July may not have experienced any industry-changing game releases or NFT hype, but there are definitely positive seeds starting to germinate. Both Bitcoin and Ethereum have been showing signs of recovery, “the merge” is supposedly creeping closer, and even contagion from the previous Luna crash is comfortably in the rear-view mirror.

Behind the scenes, many teams are quietly working hard to build new web3 games and so-called metaverse projects. It’ll take time to see the fruits of that labor — in many cases a couple years — but even as soon as the next few months we’ll see more new games hit the market.

In the meantime, the industry’s existing games are still being played. Traditional P2E continues to unravel, but July saw relatively flat unique active wallets (compared to June) despite continued pressures on transaction volumes. There has even been some notable growth in casual titles like Solitaire Blitz despite still being in soft launch.

Blockchain gaming related fundraising is also fairly consistent with last month. Of course, venture capital as a whole has meaningfully slowed down this summer, and the kinds of blockchain gaming projects VCs see has evolved to be more “gameplay first.” Despite the slowdown — hopefully in which investors have gotten more selective — there remains a bunch of dry powder on the sidelines, and many solid games teams are still raising the money they need to build the projects that will define the future of blockchain games. We’re optimistic about what these teams are building, even though it will take longer than many want to truly play out.

With that, let’s dive into the highlights of July…

Notable Releases

Source: GMW3
  • One of the most interesting semi-debuts this month is Ev.io. The game has been playable since May but didn’t really take off until the ability to actually earn arrived in July. The Solana-based game is a first-person shooter that is instantly playable in a browser much like Mini Nations Royale. It’s surprising that of all the genres with instant free web play and easy onboarding, first person shooters seem to be doing it best. Generally, the graphics of these titles are kept fairly minimalistic to provide faster loading plus an easier time running in a browser, and Ev.io is no exception. The real novel element is how earning is funded through advertising. The game runs billboard ads throughout the levels, and the money used to pay for the ads is put into a SOL earnings pool. Winning in the game can reward players with a virtual currency, E, which can be converted to SOL at an exchange rate that is dependent on the amount of advertising money amongst other variables. With advertising in general being so sparse in Web3, it will be worth watching to see the direction it takes.
  • Blocktrucks.io, a monster truck racing game (also free and instantly playable in browsers), is running a playable time trial competition in an attempt to attract some players to an early version of the game. Players can win free NFT founders packs each week of the event. It also has an APK available to join via Android thanks to being a Unity-based game. Interestingly, the game is one of the first games being built on Efinity, an Enjin-related Polkadot parachain.
  • Netmarble’s Golden Bros finally released at the end of the month on mobile and PC after a series of delays during early access. It’s too early to tell if the game will catch on, but Netmarble seems committed to making sure its web3 projects succeed. Initial reviews have been rough, but being a free-to-play game it’s worth a try, especially as Netmarble works through the kinks over time. We discuss Golden Bros more in this weekly update.

Unique Active Wallets

  • Per DappRadar, blockchain gaming daily unique active wallets (UAWs) saw a month-over-month 2.9% decrease to 852.6k. While the drop is minor, it follows a large drop last month (and YTD), leaving overall UAWs quite depressed. On the positive side, the dip being so small means the current numbers may have mostly stabilized and are unlikely to drop much further barring any large negative events. Lack of any new major games at the moment also means it is unlikely to grow significantly in August, although Axie Infinity Origin reaching Phase 3 (with SLP earning and crafting) in a few weeks could have some impact. We wouldn’t rule out a game catching fire out of nowhere and driving up UAWs a significant amount, especially from an existing game developer branching out into web3 while staying quiet so far.
  • 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

