Top News
#1: Apple Locks Down NFT Policies
Following the previous leaks about Apple allowing in-app NFT sales via the normal IAP payment mechanisms, Apple recently released a series of updates to its developer App Store Review Guidelines detailing the limitations of NFT and cryptocurrency usage (among a few other topics). The new guidelines are notable for allowing NFTs while at the same time impeding almost every aspect of them. As is usual with Apple’s review policies, the rules may seem specific, but there is actually a lot of room for interpretation and inconsistency of application.
The first policy update is a revision to 3.1.1 around content unlocking: “Apps may not use their own mechanisms to unlock content or functionality, such as license keys, augmented reality markers, QR codes, cryptocurrencies and cryptocurrency wallets, etc.” Notably, this policy isn’t just about web3 elements but about any outside unlocking mechanisms. Apple is pretty clearly trying to ensure all app-related economic activity happens through its systems (so it can take its revenue cut). This partially is an attack on web-based stores (especially those that offer exclusives in an attempt to drive transaction activity off the apps), but including augmented reality markers and QR codes shows Apple is thinking bigger than just web3 as it exists today.
The definition of “unlocking content or functionality” does offer some wiggle room for interpretation, but it likely means that, at best, the markers could only be used for web links and content viewing that have no gameplay elements at all. This is likely a way to address other forms of physical or digital sales that might be used to circumvent Apple’s “30% of everything” tax. There are already existing games that would be in violation of this; for example, Pokemon TCG is built around the business model of not selling anything in-app and instead using QR codes from physical card packs to unlock content. There are also web3 games intending to use other mechanisms for content unlock that will now have to decide whether it’s worth supporting iOS or changing course.
The second policy change to 3.1.1 is an addition specifically addressing NFTs: “Apps may use in-app purchase to sell and sell services related to non-fungible tokens (NFTs), such as minting, listing, and transferring. Apps may allow users to view their own NFTs, provided that NFT ownership does not unlock features or functionality within the app. Apps may allow users to browse NFT collections owned by others, provided that the apps may not include buttons, external links, or other calls to action that direct customers to purchasing mechanisms other than in-app purchase.” The part about allowing NFT purchases via IAP was leaked before, but the real catch here is not allowing the unlocking of features or functionality based on NFT ownership.
This means that an NFT purchased using IAP can be used as part of the game, but an NFT acquired using any other means (free or paid), such as OpenSea or even directly from a game developer, cannot do anything but be viewed. Considering the ability to transfer NFTs is often one of the key features, this essentially nullifies most of the purpose of a digital item being a NFT. There’s a grey area of what constitutes viewing vs functionality, and we suspect Apple’s upcoming enforcements (and possible policy additions) will provide more clarity.
Given how the policy is worded, though, even free NFTs would still be subject to view-only despite there possibly being no monetary transactions involved. A lot of developers invested in releasing web3 games on mobile are already scrambling to identify some potential workarounds. Theories include possibly using IAP to “unlock” the functionality of an NFT brought into the game so that Apple is still receiving 30% of some transaction, or only allowing NFTs to be minted using IAP to guarantee that no matter where the NFT comes from, there was an IAP involved in its creation. As usual with the iOS App Store, developers will be subject to the interpretations of the reviewer and appeal processes with no assurance of a suitable workaround. There was already a hesitation among developers around committing to a platform without clear guidance, and now that there is some (unideal) guidance, the effect may be even more chilling.
Despite the predictable negative reaction from the majority of web3 developers, Gabriel Leydon (CEO of Limit Break) in contrast seems optimistic given Apple’s changing stances in the past. He mentions, “When I started on iOS, they banned free apps from using IAP too. Do you remember that?” He even included a follow-up tweet linking to a news article about when Apple started allowing IAP in non-premium apps. It’s a surprisingly positive take, considering Leydon took in $200M for Limit Break’s web3 game project that likely includes a mobile strategy.
Lastly, Apple also made an update in 3.1.5 regarding cryptocurrencies and exchanges: “Exchanges: Apps may facilitate transactions or transmissions of cryptocurrency on an approved exchange, provided they are offered only in countries or regions where the app has appropriate licensing and permissions to provide a cryptocurrency exchange.” While this does provide some good clarity by deferring to local legality, it is focused on transactions but does not allow for actual utility within apps. This of course means you still can’t transact in cryptocurrencies as part of a game purchase that has any kind of in-game functionality.
