DappRadar's double-counting problem

April's gaming report is a zinger for all the wrong reasons

For the record, I used to work at DappRadar and still use its raw data all the time when making graphs and videos. I think it’s a solid company, trying to make the complex world of blockchain data more transparent for us all.

I also started its monthly roundup articles in conjunction with the BGA, many years ago now.

And that’s the context which has made me pretty mad about its report for April 2024, which is entitled: “Impressive $988M in Investments Fuels Blockchain Gaming Growth”.

Of course, like things that bleed, big numbers always lead. This isn’t the first time DappRadar has inflated the amount of investment going into the blockchain gaming sector.

I’ll even confess in the boom years of 2022, I was also somewhat inflationary in terms of counting funding rounds that weren’t really involved with blockchain gaming. But I repented, for example recalculating my funding total for 2022 — from over $8 billion as originally stated down to $5.3 billion.

By which I mean to say I take this stuff seriously. For the record, during April 2024, I tracked 22 investment events in blockchain gaming worth $79 million.

That’s quite different to $988 million!

So what’s DappRadar counting to get to this massive figure?

“A major highlight of this investment wave is the announcement by a16z, a renowned venture capital firm. a16z has launched a substantial $600 million games fund as part of a larger $7.2 billion fundraising effort,” it says.

And

“Additionally, Bitkraft Ventures, another prominent player in the venture capital scene, has successfully raised $275 million for its third fund.”

Do you see the problem?

DappRadar is counting VCs’ announcements about the money they’ve raised as direct investment into blockchain gaming. In a manner of speaking it could be at some point in the future, although in both of these cases, the capital raised by a16z and Bitkraft targets the entire games sector, not specifically blockchain, although some percentage may end up here.

The bigger issue, however, is double counting.

Suppose Sky Mavis announces a $100 million investment from a16z and Bitkraft in June? Of course, DappRadar would then add $100 million to its June total, double-counting the money as announced by the VCs in April and by Sky Mavis in June.

And it couldn’t not do so because in real funding rounds, Sky Mavis would announce a $100 million investment from VCs including a16z, Bitkraft, Animoca, Degen Capital Inc, Old Tom Cobley and all. In real funding rounds, you don’t know how much each VC invests so if you include VC fundraising into your total, you couldn’t strip out the double-counting even if you were aware of it and wanted to.

And this is why while VCs announcing funding is interesting news, it can’t be counted as investment into web3 gaming and stuck into a headline.

Sadly, this isn’t the only number inflation in the report either.

DappRadar also looks at the most popular blockchain games in terms of daily activity, correctly concluding Pixels is top but coming up with the massive total of 20.3 million unique active wallets in April.

In actuality, Pixels currently has around 1 million daily active unique wallets, as per DappRadar’s own live data. However, you can’t add up all the daily totals across April to get a monthly unique total because DappRadar’s data only measures the uniqueness of wallets on a daily basis.

This means if my wallet makes 10 transactions a day, it counts as one unique wallet for that day. In that case, does that wallet making a transaction every day for month count as 31 unique wallets for that month?

Of course, it doesn’t and what’s really odd is that if you double-check on DappRadar’s live data using a 30-day range, you get the correct total: Pixels’ monthly total unique wallets over the past 30 days is 2.04 million, not 20 million.

As already stated, I’m probably over-reacting because this isn’t the first time DappRadar has been shoddy in these reports.

Perhaps that doesn’t matter so much but because these reports also have the BGA’s name on them, these numbers are going to be quoted in many media outlets who don’t know better. And these numbers are wrong.

Indeed, I’d question the entire premise of the report, which is that “the blockchain gaming market has seen a resurgence,” and “with substantial financial backing breathing new life into the sector, we stand at the precipice of what could mark the next major wave of adoption”.

In fact, the blockchain game sector is in a much more nuanced position in May 2024. Sure, there’s plenty of promising games and tech innovation, but the only game with any proper audience right now is Pixels, possibly NFT Rivals and hopefully Guild of Guardians in the months to come.

Investment levels remain lower than a year ago; even the likes of a16z and Bitkraft are operating at a fraction of their 2022 and 2023 deal-rate. During 2024 to-date, I’ve tracked 96 investment deals in blockchain gaming worth $458 million; in other words, half a DappRadar April.

Everything is not rosy in the garden, and you can quote me on that.

I’ll just end by reminding everyone that the Big Blockchain Game Report for Q2 2024 will be out in early July.

You can see how the current data is stacking up here and check out the Q1 report here.

---

Sponsored by Hiro Capital: investing 📈 in the future 🔮 of gaming 🎮

---

Weekly News Roundup

• Continuing its growth story, Pixels breaks 1 million DAUWs level.

• NFL Rivals breaks $5 million in lifetime NFT trading volume.

• Anichess partners with Team Secret and reveals partnership with the mysterious Checkmate Foundation.

• Crypto Unicorns converts RBW token to CU as part of Arbitrum migration.

• Previously on Immutable, Chibi Clash is moving to Base.

• Fully onchain Wolf Game moves from Ethereum to Blast L2.

• Ronin-based Apeiron announces $1 million prize pool esports tournament.

• Alien Worlds offers $50,000 grant project for new ecosystem games.

Blockchain Gaming World news

• Hot off the press, my interview with Guild of Guardians’ game director Chris Clay is now live. It’s a really good one, not just because I’m a massive Guild of Guardians fan but because I got to talk to Chris post-launch — so we go through that process — as well as getting into the details of what happens when the game goes into liveops. Scoop — there will be a new NFT drop in June.

We also focus on getting the balance between hardcore crypto players and the normal web2 gamers who will be the majority of players as Immutable starts its UA marketing, both within and external to the app stores.

Recommended. You can also read the transcript here.