We’ll start with the monthly update – recapping key data from February – and then shift into everything you need to know about the past week.

February 2022: Monthly Market Update

As predicted last month, overall blockchain gaming activity experienced a slowdown in February. Unique Active Wallets (a proxy for users) saw a 14% month-over-month reduction due to game economy issues and stagnation in the industry’s of top games. NFT transaction volume in games saw a 40% month-over-month rollback from January’s gains to just above December, led by reductions in big items like The Sandbox land sales and a continued slowdown in Axie Infinity’s market. Fundraising also took a 41% month-over-month hit after such a big January for games all around, but money is still flowing into funds that will eventually allocate to the blockchain games as a whole.

Bear markets never feel great, but they’re also not permanent. Markets usually go down faster than they go up, but they ultimately go up more than they go down. The long-term view is important, and it’s critical to remember that short-term volatility and high project turnover are normal for nascent markets. More talented games teams are building than ever before, and we expect the upward trend line to stay intact, despite any difficult months that may emerge in the interim. As more games hit the market over the upcoming months and years, this will become increasingly obvious. It’ll just take one breakout game to change the entire trajectory.

For now, let’s dive into what happened in February — key trends and their drivers — in more detail below.

Unique Active Wallets

Source: DappRadar
  • Per DappRadar, blockchain gaming daily unique active wallets (UAWs) dropped 14% month-over-month to 1.1 million in February 2022. This was driven by a large decrease in activity in two top 10 games (Bomb Crypto and Alien Worlds) along with a continued decline in Axie Infinity due to its prolonged inflation issues. 
  • Despite UAWs reverting back below Oct 2021 numbers, things have already begun rebounding heading into March. Importantly, this multi-month stagnation will almost definitely go away as more, higher quality games get released. It just takes time to get to that point.
  • 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. Furthermore, games with low complexity of interactivity, like Alien Worlds, have been prone to bots which leads to overestimating actual user activity.

Top Games by Unique Active Wallets

Source: DappRadar
  • The only game that saw notable growth in UAWs this month was Farmers World, which has been on a gradual upswing of active wallets since the start of the year. It’s also very likely that a portion of the increase is driven by bots. Games that get more attention from players while also having transactional gameplay and web interfaces are most at risk of being targeted by bots.
  • Splinterlands, despite not growing UAWs itself in February, took advantage of the outsized UAW decline in Alien Worlds and Bomb Crypto to regain the #1 spot. This was also helped by extra attention stemming from a recent successful NFT sale in collaboration with rapper Waka Flocka Flame, plus an announcement of future projects with Warner Music Group
  • Last month’s 35% gain for Bomb Crypto was most likely due to the mid-month release of its new Adventure Mode. Unfortunately, rewards were set too high in the game, causing the BCOIN token to crash 72% from $3.00 to $1.74 by the end of January. Despite attempts to better adjust these rewards and create stability, the token crashed another 74% (from $1.74 to $0.45) by the end of February leading to an exodus of players.
  • Alien Worlds dropped a significant number of active wallets despite recent engagement initiatives like rewarding participants in its discord community. There was a 54% drop in the value of the Trillium ($TLM) utility token price ($0.22 to $0.10) towards the end of January that may have triggered some players to exit the game. Perhaps because of the reduction, TLM saw a short 50% ($0.10 to $0.15) bump in mid-February. Its value saw a huge spike to $0.44 in November last year but has generally only fallen since.
  • The top 10 games continue to see some stagnation in terms of which titles rotate in and out. The only change this month is Sunflower Farms (95% UAW decrease) dropping out due to being essentially shut down and being replaced by another farming game, Farmers World. It’s possible that both players and bots switched games as a result of the shutdown.
  • There are some games outside of the top 10 that saw growth larger than Farmers World did. In 11th is Pegaxy which saw a 78% UAW growth despite a 66% drop in the value of its PGX token and an 88% drop in its VIS token throughout February. Without significant changes to its economy and gameplay, it’s likely to continue its decline. StarSharks saw a 336% UAW increase due to the launch of its staking feature on February 1st. The game copies heavily from Axie Infinity but with some small economic changes that could help it sustain its economy better. Axie Infinity itself could see an upswing in late March or early April if its Origins alpha goes well.
  • Most of the top 5 blockchain games by UAWs are likely to at least remain in the top 10 for the next couple months until games with more polish and actual gameplay arrive (with many scheduled for release later this year). That’s not to say that games like Splinterlands, Axie Infinity, and even Pegaxy don’t have big plans for this year, of course. Notably, Alien Worlds gameplay, in particular, is starting to look relatively dated by virtue of it being one of the earliest examples of successful blockchain games.
  • The distribution between blockchains is a bit more evenly spread this month amongst Wax, Polygon, and BSC. Avalanche is still attempting to find a place in the top 25 with a small 27% growth for Crabada at 26th place and Pizza Game at 30th after launching last month all the way up to 5.6k UAWs. Solana also lacks good representation despite a large slate of games set to release this year and next. Immutable X is also in a similar position but at least has its flagship game Gods Unchained holding relatively steady in the 22-23k UAW range. However you look at it, the top blockchains used for gaming are destined to evolve as more games launch on newer L2s and L1s.

