Wen capitulation?
After the breaking point, a sun will rise
I’ve never enjoyed rollercoasters but I do find the ceaseless interaction of market forces on the human pysche — mine included — an increasingly fascinating process.
Upwards, you learn next to nothing. But downwards, it’s an entirely different pressure when you endure day-on-day losses of +10%. Just how low can we go?
Even for someone who thinks everything can only trend to ‘1’ or ‘0’, it gets depressing.
Cassandra, moi?
But no-one’s joking about ‘diamond hands’ any more. If they haven’t dumped their bags wherever they can find liquidity, they’re just not bothering to check prices anymore.
All bets are off, even ones with a potential 100-fold upside.
Certainly the old stock picker’s adage to ‘Sell in May and go away’ would have saved a lot of heartache for many crypto traders this year.
But even aside from singular problems since May Day, such as Terra’s collapse and ongoing liquidation events — notably today’s issue with CeFi bank Celsius halting outflows — crypto’s cyclic volatility seems as undamped as ever.
Perhaps relatedly, crypto seems as correlated to real world assets as ever too.
Today’s sell-off was triggered/mirrored (take your pick) across the macro economy, with US inflation at a 40-year high and a sharp uptick in interest rates expected, taking APAC stock exchanges down +3%, as currencies ranging from the yen to the rupee hit historic lows against the dollar.
Oh and oil remains way above $100, Shanghai’s back into a Covid lockdown, and wheat prices are at an all-time high, plus 22 million tonnes of Ukrainian grain are estimated to be stuck in port silos, or stolen by the Russians.
It’s the sort of newscycle that seems like it can’t get much worse. But, of course, it always can. Really, the only question is how long — 12 months, 18 months? — the various recessions will be and whether Tether finally loses its peg.
So what does this all mean for blockchain games?
Clearly it’s not a great time to be launching digital assets, although the likes of Shrapnel, Castle Crash and Planet Mojo are bravely minting NFTs. At least they know those people buying are going to be committed.
More generally, though, I think this period will mark a guillotine for current play-to-earn projects. Once your token is down 99% from its all-time high and approaching parity with its IDO, there’s very little hope of resurrection even if you offer something more than tokenomics, which most don’t.
I also think this will play out in different ways across different blockchains. Notably while — for cultural and community reasons — BNB has been one of the most popular blockchains on which to launch games, almost all of these have been P2E or GameFi-oriented, with very little NFT focus.
Relatively spealing these games are going to be hit hardest — and find it much harder to rebound — than say games on Solana, which for various structural reasons, have been NFT-focused. Despite all its other issues, Flow probably has a similar advantage.
Indeed, it could be argued that Flow’s lack of live games up-to-this point now seems like a masterstroke in terms of the opportunity to position itself as a blank slate ecosystem post-crash, especially when fuelled by its $725 million ecosystem fund.
And, more generally, that’s going to be the big opportunity for new projects and games yet to launch their token.
We’re not a rock bottom yet, but post-capitulation — when the very mention of an IDO turns speculators’ stomachs — a sort of tabula rasa will await to be built on by the interactions of players who own and trade their own in-game assets.
It’s as simple as that, and always was.
This Substack is sponsored by Hiro Capital: “In the Metaverse, Hiro Protagonist is a warrior prince”. Neal Stephenson, Snow Crash
Funding news
PartyDAO has announced a $16.4 million funding round which was led by a16z. Other investors included Dragonfly Capital and Standard Crypto plus DeFi dapps Compound and Uniswap. Loot creator Dom Hodmann also invested.
PartyDAO is best known for PartyBid, a community-based NFT fractionalization trading platform.
US collaborative web3 developer Proof of Learn has announced it’s raised $4.5 million in grants for its multiplayer, ‘learn-to-earn’ game Metacrafters.
The investment came from Polygon Studios, Flow and Solana in terms of grants that will effectively act as rewards for players who complete the game on those specific blockchains.
Players pay to ‘play’ and learn via Metacrafters but then earn back their tuition fee plus grant rewards when they complete their course. Successfully completing a course will also get users a Proof of Learn NFT.
Proof of Learn previously announced a $16.7 million seed round earlier in 2022.
US-based Superpower Squad — it’s a mobile twin sticks shooter — has announced an investment led by KuCoin Labs with participation from Ankr and Everest Ventures Group. The size of the investment was not disclosed but Superpower Squad’s valuation is said to be $50 million.
The game is currently available for testing on Android via APK with iOS expected soon.
Partnership news
OnChain Studios — the company behind the Cryptoys NFT platform — has announced a global, multi-year deal with Mattel.
The deal will see as-yet unspecified Mattel IP — although described as “some of the company’s most beloved and iconic brands and characters” — entering the Cryptoys’ interactive universe, which runs on the Flow blockchain.
Cryptoys’ first NFTs are expected to drop this summer.