The lack of support for any kind of cryptocurrency-based purchases forces all NFT purchases to go through the severe limitations of Apple’s rails without allowing for any other on-ramps like Moonpay or Ramp. These limitations include a $100 cap on single purchases, fixed purchase pricing points like $x.99, and the inability to have dynamic pricing based on external market prices. The proposed workaround is to sell virtual currencies, such as gems, and use them to at least circumvent the first two limitations while still technically selling the NFTs as part of in-app purchases by proxy. It is unlikely that Apple will permit using virtual currencies to buy cryptocurrencies except possibly through a licensed exchange, but this is unclear in the policy.
There is one more reason to consider the necessity of IAP a potential non-starter — refunds. Apple’s policies allow for the refund of IAP under certain circumstances, and for game developers this generally means being able to revoke the sold digital goods. In the case of NFTs (or cryptocurrencies), usually there isn’t a way to reverse purchases that were also resold. You can have controls in smart contracts that allow developers to take back possession of (or burn) NFTs from players, but the situation becomes difficult to untangle if the NFT is sold to someone else, as that transaction is not under the control of the developer to properly reverse. This creates a huge risk for game developers already struggling with fiat-to-cryptocurrency on-ramp issues and wanting to easily onboard players into web3. There are also issues with chargebacks from stolen credit cards to contend with as well. If widely exploited, this leaves game developers with the opportunity to only deal in commodity NFTs that don’t hold significant value (we’ve already seen issues that can arise with hacks of “blue chip” NFTs and market blacklisting).
Overall, the policy updates are a big step in clarifying Apple’s stance on NFTs in particular. Unfortunately, it’s clear that the #1 motivation behind these changes is control. Apple seems to care more about ensuring all economic activity rolls through its systems (where it sets the rules and takes a cut) than how much app-based economic activity thrives. These moves slow innovation, reduce economic activity, and make certain businesses no longer viable. It’s one more reason why antitrust alarm bells should be ringing around the world.
There is the possibility that Apple is just testing the waters before being more permissive, as Leydon insinuates, but we’re not so sure. Lately Apple only budges its rules when threatened by regulations (and even then often fights back). Google has yet to offer a public stance, which has the potential for more openness in light of Google’s interests in supporting web3 businesses, especially with its Cloud sector. The battle for web3-friendly platforms is critical due to the essentially homeless nature of the technology right now, having only found full acceptance in desktop web browsers and possibly the Epic Games Store. In short, this story still has a long way to play out.
#2: MetalCore Shows Some AAA Promise
One common complaint about the current state of web3 gaming is the general lack of high-quality gameplay, with many games being little more than dressed up DeFi elements or rudimentary web games. Despite the huge interest in high-quality titles that put “fun first,” good games take significant time to make, and we are only now finally starting to see these games emerge thanks to the many alphas popping up. These alphas range widely in quality, but one game showing potential with its Open World Alpha (for NFT holders) is MetalCore.
MetalCore certainly has many rough edges and polish left to fix, but what’s been shown so far teases a possible solid AAA release. The gameplay is akin to something like Planetside, Battlefield, or MechWarrior with a mix of on-foot FPS combat and large mech fighting. Mech combat is interesting in that it remained a relatively niche genre on PC / console throughout the ‘90s and early 2000’s but has slowly gained popularity since (even on mobile). There is a seemingly strong overlap between web3 gamers and those who are into sci-fi and fantasy, increasing the potential for this genre to hit home. The game also benefits from its good visuals thanks to the use of Unreal Engine, a popular choice for giving web3 titles a stronger sense of production value. The current alpha is only a small slice of the game, as expected, but the alpha’s roadmap (3 phases that go through March 2023) shows several incoming features:
The actual gameplay (which builds on top of a pretty vague litepaper) seems relatively varied with multiple vehicles/mechs alongside the first-person shooting elements. The roadmap makes it clear that there is still a huge amount of content to be added, and, if delivered, there is definitely potential for a successful game. Where there’s more uncertainty, though, is in the web3 and economy aspects of the game. There has been public mention of player-owned NFTs of vehicles, pilots, land, and more, as well as tokens, some of which were sold to investors. Knowing the state of many games in this volatile space, it’s likely that the developers are still exploring potential tweaks or pivots to the tokenomics as they learn more about the challenges of sustainable web3 elements. Given the capability that Studio 369 has shown in improving the Open World Alpha, we look forward to seeing the progress of MetalCore and other games that may expand the web3 gamer audience.
