The state of crypto gaming

The key difference between crypto games and a garden variety online games is that the former integrate blockchain tokens, allowing gamers not only truly own and trade their gaming artifacts or heroes, but also earn tokens while playing. Crypto games can fully exploit the play-to-earn concept, and we do believe that the future of gaming will be written on the blockchain.

However, crypto gaming is still in its infancy: user experience and graphics are pretty basic, underlying blockchain protocols are regularly stuck due to transaction overload, and, like the recent Ronin chain hack showed, some of them are not secure enough.

These problems are being actively tackled, and billions of dollars pour in to develop both the games and the protocols they are built on.

Here’s what the current state of crypto gaming looks like.

Crypto gaming activity

Analytics website DappRadar has recently released a report on the blockchain gaming, and the figures show that despite a general cooling down of NFT and metaverse hype, crypto gaming activity stays high.

In the first quarter of 2022 crypto games attracted 1.17 million unique daily active wallets – that’s 2’000% more use than Q1 2021.

Moreover, crypto games activity represents 52% of all blockchain use, showing just how important the sector is for the whole crypto industry.

Gaming protocols

? Among the blockchain protocols, most popular for crypto gaming is Hive – a fork off Steem blockchain initiated by the community after TRON founder Justin Sun took over. Hive is home to Splinterlands, which is basically a crypto version of the famous card game Magic: The Gathering. Splinterlands attracts 652k monthly users on Hive and generates $125k worth of monthly transaction volume.

? WAX is keeping the second place with the most popular crypto game of the moment – Alien Worlds, a space-themed game allowing to go on exploration or colonisation missions and earn tokens. Alien Worlds is being played by over 900k users monthly, generating a trading volume of $3.8M.

? Ethereum’s layer-2 sidechain Polygon is coming forth as a major protocol for game development. Its most popular game is Pegaxy, a horse racing game with over 200k monthly users and $16M in monthly transaction volume.

? Binance Smart Chain is struggling to keep its ground, with its most popular game being MOBOX:NFT farmer, a GameFi platform plugging gaming elements into the DeFi mechanisms of staking and farming. MOBOX counts 218k monthly users and $81M of transaction volume.

? EOS is keeping up with Upland, which is basically a city-building metaverse offering property parcels mapped to the real world.

? The last place is taken by Ronin, an Ethereum sidechain designed specifically for one game – the famous Axie Infinity that, some may say, has set play-to-earn standards in the sector. Axie had its set of problems recently : in an attempt to make the tokenimics more sustainable, Axie’s recent upgrade effectively decreased players’ rewards, which has decreased their activity. Moreover, last month Ronin chain was hacked and a whopping among of $622M stolen. And still, despite these difficulties, Axie Infinity is being played by 98k monthly users, and its transaction volume is still the highest in the sector – $884M monthly.

Gaming investments

Last year crypto games have raised a total of around $4Bn. In just the first quarter of 2022 the sector has attracted over $2.5Bn, which could lead to an estimated $10Bn by the end of the year.

Among the most significant fundraisers we can mention:

? $450M raised by Polygon (led by Sequoia Capital),

? $450M raised by BAYC creators Yuga Labs for their future metaverse (led by a16z, Web3 game developer Animoca Brands, The Sandbox, FTX and Coinbase),

? $360M raised by Animoca Brands itself (led by Liberty City Ventures, Sequoia China, Soros Fund, Gemini Fund, Winklevoss Capital and others),

? $200M raised by Immutable-X (IMX), a layer-2 solution built on Ethereum and home to some popular crypto games like Gods Unchained (trading cards game) and Guilds of Guardians (role-playing game, in pre-aplha mode).

? $150 raised by Axie Infinity developers Sky Mavis, mostly to help reimburse the victims of the Ronin chain hack (round led by Animoca Brands, Binance, a16z).

Hong Kong-based Animoca Brands is the company well determined to become a crypto gaming mogul, and it is associated with dozens of games, including some high-profile ones like Axie, Alien Worlds, Aurory (roleplaying game built on Solana), whatever Yuga Labs is building… They have also recently signed a partnership with the BSC-based MOBOX to accelerate the development of the MOMOverse.

Gaming in the metaverse

Existing crypto games’ developers work hard on improving user experience (despite its difficulties Sky Mavis has recently released Axie Infinity : Origin in early access, a game mode with a new, “more beautiful” battle system and free starter Axie). However, the advantage may lie with the newcomers, which could profit from all the knowledgebase accumulated so far and its competitors’ past mistakes.

Yuga Labs can very well become these astute newcomers.

Marketing prodigies who could turn a collection of 10’000 NFT apes into a cult following generating millions of dollars of trades in just a year, Yuga Labs will soon release their own metaverse called the Otherside, which will be powered by the newly issued APE fungible tokens. The expectations are very high, and Yuga Labs is working closely with Animoca Brands to incorporate P2E gaming experience into the Otherside.

Metaverse and gaming are indeed intertwined concepts, especially amid the growing disappointment from people who don’t find enough interesting things to do in Decentraland or the Sandbox. We do believe that together with technology improving, the use cases will grow, but at the moment P2E games is what might effectively drive users. Metaverses combining games with social features may well be the next big thing, and Yuga Labs’ project, as well as some existing ones like TudaBirds, will be interesting to follow.