Transaction Volume

Source: CryptoSlam
  • According to Cryptoslam, NFT transaction volumes (including both games and collectibles) dropped 40% month-over-month. This is back to slightly above December levels despite a large spike in January, but, of course, the market remains extremely volatile and driven by a mix of macro sentiment and whatever is launching within any given month.
  • Some of the decrease in February was driven by a large drop in The Sandbox LAND sales, although Snoop Dogg’s The Doggies avatars for the game did see significant ($15.7M) sales volume. We may see The Sandbox climb back up the charts if Alpha Season 2 does well and the March 3rd LAND sale leads to a lot of secondary market transactions.
  • We continue to see shifts in the distribution of sales among protocols. Ethereum’s high gas fees have continued to drive lower volume since its peak in November. The networks that saw the largest increases were Polygon, which saw a 77% gain, and Avalanche, which shot up to $63m thanks to still growing (10% month-over-month) sales for Crabada. Polygon is likely to see continued growth due to being an Ethereum layer 2 that’s easier to migrate to thanks to its EVM compatibility, but questions remain about its scalability after the Sunflower Farms ordeal over the past couple months.
  • 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 Transaction Volume

Source: CryptoSlam
  • January’s gaming-related NFT transaction volumes were driven by Axie Infinity, The Sandbox, and Crabada. The titles with the largest month-over-month increase in transaction volumes were Crabada (304%), Parallel Alpha (297%), and WebbLand (131%). 
  • Crabada is an idle game that has seen exponential growth due primarily to the high returns users can currently earn by playing the game. However, like several other play-to-earn games, this activity is likely unsustainable unless Crabada can attract and retain more users who want to play the game regardless of the financial reward. You can learn more in our podcast episode about Crabada, here.    
  • Conversely, Axie Infinity and The Sandbox saw the largest month-over-month declines, despite being the top two games this month. Axie Infinity, the top game by transaction volume, has seen its in-game token SLP supply increase exponentially over the past several months, leading to a falling SLP price. As we discussed in our Axie Infinity deconstruction, falling SLP prices has resulted in “scholars”, the majority of Axie players, no longer earning at the Philippine minimum wage level when playing the game. This trend has continued since we published our report and is likely a key driver in the decline in Axie’s UAWs and transaction volumes. 
  • We continue to see consistent turnover in the top 10 games by transaction volume with four new titles: Carbada, WebbLand, Monkey Ball, and PXQuest Adventurer. We expect to continue seeing a fair amount of turnover over 2022 given i) the fact that many games mint NFTs to fund development of the game and ii) the boom/bust tendencies of most early play-to-earn games.

Fundraising Events

Source: Various
  • By our count, overall funding activity for the month of February was roughly $528 million, a 41% month-over-month reduction. Of course, these numbers ebb and flow based on the large deals that occur.
  • The largest action was Polygon’s $450 million late-stage raise via a $MATIC token sale at a $20 billion valuation. 
  • There is an incredible amount of capital within a range of gaming-specific and blockchain-specific funds still waiting to be deployed. Funding will ebb and flow month-to-month – especially as sentiment around crypto and high growth investments adjusts – but expect to see many more massive and early-stage bets over 2022.

March 11, 2022: Weekly Update

Top Games

#1: Immutable Raises $200M at a $2.5B Valuation

Source: WeMeta

Polygon’s recent $450 million raise may have been the biggest Ethereum Layer 2 network raise so far this year, but one of its competitors is also showing strength. After raising $200 million in a recent funding round led by Temasek, Immutable now weighs in with a $2.5 billion valuation. While its NFT marketplace, Immutable X, has only been live since April 2021, it has seen a flurry of activity from third parties but also from within. Immutable’s trading card game, Gods Unchained (approximately 25k DAUs), is hosted on Immutable X, as is its upcoming game, Guild of Guardians, which already has a bunch of NFTs actively being traded. 

