Similar to the last few months, November maintained a relatively stagnant holding pattern. There were, of course, a number of winners and losers amongst existing titles but relatively few new projects released. While we are certainly in a crypto winter period — at least in terms of the pace of big projects, excitement, and growth of participation — the big questions are: how long is it likely to last, and what will the industry ultimately look like when times get better?
As many will remember, the previous crypto winter started shortly after CryptoKitties managed to capture significant attention in late-2017. During that winter period — from mid-2018 through 2020 — there were a number of teams uncertain about whether or not things would recover. The perfect storm happened in 2020 when COVID gave people more free time, forced them to be more online, and low interest rates and government handouts led to abundant spending. Crypto prices eventually rebounded, DeFi accelerated, NFTs took the world by storm, and Axie Infinity, in particular from a gaming lens, pioneered the play-to-earn boom that reached multi-billion dollar highs. Naturally, such a rapid wave of FOMO — paired with unsustainable economic models and low quality games — was destined to revert, which it heavily has over 2022.
While we wait patiently for the “next big hit,” it’s worth considering the market conditions it will be born in. It’s unlikely we’ll see another strong low interest rate driven money-printing cycle spark speculative mania anytime soon, which means that the next crypto spring might move more slowly and result from real utility over speculation. It’s possible that next year we’ll see heavy recessionary and regulatory pressures further depress speculative excitement about the market. The important thing to consider here, however, is that with games being more resistant to these pressures, there will likely be a number of titles that are fun-focused first and successful with small, optional web3 elements. Much like the internet took many years to go from an obscure academic platform to a ubiquitous part of life, we are likely to see a slow market penetration based on specific interest usage rather than just adoption. Unfortunately, this also means that while Unique Active Wallets, for example, should experience upticks in little spurts, the overall market may still grow more slowly than many early pioneers and adopters initially hoped for.
In November, UAWs saw a minor drop despite decent hits to a number of top games, but web3 users still mostly stayed in the ecosystem. Casual and hypercasual continue to be the strongest growth vectors for web3 games trying to capitalize on the “earning” concept, while NFT-heavy games remain in alpha and beta phases, needing more time in the oven. Despite the NFT “craze” being more of a murmur these days, NFT transaction volumes actually went up slightly, although not necessarily for games. Activity around vague projects off in the distance, like Yuga Labs’ Otherside, show that speculators still remain in the space despite a tighter economy. Fundraising also went up slightly, although the majority is still flowing to infrastructure-related businesses, with a variety of small checks keeping game development going through the winter. Blockchain dominance also continues to shift, with Ethereum continuing to retake market share.
Overall, the signs of web3 sticking around despite the financial bubble and subsequent FTX debacle are strong this month. We caution, however, that not only is the FTX collapse tied to the Luna collapse contagion, but this is unlikely to be the end of the story, as big financial holes tend to turn over lots of previously ignored rocks. We hope FTX will be the last big meltdown for a while, but there are still likely to be a number of unforeseen aftershocks to brace for.
With all that said, let’s dive into the highlights of November, including notable releases, daily active wallet trends, transaction trends, and fundraising news…
Notable Releases
- Gala Games is on a bit of a streak. Spider Tanks was the notable release last month, and this month Superior takes its place. The big twist with Superior is that rather than just being a Gala launcher game, it is also purchasable in Early Access on Steam. The trick is that the co-op FPS/RPG keeps the web3 elements out of the Steam client for now, and players will be able to migrate their accounts over to the web3 version and play with web3 players. This allows Superior to use Steam as a way to test and improve gameplay while introducing the game to that audience with the hopes of it migrating to web3 later. There are plenty of games making the web3 aspects optional over the next year, but rarely you’ll see a title running a separate web2 client just to be able to use Valve’s distribution platform. Early reviews are mixed, especially with the low player count making multiplayer difficult, but it’s at least playable already.
- Other notable releases:
- Ev.io, a browser-based F2P Solana FPS, released a mobile browser playable beta. This helps circumvent app store issues by working entirely in-browser, which is very uncommon for FPS games.
