The month of September was a continuation of what the blockchain games industry experienced most of the summer — no major game releases, waning hype around many older games, but some light success from a few new games. There is also a strong sense of pent-up anticipation for the next big wave, but it comes in the face of a weak crypto market, not to mention global macroeconomic risks. Unique active wallets (UAWs) stayed relatively steady — mostly shifting between games — with some percentage likely attributable to the stable bot army.
Casual and hypercasual games have slowly been taking over the blockchain gaming charts, and until more notable games come out with a bang, the way Axie Infinity did, this trend is likely to continue. Transaction volumes have yet to recover, but we’re also not seeing further major declines, which signals at least some staying power regarding NFTs, even in the depths of a bear market.
Additionally, blockchain market share continues to lightly shift around as other L1s and L2s erode Ethereum’s dominance (despite the successful Merge event). Fundraising also dipped month-over-month, but it’s still relatively strong, there’s lots of dry powder, and those who are left are nearly all in it for the long-term (not speculators) despite the risks (such as regulatory uncertainty).
With that, let’s dive into the highlights of September, including notable releases, daily active wallet trends, transaction trends, and fundraising news…
Notable Releases
- There weren’t any groundbreaking releases this month, yet there were a handful of notable playable releases:
- Dimension X, a semi-idle RPG, has performed decently. Rather than drop after the initial free minting, the floor prices for its NFTs actually went up despite the game being F2P. It’s the third most played game on Flow, with the two previously featured Blitz games taking the top two spots (of course, there isn’t much competition on Flow yet). Regardless, the game is continually being developed and sees strong community engagement. So far, it has reached $691K in NFT sales (a $221 average sale) and a sales volume of nearly 7K on its Gaia Marketplace.
- Blankos Block Party finally made its debut on the Epic Games Store, becoming the first web3 game on one of the two dominant PC game marketplaces (with Steam still being anti-blockchain for the time being). The launch was also paired with a brand new season of content to keep existing players retained. With easy custodial onboarding and promotion on a popular platform, the game will likely reach additional adoption amongst gamers who aren’t anti-web3 and are focused on having fun with friends instead.
- Cross the Ages, a trading card game with notable backing from Ubisoft, Animoca Brands, Polygon, and many other VCs, released an Open Beta. It also announced a competition with a $20K prize pool. While it is joining a slightly crowded market, its gameplay greatly differs from other TCGs. The beta does have some stability issues but allows for playing against real players and gives a good idea about the gameplay.
Unique Active Wallets
- Per DappRadar, blockchain gaming daily unique active wallets (UAWs) saw small 0.9% month-over-month increase to 866.27K. This metric has been mostly flat the entire summer, and it could continue as such throughout the fall. However, given the number of games hitting alpha and beta status, we may see an uptake by the end of the year depending on when the more notable releases actually occur.
- While most of the more traditional P2E games have fallen, casual games (like Solitaire Blitz and Trickshot Blitz) and hypercasual games (like Gameta) have managed to find enough of a userbase to make up for the declines elsewhere. Of course, it’s tough to tell if these “casual” players are new blockchain players / wallets or are existing players biding their time until more exciting releases occur (or are bots). Given the number of high quality casual mobile games that already exist, our assumption is that most adopters are still in it more for the money than for fun. This will need to change if UAWs are to multiply from here.
- 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. Bots are also common across many games due to their ability to earn and will also show up in UAW numbers.
Top Games by Unique Active Wallets
- Gameta’s (the hypercasual game) BNB Chain release managed to exceed last month’s expectations. While the Solana version has declined this month in terms of users, the BNB Chain version gained the majority of its players right at the end of August and carried them throughout all of September. It’s possible that the BNB Chain appeals to a different — and in this case larger — demographic of players than Solana. Actual daily wallet numbers were mostly stable for both chains throughout the month, so if the trend continues, we don’t expect a huge change in its position next month. Of course, being three times larger than the next largest title isn’t always sustainable.
- Alien Worlds only saw a 2% decrease in UAWs as its dedicated playerbase of both humans and bots continued investing time and money into the game. No major updates here.
- Splinterlands, a card game, experienced a small 4% gain as it released new content with decent sales: a new card set, content for a new tower defense game, and its PFP card project. While the game may not be growing massively, it’s good to see that it is managing to keep its players seemingly happy enough to continue playing. Splinterfest, the game’s in-person event for its community is also happening in early October.
- Benji Bananas, an action-adventure platformer game, saw a massive 331% monthly gain thanks to the release of its own P2E token, PRIMATE. The token is designed to convert into other tokens, including APE, and KYC is required to claim any earnings. While KYC is annoying for players and certainly adds some friction, it also should reduce inflation since bots and multi-account players will struggle to game the system as effectively. As we’ve learned many times over, when players join a game to extract more value (earning / yield) than they put in, it’s likely a sight of unsustainability. We’ll keep an eye on the project and see where it goes from here.
