There’s a strong bifurcation in blockchain gaming right now. The bear market continues to rage, and unsustainable, ponzinomic, and non-fun games continue to deteriorate month-after-month, as predicted. However, the next era of fun games that are less dramatically play-to-earn are steadily being built by many talented teams around the world. What’s tough is that because great games take time to build, the existing games are falling apart faster than the next era of games can launch and prop up industry growth. This leads to rough looking industry statistics — “top” games continue to shed users, unique active wallets as a whole are trending down, NFT transaction volumes remain volatile, and fundraising/token launches have slowed due to more cautious market dynamics. Plus, in a bear market, many retail investors/users are less willing to shell out significant money for NFTs than they were 6-12 months ago. In other words, it’s a tough time to be a blockchain gamer or investor in the crypto space.

All that said, we continue to push what we’ve said since day one of Naavik pro: the time will likely come. It just takes some patience, and in the meantime we should learn all we can to best prepare for spotting future opportunities (as developers, founders, or investors).

The first era of blockchain gaming primitives was defined by CryptoKitties, which showcased what NFTs and “player” ownership could mean, but (limited functionality aside) it was fundamentally held back by the Ethereum network’s complete lack of scalability (and there being no other options). The next era was defined by Axie Infinity, which actually built a real game and used scalability solutions, but it’s fatal flaw was economic design — prioritizing unsustainable earning (yield) over fun, which cascaded across countless copycats and infrastructure built around it (guilds, tooling, etc.). The next era, to (over)simplify, will build off of the previous two — using various scalability solutions and sidestepping the largest economic flaws while prioritizing fun. It doesn’t mean everything will be perfect or it’ll come instantaneously or it’ll take over everything — none of that will be true — but there’s too much talent, capital, excited players, and momentum (despite the bear) for much of this to not come to any fruition. Great teams are building and eventually — over the next year or two — we’ll likely see the next wave of growth, catalyzing active wallets, engagement, and transactions to new highs yet again.

Again, it takes some patience and we’re not calling the bottom yet, but we’ll continue to to study the industry every day to help all of our subscribers stay ahead of curve, learn from the most important projects (good or bad), and best prepare for the future. As always, you’re more than welcome to reach out, request topics for us to dig into, and see if we can help you in any other way. In the meantime, let’s take a look at all that happened in June — including new releases, top games, trends, and their drivers — in more detail below.

Notable Releases

  • Solitaire Blitz made a strong debut this month, showing the appeal that casual games with token earnings can have. It adopts a competitive model similar to what fellow casual game platforms Arc8 and Skillz have implemented before it, showing that much like in player-banked games such as poker, zero-sum is clearly a more sustainable flavor of P2E.
  • Ni No Kuni: Cross Worlds actually came out at the end of May, but it was Netmarble’s newest blockchain game push in June as part of the MARBLEX ecosystem. The game allows for earning Asterite tokens via PvP and Territe Tokens vs PvE. The game has been hit with significant criticism due to some P2W elements as well as P2E elements causing problems like bots creating long queues to join the servers. This isn’t the first Web3 game from Netmarble, as they also added tokens to A3: Still Alive and released Monster Arena, The King of Fighters Arena, and Meta World. Additionally, Golden Bros is still in beta and has had its release date pushed a few times already.
  • A few games also opened up betas in June. A couple highlights:
    • K4 Rally, a rally racing game, joined the growing list of motorsports entries in blockchain gaming. The game is free to play with a practice mode for non-NFT players and offers a free NFT available for leaderboard play after completing some social engagement tasks. It’s on the BSC chain, thus making it relatively cheap to mint the free NFT.
    • Forge: Arena also released a P2E beta, although only for closed beta testers. Closed beta access is open to anyone with a Gen-E capsule NFT, which can be purchased for about $55 at time of writing.

Unique Active Wallets

Source: DappRadar
  • Per DappRadar, blockchain gaming daily unique active wallets (UAWs) decreased by 23.3% to 877k. This is the biggest dip we’ve seen so far this year, but it isn’t a surprise given the dearth of great games and the crypto market sell-off. Top games also saw some drawdowns in “players” due to lowering token prices and pushing bots out of the economy. Despite the drop at the start of the month, the move has mostly been horizontal since, which is a silver lining given the lack of any major game releases.
  • Overall, UAW numbers are back below August 2021 numbers. It’s likely we’ll still see some more shakeout of the broader player base while we wait for some bigger hits or games that draw in new audiences. The reduction in earnings may also reduce bot players if it’s no longer worth the effort to maintain them. It will be worth keeping an eye on UAWs through the coming months to see how blockchain gaming’s resistance to recessionary factors compares with console, desktop, and mobile.
  • 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 their ability to earn and will also show up in UAW numbers.