- Wemix released Kingdom Hunter, a strategy trading card game, on mobile app stores. Interestingly, the crypto elements are somewhat mentioned in the iOS App Store description but not on Google Play Store. The game looks like it’s trying to appeal to both the 4X/RTS strategy audience as well as card gamers. Rather than supporting cards as NFTs, the game is focused on earning tokens instead.
- Com2Us launched Dear Ella, a mobile RPG, on its XPLA mainnet. The game is notable for being a mobile gacha RPG from a well-known publisher that also supports tokens and NFTs. The web3 elements aren’t mentioned on either store description, and interacting with them requires using the web browser and C2X Vault app rather than in-game.
- Yumon is a fantasy-sports-like game based around content creators. With the success of fantasy sports games that use trading card elements like Sorare, it will be interesting to see if the concept actually works for internet celebrities.
Unique Active Wallets
- Per DappRadar, blockchain gaming daily unique active wallets (UAWs) saw a small 3% dip in November. Unfortunately, the month was once again without any major releases; however, it included lots of alpha/beta games, mostly for pre-sale purchasers and NFT holders. Even while being down overall for the month, you can still see some strong UAW activity at the end, partially due to the performance of specific games like WAM (discussed further below).
- Most of the top games declined a fair bit in UAWs, and the fallout from the FTX meltdown (and Luna before it) hasn’t been a strong endorsement to attract new players. That being said, a few did fairly well thanks to new events and retention efforts. With games still fluctuating and slowly trickling out, we do imagine there are some older players churning and a small amount of new players entering. There is also some potential for UAWs to drop due to bots either being detected or simply dropping off due to diminished profit.
- On a positive note, however, UAWs have remained semi-stable within a reasonable range for nearly 6 months, which indicates a solid base of participation regardless of profit. Casual and hypercasual games have played a big part in maintaining the numbers, which still come mostly from web3-native players. Where we are likely to see significant growth is from a game that appeals to non-web3 gamers and onboards them without triggering the poor reactions gamers have typically had. It’s entirely possible to get players to create a wallet and interact with the blockchain without ever mentioning those things. The recent Reddit NFT project converting huge amounts of anti-web3 Reddit users into wallet holders is a great example of this.
- 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
- Alien Worlds, a space mining NFT-driven game (that we deconstructed here), saw some solid growth towards the end of the month due to hype around its Battledome tournaments. Battledome is an F2P strategy game in the Alien Worlds metaverse that uses existing Alien Worlds NFTs. Giving players additional utility and incentives for NFT ownership is always a good way to increase engagement, as is the case here. Alien Worlds overall has been faring better than its former nemesis, Splinterlands, in holding its spot at #1 over the last few months. It’s doubtful that the Battledome tournaments will keep it high in December, so unless something else drives high activity, a good chunk of that 34% increase might reverse. Given its transactional nature, it’s also one of the games that likely has the highest percentage of bots in the top 10.
- Benji Bananas, a casual-runner-style game (deconstructed here), also did quite well this month, managing to heavily overtake Trickshot Blitz, although still with lower numbers than the latter’s 529K from last month. Interestingly, Benji Bananas’ biggest day for UAW activity was Thanksgiving (and the 2 days prior), when it jumped from averaging between 15-50K all the way up to a turkey day peak of 85.5K UAWs! Of course, this wasn’t just due to boredom at family gatherings but also thanks to the game announcing a tournament mode for non-pass holders to win passes instead of PRIMATE tokens. That pass is what allowed players to earn PRIMATE tokens thereafter.
- Arc8, a casual competitive platform (deconstructed here), remained positive in the casual space this month thanks to a solid spike between 16K-20K daily during its Card Shark Showdown event in mid-November. Unfortunately, the event numbers have fallen down below some of the previous dailies for October and September.
- Axie Infinity (most recently deconstructed here) continued to drop as it still just sees balance tweaks and incremental additions but nothing that is drawing in new players or retaining the old. Given the pace at which it continues to drop, it wouldn’t surprise us to see it disappear from the top 10 altogether in 2023.
