Top News
#1: Sorare x MLB
Sorare recently announced a deal with Major League Baseball (MLB) to launch the first licensed F2P and NFT-based fantasy baseball game. Players will create athlete card-based teams and compete in tournaments, with results based on how the athletes perform in real life. This is big news for Sorare but also shouldn’t come as a huge surprise. After all, the company has already been largely successful with its fantasy soccer/football version, which boasts about 370k monthly active users across 185 countries, over 1.8M registered users, and $325M in 2021 sales. Also, based on the below data from Dune Analytics, Sorare has done a great job onboarding new players (the orange) in recent quarters:
In terms of NFT-based sports collectibles, Sorare’s main competitor has been Dapper Labs, which has products for the NBA, UFC, and NFL. However, Dapper Labs’ products don’t offer any real game features, making Sorare the ideal entry point for sports enthusiasts who also like fantasy sports (and ideally NFTs).
Obviously, working with MLB — which boasts over 10M viewers and a long history of card collectibles — is a phenomenal opportunity for Sorare. The move should also help Sorare attain a larger American audience since soccer isn’t as popular as baseball in the country. The move is beneficial for the MLB, too, since TV broadcast interest in traditional sports has declined over the past few years, and the league is seeking adjacent forward-looking revenue streams.
It’s also worth remembering that Sorare raised a $680M Series B last year (led by Softbank) at an eye-popping $4.3B valuation. If it were to raise in today’s environment, the valuation would likely be far less, but it does mean that Sorare has enormous resources to deploy to make this new experience (and more to come) high quality. And, sure, it’s even possible (given FIFA’s break with EA) that Sorare has a shot at working even more closely with FIFA in the future, which would give its soccer product a boost.
While the MLB content won’t hit until later this summer (likely right before the World Series), the timing is ideal thanks to the full release of the Sorare iOS app this week. The Android version is currently in beta and has the potential for release with MLB support. We’ll be keeping an eye on how this new product performs when it launches in a couple months.
#2: Splinterlands Shakes Up Its Rewards System
Splinterlands, which we deeply covered in a previous deconstruction, has proven to be one of the more sustainable blockchain games due to its focus on gameplay and collecting over earning. In the team’s effort to maintain balanced rewards and deal with bot play, it has recently needed to make some previously unpopular choices in how rewards work for low-ranked players. Splinterlands is one of the few games that is ok with bots participating in the economy as long as they are contributing to it, and newly announced reward changes take that into account.
Normally, in order to earn rewards in the game, a player needs to purchase a $10 “spellbook” that provides a large collection of non-NFT “starter cards” to play with. Now, in order to combat bots and low-investment players from reaping outsized rewards, the new rewards system specifically reduces the overall rewards in proportion to how many starter cards a player uses in matches. This new system — called “reward shares” — helps scale battle rewards, daily quest rewards, and even seasonal rewards based on the cards used throughout. In simplified terms, those who can earn the most generally must also buy the most.
Previously, Splinterlands already boosted rewards if a player used older edition cards or special gold foil cards as a way to reward spenders, but the new changes go further in scaling rewards more directly. In order to help compensate for the complete lack of rewards for players who only pay the $10, purchases of the spellbook will now come with 3,000 Credits to be spent on cards. The system should allow for some easy bootstrapping for thrifty but skilled players as cards can be rented for cheap in addition to being purchased, allowing a skilled player to earn from the rented cards and use those profits to continue renting.
However, it also means that bots can do the same provided they are managed correctly. It’s important to note that due to the way the rules change per match, players will need a wider variety of NFT cards than the 3,000 Credits will get them to avoid using starter cards at all. It’s also worth mentioning that Splinterlands already enforced some level of “spend gating,” as moving up the ranks each season required minimum levels of “collection power” that represent the total value of a player’s card collection.
The upshot of all this for players is that due to scaling rewards both on skill rank and spend, overall rewards given out will be significantly increased. There are also some changes to the daily quest system and loot chests to incorporate “rewards shares.” The system is due to go into effect starting with the new season on May 31st.
Splinterlands’ utility/rewards token, DEC (Dark Energy Crystals), has managed to maintain a price at or above its soft-peg value of $0.001 for a significant amount of its lifespan thanks to continuous attempts to keep the economy balanced. At the time of writing, the price is almost exactly the soft-peg value, but it will be worth watching next month to see if the value goes up again.