- Axie Infinity saw a large 49% monthly drop in players as overall interest in the game failed to sustain despite the recent excitement over Season 1 and Axiecon. While Axies themselves still see some secondary sales, Ronin as a blockchain saw far less interest this month. It also doesn’t help that SLP and AXS both remain relatively flat with no signs of recovery, and it doesn’t look like this will improve anytime soon with the continued inflation in circulating supply.
- Trickshot Blitz witnessed a 44% UAW decline. This is much worse than Solitaire Blitz, because, as we previously predicted, the game has a higher difficulty curve and lower general appeal. It’s still performing decently overall but will continue to trend lower as more players who aren’t earning drop off. Solitaire Blitz still saw a 19% drop, however, as the novelty has worn off enough for some player churn to kick in. We expect there to be continued near-term churn in these games unless they are released in more countries. Of course, it’s totally possible that yet another game in the Blitz series gets published, benefits from that active community, and rises up the ranks, too.
- Arc8, the skill-based gaming app with real crypto winnings, also saw some strong growth with a 71% month-over-month gain. As interest in casual and hypercasual blockchain gaming continues to grow, many games are benefiting from this rise. Notably, this trend won’t be the leading trend forever, and it’s worth remembering that hypercasual players (like in traditional mobile) are not particularly loyal to any specific games. As more interesting games launch, these early casual/hypercasual blockchain games will likely have a tough time with retention.
Transaction Volume
- Total NFT transaction volumes fell 30% over September, reversing the small gain experienced in August. Of course, these swings are still quite minor compared to the months around major NFT releases. It’s true that most (but not all!) of the speculation has dwindled by now — and hopefully that means we’re nearing a bottom — but we’re also seeing tremendous improvements across infrastructure, tooling, and platforms that are laying the foundation for the next wave of more justifiable growth.
- Ethereum — which successfully completed its “Merge” update (switching to proof of stake and making the network deflationary) — is continuing to show diminished dominance as other networks and layers take more market share. Much of it is naturally shifting over to Layer 2s on Ethereum (like Polygon and Immutable), which is good for the chain, but Solana, a competing Layer 1, also experienced a large month of market share gains. As Ethereum has faced problems around high gas fees, Solana has continued to be viewed by many in the NFT community as a place for new NFT projects that don’t feel as attached to the Ethereum ecosystem. And while Solana has faced its own network reliability issues, those may not have a strong impact on the simple minting and trading of NFTs as it does on games or dapps requiring frequent stable transactions.
- As predicted, Polygon corrected back from the very outsized burst of activity last month. It still remains a network with huge potential given the technical progress, major bizdev wins, number of games, and other NFT projects on it.
- Ronin dipped down to a meager $0.17M in volume due to its entire existence depending on the success of Axie Infinity. Sky Mavis certainly has the money to try and turn things around, but despite the attempts at funding other Axie ecosystem projects, it has yet to prove why Ronin has a solid future.
- Immutable is still performing strongly off the back of Gods Unchained and IMX token staking programs and sales. GameStop’s wallet and NFT marketplace (which are built off of Immutable) also help to drive interest. There are a number of games still to be released on the Layer 2 network, and its gasless nature combined with ZK-rollup technology has the potential to quickly gain market share if they do well. Illuvium and Guild of Guardians are still the flagship titles on the way, but over time, a number of smaller to medium size titles may help cement growing activity.
- Flow is starting to finally build up a base of users beyond just collectibles thanks to the two Blitz games, Dimension X, and the upcoming Chainmonsters, which has a demo release set for October 6th. Despite it being a somewhat underdiscussed blockchain, it is already starting to outpace Wax, Polygon, and Immutable just in terms of NFT transaction volume. The Dapper wallet’s ease of use and effective fiat-to-crypto on-ramping can make a big difference as the game library grows.
- 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, and Immutable.
Top Games by NFT Transaction Volume
- Sorare, like many others, dipped a bit this month despite the recent announcement of basketball (in partnership with the NBA) coming to the platform. We anticipate it will see a sharp upswing once the NBA content launches and the season is in full swing. Sorare is also continuing to attract competition as sports content is proving to be an area of growth for many projects.
- As expected, Otherdeed continued its decline and should continue to decline until there is content to engage with, specifically for Otherdeed owners. The Ape DAO has been fairly active and continues to engage the community, but this doesn’t translate to land ownership as opposed to ApeCoin holding. We expect this to drag out over time until the project begins picking up speed, which may not happen until 2023.