- Trickshot Blitz, a casual competitive billiards game, may have lost some of its casual magic, but WAM hitting the charts this month helped make up for some of the loss of activity. WAM is a single mobile app that contains multiple hypercasual games, and, like Arc8, it uses its token as an entry fee for tournaments as the method for players to earn. The WAM token has been on the market for almost a year, and after dropping heavily in the spring like many other tokens, it seems to have settled at around $0.004. It kicked off November with some tournaments that drew some interest, but the DappRadar UAW chart shows extremely spiky numbers that can go as low as 3 UAWs and as high as 9K. Knowing that this is measured based on smart contract interactions, the spikes could correspond to payout periods or potentially technical issues.
- Over the last few months, most UAW movement centered around casual platforms Arc8, Trickshot/Solitaire Blitz, Gameta, WAM, and Benji Bananas following a clear pattern of quickly grabbing new users with token reward promises but often with issues at retaining them long-term. NFT-ownership-driven games like Alien Worlds, Splinterlands, Upland, Axie Infinity, and Farmers World have managed to stick around in this chart for quite a long time but tend to ebb and flow in terms of overall active userbase, and all have declined heavily from their highs. While we expect more opportunistic casual attempts, NFT ownership has shown a stronger sense of long-term retention, albeit from games with very weak gameplay. This just highlights the fact that high-quality games with NFTs have meaningful retention potential.
Transaction Volume
- Total secondary market transaction volume of NFTs actually saw a modest boost in November of 16.62% compared to recent September and October lows. Of course, as can clearly be seen on the chart, this is still very low relative to the spring of 2022 and prior. Some of the usual expensive but popular NFTs from Yuga Labs and Azuki got bumps around the middle and end of the month. A big chunk of the uplift making up for others going down was a PFP/Art project mint that occurred near the end of the month — Valhalla. It’s a bit surprising to see art projects still having big launches, but perhaps being an LA-based company has some extra influence.
- Ethereum has continued recovering since its drop in September, going from $324M to $410M in volume this month. This shows that the premiere NFT network clearly isn’t going anywhere, with its market share of secondary transactions rising to 77%. A big reason for this, of course, is that the majority of NFT transactions still aren’t game-related and rather focused on art and metaverse projects, which tend to prefer operating on a leading layer 1 network.
- Solana was the only other main network that managed to grow slightly this month, going from $67M to $70M in volume despite widespread fears of FTX contagion (due to a large SOL dump). The network seemed to weather the storm pretty quickly despite the token losing half its value. There are still a number of large non-gaming NFT projects holding these numbers up, like y00t, DeGod, and a solid November debut from Claynosaurz (with $4M in sales). While the network doesn’t currently seem to make a huge impression on gaming NFTs outside of StepN (and the unreleased Star Atlas), the 50% discount in SOL tokens probably provided a nice discount for other NFT purchases.
- Ronin continued its plummet due to being entirely dependent on Axie Infinity as it dropped nearly 50% from $0.14M to $0.08M, which is a significantly bigger drop than last month’s. With nothing imminent on the horizon to change things outside of the Builder program, we expect the network to continue dropping to less significant than even any of the networks we track in the Other category, as it’s already below Tezos, Palm, Cronos, and Algorand. The first week of December has already shown continued weakness, and we expect a pretty lean holiday season for Ronin.
- The Other category itself also grew as a whole from $39M to $40M thanks to Immutable still going strong at $19M in volume; also, Cardano is now included in the data and running higher than Flow, WAX, and even Polygon at $9M. That being said, Cardano is still down pretty heavily from a very strong $23M in October. Immutable also dropped down from $23M in October, but $19M is still higher than its May-September numbers. Unlike Cardano and most of the networks in the Other category (except for BNB), Immutable will have a number of games coming out over the next year that look relatively solid, and gas-free trading should lead to higher volumes.
- Polygon experienced a heavy drop in NFT volumes from $13M in October to $3.8M. Unfortunately, at the moment, Polygon isn’t big for non-game art NFTs, and the games in the top 10 by UAWs are casual with a focus on tokens, not NFTs. Once some bigger games start launching on the network, we expect to see Polygon’s share increase, but unlike Immutable, there are gas fees to contend with, however small. Luckily, Polygon Studios has a lot of good partnerships and investments that are helping bring many games to life.