Attempting to adjust rewards based on spending as a way to maintain a more sustainable economy is something we are seeing more frequently. For example, Bomb Crypto tried this recently with its poorly implemented ROI nerf system. Upcoming Blast Royale is using personal reward pools that take into account players’ NFT ownership and spending on repairs; and Golden Bros (in early access) scales rewards based on the rarity of the costume NFT used. We expect this trend to continue as games look to find ways to better manage the value flowing out compared to the value flowing in.
Game Announcements
- Axie Infinity: Origin beta was released for Android devices. Link
- Crabada officially launched its new Battle Game on desktop and mobile. Link
- Gala Games is running a Town Crush event for its Gala Chain testnet as part of its May Mayhem campaign. Link
- Animoca Brands announced more details about F1 Delta Time asset swaps and rewards. Link
- Animoca Brands announced a partnership with OliveX on an allowlist campaign for move-to-earn game Dustland Runner. Link
- Animoca Brands is adding KYC requirements for Crazy Defense Heroes TOWER reward claiming and The Sandbox Land purchasing.
- Yuga Labs released more information on The Otherside via a lore-related webpage. Link
- The Sandbox released a roadmap update for Land owners.
- The Sandbox is running a game jam competition in collaboration with another Animoca-Brands-owned property, Gamee. Link
- The Sandbox is also hosting another design competition partnered with Star Atlas. Link
- Pegaxy launched its mobile Android app. Link
- Pegaxy announced a release date of May 23rd for its Themis Voting Platform. Link
- Gods Unchained announced royalty fees for secondary market transactions on card NFTs. Link
- PlanetQuest is organizing a planet NFT sale with help from Immutable. Link
- Towersmash released an open pre-alpha of its deck-building, tower-attacking Wax game. Link
- CyBall used a community NFT pool buy bot to purchase and burn 1M in $CBT. Link
- Gotchiverse announced its Universal Basic Income system. Link
- Zodium announced its first P2E game, “The Land of Battle.” Link
- Summoners Arena is running a series of events for its mainnet launch on May 26th. Link
- StepN released version 0.6.6 of its mobile app with some new features. Link
- Tatsumeeko introduced its farming feature preview. Link
- Sipher revealed a work in progress version of its Moonbase Station market. Link
- Aurory released early access to its Nexus play. Link
Funding Announcements
- Andreessen Horowitz raised a $600M fund to invest in games. Link
- N3twork Studios raised $46M in a Series A funding round led by Griffin Gaming Partners for its two web3 games, Legendary: Heroes Unchained and Triumph. Link
- Metatheory, the developers of Duskbreakers, raised $24M led by Andreessen Horowitz. Link
- Illuvium announced a land sale from June 2nd - 4th. Link
- Phantom Galaxies, a space mech game, raised $19.3M in Private Planet Sale. Link
- Realms of Ethernity listed its $RETH token on Huobi on May 16th.
- The Sandbox announced a $50M startup fund with its parent company Animoca Brands, as well as Brinc.
- Battle Derby raised $1.8M and joined the Chromia ecosystem. Link
Ecosystem Updates
- YGG announced a partnership with Magic Eden, a Solana marketplace. Link
- OpenSea rolled out improvements to its verification process and plagiarism detection. Link
- Terra proposed a poorly received plan to revive the blockchain. Link
- Blackpool, a hedge fund for NFT governance, announced a partnership with Guild of Guardians. Link
- Square Enix mentioned interest in issuing tokens as it dives further into web3. Link
Notable Market Moves
- Despite the drastic correction to the entire crypto market in the wake of the Terra meltdown last week, 6 of the 10 tokens in the top 10 are up this week. Don’t over-read into that, though.
- APE’s performance stood out in a positive way as the slow drip hype for The Otherside continues, and some goodwill was garnered after Yuga Labs refunded the excessive gas fees from the Otherdeed sale.
- Decentraland’s MANA token managed to overtake The Sandbox’s SAND token. Excitement from The Sandbox’s Alpha Season 2 died down, and Decentraland got some new experiences from Wilderness MMORPG, the return of Megacube, and a game jam. Both platforms have also seen the values of their digital land decimated, which makes sense — expectations far exceeded reality (and still might).
