Blockchain game devs' original sin
A moment of fierce clarity
Maybe it’s because I’ve been struggling with summer flu all week but my ongoing musings from discussing the Big Blockchain Game Report for Q2 2024 have resulted in a moment of fierce clarity.
The original sin of blockchain game developers is — and remains — selling tokens and NFTs direct to consumers.
As condensed out during a discussion in this week’s news podcast, this isn’t actually a new thought for me but it is one that’s been reinforced by the terrible performance of most of the gaming tokens launched in 2024.
Most of these tokens were also pre-sold to crypto retail, KOLs and other ‘investors’ at a price set by the developer. This works for a time if market sentiment is good and the price goes up.
However, when the price goes down — particularly when the token price drops below the sell price — it’s almost impossible to reboot the game (or project) successfully.
It’s not just tokens. Back in 2022-2023, the asset of choice to sell was NFTs and the process worked out exactly the same.
Developer sets NFT launch price.
Everything is good until price drops beneath launch price.
Then game over.
Of course, it’s very hard not to do this because this is still how most developers fund their game. But it’s also still the reason why most of these projects fail or are failing.
Asset price becomes the dagger pointed at their heart but the developer’s hand is not on the handle.
So what are the alternatives?
Easy.
Raise the money you need from investors by selling equity, and
Give away assets to your players and let the market set the price.
This doesn’t guarantee success but I think it removes some of the most obvious failure modes as demonstrated by the likes of Pirate Nation — as discussed in yesterday’s email — as well as NFL Rivals and Nine Chronicles.
To a degree, I’d also suggest this is reflected in the relative success of older games such as Axie Infinity, Alien Worlds and Splinterlands because they launched their assets before the market became so driven by speculative activity.
However, this is obviously not an easy alternative because most of the game investors who invest for equity not tokens have been driven out of the market by all the speculation of recent years.
It’s one of the reasons that I’m now beginning to think the companies most likely to make the big, successful, future blockchain games will be the traditional developers, who can fund operations out of existing cashflows.
Crypto-native devs will continue to sell speculative assets and maybe also to come up with interesting experiments but successful mass-market games? I’m just not seeing it.
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Weekly News Roundup
BCGbiz Mavens discussed choosing a blockchain (recommended).
Immutable adds most new games in first half of 2024.
Wemix unveils new games and revamped payment system.
Eden Games launches web3 kart racer Cosmic Royale for Mocaverse community.
Valeria Games migrates mobile RTS Land Before War to Xai.
Stardust launches games reward platform Starbase.
Torque Drift 2 adds new Toyota and Mazda cars as update 10 is released.
The Sandbox sells lands in reality TV-themed ShowCity area.
READYgg’s RDYX token has completed its pre-sale via Coinlist.
Some of which is discussed below:
Yuga Reboot news
Yuga Labs has announced its support for Pixel Vault’s PVP skill-based wagering blockchain platform Reboot, which is powered by the GG token. In a tweet, it says it will integrate Reboot within its Otherside metaverse “and other future projects”.
Another element of the partnership will see Reboot migrate from Arbitrum to Yuga’s Arbitrum-based L3 ApeChain.
TON Gaming Token Launch news
Quite how Pixelverse fits into my new taxonomy I’m not sure, given I don’t (yet) care much about tap-to-earn games on Telegraph/TON, which is where the company is currently operating with its PixelTap game. Nevertheless, it has timed the market very well, launching its PIXFI token into super-heated TON speculation, resulting in a price rise of almost 400%.
In addition, PixelTap’s NFTs — note: which will be freely rewarded to players — are being launched on 25th July. Holders will also get a PIXFI airdrop and be encouraged to stake their tokens via an auto-stake system for “additional rewards”.
Users who want to immediately claim — and presumably sell — their tokens will only be able to get 10% of their formal allocation, with the remainder being deposited into the Community Incentives Pool.
As to the question of why anyone wouldn’t immediately dump the tokens they gained from a simple tap-to-earn game, Pixelverse is also building out Pixelchain, a TON layer 2 blockchain that will be EVM compatible so presumably some people will want to hold onto their PIXFI in the hope of a future Pixelchain allocation.
My gut feeling is that tap-to-earn games aren’t sufficiently sticky to provide a long term foundation for value creation so this is a pure speculation play. But whatever happens to the PIXFI price, it will provide a good test case for my thesis!
Additional Links
Ubisoft’s Champions Tactics has minted 76% of its 75,000 champions NFTs.
Polygon’s network upgrade is scheduled for 4th September, which will see the MATIC token become POL.
The Web3 Gaming Growth Handbook according to Sky Mavis’ Jihoz.
Yuga’s Otherside metaverse announces Project Dragon … “Meebits, Voyagers, Kodas, BAYC, MAYC, BAKC, Grailed, Moonbirds, Kodamara, & HVs can all attend”.
Check out the Big Blockchain Game Report Q2 2024 👀 here.