- Flow and WAX both saw pretty decent losses, going from $10M to $6M and $2M to $1.5M, respectively. Both chains have had very little new 3rd-party development releases and seem to be overly dependent on 1st-party titles as games teams increasingly look towards Polygon/Immutable and artists look towards Ethereum/Solana. WAX, especially, seems to be coasting on Blockchain Brawlers and whatever hype there might be for Music Mogul, while Flow at least has Chainmonsters coming and benefits from the three Joyride-made Blitz series games. WAX also seems to be evolving little as a blockchain while Flow is still pretty actively under development, but of course Dapper Labs laying off a significant number of employees may partially slow the pace development down.
- As a reminder, Cryptoslam only accounts for NFT volumes in the secondary market. It only includes data on the following blockchains: Ethereum, Solana, Avalanche, Ronin, Flow, WAX, Polygon, Panini, Tezos, BSC, Theta, and Immutable.
Top Games by NFT Transaction Volume
- While Sorare may have lost 16% of its secondary market NFT transaction volumes this month, it still clearly remains the top dog among game NFT trading. Of course, it’s important to keep in mind that the design of Sorare itself, being a fantasy sports card-based game, heavily encourages active trading to maximize play. It is a bit surprising, though, that despite having three sports and the World Cup going on, it isn’t doing even better. However, it recently had to contend with French gambling law issues around its World Cup competition that required allowing some free NFTs for play.
- Otherdeed did surprisingly well despite the lack of public activity around the project and the ongoing investigations into Yuga Labs, as well as many lawsuits. It was actually the best month in terms of transaction volume for the project since reaching $30M in July. Based on early December data, we actually expect next month to also be pretty solid for the project.
- Gods Unchained cooled down 19% this month from $22M to $18M. Overall, pivots and incentives from the Gods Unchained team do seem to be working pretty well in driving activity, and other games coming to Immutable are likely to help this in a minor way, as players on the network have more liquid assets on the Layer 2 without needing to deal with bridging and on-ramps. As mentioned earlier, being gas-free does help smooth things out a little, and being a trading card game encourages trading by default.
- Hype around DigiDaigaku has also cooled a bit, but the project still remains strong in trading. The project is slowly revealing more details, and December has more minting in store. There is definitely interest in how things will go in February, of course, with the already infamous Super Bowl commercial that is now revealed to include a QR code for a free Digi Dragon NFT mint for the lucky few who get it first. Considering the “factory NFT” concept behind these NFTs, there is potential for heavy trading of these particular NFTs if the game itself takes off.
- Despite a lot of disappointment around the project by many in the community, the Runi PFP trading cards from Splinterlands are still trading fairly well (albeit at a discount) — up 40% in November. It is unique for being both generative trait-based PFPs, as well as eventually being 1-of-1 playable cards in-game utilizing those traits. Once minting was done, that likely drove much more secondary market activity, explaining the increase in volume, but the Runi still don’t have actual functionality in the game yet. We expect to see Runi potentially dropping off the charts until that utility is in place, which could drive activity again. It’s important to note that Splinterlands runs on Hive, so generally, its market activity doesn’t show up on Cryptoslam, but Runi are unique in that they exist on Ethereum and have to be connected to the game via a wallet like Metamask.
- Era7, a trading card battle game with some spatial strategy elements, also managed to make the list despite losing some volume. It’s the only BNB game on the list, and despite a slowdown in trading, it’s been sitting very comfortably in the top 15 games on DappRadar for a few months now. Like Gods Unchained, it’s also a trading-card-based game, which always provides an edge in inherent tradability, assuming the game is designed well. Players don’t seem to be dropping much either, as the game’s UAWs have been relatively high since July.
- The other Immutable game to sneak into the list this month is Illuvium, which is still managing to encourage land trading following a second private beta. Illuvium is designed with land being critical to the economy, and trades are likely going from weaker hands to those with more bullish expectations of profit due to the resource dependency. While volumes are down 18% month-over-month, keep in mind that’s only a difference between $0.5M and $0.4M. There is potential for more hype if the “Overworld Private Beta” is well received in mid-December.