- StepN’s GMT token continues to bounce around the $1.30-$1.50 area after losing half its value in the last 2 weeks ($3.52 on May 5th before dropping to a low of $0.92 on May 11th). The StepN team continues making modifications to GMT’s involvement in the game’s economy as it looks to fight vocal doubts of the sustainability of the current move-to-earn model. Of course, if something is too good to be true, it likely is; all ponzinomic models must flame out eventually, StepN included. We’ll cover this model more deeply in a future deconstruction.
- Wax managed to reclaim its spot from Illuvium, although it may be a temporary victory as Illuvium is ramping up through land sales and is on its way to an eventual release. Wax and Enjin, out of the current top 10, are also the two tokens most down over the past year, as the overall appeal of their networks has waned.
- AXS also managed to claw back some of its value, although not enough to provide any valuable signal. Shifting Axie Infinity to a more sustainable model is going to be challenging and anger a lot of community members in the process, but we’ll dig much more into what the game’s redemption arc could look like (or not!) in an upcoming deconstruction.
- We’re clearly in a bear market, given the fact that all of these “top” tokens are down 60-80% in the past quarter alone. The entire market cap of blockchain games has been greatly reduced, rapidly. Frankly, many lackluster projects could (should) fall much more, but it’s also a time when the builders that will drive the next bull market are hard at work building games that will attract much larger audiences and bigger, more sustainable spending. The top 10 may shake up some in the near-term — although projects like APE, MANA, and SAND will likely stay toward the top — but expect extreme turnover as more games and networks launch in the coming months and years.
Content Worth Consuming
- Crypto Gaming is Broken. How Do We Fix It? (Nat Eliason) - “Let’s say the price averages out to $10,000 per land across all 100,000 pieces of land. That’s about $1b of Otherside land. If we generously assume the BAYC metaverse will be popular for 10 years, you have to ask if you can at least break even on your land in that time period, assuming you aren’t happy to spend $10,000 just to play with no promise of return. The only way you get a return is if you can sell your land to someone else for more, or if you can generate a good cash flow off of it. But selling it to someone else for more is the normal ponzinomics we’re used to and want to move away from. But you can see the problem here pretty quickly. Assuming you want at least a 10% annual cashflow on your BAYC land, the whole ecosystem would need to pay out $100,000,000 a year to land owners. Say BAYC can match Fortnite’s popularity, which generates about $5b a year in revenue. Could BAYC give away 2% of its revenue to land owners?” Link
- Robbie Ferguson: How to design and scale blockchain-powered game economies (Naavik Metacast) - “Robbie Ferguson is Co-founder at Immutable, builder of the first Layer 2 for NFTs on Ethereum. Immutable has also created the Blockchain Games Gods Unchained and Guild of Guardians. He joins your host Nico Vereecke today to discuss all things Blockchain Gaming. We go into #1 Why Game Devs should work with Immutable, #2 Ethereum Scaling: Zero-Knowledge Rollups, #3 What Blockchain brings to games, #4 Practical Tips on designing a Blockchain-Powered Game Economy” Link
- Why build Guild of Guardians out of all possible blockchain games (Derek Lau) - “Given this challenge, we needed a very strong thesis for winning. We did not believe that simply making things tradable in a game would be sufficient to win. To illustrate - yes we could have tried to build Fortnite but make the skins tradable. But would our version of Fortnite + skin economy be more fun than the Fortnite that exists today? This would be a mammoth challenge. Instead, the core thesis was that we needed to leverage the full breadth and depth of web 3 to really win. See this article on specific examples of these advantages. The key questions we asked ourselves: In which genre do we have the greatest likelihood of disrupting as a game? In which genre does blockchain make the game significantly better for players?” Link
- A framework for the community fund (Konvoy Newsletter) - “A majority of holders do not use them in game: This is already obvious when looking at wallet activity for active games. Sanbox’s token, SAND, has ~140k holders, however, only 1-2k wallets (~1-2%, wow)a few thousand wallets transact with SAND every day (Etherscan). This begs an important question: are players truly benefiting from the majority of token drops? Inactive holders are not players and the lack of activity in these wallets shows that there is no benefit to granting tokens to these people if they do not meaningfully contribute to the project and only plan to dump at an attractive price. Actual players, on the other hand, will make decisions based on the quality of the game (in conjunction with financial motivations).” Link
