Source: Protocol

The web3 market experienced a widespread slowdown in the month of April. Despite a reasonably good month for BTC and Ethereum prices, particularly during the first half of the month, the enthusiasm for NFTs did not reflect this trend. The dip in excitement was evident in the fine details for both transaction volumes and Unique Active Wallets (UAWs), which seemed particularly sensitive to the hype surrounding new projects. There was less interest in some of the long-term games that continue to hold down the fort until more AAA games make their debuts. There is an emergence of higher-quality games, notably from South Korea, but they haven't garnered sufficient market interest to boost web3 as a whole.

Secondary market transaction volume for NFTs saw a minor dip, which hit game related NFTs a bit more than constantly flipped assets like speculative PFPs. Just like in March, Yuga Labs continued to extend its control over the secondary market transaction volume. Regrettably, game NFTs as a whole have struggled to maintain a consistent top spot on the secondary market transactions list without massive speculative fluctuations, except for a few consistent card-based games like Sorare, Gods Unchained, and Axie Infinity. This does spotlight what can help keep transaction volume significant for game NFTs, but it may not necessarily fit every genre. This is just one way to gauge interest and excitement around games, but the slowdown here mirrors a decreasing interest in the current state of the first-generation web3 games.

Decreasing UAWs is another indicator that reflects a growing impatience amongst web3 natives with the lower-quality games from the 2021 to 2022 wave. Even some of the more stable games like Alien Worlds began to show signs of weakness this month, likely marking the beginning of a gradual decline in the majority of UAW-heavy games. Much like secondary market transaction volume, this metric may not be suitable for every type of game, but it does act as a general sentiment indicator for a quieting web3 game market. This trend may be a precursor to a shift in summer or fall when more enjoyable high-quality web2 games with optional web3 elements begin to come out ahead of flagship web3 game launches. Well-made mobile RPGs/MMOs like Oath of Peak, which managed to slightly increase UAW this month, are a good illustration of this trend.

Despite fewer fundraises, there was still a slight increase in total funding over March. Funds are still being slowly deployed, including investments in Series B and other later-stage private investments or token sales. However, this trend is expected to decrease until a big hit can restore confidence in the sector. We may be nearing a stage of consolidation as projects begin to exhaust their resources and find it difficult to secure more VC funding.

Now, let’s dive into April’s notable game releases, UAW stats, transaction trends, and funding announcements.

Notable Releases

Stella Fantasy

Stella Fantasy
Source: Ring Games

Stella Fantasy is a AAA South Korean "Premium Character Collectible NFT RPG” by Ring Games that released on PC with a mobile release planned for later in the year. Unlike some of the previous web3 ARPGs and MMOs that have come out of South Korea, Stella Fantasy integrates NFTs quite deeply into the core of the game rather than just as a token earning-focused experience. There is still a token element to the game, but the game incorporates gacha elements for acquiring new characters that act as NFTs. 

While it’s probably not the best indicator due to variability in rarity and utility of characters and gear, current NFT floor prices on the BNB-based marketplace are $40.26 and $15.60, respectively. It’s difficult to say what the ideal token price should be, but the game’s SFTY token has taken a bit of a dive since release from $0.11 to $0.042. Depending on how assets are priced, a cheap token could actually help players get in at a lower cost if primarily interested in the gameplay and NFTs. 

It will be worth watching Stella Fantasy as one of the higher quality web3 game releases with an interesting, although probably inflationary, economy design. Unfortunately, until the mobile version releases we are unlikely to get details on actual user engagement, but it won’t be released in its native South Korean app stores due to local regulations on web3 gaming. 