Game Launch Radar
- GRIT released its closed beta on the Epic Games Store for players with keys. Link
- Legends Reborn, a Gala Games TCG, launched its alpha. Link
- Gala Games revealed more information on its upcoming Battlestar Galactica game. Link
- Mech Infinity, a battle royale game, released a demo. Link
- Lattice released an open source fully on-chain Minecraft-like game running on Optimism. Link
- Blast Royale released its penultimate update (0.7.0) before its final testing. Link
- Mantisco, a South Korean developer of battle royale game Hunter’s Arena: Legends, announced a web3 game in the series on Immutable X called Hunter’s Arena: Rebirth for release in 2023. Link
- Chainmonsters’ demo launch doubled its user count in a week. Link
- Fable announced an AI NFT metaverse project, The Simulation. Link
Other Game Announcements
- Splinterlands launched minting of its unique playable PFP project, Runi, for whitelisters. Link
- Town Star held a bonfire event to burn excess overproduced game NFTs. Link
- Internet Game partnered with the SAW movie franchise for a second annual Halloween event. Link
- Ambrus Studio announced a partnership with Multiverse Play to onboard web2 players for its open source MOBA sandbox game, E4C: Final Salvation. Link
- DragonMaster announced a $3K tournament as part of its upcoming Season 7. Link
- Metarun, a P2E multiplayer endless runner, officially launched its marketplace. Link
- Axie Infinity: Origin launched its new live-ops contests feature, “The Premiere.” Link
- Ev.io released a new Last Team Standing game mode. Link
- Xandar, a BSC MMORPG, announced plans to migrate to Myria to help scale. Link
Funding Announcements
- Celestia raised $55M to launch a new modular blockchain in a combined Series A and B round led by venture capital firms Bain Capital Crypto and Polychain Capital. Link
- Journey announced an acquisition of software development studio The Devhouse Agency. Link
- Arcade raised $3.2M in seed funding for its P2E gaming platform led by Crypto.com. Link
- ChainSafe raised $18.75M in a Series A funding round led by Round13. Link
Ecosystem Updates
- Reddit’s NFT launch has led to the creation of 2.5M wallets. Link
- Telegram announced it will be launching its web3 marketplace soon. Link
- Hester Peirce of the SEC mentioned in an interview that some NFTs may be treated as securities. Link
- Rarible launched a series of significant updates to its platform it is calling Rarible 2. Link
- Metaverse casino Slotie has been ordered to cease NFT sales by a Texas Securities Board. Link
Notable Market Moves
- It was another relatively quiet week regarding the top blockchain gaming tokens.
- ApeCoin had a good week thanks to some positive messaging from Yuga Labs. In an interview, two of the co-founders mentioned a targeted release of 2023 for the persistent world beta and compared gameplay elements to an adult Roblox. Given the overall lack of detail about the project so far, the statements were an injection of confidence for ApeCoin holders. We’ll of course see how well the team delivers on these lofty goals.
- Last week, we noted that there’d be negative pressures on Axie Infinity as it experiences a large token unlock (on top of a slumping playerbase). We were right; it was the worst performer of the week. Unfortunately, we don’t see a turnaround in sight since the game is still fighting to onboard new players while older players who are there to earn money fade away. We’ll see what the Sky Mavis team comes up with next, but a fully diluted market cap of $2.5B is still incredibly ambitious.
- StepN continues its slow decline as both new user growth and its existing playerbase dwindle. Much like Axie Infinity, there are still diehards unwilling to give up, but there is little motivation at this point for either the GST or GMT tokens to rise. Also like Axie Infinity, much of the profit that initially excited users was due to new user growth and not any sustainable form of economic flow. Without some very dramatic boost, we expect that StepN will continue its slow creep down the charts until eventually even the loyalists realize it's easier to just exercise without the app.
- As always, we recommend looking long-term, even in weeks of positive upswings. There are a lot of factors in day-to-day or week-to-week prices, including the outsized influence of Bitcoin and Ethereum on most gaming tokens. We remain long-term optimistic in the growth of the market, but hurdles are yet to come down the road.