Top Games by Unique Active Wallets

Source: DappRadar
  • Both top games, Alien Worlds and Splinterlands, saw some player loss this month. With the price of all crypto going down at the moment, it’s no surprise to see player and bot motivation wane. Alien Worlds TLM lost 2/3rds of its value in May and then another 1/3rd in mid-June, which is contributing to some player churn. Splinterlands also lost a significant amount of active wallets, most of which are theorized to be bots, due to major reward changes at the start of June. Bots leaving the system also likely led to some selling pressure as the bot owners cashed out of their assets; combined with overall markets being down, it has led to the value of DEC sitting at half its soft peg price of $0.001. Splinterlands is looking at further tweaks to earnings that may see SPS displacing some DEC rewards, which may decrease supply and increase price.
  • This month did see a new release with Solitaire Blitz, which managed to immediately make the top 5. It also launched on Flow, which despite being successful with collectables like NBA Top Shot, UFC Strike, and NFL All Day, it hasn’t had any games really hit the chain yet. This will be a good test for Flow, to see if it’ll attract more games to the chain, especially as MotoGP Ignition and Chainmonsters look to slowly roll out there as well. Most importantly for mobile developers eyeing blockchain game development, Solitaire Blitz marks the continuation of a trend we’ve been seeing creeping into the top 10: Casual / Hypercasual / Puzzle games. Arc8 has been around for some time but has been maintaining a steady daily UAW of 10-15k while other games have dipped. Gameta has seen some pretty strong growth since it released in May, and Galaxy Blocks had a very strong May as well; it’s down a bit down from then but still doing decent. With there being a lot of potential for mobile games to find creative ways to integrate blockchain elements, we expect to see more casual and puzzle games creep into these charts until more significant games from other genres are released.
  • Sunflower Land also experienced a pretty strong UAW dip of 38%, which might be expected given the way rewards diminish over time as more players harvest. The developers have been doing a good job of slowly adding more elements to the game and doing fun crossover events, but at the end of the day the gameplay itself is very rudimentary. There’s a fair amount of attempting to keep bots out, and that may also lead to lower UAW, but it’s something I’m sure most players are happy about. It remains to be seen how long the game can last, given its simple, fairly linear progression nature. The price of the SFL token has at least managed to hold around its price range of $0.13-$0.15 fairly well throughout June, which is a good sign in the short-term.
  • Despite Upland’s UAWs falling 18%, it is doing fairly well for being such a simple game, but it has been steadily releasing some good updates over the last few months, which is keeping it relevant to interested players. It attracted most of its player base in January and isn’t likely to have any significant growth without a major user acquisition strategy, but for now maintaining its core audience is still an achievement. Of course, it may not be a great long-term game with excellent long-term retention without significant live ops, however.
  • Unfortunately, most games below the 10th mark on the chart are ones with significant UAW losses of 30-70%, and there are currently no new up-and-comers within the top 25.
  • As we hinted at last month, MiningNetwork dropped significantly with a 97% loss in players, and it’s likely heading toward zero (barring some kind of major shift).