Other noteworthy releases:

  • Mythical Games' NFL Rivals launched at the end of April on Android and iOS. The game allows players to build teams using authentic NFL branding and draft players from any NFL teams. The gameplay is straightforward and quick, with both PvE and PvP matches lasting less than five minutes. Players' progress helps them acquire and enhance more players through booster packs. Interestingly, Mythical has opted to stay in Apple's good graces by relegating all web3 aspects to a marketplace on its website, where players can buy and sell NFL players, with no mention of web3 within the game client itself. This setup offers players an alternative to the game's blind pack acquisition. The player NFTs are priced in the Mythos token, which is the native token of the game’s Mythos blockchain.  According to the game has nearly 500,000 downloads, 47,000 active users, and $140,000 in revenue across Android and iOS since release. For a more in-depth look at the game, we recommend checking out our coverage here.
  • MagicCraft, a mobile MOBA, was released in early April without much publicity. The gameplay contains the basic hero ability system of MOBAs, but the actual match formats play very differently with a variety of different modes. While the production quality can be a little lacking, the game itself is still pretty decent given the small development team. The web3 aspects include cosmetic character NFTs and a token that unfortunately has low utility outside of staking and using in the NFT marketplace. The game seems to be getting picked up more by an Android audience with 4,5000 downloads versus just 421 on iOS. Realistically, the game will need a lot more polish and marketing to attract enough players to survive in a very competitive MOBA market. The different modes are refreshing, but might throw off players expecting a standard MOBA that also has web3 components.  

Unique Active Wallets

Per DappRadar| Blockchain gaming daily unique active wallets
Data Source: Dappradar
  • Per DappRadar, blockchain gaming daily unique active wallets (UAWs) showed a strong increase of 30.2% — with a large spike before dipping back down. Looking at individual games, however, you can see a downward trend mostly across the board, with the main exception, Iskra, also being highly correlated to the spike upwards and back down. We’ll discuss Iskra more below.
  • There seems to be a growing sense of fatigue creeping in from the repetition and lack of evolution in game quality from 2021. This combined with dissipating excitement about the web3 gaming space as a whole from the crypto curious has hurt UAWs across most web3 games. The majority of the top games continue to stagnate, and they're largely not being surpassed due to the absence of other games that have a compelling enough allure to surpass them. However, the silver lining in all this is the potential future of user retention that the sense of ownership and investment in these games continues to demonstrate in those that have stuck around. This is a promising sign for when powerful games with robust live operations finally make their debut.
  • The limitations of tracking UAWs using tools like DappRadar is also starting to grow as more in-game activity is performed off-chain and the data that is tracked may be more market related. We expect this to become more of an issue as more “web 2.5” games appear that keep much of the gameplay and economy off-chain with only optional aspects happening as chain transactions. 
  • We will continue evolving our methodology for tracking engagement as this shifts, with tools like bringing quality metrics for mobile web3 games. As real players leave some of these top games to move to less transactional games, it will leave more of the UAWs as bots and traders rather than real players. We expect this could lead to a drop in UAWs over the summer until a better methodology is found. 
  • There is one potential trend that could offset the UAW decrease: more and more high-quality Asian (especially South Korean) mobile web3 games are releasing this year.
  • As a reminder, UAWs are not a perfect indicator of users. A user can have more than one wallet — potentially overestimating actual user activity. Conversely, a user can play a game but not transact with a blockchain over a period of time, potentially underestimating actual user activity. Bots are also common across many games due to the ability to earn and will also show up in UAW numbers.

