there is a Gold cost associated with breeding, if this cost is fixed, we expect the price for lower tier Champion NFTs to quickly reach this Gold cost as a floor. However, this could result in a more affordable entry point for new players. In contrast to Axie Infinity, we hope to see more economic objectives that will help sustain the economy.

We expect that not offering a free Champion NFT for F2P players to use could be problematic and require adjustment, since even inexpensive NFTs are still more expensive than a free one. It may be beneficial to provide a free starter Champion that is off-chain but can be minted after upgrading to a certain level through some of the Gold-gated systems, with an additional Gold cost for minting. This would enable F2P players to engage in all potential gameplay systems over time while also preventing extractive bot behavior without any spending.

Plai Labs still needs to flesh out more details if we’re to truly evaluate the sustainability of the game’s economy, but the systems provided so far shed some important light on the current interdependencies. As with most games, however, the long-term success will ultimately be determined by Champions Ascension’s fun factor, Plai Labs’ marketing success, and how well the game retains players. The pre-alpha is now available to play, no wallet required, so to get an even better sense of the game we recommend trying it for yourself.  

Upcoming Game Announcements

• Ember Sword announced open registration for an upcoming open alpha. (Link)
• Blocklords announced a partnership with Polygon Labs and a switch to Polygon from Immutable. (Link)
• Phantom Galaxies announced an upcoming closed beta for 'Zorran's Favour' NFT holders. (Link)
• Gunzilla Games launched GUNZ, an economy platform fully built on an Avalanche Subnet that will be used for its game Off The Grid. (Link)
• Wildcard announced a genesis NFT mint for April 20th. (Link)
• Echoes of Empire announced a playtest for April 19th through April 24th for NFT holders. (Link)
• WAGMI Defense, a deck-building auto-battler, opened for pre-registration. (Link)
• StarGarden, an auto-battler from Project Eluune, opened pre-registrations for early access. (Link)
• Unioverse announced a playable alpha for its game Proving Grounds on April 26th. (Link)
• Hash Rush released a development update leading up to its early access. (Link)
• Nyan Heroes released a development update and GDC art showcase. (Link)
• MonkeyLeague announced a 14-day Community MonkeyChallenge Competition with $10K $MBS tokens available in prizes. (Link)
• Paradise Tycoon released details on its upcoming Passport NFT. (Link)
• Legends of Elumia launched a public game build. (Link)
• Polygon Labs announced a partnership with Feature to work on a new racing franchise dubbed Lollipop from David Ayer, the creator of The Fast and the Furious. (Link)
• Project Red, a GTA-style MMO, released a whitepaper. (Link)
• Mundo, an MMORPG, launched a V1 alpha demo. (Link)

Live Game Announcements

• MagicCraft, a web3 MOBA, launched on mobile. (Link)
• Arc8 announced details on Season 8 and a series of upgrades and partnerships. (Link)
• The Sandbox announced an April festival with a 1M $SAND reward pool. (Link)
• Synergy of Serra announced its first card expansion set. (Link)
• Mobox released details for version 2.0 plans. (Link)

Funding Announcements

• RACA, formerly known as Radio Caca, raised $16M from DWF Labs. (Link)
• Social Future, a web3 AI driven metaverse, raised $6M in an early stage round. (Link)

Ecosystem Updates

• Ultra, a web3 game distribution platform, announced it goes live on April 25th. (Link)
• OpenSea launched its professional trading platform as a competitor to Blur, OpenSea Pro. (Link)
• Huobi announced a partnership with Gala Games to speed up its web3 ecosystem development. (Link)
• Marblex, Netmarble’s web3 branch, announced its NFT staking service is live. (Link)
• Alibaba Cloud launched a blockchain lab in Shibuya for Japanese game developers. (Link)
• An email receipt leaked more details of Amazon’s web3 plans. (Link)
• Seedify launched ChainGPT, an AI solution specifically for blockchain problems. (Link)
• The NFT Gaming Company (NFTG) announced a partnership with ChatGPT and Midjourney for AI game development. (Link)

Notable Market Moves

• Magic finished the week down again although not nearly even close to as bad as last week. TreasureDAO had little game news but did publicly vote against an ArbitrumDAO proposal.
• Axie Infinity saw some benefit from the recent announcements around Ronin which could bring new players to the chain and potentially benefit the AXS token in the future indirectly.
• ApeCoin ended with a modest gain but should have some positive sentiment around all the recent positive Yuga Labs activity and Otherside ecosystem expansion. We expect more of a boost when more utility is announced for the token itself.
• StepN ended slightly down despite a partnership announcement with Lost Worlds and a design competition. We expect that the further we get from New Year’s resolution, the harder it will be to maintain long term interest although it could still benefit from spring and summer weather driving users outside more often.
• Enjin benefitted from teasing some sneak peeks at an upcoming new Enjin Platform with improved NFT management as well as posting some solid developer updates.
• As usual, we recommend looking and thinking with a long-term perspective. With the focus shifting over to AI for fundraising, the markets may fluctuate in smaller increments without big enough events to drive substantial swings.

Content Worth Consuming

• Com2uS on the promise of blockchain gaming (BlockchainGamer): “Chronicles is a huge MMORPG based on the Summoners War IP, and it’s been in development for five years. It’s already become a number-one hit in France, Germany, Thailand, Taiwan, Japan and more. At launch it’s a traditional game available on multiple platforms, with Com2uS announcing at GDC that web3 elements will be added this year courtesy of XPLA. And this approach clearly signals the strategy going forward. ‘Every single game that we’re releasing is going to come on [the platform]. Everything. Every original IP. Because we also work with Major League Baseball and other licensed IPs. Right now, our focus is on: we’re going to bring every single original IP to the blockchain.’” (Link)
• The zkEVM – The Next Frontier of Web3 Gaming (Bitkraft): “This piece explores the latest bleeding edge innovation to hit the Ethereum ecosystem, the zkEVM. We look at how rollups work, and where the zkEVM fits within the wider Ethereum scaling landscape. We cover what types of zkEVMs are being built and what tradeoffs different projects are making. Finally we outline a few considerations and risks founders should be aware of, as well as some potential starting points for those interested in diving in deeper.” (Link)
• Sky Mavis, Delegated Proof of Stake and Building on Ronin (Naavik Gaming Podcast): “Sky Mavis, the developers behind the OG web3 game Axie Infinity, with $1.3B in lifetime revenue, have been busy beefing up the security of their Ronin blockchain and opening it up to third-party game developers. On March 30th, 2023 Sky Mavis announced the Ronin blockchain’s upgrade to Delegated Proof of Stake (DPoS), and unveiled the genesis batch of game studios that will be building and launching games on Ronin: Directive Games, Tribes, Bali Games, and Bowled.io. Your host, Niko Vuori, chats with Kathleen Osgood, Director of Business Development at Sky Mavis, about what this means for Sky Mavis, Axie Infinity and third-party game developers looking to build on Ronin.” (Link)
• Web3 Games Regulation: KYC, AML and VAT (FOGCast): “In this week’s FOGcast, your hosts Nico Vereecke and Devin Becker are joined by Ake Andre to take a deep dive into regulations around Web3 Games. We discuss: the similarities between Web3 Games and Online Gambling, KYC and AML checks, what these means for governments and gamers, VAT for NFTs, and much more.” (Link)

A big thanks to Devin Becker for writing this update! If Naavik can be of help as you build or fund games, please reach out.