January was overall a better month than December for the general crypto market (and tech at large), with prices going mostly up alongside funding. However, the continued lack of significant new releases led to the expected persistence of flat numbers in unique active wallets (UAWs). Plus, despite the general positivity and some high-transaction NFT projects, overall NFT transaction volumes mildly fell. In short, it was a month similar to the last several with little change.
With no significant negative crypto events so far this year, there is at least more fertile ground for the right web3 game to find a receptive audience, and February’s DigiDaigaku Super Bowl free mint commercial will no doubt attract some attention. Funding for games continues to be on the low side as VCs are becoming pickier as FOMO wanes, valuations deflates, and as they wait for more signs of what works.
Unfortunately, the lack of major games is unlikely to change much come Q2, but depending on timelines, we could see some movement in the second half. We’ll continue to take it a month at a time, but we don’t expect this flatlined performance to remain forever.
Now, let’s dig into January’s notable releases, user and transaction trends, and top fundings.
Dookie Dash: While it was only playable until February 8th, Dookie Dash is the first of multiple mini-games out of Yuga Labs as part of a series of games that use and transform NFTs. While the gameplay is a fairly derivative endless runner, it does try to innovate with the idea of a “skill-based mint” in which a player’s highest score determines the traits of the NFT that they can convert the Sewer Pass NFT to. It also includes a power-up bundle that can help boost scores in exchange for ApeCoins, giving it a slight pay-to-win element. It’s Yuga Labs’ first actual game and acts as a good distraction while waiting for The Otherside’s second test in March. We recommend reading our weekly update that breaks down the project in more detail.
Other notable releases:
Captain Tsubasa: Rivals released a pre-mobile web version of its NFT card game based on the popular Captain Tsubasa manga and developed by Thirdwave.
Thetan Rivals, a casual multiplayer game from the developers of Thetan Arena, was soft-launched in select countries.
Mir M, the successor to one of the first web3 MMOs, Mir4, was released on January 31st on PC and mobile. There seem to be some anti-botting learnings from Mir4 around the crypto aspects, but there’s been criticism around the controls and gameplay.
Per DappRadar, blockchain gaming daily unique active wallets (UAWs) saw a very small 0.1% gain in January. While January was a decent month for crypto market prices, that doesn’t translate into new players without any noteworthy and accessible releases. The only title to make a notable impact, Dookie Dash, was gated behind a Sewer Pass NFT. This game was admittedly not tracked by DappRadar, but since it was NFT-gated we know that its audience impact was minimal.
A majority of the top UAW games saw very little decline, and some saw continued gains, helping make up for any dormant wallets this month. With the audience for the current games still being primarily existing web3 players, it’s no surprise that the active wallets remained mostly the same ones we’ve been seeing the last few months.
Something that might trip up this metric is the potential for multiple mobile games that both keep the web3 elements optional and use custodial wallets for easier initial onboarding. The optional web3 elements mean it will be difficult to track the total player count without additional data from sources like data.ai and identifying the percentage of the playerbase actively engaging with the web3 aspects.
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 show up in UAW numbers.
Top Games by Unique Active Wallets
Alien Worlds experienced a small drop of just 5%, which puts its UAWs very close to where it was last June (542k); however, it remains far below its highs. As there is very little at the moment to steal away players who don’t mind making slow but steady progress, we don’t expect any major drops until another game releases that cannibalizes the same playerbase (or the game itself makes a significant fumble). Also, as we stated since the beginning, we highly suspect that many of these UAWs are bots, with multiple belonging to single users; these likely won’t drop off until the costs outweigh the gains.
Splinterlands managed to regain its #2 spot over Benji Bananas, which is more due to Benji’s 21% decline than Splinterlands’ meager 6% gain. The game continues to slowly push forward, make iterative improvements, and incorporate community governance feedback, but major upgrades like Land are yet to fully arrive. While Splinterlands itself is unlikely to grow significantly in the future without a major change to the relatively ancient-feeling gameplay, it could benefit from the adjacent tower defense game or planned sports games. Like Alien Worlds, it could lose a good chunk of players over to other more modern games, especially in the TCG genre. It’s likely that Skyweaver won’t overlap enough with the web3 aspects of Splinterlands to steal audience away, but there are many more TCGs set to launch in the coming months and years.
Planet IX, a space-themed resource management strategy game, has been slowly gaining active UAWs since November 2022, but it’s important to keep in mind that UAW is a measure of contract interaction and not necessarily gameplay. This definitely applies to Planet IX, as the activity being measured here is staking activity, which has been increasing due to more staking-based functionality being added over time.
WAM managed to rocket up the UAW charts this month thanks to anticipation of the upcoming 3.0 launch. DappRadar has since delisted the multi-game hypercasual platform, but that may be due to changes necessary for the 3.0 version, as DappRadar itself had acknowledged the UAW rise and pending update towards the end of the month. Unfortunately, DappRadar doesn’t comment on game removals, so it’s difficult to be sure.