Top Games by Unique Active Wallets

Unique Active Wallets
Data Source: Dappradar
  • Iskra went from second spot last month to absolutely dominating this month. As a reminder, Iskra isn’t a game itself, but rather a game platform that currently only has one live game, Three Kingdoms Multiverse (3KM), on Android. The contracts tracked by DappRadar include those related to $ISK token activity, Iskra platform NFTs known as ”Pioneer NFTs,” and other incentive systems such as the daily free spin. It’s likely that the majority of the UAWs are related to the platform rather than 3KM, as the game has under 100K downloads according to Google Play. Iskra received a large majority of its UAWs during the second half of the month with a drop back to prior daily lows at the start of May. The start date corresponds to a feature on the platform by DappRadar, which was released on the 19th along with some new airdrops and giveaways leading into DAO governance beginning. It will be difficult to separate the platform from the individual games (much like Arc8 and Gameta), but with quite a few more games on the horizon for Iskra we anticipate some spikes up and down based on interest.
  • Alien Worlds saw a huge 34% drop in UAWs, now down to the lowest UAW levels we’ve seen for the game since we began tracking. Interestingly, whereas the monthly UAW tally (as shown above) is down, the actual daily UAWs were relatively stable and better than March, which indicates consistency across much of the core players, but a dropping out from less consistent and newer players. The reason this can happen is that unique for a month is aggregated (each wallet can only count once) whereas the same unique wallet can show up in the daily UAWs every day of the month. As a game centered on mining the Trillium (TLM) token which hasn’t maintained a good price in some time, we expect this trend to continue as the game continues catering mostly to the hardcore and bots. There’s always potential for future spikes related to strong promotions or earning potential, but the game itself is only incrementally updating at a slow pace.
  • Splinterlands suffered an even bigger 42% drop this month as overall interest in the game drops. Unlike Alien Worlds, its daily UAW numbers dropped to a lower baseline than last month. More importantly, the usual spikes in UAW surrounding the end of game seasons every two weeks were much more muted. The Land features that have been a long time coming are still some ways away from having any kind of gameplay functionality which has diminished overall excitement. There also haven’t been any new card sets for sale for some time, but the game released a brand new single card, it’s first “multi-element card” for sale at around $80 at the beginning of May which could have some small impact next month. It’s not unusual for trading card games to have lulls during big gaps between card sets as that is usually the exciting part of collecting. The team did mention a desire to increase new user acquisition during a recent Town Hall although it’s unclear how that would work, especially given growing competition in the TCG space. 
  • Farmers World managed to somehow avoid a drop in UAWs despite almost no real updates from the devs since the end of February. The game has actually been one of the most consistent this year with only single digit percentage changes each month in 2023. Transaction volumes, however, have been on a slow decline which likely corresponds to stagnate growth as new players are often necessary for higher volume in these types of games. Much like Alien Worlds and Splinterlands, this game has settled into a groove of its dedicated core players mixed with bots. Given the lack of growth and significant updates from the developers, it’s only a matter of time before the game sees a large drop. It is interesting to again note the high levels of retention web3 games have managed to show, for example Alien Worlds holding between 200,000 to 300,000 UAWs fairly consistently since May 2021 despite the simplicity of gameplay.

