Source: Tech in Asia

In March, there was a fair amount of exciting news and funding around blockchain gaming but relatively little in the way of new playable games. Unique active wallets managed to grow 10% from February’s lows, but there were definitely winners and losers in terms of user retention. March also saw a big uptick in funding compared to February, and given the tremendous amount of capital from big funds and orgs (Animoca Brands, Andreessen Horowitz, etc.) waiting to get deployed, we expect that we’ll continue to see significant investments made in the future.

One notable point is that NFT sales suffered this month, but after such an elongated period of hype — and limited industry-shaking releases — it’s not surprising to see the market temporarily cooling off. Monthly changes also still depend on whatever big sales are taking place, so month-to-month volatility is to be expected. That said, spending will likely start shifting toward more proven projects, and rampant speculation based on promises (and ponzinomics) will pull back; this is a sign of normal and healthy market behavior. Also, despite reduced gas fees, Ethereum as a hotspot of NFT activity lost some market share as other networks like Solana gained further traction.

We dive into these trends and their drivers in more detail below.

Unique Active Wallets

Source: DappRadar
  • Per DappRadar, blockchain gaming daily unique active wallets (UAWs) increased 10% month-over-month to 1.21 million. This is a modest recovery from last month’s decline, but as we can tell from the relative flatness since September, the industry is still waiting for the next breakout game to take this growth to new heights.
  • There weren’t any obvious UAW trends that were relevant to most games this month. Many games had flat UAWs, many saw decreases, and some like Alien Worlds managed to see strong growth.
  • Activity in ponzimonic-driven games like Bomb Crypto may not recover, and these types of games will gradually lose market share. However, many passionate web3 gamers will usually find a new game of interest to replace their time and effort. It’s a strong signal of continued interest in the space that UAWs don’t drop significantly when there’s a period of relative stagnation in new popular games or even major milestones in the top games. It’s unlikely there will be a big influx of new wallets until a new game arrives that manages to draw in more non-crypto native players, potentially later this year.
  • As a reminder, UAWs are not a perfect indicator of actual players. 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.

Top Games by Unique Active Wallets

Source: DappRadar
  • Alien Worlds was able to surpass Splinterlands (which had mostly flat UAWs) to regain the top spot. Part of this may be due to excitement over Huobi listing TLM/USDT for trading, which led to a large spike in volume and a jump in users mid-March. Keep in mind that Alien Worlds is a very transaction-centric game and is susceptible to bots, so there may have been an increase in that activity as part of the bump.
  • Bomb Crypto continued its descent (-46%), but it’s dropped was outpaced by X World Games completely falling all the way down to the 23rd spot on the list with a 78% drop over the last 30 days. This provided a good opportunity for Upland to creep up a spot despite shedding some players. April may see some temporary growth for Upland due to its Spark Week event starting on April 11th.
  • DeFi Kingdoms saw increased activity (+28%) surrounding the hype of its Crystalvale expansion launch as an Avalanche subnet (those UAWs not included here). Remember, this is more of a DeFi system with a gamified wrapper and less an actual game.
  • Axie Infinity continued dropping players (down another 23%) as earnings remain low, SLP stays depressed, and players wait for Origin’s full release. Players of the Axie Infinity: Origin Alpha likely won’t be contributing to Axie Infinity’s main player base anytime soon as Sky Mavis looks to tweak Origin in the open prior to a full release.
  • Galaxy Blocks experienced a wild month. Its UAWs saw a sharp spike during the first week of March, and the game hit record UAW highs before crashing at the end of the month. StarSharks is hot on its heels in 11th place, and there’s the possibility that it breaks into the top 10 next month as the game continues to pick up some disenfranchised Axie Infinity players. There’s also a strong possibility that Sunflower Land makes a return to the top 10 given its beta opened on April 7th with strong interest.
  • Despite the value of Pegaxy’s VIS token sitting at all-time lows, the currently ranked #12 game may make a comeback in April. On March 30th, the game’s stats-based racing and genetic breeding went live and will feed into a breeding event from April 3rd to the 10th. Later in April, there’s also the release of a mobile app slated. None of this solves Pegaxy’s deeply rooted ponzinomic issues, but it’s still one to keep an eye on in the interim. Can it swing back from economic implosion or is faith in the team permanently lost? We shall see.

