Top News
#1: Yuga Labs Reveals The Future Of The Otherside
Going from profile pictures to building an actual “metaverse” is no easy feat, but Yuga Labs has recently demonstrated that it’s serious about the endeavor. It started with a very plain stress test which involved thousands of players loading into a shared blank environment for 30 minutes. The purpose behind the event was simply to verify that the Project Morpheus technology built by Improbable could handle a large number of simultaneous players, as is required for The Otherside metaverse project. The follow-up “First Trip” test on Saturday the 16th is where things started getting interesting. Yuga Labs let 4,300 Otherdeeds NFT holders participate in the test event, which started similar to the previous textureless stress test. From there, things quickly escalated into some virtual world activities, like a quest to free “Kodas” and a fight against a giant Koda boss where players were flinging themselves against it using jump pads in order to defeat it.
While The Otherside is very far from a complete playable project, the First Trip event demonstrated that Yuga Labs is actually working towards something more than just the massive avatar-based chat rooms that most “metaverses” are reduced to. Most importantly, Yuga Labs followed up by releasing a litepaper detailing some of its future plans. The litepaper itself was of course pretty limited on specific details, but it did lay out an 11-part roadmap outlining future updates. The important parts of the specific phases were: Living documentation, Otherdeed resource generation, crafting, potential P2E, land structure creation, marketplace, development kit, and stats/skills.
The roadmap is pretty packed, and Yuga Labs has been clear that the project will take quite a while to complete, with access being reserved primarily for Otherdeeds holders for a long time. The important part is that the roadmap gives clarity on certain gameplay features around resources, crafting, trading, structures, stats, and skills. When it comes to the crafting system, players will be able to create “templates” that enable them to craft something for free, but crafting the actual thing will require resources that are ultimately under the control of land owners.
Lastly, the Otherside Development Kit (ODK) portion gave some detail on how it intends to create NFT interoperability through a specification called Open Object Standards that uses ERC-721 JSON metadata, gITF format 3D models, and JavaScript code. Overall, there is a tremendous amount of work to be done, but openly demonstrating some of the technology with the First Trip and laying out a useful roadmap lends confidence to a very ambitious but culturally impactful project.
#2: Spider Tanks Details Its Economy
In another litepaper release, this time for an already playable game, Gala Games’ Spider Tanks finally shed some light on how its economy will work. Following the often repeated motto of “game first” for Web3 games, Spider Tanks has been in open beta for a while and even hosted tournaments and events. There were, of course, pre-sales of NFTs without the full economy being laid out, but at least the gameplay itself is proven out before introducing any economic elements. In a model made popular by Thetan Arena, the game will be F2P and earning will require owning or renting an NFT. We expect to see this as a continuing trend; F2P is important when looking to onboard much larger audiences and more effective than models that require NFT/token purchases to be made before experiencing any gameplay whatsoever.
The economic design takes advantage of some of learnings from previous Web3 game crashes, especially around controlling token inflation. The basic earning element is Victory Points gained by playing and winning matches but decreasing in a similar manner to Splinterlands as subsequent matches are played throughout the day. The actual token-earning of $SILK is awarded based on a conversion ratio from Victory Points at the end of the day. The ratio is smartly designed to take into account the total amount of Victory Points earned from all players along with the circulating supply to scale earnings in a deflationary manner.
There are two ways for reinvestment to be factored into earnings. First, by spending $SILK in the game, which is then burned; the total circulating supply is reduced, which will increase potential earnings. Second, $SILK or Victory Points can be converted into another off-chain currency, Arachnium, which can be spent to upgrade NFTs and increase Victory Point gains.
Depending on the types of players that end up participating in the economy, the overall earnings might have some level of sustainability. If it ends up being all-scholars, however, the earnings will quickly plummet due to both lack of burning and continuous increase in circulating supply. It’s a little too early to tell how much of a pay-to-win element there could be via different NFTs, which in itself could help improve $SILK spending. There is also an ability for F2P players to try and convert into earners by using a commission-based rental system, but that is likely to invite guild- and scholar-type behavior, which may hurt the economy in the long run. While the economy is designed well in terms of keeping inflation in check, we have to wonder if enough effort will go into the demand side of things in order to keep the game from simply bottoming out earnings-wise and dying a slow death. The esports angle will be among the elements to keep a close eye on.
#3: Minecraft Blocks Blockchain
In a move that caught the entire Web3 community off guard, Mojang Studios announced new guidelines for Minecraft disallowing any NFT integrations. The core reasoning given is that NFTs create exclusivity issues due to scarcity or pricing systems: “NFTs are not inclusive of all our community and create a scenario of the haves and the have-nots.” This is a surprisingly different reason than the kind usually given when it comes to financial issues, scams, or environmental concerns. While there are a variety of NFT or blockchain projects piggybacking off of Minecraft, the two most affected are NFT Worlds and Gridcraft.