- Gods Unchained saw a significant boost in trading volume thanks to finally releasing its P2E system which relates to card ownership, similar to Splinterlands. It also benefited from a boost in sales from an epilogue card set with the Light’s Verdict mini-set for Mortal Judgement. These mini-sets are also a tactic used by both Splinterlands and Skyweaver, expanding on the concepts in the larger set while development of the next big set continues behind the scenes.
- Axie Infinity continues losing interest outside of its diehard playerbase as the major revamps of Origin aren’t likely to bring in many new players. SLP and AXS still carry many of the same inflationary risks despite there being more utility sinks. The marketplace gains some benefit from the new Runes and Charms, but these also can suffer from inflation and variable desirability. Sky Mavis seems to be hoping that the esports angle could renew interest as a way to play and earn, with skill being more of a factor than before. But without a large enough base of players playing for fun in order to gateway into the system, it may be a lost cause.
- DigiDaigaku from Limit Break continues seeing interest, although some of the initial hype has died down. The generated Spirit NFTs that require the original NFTs as a means to gain also have seen decent volume. As far as gameplay, there have only been “adventures” released as a staking-like program. While it's hard to say what kind of prices and volume these assets will command in the future, there is definitely a lot of interest in where Limit Break is going thanks to Gabriel Leydon’s ongoing public remarks.
- Parallel Alpha seems to come and go in terms of trading interest for its card releases despite the game not yet being available. At the very least, it’s building up a strong speculative community to drive up the volume around collecting. It is targeting a release of something playable this year, but knowing how dates slip, it may bleed into early 2023. While trading card games are slowly becoming a crowded market, the amount of early engagement could translate into a major launch if the gameplay manages to deliver.
- Wolf Game made a comeback thanks to Land as part of its V2. The game spawned many competitors because of its unique concept, although it's unclear if V2 will grow it further. As with most NFT-based land, a majority of the trading volume will be speculative and overvalued initially. We expect that it will likely drop out of the top 10 next month.
- PlanetIX, a strategy game on Polygon, managed to grow a little since sales started in August, going from $821K to $918K in September, and is off to a decent start again in October. The game has been live since November 2021 and saw large growth in July 2022, but since then it has remained a bit more horizontal.
- Zed Run and Metamon have continued losing momentum, while Town Star has dropped much farther down the list. Players of web3 games are going to start having higher expectations for gameplay and economic design, so we expect some of the older titles to begin falling off completely over time as we shift from the original P2E games to other models with more thoughtful design and polish.
Fundraising Events
- Based on the deals we saw, September experienced a 17% month-over-month decline in funding but saw a good balance between infrastructure and games deals. We are also starting to see more Series A and B funding rounds as the market matures. The list of projects funded was also smaller this month, with the two largest investments representing the majority of what was raised.
- The big standout is Mysten Labs’ $300M Series B, which will be used to grow its Sui blockchain. Sui is an attempt at creating better tech, and it’s coming from former Meta employees, including many who worked on the ill-fated Novi financial project. The backers include many familiar faces like FTX, a16z, Binance, and Coinbase, so there is definitely faith that there will be a spot in the ecosystem for this chain. We shall see.
- The other notable raise is LootMogul’s $200M seed round, which is building a “global sports metaverse.” The deal structure is somewhat atypical, so it didn’t actually raise $200M out of the gate, but it may amount to that much over time. As mentioned a number of times, sports have been on the forefront of blockchain integrations, and LootMogul is also aiming to provide real-world perks for its virtual content. There are definite risks, but the investor, GEM, clearly sees potential.
- Most raises in the $10-30M zone were for infrastructure projects, but a few were for games too. For example, Immortal Games managed to pull in a pretty significant $12M for a competitive chess platform that uses NFT pieces to provide an earning system around completing quests. It has the backing of some well-known chess celebrities, and while it definitely has competition, the game is already looking like a strong contender. Additionally, Revolving Games also managed to pull in $13M for its Battlestar Galactica-themed game on Gala Games. While the IP is a bit older (the TV show is finished), there will definitely be a decent audience for a strategic title based on it, and its developers have relevant experience.
- There is still a significant amount of funding to be deployed across many venture and ecosystem funds. We expect that the next few months will lean slightly smaller with a bit more emphasis on infrastructure as investors look for longer-term bets with their remaining capital. Of course, we’ve already seen some pretty major funding announcements, and once some of today’s leaders get into a position to raise larger rounds, we may see some very substantial funding months mixed in with smaller ones. Overall, even though the pace of deals has slowed, there’s still enough positive investor sentiment in high quality projects to set the industry’s future up for brighter days to come.
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.