Axie Infinity had a pretty decent January with rising UAWs, AXS token price, and secondary market trading volume. The positive sentiment was due to token unlocks, Axie Infinity: Homeland season 0, and trading around the accessory NFTs released at the end of 2022. The token unlock was for 4.89M AXS tokens (1.8% of total supply) as staking rewards, which can often have a negative effect on the price due to selling pressure, but here it seemed to lead to a price increase. Homeland was a much bigger deal, as it offered the first available gameplay to holders of the expensive Axie Land NFTs that can provide AXS earnings and are supposed to integrate with the economy of the main Origin game. There may also be some benefit from the beta release of the first builder program game, Axie DoLL (Defenders of Lunacian Land), which released in mid-December and provides new gameplay and utility from Axie NFTs.
Total transaction volume on secondary markets suffered a small drop of 7.94% despite cryptocurrency faring well and a few large volume NFTs. Of course, when zooming out, it’s clear that volumes have been roughly flat since last summer. The biggest cause for the drop was Ethereum going from $547M to $477M in volume month-over-month, although this is still higher than the September-November time frame when it ranged from $320M to $411M. Polygon also retracted from its very large December of $15M back down to $4.4M, which is still an improvement over November’s $3.8M.
It’s actually a bit surprising that Ethereum suffered as much as it did given the release of the Sewer Pass, a new DigiDaigaku NFT type, and the typical top 3 of Otherdeed/Sorare/Gods Unchained all gaining from last month. It’s likely that the drop was more across the board rather than in the high secondary market volume. It’s also worth noting that the secondary market volume is across all NFTs, not just the gaming-focused ones, so a reduction in the trading of PFPs and other art projects also affects the volume here.
Polygon unfortunately depends on large high-profile projects, and, as expected, the hype from last month’s big Trump Digital Trading Cards sale has died down. Once some of the bigger Polygon projects hit full release, we may see more consistent months from the network.
Solana had a very strong month at $108M compared to the $75M in December. The gain doesn’t seem to be attributable to any one project with outsized transactions but rather some good volume on popular NFT projects (although not so much on games). Regardless of the sources, the uptick in volume is good for the network, as it had recently seen some projects moving away from exclusivity on the network, such as DeGods and Fractal.
Flow, on the back of a lack of big projects and developer traction, decreased another $1M, going from $5.3M to $4.3M. Dapper Labs doesn’t seem to have found its footing past the initial success of its first-party NBA Top Shot and other sports collectibles. Immutable also seems to be suffering a similar fate with its continued reliance on Gods Unchained while the other games are yet to deploy on the network. Guild of Guardians did try and push a new esports-focused NFT sale, but that hasn’t moved the needle much, and we await more Illuvium content to further prop up sales.
Quick note: We revamped the volume distribution chart below to focus on additional top blockchains. We replaced Ronin and WAX with Immutable and Cardano and shifted the range to the last 7 months. We are currently focused on gathering accurate historical data to reintroduce the “Other” category next month, and we will continue to revise as needed to ensure we’re properly tracking the most important chains as the market evolves.
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, BSC, Theta, Cardano, Arbitrum, and Immutable.
January’s positive crypto market sentiment benefited many of the top web3 gaming projects, some of which capitalized with new content or sales. Of course, as we’ve said since day one, volatility works both ways. In this case, we can’t expect this level of month-over-month change to continue, and a retraction next month is quite possible.
Notably, Gods Unchained is one of the very few projects on this list that could continue to put up good numbers if it’s able to grow users, improve player retention, and increase player spend via its mobile release. Its mobile alpha is expected to launch sometime in Q1.
The obvious standout here is the Sewer Pass, which had no primary sales due to being claimed by BAYC/MAYC holders for free. The Sewer Pass NFT was a requirement to play Yuga Labs’ Dookie Dash, which was a high-score competition to transform the Sewer Pass NFT into an unknown but score-related NFT with uncertain future utility. Rampant speculation and excitement over the first actual game out of Yuga Labs, along with the promise of an exclusive NFT for the top score, led to the high volume of trading seen here. The actual pass itself won’t have any real value after the competition ends in the second week of February and will be transformed into another NFT, so we won’t be seeing the Sewer Pass in next month’s report. Hopefully, the buildup of mini-games from Yuga Labs will continue driving excitement and interest, although few players will be able to afford participating. Of course, Dookie Dash’s / the Sewer Pass’s hype also created a halo effect on Otherdeed, which did pretty well this month with a 31% gain. (If interested in learning more details about the Sewer Pass system, we recommend reading our previous update here.)