Apologies for the detailed images of text, but here are the public statements given in response to the news from both projects via their Discord servers:
With neither project really having received a heads-up about the policy shift, Plan A for both would be to try and find a way to continue the projects in compliance with the new guidelines. Plan B seems to be finding a way to continue the project on different platforms, as they were ways of extending Minecraft. As NFT Worlds points out, there are many Minecraft-like projects out there to consider using or even acquiring as a game base. While building on top of Minecraft was a great innovation for bootstrapping virtual worlds, this policy shift really underscores the decentralized philosophy of blockchain development, since a centralized entity can always punch the blocks out from under you.
Seeing as this was not a community-vetted policy change, there is always the possibility that backlash or protest from the overall Minecraft community could pressure Mojang to adjust or reconsider the new guidelines. There is also a possibility for the policy to be reversed in the future if NFTs become more widely embraced by game studios, even if that proves to be too late for NFT Worlds and Gridcraft. We expect that a few Minecraft-like projects out there view this as a big opportunity to step up and are considering contacting these two projects. With so much invested in both projects in terms of time and money, we hope that there’s a positive way forward and that this incident serves as a warning for others trying to build on another company’s platforms.
#4: Town Star’s Emergency Pause on Earnings
Here’s a quick bonus update from Lawrence Hsieh on Town Star’s big news of the week:
As we mentioned in the recent research essay describing Town Star’s economic struggles and changes, introducing sufficient token sinks is critical to creating a sustainable economy since it offsets any rise in token supply and limits runaway inflation. In recent months, Gala Games already cut Town Coin’s (TOWN) distribution 40% by shifting to a point system with a fixed daily supply (vs an uncapped daily supply). However, this (already bold) change — which wasn’t loved by the players looking to earn lots of money — proved not to be enough, and starting on July 19th the team decided to pause all TOWN distribution as they work to rebuild and revamp the Town Star game and economy.
As you can see in this chart (apologies if it’s blurry), the rising blue “net” number (newly minted coins – sunk coins) shows that the economy has grown out of balance as new tokens get minted fast than they can be sunk:
Pausing TOWN distribution is clearly a major — if not nuclear — option to fixing an active economy and one we rarely ever see in blockchain games. Usually, if a token stops minting it means the project has died or abandoned, but rarely do you hear about a team voluntarily pausing their own token’s distribution. Interestingly, the market reacted positively to the change, sending the price of the token up 66% the following day. This also indicates the degree of the massive sell pressure that was happening as players (mostly whales) were farming TOWN and dumping it each day.
This story is also a reminder that economies built on the premise of most players earning yield will likely need to be heavily reworked. Is Town Star’s pause indicative of what other P2E games will do or need to do? We doubt many teams will completely pause token distributions altogether, but we’ll likely see many economies continue to drastically change their policies in the weeks and months to come as they navigate this new frontier.
Game Announcements
- nWay, owned by Animoca Brands and developer of a recent NFT-driven Olympics game, announced a Food Truck Coin Club game. Link
- The Sandbox has opened up non-NFT asset publishing to all users. Link
- Phantom Galaxies released its governance token, $ASTRAFER. Link
- Train of the Century announced updated tokenomics with new sinks. Link
- Mandala, an MMORPG with a spiritual slant, announced a partnership with Immutable X to build on its carbon-neutral platform. Link
- Sorare has gone live with its MLB addition. Link
- Ultimate Champions, another fantasy sports game, announced a July 25th launch date for its CHAMP token. Link
- Cryptonom, a Pokemon-like, released a playable demo. Link
- Curio, a troop battle game, released a playable sandbox version. Link
- Big Time opened up early access for Ruby Pass holders. Link
- Synergy Land followed up its Pre-alpha demo release with a Badge sale.
- Nekoverse released a 1.1 Alpha patch with a series of changes to the game. Link
Funding Announcements
- Uncaged Studios, developers of MonkeyLeague, raised $24M in a Series A round that included Griffin Gaming Partners. Link
- Zebedee raised $35M for its Bitcoin-based payment systems for games led by Kingsway Capital. Link
- CLUB, a football ownership game, raised $3.1M in a round led by Zee Prime Capital. Link
- REALM, a metaverse platform in open beta on mobile, raised $10M from LDA Capital. Link
- Jakaverse, another metaverse platform, raised $3M in a Pre-Series A round from Titan Capital Group Holdings. Link
- AMGI Studios raised an undisclosed amount of funding from YGG, BITKRAFT, and Delphi Digital to build an NFT game bridging Web3 and Hollywood. Link
Ecosystem Updates
- Polygon was selected as one of six companies to join the 2022 Disney Accelerator Program with mention of Virtual Worlds. Link
- Snapchat began testing AR-lens-related NFT functionality. Link
- Rainmaker Games launched a cross-chain marketplace for game NFTs. Link
Notable Market Moves
- Most of the overall crypto market saw a good lift around July 16th, with part of an overall rally being attributed to more detailed Ethereum 2.0 merge plans announced for September 19th.