Source: DappRadar
  • Alien Worlds and Splinterlands both saw a modest UAW increase. Both games also have a good number of bots, which can sometimes account for the stability as long as the bots remain profitable to operate. While profitability of play is not the only element that keeps these two topping the charts, it does contribute to retention.
  • Axie Infinity is back in the top 10 after DappRadar tweaked its tracking, although there is some suspicion that they added new contracts into the mix (like Land, which recently started supporting staking) that may not accurately represent active players. Due to the lack of clarity on what caused the change and the ongoing transition over to Origin, we recommend looking at the UAWs for the game skeptically. Hopefully within the next two months we see a clean break from Axie Infinity Classic with a full release of Origin.
  • Solitaire Blitz shot up the charts with massive growth after its debut last month. The game still seems to be in soft-launch, so one could imagine even bigger numbers with broader distribution. It also reflects well on the Flow blockchain, and the game is currently Flow’s top dApp based on MAUs. Solitaire Blitz could also impact Arc8 given the fact that both teams target a casual audience, and one of Arc8’s competitive games is Solitaire. Perhaps it’s not a coincidence that Arc8 saw a 35% decline in UAWs this month.
  • Era7, which experienced pretty steady growth since early May, found its way into the top 10 for the first time. It kicked DeFi Kingdoms off the list to 11th place, and it gives BSC some fresh representation again. The game is free-to-play with a marketplace for cards, and even though it’s not hugely innovative, it has some interesting twists on trading card game battles with its grid lane based combat. It’s also available on iOS and Android, but judging by some of the reviews it may not work as smoothly as intended, which is typical for many of the early web3 mobile games. According to its roadmap, the game has esports ambitions for Q3 onward, which is something many competitive games are hoping to achieve despite the uphill battle for attention.

Transaction Volume

Source: Cryptoslam
  • Despite some recovery in Bitcoin and Ethereum prices, secondary transaction volumes for NFTs continued down to almost exactly the same point as a year ago. As usual, the monthly transaction volume is often dependent on one or two large projects driving up the entire market, which didn’t happen in July. We do expect there to be some future months with large volume spikes, but it will be a heavier lift and take some time for confidence in high NFT valuations to return.
  • With less volume overall, the spread across different networks is fairly close to last month. Solana saw a dip from 12% to 9% as StepN activity dwindled down, but overall interest in the network from game developers still runs high. As more projects release, it will continue driving interest in the chain as it is currently the strongest Layer 1 competitor to Ethereum for games.
  • Polygon saw a decent drop despite continued growth of the network, but NFT projects may not be its strong suit. Ronin also saw a minor bump from Axie Land activity, and the network should see even more activity once Phase 3 of Axie Infinity Origin begins. Despite not being broken out individually, Immutable actually saw slightly higher activity than Ronin and will be helped by recent Gods Unchained and network token staking programs alongside the GameStop marketplace. Wax also experienced a drop as interest in the network is being overshadowed by those with bigger NFT projects or better game support.
  • 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 NFT Transaction Volume

Source: Cryptoslam
  • Note: Cryptoslam continues to not perfectly track certain projects like Decentraland and The Sandbox, which are missing from this list. Therefore, it’s not a 100% perfect representation, but there are still notable changes to spot and learn from.
  • Sorare significantly grew thanks to its expansion from just Football to now also Baseball (via MLB). Sports collectibles have always been strong in the physical space, and it is a sector that continues showing its potential in NFTs. There will definitely be other contenders in the fantasy sports arena, but with such a strong foothold it wouldn’t be surprising to see Sorare add a third sport like American Football or Basketball in the coming months.
  • Otherdeed continues to heavily change hands thanks to successful public tests that show off the Improbable tech being used in The Otherside alongside a litepaper detailing some of the early plans for Otherdeed owners. It may be a slow burn, but for now it looks like Otherdeed may stay a staple of the top 10 if it can keep up the momentum. The project still has much to prove, though, if it wants reality to match the hype, so it likely won’t be a smooth journey.
  • Electric Sheep saw an incredible $4.8M in volume on July 25th for its genesis NFT mint. PFPs/Avatars and Alpha gameplay are the next phase for NFT holders, so we may see some more decent trading volume depending on how much hype there ends up being around the project at that point. The minting was left with 3,515 unsold NFTs; a proposal is being voted on for what to do with them, and what’s currently winning is to put 515 into the treasury and burn the rest.
  • Axie Infinity saw a good boost with the release of Land staking, allowing owners of Land to finally do something with their “investment.” Actual engagement with Land is a ways off, so current staking is simply causing dilution without creating any real value for the ecosystem, and those buying Land secondhand may struggle to find a good return. It’s hard to be excited about the prospects here yet, but we’ll continue to keep an eye on the progress here.
  • NFT Worlds saw a strong spike in market engagement thanks to Mojang’s policy announcement barring NFT involvement in Minecraft. While the average sale price went down slightly (suggesting many were selling off their land investments), there were definitely also believers picking up the “opportunity.” NFT Worlds will pivot and continue to run; it should maintain some relevancy as long as the pivot doesn’t slow down future plans too much.
  • Parallel Alpha, a NFT-based and sci-fi themed card game, doubled its June sales by continuing to promote rewards from collection snapshots. In July, it offered an exclusive hoodie based on a late month snapshot. With continuing rewards and promotions into August and a good start on trade volume, we expect to see it on the list again next month.
  • Polkamon (aka Polychain Monsters) had a good month with a number of partnership announcements and rewards for holding, staking, and opening booster packs. Trade volume dropped off significantly at the end of the month, but the project has been able to generate between $2-$2.5M since May, so it’s reasonable to expect at least $1.5-2M in August if they can keep interest up.
  • Etherjump is an indie project built around a 2D platforming level editor with plots representing a level as an NFT. The project also recently added the ability to have NFT PFPs displayed within a level for that extra bit of web3 customization. With only 5,555 plots available, it will be interesting to see if the trading volume can sustain with this particular twist on selling land.
  • Town Star was surprisingly able to maintain near its previous trade volume despite the complete halt of earning in the game economy. Gossamer Seed lost the majority of its momentum from last month, but this is typical with projects that have large bursts of sales but no gameplay yet. Genopets Habits fell off the list but may return next month since its management functionality is releasing.