Content Worth Consuming
- Yuga Labs Envisions the Otherside as a Web3-Native Roblox for Adults (Playtoearn) - “A key takeaway is that the duo thinks the Otherside will eventually become a Web3-native Roblox. But while Roblox is catered to a younger demographic, Aronow and Solano said the Bored Ape virtual world is geared toward adult audiences. “I think one way of thinking about it is as a semi-decentralized but absolutely Web3-native Roblox,” said Aronow during the interview. "But obviously much better looking and geared for a slightly more adult audience.” According to its official website, Otherside is a gamified, interoperable metaverse comprised of MMORPG elements and Web3-enabled virtual worlds. It is also a world-building platform that allows users to play, create, compete, connect, and explore together. In the podcast itself, both co-founders emphasized that the future of NFTs is in gaming. But Yuga is doing things differently than mainstream game developers. Instead of building a full game before releasing it to the public, the company brings in NFT holders to test out the game through multiple ‘trips’ or iterations.” Link
- NFT game design is hard (METAVERSAL) - “When it comes to “what makes for a good NFT game,” we have to go back to the fundamentals of games, period. And for that we have to understand why people play games in the first place, which I think Sal.xyz described perfectly in the tweets above: “to test our skills, to have unique independent experiences, and to connect with others.” With these pillars in mind, there are ways to build NFT games smarter in order to optimize for these fundamentals and mitigate the challenges of economic outflows and overspeculation.” Link
- Matthew Ball and A16z’s James Gwertzman discuss how to unlock the metaverse (Venturebeat) - “Your reputation can travel with you from place to place, as will your friends list. Games will start to overlap with each other more. And a world built for one game might get reused in other games. Those who are into user-generated content and modding could reuse those places for new experiences. The creator economy will come into games themselves. “That’s going to really be a huge driver of the metaverse, and everyone will be expected to create and contribute, not just be a passive observer,” Gwertzman said.” Link
- Are Reddit & Polygon Bringing Back the Bull Market? (DappRadar) - “The Senses x Reddit collection and the Foustlings x Reddit collection are the most successful ones. For example, in the last 30 days, The Senses x Reddit collection hit a trading volume of 387, marking a surge of 516%, while the Foustlings x Reddit collection had a trading volume of 369 ETH, an impressive increase of 524%. An important highlight is that those who purchase the NFTs get licensing rights, enabling redditors the opportunity to use these NFT avatars in and outside the platform, which can unlock further utility. For example, you can modify their look with various merchandise from the avatar builder.” Link
- Animoca Brands’ Yat Siu on why Asian companies may have the edge in blockchain games (Venturebeat) - “”It’s a great time to be a gamer,” he said. “Maybe the valuations aren’t as lofty as they were nine months ago. But you can still raise money if you’re a great studio with a great concept.” He added, “I think of this as an economic development. The metaverse/Web3 is like the construction of a new nation. If you look at the growth of Korea, it’s one of the most wealthy nations in the world. But 30 to 40 years ago it was a military dictatorship. There are 3.4 billion people who play games who still have no ownership of the assets that they have built over time. If you believe that this is a better internet, that the DAOs and blockchain tokenization and Web3 and the open Metaverse are the future, then, bumps on the road aside for the long-term, I think we’re going to be okay.”” Link
- Making Sense of Web3 Trends (The Metacast by Naavik) - “Anyone involved in web3 knows how lightning fast the space moves. Every single day there is some major new development, every week there is a new NFT project that comes along and captures a huge amount of mindshare and huge amounts of trading volume, and every month whatever the prevailing “meta” is is totally upended, and the rules of the game get rewritten by the next hot hotness. In this episode, your host Niko Vuori talks to two independent web3 analysts who cover the space. Thomas Pan writes a daily web3 newsletter called “Web3 with TPan,” which provides a fun and entertaining analysis of what is driving the web3 news of the day. Chris Sotraidis writes a newsletter called “Spatial Awareness,” which is less frequent but goes really deep on topics, especially as it relates to established web2 brands engaging with, and building in, web3.” Link
- Sebastien Borget Gives Us a Tour of The Sandbox (Deconstructor of Fun) - “Animoca-Brands-owned Sandbox is an undisputed pioneer and leader in the blockchain gaming space. That's why we are beyond excited to have Sandbox COO Sebastien Borget speaking with Ethan on the podcast this episode. Sebastien takes us through the history of Sandbox, which started as a mobile, free-to-play game, and explains how the Sandbox team saw the early potential in blockchain gaming lightyears ahead of most other established players in the space. From the token to the land sales, to the brand partnerships, to the creator tools, you will exit this episode with a much deeper understanding and appreciation for The Sandbox than when you started it.” Link