Transaction Volume

Secondary market transaction volume
Data Source: Cryptoslam
  • Secondary market transaction volume dropped a minor 9.4%, but there are a few caveats to note with this month’s data. Crytposlam is having some issues with providing completely accurate values for certain networks (Immutable, Ronin, Wax, Panini, Tezos) which looks like it may be related to updates around wash trading detection. The other factor is that the Mythos blockchain data was added (placed into the Other category in the chart below for now) which brought in significant trading volume in April. Without Mythos the drop would have been 13.8% as that accounted for $32.2 million of the secondary market volume. Overall secondary market transaction volume across all the networks did drop by at least 11% per network across the board, showing a continued slowdown in market enthusiasm and speculative flipping.
  • Ethereum was once again the network dropping the most in pure dollar terms as it dipped back down to November 2022 levels despite a very strong February 2023. Interestingly, the wash trading volume actually dropped much faster than legitimate trading, according to Cryptoslam’s detection algorithm, with a reduction from $1.1 billion to $635.4 million in wash trading compared to legit volume going from $573 million to $431.7 million. Of course it’s not great to have wash trading be so high compared to legitimate trading, but this is only the case with Ethereum as Cryptoslam’s algorithm shows much lower numbers for the other blockchains. As a reminder, wash trading is trading back and forth to falsely increase volume or price numbers. Unique sellers on Ethereum also dropped below 200K for the first time this year and Unique buyers also dropped back to late 2022 levels, although the drop this month was much smaller than the nearly 50% drop last month. Ethereum may not always be the best blockchain for gaming NFTs anymore, but it is still considered the primary NFT network for now. It does seem like interest in Bitcoin Ordinals based NFTs has been driving some fresh excitement away from Ethereum, but it’s unlikely to have long legs as an NFT ecosystem, especially for games which are unlikely to use Bitcoin as a primary network.
  • Solana dropped a bit from March but still beat its February low. The release of the Saga Solana phone unsurprisingly had little effect on secondary market volume as it was never going to have a ton of customers. Unfortunately Solana still fails to capture the gaming market with game related NFTs for Aurory and Genopets barely registering transaction volume. The network certainly isn’t going anywhere anytime soon, but without the kind of business development efforts coming from competitive blockchains like Polygon or Immutable it’s likely to struggle for overall relevance except as a cheaper PFP platform.
  • Mythos was a previously untracked blockchain until making an exclusive deal with Cryptoslam to share data in early May. The Mythos chain was created by Mythical Games, creators of Blankos Block Party and more recently NFL Rivals. The Mythos chain is in the process of shifting governance from Mythic Games to a Mythos Foundation DAO, and the chain itself is migrating from a standalone EOS chain to the Polkadot network. Despite having two games, almost the entirety of Mythos’ $32 million secondary market transaction volume is from the DMarket marketplace. DMarket is a marketplace based almost entirely around web2 Steam marketplace games like CS:GO, DotA 2, and TF2 using a trading bot. It’s unclear if the $32 million is actually transacted in $USD or $MYTH tokens as all the transactions use the blockchain, but all the payment information for depositing and withdrawing refers specifically to $USD. Some information available about the platform states that it’s “powered by the MYTH token”, but doesn’t get more detailed. There is one web3 game in the marketplace with Life Beyond, but it is ironic for the majority of the volume to ride off the back of web2 marketplace transactions yet be tracked as NFT volume.
  • Cardano and Avalanche, which both have some promise but limited pull, also dropped 30% or more. Both networks have had trouble attracting much in the way of games outside of Avalanche subnet games like Crabada. Cardano was unable to get the volume for a single NFT above $1M and Avalanche none above $120K. One of the most promising Avalanche games, Shrapnel, didn’t even sell its NFTs exclusively on Avalanche as it also sold Ethereum and Polygon editions.
  • As a reminder, Cryptoslam only accounts for NFT volumes in the secondary market. It also only includes data on the following blockchains: Ethereum, Solana, Avalanche, Ronin, Flow, WAX, Polygon, Panini, Tezos, Palm, Cronos, Fantom, Waves, BNB, Theta, Cardano, Arbitrum Mythos and Immutable.
Blockchain Market Share| Total NFT Sales
Data Source: Cryptoslam

Top Games by NFT Transaction Volume

 NFT Transaction Volume
Data Source: Cryptoslam
  • While Otherdeed seems to have dropped in volume despite holding its top spot, it’s more of a fragmentation. As part of the evolving Otherdeed system for The Otherside, Yuga Labs recently created a system to decouple the Koda characters contained in some rare Otherdeed NFT metadata into its own NFT. This has resulted in Koda NFTs and Otherdeed Expanded NFTs, with the original Otherdeed NFT burned in the decoupling. With the decoupling only being optional and only applying to the Otherdeeds that have a Koda in the metadata, there will still be plenty of regular Otherdeed NFTs tracked in the future. The actual combined secondary market volume for Otherdeed, Otherdeed Expanded, and Koda NFTs is actually $24.9 million. If the other Yuga Labs NFT here, HV-MTL is included that gives Yuga Labs almost half of the entire top 10 in transaction volume. All of these NFTs do relate to The Otherside in some way or another in different ways, and we recommend reviewing our previous coverage of the metaverse interrelations here
  • Blocklords, a strategy MMO similar to 4X games, experienced a banner month with $13.6M in volume for its NFTs. Much of the trading started as the result of a Hunter Hero giveaway on the 6th. The game had little other news for the rest of April and of course still isn’t released yet, so much of the transactions are also riding on hype and speculation with the promise of being able to climb higher in the hierarchical ladder of royalty related to earlier access. There are some previews of the game starting to come out, but with no concrete roadmap. The game has done a good job launching new types of Hero NFTs to gain in various ways, which has resulted in a good amount of volume over the last few months, although it remains to be seen if it can maintain the momentum.
  • Pixelmon, a Pokemon-inspired RPG developed by an indie team and outsourced partners, went huge in April following a lot of Twitter influencers and articles touting its comeback story. Early in the month Pixelmon shared its new advisory board members, and well known DAOs like SpiritDAO started buying into the NFTs heavily. Pixelmon started sharing internal builds and lots of nicely rendered images of the various creatures on social media, which helped combat the earlier bad perception of the game quality. The team also released a whitepaper to help reassure the community it had a plan for the game. Lots of games have pitched the idea of Pokemon for web3, but not many have the runway Pixelmon managed to accrue (supposedly four years at current burn rates). The game will definitely benefit from competitor Chainmonsters recently halting development as well.
  • After a slump in March, secondary sales of Land for The Sandbox returned back to the $1.9 million range of January and February. A majority of the volume can be attributed to just one day, April 10th. The large single day volume followed the release of the 2023 Land roadmap (see our coverage here) and the announcement of its April festivities. While Land sales in general have cooled off, The Sandbox’s April volume alone was almost double what Decentraland did in the last 90 days (583 ETH according to OpenSea). The big issue for The Sandbox is still player retention as it can drive visitors during Alpha Season’s and for some events, but the lack of non-partner creations keeps it from staying consistently fresh. Of course as Decentraland shows, having working UGC isn’t necessarily enough to avoid becoming a ghost town.