With many players looking for cheaper, faster, and more environmentally friendly NFT / crypto transactions than Ethereum (layer 1) can provide, alternatives like Immutable X are primed for growth. There are also clear catalysts on the horizon. For example, the upcoming popular game Illuvium will operate on Immutable, and there are plans for developers like Kongregate to deploy multiple games on the platform. Currently, the Immutable X network offers perks like gas-free transactions, high speeds, and the purchase of carbon credits. According to Co-Founder and President Robbie Ferguson the company plans to use the $200 million toward aggressive M&A opportunities, which could include onboarding more games to the platform. It’s still very early days, and it’ll be exciting to see Immutable grow from here.

Game Announcements

Source: DeFi Kingdoms
  • DeFi Kingdoms, a popular game on Harmony, is launching its own blockchain as an Avalanche subnet. Link
  • Decentraland quietly launched a beta Windows desktop client to help improve the experience; it’ll no longer only be browser-based. Link
  • The Sandbox partnered with World of Women (WoW) to create a WoW Foundation and in-game world. Link
  • Crazy Defense Heroes continued growing its Unique Active Wallet count by 18% due to recent boosts in TOWER token rewards. Make sure to check out our essay on the game if you missed it. Link
  • New play-to-earn RPG Ancient Realms hits over 1,000 players on day one, immediately becoming the #24 game on WAX. Link

Funding Announcements

Source: VentureBeat
  • Studio 369 raised $15 million in a private token and NFT sale for it’s MMO mech combat game MetalCore led by BITKRAFT Ventures and Delphi Digital. Link
  • Avalanche-based RPG Ascenders raised $6.4 million in a private funding round co-led by Paramount Capital, Sino Global Capital, Three Arrows Capital, and Merit Circle. Link
  • Ignite Tournaments, a play-to-earn esports tournament organizer, raised $10 million in funding for infrastructure and operations improvements. The round was co-led by Animoca Brands, Infinity Ventures Crypto, and Moon Holdings Fund.
  • metaENGINE, a blockchain MMO game engine, raised $4 million in seed funding co-led by Lemniscap and Jump Crypto. Link
  • Tiny Rebel Games raised $7 million to build its digital pet blockchain metaverse Petaverse Network. Link

Ecosystem Updates

Source: Polygon
  • DraftKings joined the Polygon network as a validator and node operator – a first for a publicly traded company. Link
  • Forte partnered with Aleo to bring its zero-knowledge proof tech to blockchain games for reduced energy needs. Link
  • Yield Guild Games Pilipinas is partnering with Union Digital Bank to improve banking for play-to-earn players. Link

Notable Market Moves

  • The top 10 tokens remained the same as last week but continued to fall as market turbulence raged on. Of course, it’s important to keep perspective; everything on this list except Enjin Coin is meaningfully up from a year ago.
  • Notably, SAND didn’t perform well despite last week’s land sale and the start of Alpha Season 2. Most of these tokens remain heavily correlated.
  • AXS has clearly been struggling recently, and it may continue to as players wait for the release of Axie Infinity Origins, which will either revive the game or diminish its impact. Sky Mavis hasn’t given any indication that it intends to make drastic changes to the non-Origins version of the game to prevent continued inflation.

Content Worth Consuming

  • Flow: The Normie Blockchain (Not Boring blog): “Flow is targeting both today’s normies and the next generation of users and builders so web3-native they won’t even call it web3. One of Flow’s biggest hidden advantages is that it’s trying to onboard (and retain) all of the youngest users via Genies, Cyptoys, Brud, and a more seamless experience. Those young users will become creators and builders and whales. Building for them means Flow can play the long game.” Link
  • Robby Yung CEO of Animoca Brands (Crypto Corner podcast): “In this Crypto Corner episode, Robby Yung, CEO at Animoca Brands, joins your host Nico Vereecke to discuss: #1: What Animoca Brands is. #2: The biggest advantages of Blockchain in games. #3: The future of Blockchain Gaming. #4: Animoca’s strategy & value proposition. #5: Interoperability” Link
  • Ryan Foo of Delphi Digital – On successful blockchain game concepts (Twitter Thread): “Nothing wrong with this: Tokenomics, launch mechanisms, allocation & distribution of value etc is important. But content that players want before worrying too much about Tokenomics or supply schedules of your token. Value must enter into system before being distributed” Link