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#1: Playful Studios Reveals a Spectator-driven Web3 Game

This week, Playful Studios scored $46M in funding led by Paradigm for a unique take on blockchain gaming. The project, which is developed by its Wildcard Alliance division, is unique for a few reasons. First, unlike many of the games releasing currently, it’s been in development on and off for more than five years, prioritizing fun and high production quality over its blockchain aspects. Second, it’s being developed by a team and a leader with a strong history of successful development across multiple platforms and games like Words with Friends, Lucky’s Tale, Age of Empires, Halo Wars, and Orcs Must Die. Third, it’s aiming to give spectators a much more vital role in the game instead of just being onlookers who won’t play. Finally, its genre can be described as a unique hybrid between MOBA and Collectible Card Game that comes across as a 1v1 mashup of Smite and Clash Royale.

Paul Bettner, who leads the project, was initially pretty skeptical about blockchain gaming in general. While not much detail has been provided about the game’s blockchain aspects yet, he emphasized that this part of the idea was centered around the community and spectator side and mentioned a protocol that connects it all. The blockchain chosen for the project is Polygon, which has been embraced by a number of high-quality projects, alongside Immutable and Solana, for being much more efficient and environmentally friendly than Ethereum itself.

It’s not yet confirmed whether the collectable card aspects will use NFTs, but it was revealed that they will be tradable, which has been a very natural fit for blockchain gaming so far. Unlike some other games, it doesn’t plan on selling NFTs prior to launch with a vague promise of utility, which is a good sign. The strong emphasis on community and spectator engagement could be a big win for blockchain gaming as a whole if it manages to draw in large groups of non-crypto natives, especially those skeptical of the benefits.

It’s also a good sign that Bettner sees the technology more as a community enabler rather than being all about tokens or unsustainable play-to-earn models. The game is still in pre-alpha, but the announcement video gives us a good indication of its feel, and the developers are confident they already have a fun game that just needs some additional iteration and polish. If the game lives up to its promise, it should improve the currently sketchy image of blockchain gaming and demonstrate a non-financial usage, which is much needed.

#2: Splinterlands Reward Change Counters Bots

One of the topics we covered last month was the big change to Splinterlands’ rewards system that was to take effect on June 1st at the start of the new season. The main motivation behind the change was to make bots participate more in the economy if they intended to reap rewards. Instead of causing more economic engagement, this led to a major decline in bot participation, sending the active player count from 348k on May 31st down to 143k by June 2nd. We have long suspected that the player count was largely inflated by bots, but now we have a much more realistic indication of how many live players there likely are.

A big issue that the new reward system has created for bots is related to how they earned previously. Collection Power is a system based on the value of a player’s card collection that is used by the game to gate higher ranks and rewards. Players get daily quests and 14-day season rewards based on what rank they are playing, which ties both win rate and Collection Power directly to earnings. In order to boost earnings, bots would then rent cards to get to the desired Collection Power, but with a focus on using the cards from their collections that are needed for the daily quest and some simple logic based on the match rules.

This led to bots renting several non-starter cards yet primarily using starter cards in the matches. With the new system, scaling the rewards according to the non-starter cards being used leads to bots not being able to earn much without having the logic to rent a good variety of competitive cards instead of just high-value cards.

All that said, the decline isn’t 100% bot-driven. The declining current active player count likely also includes less competitive and low-spend players who are having more difficulty earning. Plus, the active player count may still include bots that haven’t gotten the memo yet and run on autopilot. It’s also hard to say if the effect will be long-lasting, as bots may be adjusted, but it won’t be an easy task to adjust and may not provide enough return to justify doing so.

Not everything is great with the economy of the game, however. The pulling out of bots has caused a large drop in rental activity, which was also a source of passive earnings for some players. The utility token (DEC) price has also dropped to its lowest point in over a year — $0.0007 at the time of writing — decently below the $0.001 soft peg it had maintained relatively well. Of course, this decline also correlates with the broader crypto market sell-off so it may not be entirely driven by the reward changes. Some players that expect the value to go back up are looking at the lower price as a timely way to buy discounted boost packs. It remains to be seen if the Splinterlands team can make any more near-term changes to try and restore the soft peg value, but we’ll be paying close attention.

Game Announcements

• Mattel announced the development of Cryptoys-NFT-based games on Flow. Link
• Gala Games partnered with Unity in a $20M professional services deal for VOXverse development. Link
• Forge: Arena, a WAX competitive FPS, opened beta play for NFT holders. Link
• Upland expanded to support Las Vegas and Rio de Janeiro as it hit 2.5M registered users. Link
• Sky Mavis detailed plans for the next two phases of Axie Infinity: Origin. Link
• Crypto Fighters Alliance, previously mentioned for developing ERC-721R for NFT refunds, is encouraging usage of the feature as it shuts down development due to lack of funding. Link
• Genopets is preparing to launch its KI token by snapshotting GENE stakers on June 18th for an airdrop. Link
• K4 Rally, a Web3 racing game, launched a free-to-play open beta. Link
• The Sandbox partnered with VoxoDeus to run a game jam event from June 13th to June 26th. Link
• Gamerhash announced a partnership to bring its 700k following to The Sandbox. Link
• Lionsgate is adding its properties like Hellboy, Rambo, and Expendables to The Sandbox. Link
• Decentraland announced in-world wearable support for external NFT collection The Satoshiverse as non-native wearables. Link