Transaction Volume

Source: CryptoSlam
  • The NFT market has cooled off significantly from January’s levels. Outside of the fervor surrounding the Bored Ape Yacht Club and its metaverse ambitions, there haven’t been many particularly noteworthy NFT releases to drive up sales. Even metaverse land sales have finally started cooling off; the active userbases on these platforms simply haven’t been high enough to prop up lofty valuations.
  • Of course, this decline isn’t permanent. As development on some of the more anticipated games this year reaches the point of NFT sales and playable betas, there should be an uptick in NFT purchases. And as any games start truly breaking out into the mainstream, today’s sales will increasingly look like a drop in a bucket; it just takes time.
  • In March, more networks took a bite out of Ethereum’s NFT market share, which fell from 85% last month to 62% in March, despite some reduction in gas fees. The two biggest culprits are Avalanche (thanks to Crabada) and Solana, which has seen meaningful development activity (growing from 6% to 18%). With OpenSea now supporting Solana NFTs, more game releases in the pipeline, and its lower fees / higher speed blockchain, Solana could continue to take share. Avalanche’s subnet architecture has also become a popular choice for games looking to run a sidechain, and Avalanche is putting serious effort into helping developers move to the platform. Immutable is also likely to join this list as it continues to attract game developers.
  • 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.
Source: CryptoSlam

Top Games by Transaction Volume

Source: CryptoSlam
  • Six of last month’s top 10 — Crabada, Sorare, Axie Infinity, NFT Worlds, WebbLand, and Metroverse City Block — remained on the list, but the orders shuffled around and transaction volume fell across the board. Crabada saw the least decline, so it claimed the top spot; there’s little chance it’ll stay there for long, however.
  • Like last month, the second spot is taken by a new game — this time a social deduction game called Imposters, which was made by experienced game developers.
  • As Axie Infinity works towards the fuller release of Origin (and now is tangentially dealing with the Ronin hack), it slipped down further the list (now at #4). For broader context, Axie Infinity’s volume is only 1/20th what it was when we did our first monthly update back in October.
  • Despite strong sales earlier this year, NFT Worlds lost some of its steam as metaverse land sales decelerated. That said, Decentral Ice Poker — which is Decentraland-based — did manage to make the list after it saw meaningful secondary sales after an NFT minting period. Also worth noting, the one land sale that did make the top 10 (that isn’t part of a bigger platform like Decentraland or The Sandbox) was for Heroes of Mavia. The game is still in development but offers land NFT staking in the meantime.
  • As usual, a few of these are likely to rotate out next month, such as Imposters, Heroes of Mavia, and Decentral Ice Poker. In their places will probably be a few similar one-offs until bigger hits start getting published. It will also be interesting to see how far Axie Infinity will fall (again) as Origin releases and the Ronin hack affects Axie-related transactions.

Fundraising Events

Source: Various
  • Fundraising activity recovered from February’s dip; we count 104% month-over-month growth in funding amount to over $1 billion. This was, of course, largely driven by mega-raises like the $450M raise by Yuga Labs, which is building out the Bored Ape Yacht Club ecosystem. Immutable also had a big $200M raise, LayerZero raised $135M, and StarkWare raised $100M.
  • There were also numerous smaller $2-10 million seed rounds for games. Many of the games funded this month pitched themselves as some form of “metaverse” offering, which is unlikely to pan out for a lot of them in the way intended. There were also some interesting game-related platforms/engines such as metaEngine, Joyride, and C2X that could see further funding if successful.
  • A number of new investment funds also recently raised meaningful capital, so expect to see much of that money get deployed over the coming months. Despite the pricing reset going on across venture (and public) markets, we’ll likely see a mix of game studios and technology platforms raise at ever-larger valuations. Regarding blockchain games specifically, we expect investors will get more savvy and start more diligently honing in on games with more sustainable and less ponzinomic business models.

Don’t miss our next issue!

Sign up to receive the #1 games industry newsletter, straight in your inbox.