- ApeCoin saw the biggest gain, with a lot of the boost coming from the increased confidence in the project thanks to the First Trip and litepaper success discussed above. Higher prices for the coin may not sustain for too long (we’ll likely roll through the hype cycle), but confidence in The Otherside project is definitely up.
- Enjin also saw a large gain thanks to the announcement of a partnership with Square Enix to release Final Fantasy VII NFT collectibles for the game’s 25th anniversary. This was one of the most positive pieces of news related to Enjin in some time, giving hope that it remains relevant.
- StepN saw the least gain as its main earning token, GST, continues to plummet with no sign of any recovery. The gains this week on GMT are also likely to be short-lived as it corrects back down.
- While we may remain in a recessionary environment for some time, and likely continue to experience aspects of a crypto winter, we do expect more small rallies on positive news. Outside of the massive de-risking to be expected from the macro environment, the Web3 community in general remains long-term bullish in the space.
Content Worth Consuming
- Matthew Ball explains the significance of the metaverse in new book (Venture Beat) – “Traditional social services in common platforms tell you that your primary motive should be minimizing clicks to purchase or clicks to action. The idea that you would create a lobby in something like Fortnite where you actually don’t play, but you’re not exactly stuck not playing — you’re trying on outfits. You’re talking with one another. You’re waiting for them to ready up. It’s counter to traditional UX, where you would say, ‘Let’s get them into a match as soon as possible.’ It’s also that experience that works to tell you how different social gaming is from just Candy Crush, the traditional experience where the menu is just a necessary evil to get you to the gameplay. It’s half the point when you play Fortnite.” Link
- The Future of (Crypto) Gaming (Delphi Digital) – “That said, we continue to believe that there will be significant demand for financialized games that opt to put much of their economy on-chain (fingers crossed for the World of Warcraft auction house one day). These games lead to a new form of gameplay, where skill & advanced knowledge of the in-game meta can create alpha within the context of a game economy, and lead to financial rewards for dedicated and savvy players. We are proud supporters of many such games and have been very encouraged to see the progress made with titles such as Crypto Unicorns. Through a combination of economic monitoring, careful / diligent design, and continual live service development, these economies can be better calibrated, and also create a rewarding experience with a player-driven economy.” Link
- Night Clubs & Web3 Games (Vader Research) – “The 5 main actors of a sustainable Web3 game are the game developer, players, whales, paid players and advertisers. The game developer creates the content, players play some content for free, watch ads and/or pay to play some of the premium content, whales spend huge sums of money to get access to the full content, advertisers pay to show ads to players. The game developer and advertisers have financial motivations whereas players and whales have physiological motivations. Paid players on the other hand are a new breed of players. The game developer is able to cherry-pick the players that will be rewarded based on the desired behavior. The idea is that in the long-term benefits from financially incentivizing paid players will outweigh the cost. This could be through either paid players being converted into players/whales due to the ownership or loyalty aspects (and end up spending more than what they had previously earned from the game) or the existence of paid players positively impacting the LTV of other players/whales.” Link
- How to Create a Sustainable Game Economy? – Part-2 (LoneWolf) – “Many of these Blockchain games came up with a pretense of making life-changing money while playing the game. Of course, the investment will also be higher if they have to earn a big lump of money. Now this makes the players think about their ROI rather than purely enjoying the game. Not to say that there are no worthwhile projects out there, but many put the presumption of earning money in front of other elements of Gameplay, which simply isn’t as attractive to gamers as it is to opportunists. This is why NFTs must be leveraged in a way that doesn’t affect the core purpose of the game itself and promotes a system where earning and gameplay must complement each other. Players must be attracted towards the core gameplay first and only then become enraptured by the endless possibilities of true ownership and revenue generation. Anything other than this will always result in a largely money minded value extracting audience and will ultimately affect the sustainability of the game.” Link
- Magicave: Building the next generation of digital toys (Naavik Metacast) – “On this week’s Crypto Corner, Magicave cofounders Harry Holmwood and Ste Curran your host Nico Vereecke for a conversation about the future of Digital Toys. Magicave is crafting digital hobbies centred around beautiful, playful, tactile virtual items, which sit at the heart of an ecosystem of games, apps, players and creators. The company’s first project, dNo (short for ‘d-Number’), marries collectible virtual dice with figures, tiles, stories and worlds, making innovative use of game and blockchain technology to nurture a truly unique digital hobby.” Link