Sorare managed to recover from the post-World-Cup dip and still holds its #3 spot right below Otherdeed. News of Sorare making a deal with the Premier League will also help boost continued sales, and with multiple sports now, it can sustain interest as a whole during the rest of the year. Unless hit with some kind of regulation or blown out by a competitor, we expect Sorare to continue holding up well.
DigiDaigaku continued to benefit from constant new mint types surrounding the original heroes, spirits, and now villains. Despite not having much of a game to show yet, Limit Break is doing a good job of consistently maintaining interest in the project and driving secondary sales. February will see the highly anticipated Super Bowl commercial free mint of new Dragon NFTs. We look forward to seeing where all of these NFTs fit into the game ecosystem and what the team has planned.
Wolf Game continues to draw interest in its 2.0 project involving land, which the secondary sales here include. Despite being more of a game-theory-focused gamble than a true game, the project was innovative in its initial release and is trying to reinvent itself going forward. Given the successive months of appearing here, that seems to be working, but there’s a very real possibility that interest declines going into Q2.
Createra, yet another UGC metaverse project (backed by a16z), had a strong debut with its initial land sales. It touts a strong team but seems to be purposely vague on verifying several details, so we are taking a skeptical approach to this project (which may just be another metaverse land grab). On the positive side, there are at least some working creation tools available for landowners.
Axie Infinity had one of its best months in a while with overall positive sentiment on the project. Land activity seemed to draw interest around Homeland alpha season 0 which just finished. A token unlock drew market activity as the AXS token managed to gain leading up to the event, and it’s likely that the token liquidity contributed to secondary market transaction volume.
Illuvium Land also got a nice boost thanks to the early January private alpha release of the Illuvium: Zero land-based game. The release is a 6-8 week Season 0 similar to Axie’s Homeland, but it’s unclear if Season 1 will immediately follow. Illuvium has been busy releasing playable alphas and betas to maintain community interest in the project.
Parallel Alpha, a web3 TCG, had a great month as it released the final drop of its complete starting set. The developers also announced starter packs to be sold in partnership with Coinbase and provided a card faucet to distribute a free card to interested parties. The game has more scheduled for release in March, and we recommend reading our previous coverage here to get a better grip on the project.
Fundraising Events
January Funding. Various sources.
As best we can measure, January saw a nice comeback for venture funding with $277M compared to the $95M in December. This was due to both a larger number of investments as well as much stronger double-digit raises. Interestingly, these investments came from a bigger variety of VCs and investors we haven’t seen much, although the usual suspects like a16z, Bitkraft, Konvoy, and Shima were also present. Notably, HashKey Capital raised a $500M fund for crypto, although it’s primarily focused on infrastructure, tooling, and applications for mass adoption.
The biggest company raise of the month was QuickNode‘s $60M Series B at an eye-popping $800M valuation. QuickNode provides infrastructure for blockchain data and benefits from being a valuable tool for many other infrastructure projects. With the ability to easily communicate with blockchains through RPC nodes, and APIs being critical to web3 games, providers like QuickNode are in a good spot to increasingly become a part of the game dev workflow.
Candy Digital raised a $38M Series A extension as it struggles to adapt to a downturn in NFT collectible trading volume. The company was focused on building experiences around licensed product NFTs like Stranger Things, but it recently had to perform layoffs amidst the market downturn.
Plai Labs, alongside spinning out of Jam City, pulled in a hefty $32M in seed funding from a16z to continue working on Champions Ascension and some vague AI-related projects. Champions Ascension also completed a somewhat successful multi-tiered free mint in January for its new Elementals NFTs. The mint had some issues with the earlier whitelisted tiers and then turned into a major Ethereum gas war for the remaining public mint spots, going up to $350 in gas for a “free” NFT. We recommend checking out our coverage of the Plai Labs announcement and our upcoming look at Champions Ascension.
Carry1st also pulled in a nice $27M in Pre-Series B funding for its mobile game development in Africa, which is currently viewed as a promising emerging market for both mobile and web3. We recommend checking out our in-depth essay on Carry1st for more details.
Lastly, we saw a few solid low-double-digit raises, with Intella X raising $12M for its Polygon-based gaming platform that’s being developed by Neowiz out of South Korea. Createra raised $10M from a16z for its alpha launch and is also raising funds from land sales that allow for land-based UGC in a voxel-based “metaverse.” Spatial Labs raised $10M to better build technology that connects physical and digital products (otherwise known as “Phygital”). This is targeted at a younger demographic and even saw backing from Jay-Z’s Marcy Venture Partners.
There were also a few low but noteworthy game raises: Oh Baby Games (which is releasing a Kart genre game), Calveria (which is jumping into the card-battling arena), Neopets (a resurrection of the ‘90s digital pet collection genre), and Sleepagotchi (which aims to use NFTs to help gamify healthy sleep patterns).
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.