Fundraising Events

Source: Various
  • There were a few funds created for gaming and blockchain tech this month such as Konvoy’s $150M fund and Magic Eden’s Magic Ventures fund that will probably be deployed over the coming months.
  • Total funding in July (by our count — a yes, we’re likely missing a couple more stealth projects we can’t see) was a decent bump over June with a modest 21% increase from $241M to $291M. There were also a few undisclosed investments, so it’s unclear at the moment if the total funding might’ve broken the $300M mark. For most of the year we’ve seen pretty large swings each month, but now that we are entering a more quiet summer building period there may be less extreme funding changes — barring any major later stage raises. Notably, a lot more games were funded this month compared to June’s infrastructure-heavy bent.
  • The biggest funding was an additional $75M for Animoca Brands, valuing the company now at a whopping $5.9B. Klang also raised a notable $41M in order build out its virtual world/MMO, which brings its total funding up to a sizable $80M. The Klang team will use Improbable’s tech (as recently demonstrated by The Otherside tests), and it also makes claims of using some advanced AI to drive the behavior of virtual humans; we’ll see what this really means eventually. Another large funding from July was Planetarium Labs’ $32M raise. This company makes Nine Chronicles using its custom libplanet independent blockchain technology, and the funding is meant to expand that tech to more games.
  • Uncaged Studios raised a rather large $24M Series A led by Griffin Gaming Partners to continue developing its hyped MonkeyLeague soccer game. The game is being developed by some Playtika vets, and a public release is expected in Q4 2022.
  • Mighty Bear Games is another team comprised of industry vets that announced its upcoming game recently and raised money via a private token sale. The team is developing a battle royale game for web and mobile that builds on the successful mechanics from its earlier Apple Arcade title, Butter Royale. Interesting, it wasn’t the only battle royale-oriented studio to receiving funding this month; Bravo Ready received $3M for its unique BR1 game that is “pay to earn” in the sense that money is on the line during matches.
  • Projects around virtual worlds saw some decent funding; in addition to the $41M Klang deal, Aftermath Islands raised $25M, REALM raised $10M, Cauldron raised $6M, and Jakaverse raised $3M. Despite virtual worlds not being a new concept, the hype and potential for them seems to grow with each wave.
  • Ongoing funding amidst a quieter period in venture markets is a good sign of ongoing conviction in this space from investors, as well as a clear sign that top-notch talent continues to flow in this direction. Of course, since games take time to build we likely won’t see the payoffs for most of these funding for a couple years.

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.