- Overall, Sorare, Otherdeed, and Gods Unchained have remained constants at the top, with a large gap for smaller projects below. The numbers continue to shrink for all the projects below the top 3, with frequent single-month bursts charting due to an initial mint before dropping off altogether. This is indicative of many web3 games generally not encouraging and facilitating frequent trading and still being subject to speculative pre-sale bubbles rather than sustained trading, like Sorare has shown. Unfortunately, this is likely to continue until the bigger games currently in development release and find a solid audience.
Fundraising Events
- Based on the deals we saw, November saw a small 8% increase in funding to $571M, although, as usual, a majority of that capital comes from a couple triple-digit raises. Despite the slight rebound, this is of course far below some of the really big months we saw early this year.
- The lion’s share of the capital raised last month went to infrastructure projects, as can be expected in a stage where no games have proven to be sustainable big hits yet. Investing in the infrastructure underlying games can also be seen as a way to hedge one’s bet that even if an individual game doesn’t succeed, another hit on the same infrastructure could help balance it out. This seems to be a common play for well-diversified investors like Animoca Brands. The major exception to the infrastructure play here of course is Fenix Games.
- The Fenix Games raise of $150M is a little misleading, as we don’t list funds on here (if we did, the Animoca Brands $2B metaverse fund would certainly dominate!), yet Fenix Games will be using its $150M partially like a VC to invest in and publish games. The company is newly formed, although three of its heads come from being recent execs at Mythical Games (developer of web3 game Blankos Block Party). It’s unclear if Fenix Games has any intention of building any 1st-party titles or acquiring game studios, but it definitely intends on putting money specifically into a number of game projects, some of them web2-first. It’s entirely possible that a number of them may end up on this list in future months. We have yet to see exactly how the company’s strategy will unfold, as right now we only have interviews to go off of.
- The other massive raise this month is the $200M to Matter Labs. The funding is specifically to support its zkSync V2 rollup network, which will compete for a slice of the game network pie. There is a lot of speculation around how important zk-rollup technology will be, with the only current active use case being Immutable’s Starkware-based network. ZK stands for Zero Knowledge, which has to do with the ability to prove something is valid without having to provide all the details, allowing for much more efficient consensus for a rollup of transactions. Polygon is also actively pushing into the space but with EVM compatibility, which could possibly be an edge. At the end of the day, the benefit of the technology revolves around speed and lightness of transaction handling, which will definitely have value to web3 gaming.
- Ramp raised a solid $70M in a Series B and is an important piece of infrastructure needed to support gaming on-ramps. As more games get built on Layer 2 networks, it becomes even more difficult to go from fiat to in-game crypto, as you often have to buy something like Ethereum first and then bridge it over, incurring hefty gas and transaction fees. On-ramps allow going straight from a credit card to a game token or NFT on the Layer 2 itself. Both MoonPay and Ramp have been pushing heavily in this space, with Skyweaver being a notable Ramp user. Ramp also made great headway recently in deploying off-ramps to numerous blockchains, which allows going from crypto back to fiat, making players even more comfortable in spending. There is, of course, some risk here for heavier regulation, but part of the reason for using on-ramps is they handle the regulatory and financial aspect, letting a game developer focus more on its own assets and game development.
- Wemade raised another $46M. It’s already a fairly active web3 game and blockchain developer behind the game MIR4 MMO and the WEMIX PLAY network, although there have been some major issues around its Wemix token lately, as exchanges have claimed inaccurate circulation numbers and delisted the token. Wemade has made good headway in bringing web3 to a receptive Asian audience, and additional funding will help grow that further.
- Roboto Games and Thirdverse both managed to pull in $15M each as game developers. Interestingly, Roboto Games is using the funding to help add web3 elements to a web2 crafting and survival-based MMO it already has in development. Thirdverse, on the other hand, has been a successful VR and web3 developer and is looking to grow that as it is preparing to push out a popular Japanese release, Captain Tsubasa: Rivals, which is based on a long-running soccer manga.
- There is still funding waiting to be deployed that will most likely be strung out over 2023, as the market is acting much more cautious now.
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.