Transaction Volume

Source: Cryptoslam
  • NFT transaction volumes saw a continued move downward from last month with no major projects to bump it up, a reduced NFT fever, and the down market. We don’t expect a major recovery here anytime in the near future without some explosive game or NFT project release. Many NFT purchases were fueled by inflationary excess money in most economies that isn’t likely to return anytime soon, but quality projects that really capture the attention of gamers could still do quite well. With The Otherside looking to start demoing some things in July, we could see renewed interest there, but it’s going to be hard to live up to the continued hype around the Yuga Labs metaverse.
  • Ethereum is still the king, but other networks are chipping away at its market share, with Solana being the continued culprit. Not only did StepN make a huge splash on Solana, but other projects like Genopets are starting to get NFTs to market on it too.
  • Ethereum Layer 2 networks continued holding their ground, and the “Other” category saw a bump in share likely due to Immutable being added to the category this month. Immutable is still mostly living off Gods Unchained, but thanks to increased funding and development, it has other interesting projects like the GameStop marketplace and big games like Illuvium and Guild of Guardians yet to come.
  • While Polygon hasn’t seen major growth, games like The Sandbox will continue helping with recent land bridging from Ethereum and an Alpha Season 3 in the near future. Crypto Unicorns hasn’t performed super well after its initial beta release, but it’s likely to gain some more traction when more of the features are rolled out for the Unicorn activities. A lot of games are being developed on the network, so it’s only a matter of time before it sees some solid growth.
  • 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
  • Otherdeed somehow managed to hold on to its top spot despite a 96% drop, but that’s mainly due to everything else suffering as well. Continued hype and expectations around The Otherside are still causing some trading to the tune of $40M, and previews of the project could make or break that for July.
  • Sorare continues to hold a strong spot, and a 29% loss in volume is not too bad in the current climate. Interest in sports and fantasy teams aren’t fickle, and the eventual addition of MLB will add a nice tailwind.
  • While Illuvium as a game isn’t out yet, it had a fairly big land sale that may not register as strongly here, partly because this data only represents secondary market transactions and also because only a small portion of the sales were in ether (a majority were in the game’s token, sILV). We don’t expect to see it back on this chart next month, but when the game is released there will likely be some renewed interest since the game’s economy is dependent on the production of Fuel that comes from land.
  • Axie Infinity is still sliding down as the game and community is transitioning from the Classic game to Origin. July represents Phase 2 of the beta that will see AXS prizes, which may boost interest from those looking to finally earn. Overall, there isn’t a heavy market for Axie NFTs just yet, so it remains to be seen if a full release of Origin can have the big impact Sky Mavis is hoping for in August or beyond.
  • Gossamer Seed made a pretty strong debut on the charts. The game has a unique fantasy world and has a TV show coming with an A-list cast that may help carry some further hype for the NFTs. It’s definitely a project worth keeping an eye on, even if it falls off the top chart in the near-future.
  • Pokemon-esque games made a big showing this month, with Polkamon, Metamon, and Genopets all doing some decent trading volume. For Genopets, the transactions only represent “habitats” and not the actual monster pets, but it’s all part of the slow overall rollout. Monster-collecting-and-battling games have continued to hold interest from crypto natives who want to collect and battle them as NFTs for tokens, but there is yet to be a strong entry that captures that spirit — mainly lackluster and gimmicky copycats.
  • NFT Worlds continues to suffer from some apathy over virtual worlds at the moment due to lack of innovation and interest in the space outside of land speculation. WebbLand and Metroverse City Block didn’t make the cut this month either. It’s also worth noting that due to issues with Cryptoslam’s data on The Sandbox and Decentraland, these two don’t make an appearance on the chart, and we hope to find a more consistent way to track the sales of those two projects in the future if Cryptoslam is unable to resolve the issues.

Fundraising Events

  • Per usual, there were a few funds raised for supporting blockchain ecosystems and projects this month that will likely be deployed over the coming quarters.
  • Overall, June was a quieter month for funding after such a big May. So far this year we’ve seen every month oscillate between heavy and low funding, as bigger funds raise and then invest. Unfortunately, as deal flow slows and many funds look to do heavy belt-tightening and more carefully pick the projects they invest in, we may see total investments remain slow than usual for a few months.
  • This month saw a lot of investment in the tech services sector, which is likely to continue as direct game investment starts thinning out. The biggest investment of the month, however, was $130M in Solana marketplace Magic Eden, which came away with a whopping $1.6B valuation. Considering how important OpenSea is to the NFT ecosystem and how Solana has been growing as a blockchain, the investment makes sense to fuel competition. OpenSea supporting Solana NFTs will make it a little harder for Magic Eden to continue acting as a pseudo-monopoly for Solana projects, but it at least has good mind-share for Solana users in general.
  • Interestingly, two of the five game studios seeing investment this month are both AR-related. This is a trend we’re largely skeptical about in the near-term — because there’s literally only one very successful AR game ever made, period — but considering the potential for NFTs to “come to life” via AR technology, we expect to see more over time. Even Niantic is eyeing web3 support despite game cancellations and cutbacks.
  • The funding for Soba also reflects the broader trends of making development for web3 easier and focusing on user-generated content. Democratizing web3 development could be a major boon for the industry, similar to what we’ve seen across the rest of gaming.
  • WAX Studios was the only blockchain-related business we saw that got direct funding this month (most of the other chains already accumulated large funds to continue investing in game development). The $10M reflects investor confidence in WAX Studios due to the moderate success of its Blockchain Brawlers game, and it led to the announcement of a second game, Music Mogul.
  • Despite the bear market and recessionary slowdowns, web3 game development is expected to continue heads down for the rest of this year. And even though investment has slowed it certainly hasn’t stopped, so great teams will still be able to get funding. And like bear markets of the past, we should expect many industry- and genre-defining projects to be built during these hard times and become part of the catalysts for the next bull wave.

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.