Fundraising Events 

Total April Funding
  • Based on what we see, April saw a 25% jump in fundraising over March despite fewer raises, mostly due to a very large $120 million raise for LayerZero Labs. On the plus side, it was another month with raises all larger than $3 million, and a majority of the raises are going to games rather than infrastructure. Sports game related raises were popular yet again as we’ve seen it be a popular category in web3 for some time now. Interestingly there were also more token and private sales this month versus the typical Seed and Series A.
  • LayerZero Labs raised a massive $120 million Series B with 33 different backers that included big names like Andreessen Horowitz, Christie’s, Sequoia Capital, and Samsung Next. The valuation was even bigger, growing from $1 billion last year to $3 billion this round. LayerZero, as the name might imply, is a cross-chain infrastructure provider, but the primary focus is on cross-chain messaging to allow blockchains and dapps to communicate without requiring a middleman. This allows for dapps to take a more blockchain agnostic approach and spread out to more chains as some of the decentralized exchanges like PancakeSwap, SushiSwap, TraderJoe, and Uniswap are currently using LayerZero for. While DeFi has been the more obvious use case, there is definitely opportunity for games to use the tech to avoid being stuck to a single blockchain, although that is likely a concern for 2024 at the earliest. The large raise and valuation in the current bear market definitely indicates investor confidence in a multi-chain future. 
  • Mythical Games’ $20 million private raise came from Scytale Digital, an early-stage blockchain investment company, and seemed to come with a condition that it move the Mythos Blockchain over to Polkadot, which Scytale is invested in. Mythical Games had raised $150 million back in late 2021 for its Blankos Block Party and had some recent fundraising issues related to its lawsuit against Fenix Games. Given the Mythos Blockchain’s large transaction volumes, it will be interesting to see what effect moving to Polkadot might have by providing better connectivity to other blockchains. Mythical Games itself also just released NFL Rivals and seems to be readying to launch its Nitro Nation: World Tour game as well. Blankos Block Party was a good debut to show off the team’s capabilities, but it hasn’t seemed to bring in a large web2 audience over to web3 as hoped. While it’s unclear the purpose of the raise, it may help the team improve its UA with new mobile games to reach the broader audience it’s clearly targeting.
  • GOALS is also looking to reach a broader market with its $20 million Series A toward a web3 esports-focused soccer game. The team is looking to use the funding to help grow the team and ramp up development along with adding some twists to the genre like a 5v5 mode instead of just the typical 11v11. Rather than target mobile, the game will be available on PC and console with cross-play to capture the same audience as FIFA and not going after the more casual mobile audience.

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

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