Funding Announcements

• Tatsumeeko, a multi-platform and Discord-integrated MMORPG, raised $7.5M in a seed round co-led by DeFiance Capital, Delphi Ventures, and Bitkraft Ventures. Link
• Illuvium’s Dutch Auction Land sale raised $28M in ETH and sILV but at around 20% of starting prices. Link
• Saga, a decentralized gaming community, raised $3.6M to build metaverse middleware in a round led by Animoca Brands. Link
• PartyDAO raised $16.4M to develop a group social NFT buying protocol in a round led by a16z. Link
• Kaleidoco, a Web3 AR content developer, raised $7M in a seed round. Link

Ecosystem Updates

• Neal Stephenson, who originally coined the term “metaverse,” announced the development of an open metaverse-focused blockchain called Lamina1. Link
• MetalCore, which had not previously decided on a blockchain to use, announced a partnership with Polygon Studios. Link
• Star Atlas announced a partnership with MoonPay for future on-ramping using credit cards. Link
• Wemix announced a 3.0 upgrade with expanded P2E features for its blockchain gaming ecosystem. Link
• Voxels partnered with Rarible to expand land sales to its marketplace. Link
• ApeCoin DAO, after receiving proposals to move $APE to Immutable and Avalanche, voted to stay on Ethereum. Link

Notable Market Moves

• The overall crypto market has taken a pretty big hit recently, and depending on the contagion of the Celsius fallout, there may be some further blows. Most of the gaming tokens are down between 23-33%, with BTC (down 28%) and ETH (down 35%) in a similar place. The verdict is still out on whether we are officially in a “crypto winter,” but the macroeconomic outlook would seem to indicate a strong possibility.
• StepN saw the biggest drop, falling down 2 spots with a 34.5% loss and hitting a low of $0.55 on Monday the 13th. Its utility token, GST, also hit an all-time low of $0.19 as the supply continues to inflate. StepN did take some measures this week to try and counter some of the out-of-control minting that users were doing to make profit without exercising by introducing a “minting scroll” requirement to mint that is only obtainable through exercising. It’s also worth noting that StepN’s 90D decrease looks small because the 90D price was just prior to the game taking off.
• Decentraland managed to weather the drop better, with only an 11% decrease thanks to some positive spikes, including a strong jump in the Satoshiverse non-native wearable support mentioned above. While “metaverses” in general will likely struggle to see any kind of realization of their extreme valuations, there will likely be growth in the overall concept and execution over the medium-term.
• PlayDapp managed to hold on to the bottom spot as RenderToken struggles during the downturn. Thanks to the success of its recent land sale and forthcoming beta, Illuvium is managing to recover some of the gap to potentially regain the bottom spot.
• As with previous weeks, we encourage looking at the longer-term context and not getting too hung up on short-term movements. The entire crypto market has seen many significant ups and downs over the years and will recover from short-term problems after some lower value shakeouts. The demand for the technology, especially in gaming, is much stronger than any potential temporary crypto winter.

Content Worth Consuming

• A Billion-Dollar Crypto Gaming Startup Promised Riches and Delivered Disaster (Bloomberg) - “That Axie was widely viewed primarily as a way to make money has proven a major problem for its virtual economy. The game is designed to offer ways to both earn and spend SLP within the game. Any tokens spent within the game just disappear. But play-to-earners instead cash out all SLP by selling them on crypto markets, meaning the total number of tokens increases over time. The additional supply depresses prices, in a crypto version of hyperinflation. Players are constantly hounding Sky Mavis to tweak how the game works in ways that would reduce the amount of SLP in circulation. SLP prices peaked last July, but as they dropped, players began hoarding tokens in hopes of a market recovery. This strategy is self-defeating, according to Lars Doucet, co-author of a detailed—and overwhelmingly negative—analysis of Axie’s economy published by Naavik in November. Doucet says Axie is stuck with the “sleeping dragon” problem: Every time SLP value begins to rise, the dragons—the people who have been waiting to cash in their SLP—wake up and liquidate their stashes, pushing the price back down.” Link
• 1 vs 2 Token Economies for Games (Naavik Metacast) - “What are the differences between 1 and 2 token models for games? How can you leverage them to make a sustainable economy? Tokenomics experts Nat Eliason and Defi Vader join your host Nico Vereecke for a deep dive.” Link
• The Purpose of Play-to-Earn Rewards (MetaPortal) - “In DeFi, incentives are usually paid out in a governance token, leading to inflation and sell pressure, and capital acquired via incentives, whether liquidity or TVL, tends to be mercenary and leave as soon as incentives run out. Compare that to the SLP incentive campaign. Rewards are paid out in an inflationary token with limited use and no connection to governance, they don’t create inflation or sell pressure on AXS and can be minted at will by the protocol. What does that protocol get in exchange? You might think that the goal of the SLP incentive campaign was to attract DAUs. That’s partially correct, but we believe that the actual goal, whether on purpose or not, was to attract economic activity, namely marketplace trading and breeding.” Link
• How Can P2E Gaming Become a Sustainable Business?? (azf.eth tweet thread) - “The native gaming token can only be used in the game. That means the amount of utility outside of the token greatly outweighs the game token. Ex. I can only buy NFTs with $SOL and $ETH. I can only pay rent, buy food and go on vacation with USD. As a part of the dev team, the only way I can pay taxes on my fees or merch profit is to convert token to $ETH and then USD. Also if the only way the dev team gets paid is via the appreciation of the token price, they would need to sell into USD to use in the real world.” Link
• Writing a Kickass Whitepaper with Void Runners’ Spacedog (Deconstructor of Fun) - “Though veteran game designer spacedog chooses to remain anonymous, trust us, you've played some of the hit free-to-play games she has contributed to. As one of the developers behind the upcoming blockchain game Void Runners, spacedog recently authored the whitepaper for the game and iterated on it in public with her discord community. In this interview, we discuss Void Runners, the considerations behind writing a whitepaper for your game, and what it's like to work on your game’s design in public.” Link