State of the Blockchain Game Sector
The third quarter of 2021 proved that blockchain games, boosted by the play-to-earn (P2E) movement are here to stay. In Q3 2021, the Unique Active Wallets (UAW) connected to game dapps reached 754,000, which represents almost half of the industry’s activity. The footprint of games within the NFT space became more visible, as in-game NFTs accounted for more than 20% of the record Q3 NFT trading volume.
The blockchain game sector is as exciting as ever. Axie Infinity has transcended its game status, taking the P2E movement beyond the blockchain. Splinterlands became one of the most played blockchain games, while BSC doubled its DeFi offering with a heavy dose of GameFi dapps. Also, the metaverse keeps bracing itself to become the digital place to create, play, trade, and socialize.
Note: Unique Active Wallets (UAW) or unique wallets refer to unique addresses that interact with a given smart contract; therefore, UAW does not translate to (daily) active users (DAU). A single individual might utilize different wallets to interact with a single dapp. In addition, not all games require wallet activity in order to be played. Therefore a UAW can’t equal a DAU.
- In Q3 the blockchain industry registered 1.54 million daily UAW on average, 49% of those interacted with blockchain-based games.
- Game footprint becomes more visible in NFTs as in-game NFT collectibles generated $2.32 billion in sales during Q3, which represents 22% of the total NFT trading volume industry-wide.
- Axie Infinity became the most traded collection ever, surpassing NBA Top Shot and CryptoPunks; at the time of writing Axie has generated over $2.5 billion in trading volume.
- Axie Infinity generated $2.08 billion in Q3 alone; the amount represents 19% of the whole NFT trading volume during the same time period.
- Splinterlands became one of the most played games in the industry, the trading card game attracted over 245,000 daily UAW in September, 3,267% up from the end of Q2.
- Virtual world games (not including Axie Infinity) are gaining steam, they generated over 56.4 million in trading volume during Q3, a 21% increase quarter-over-quarter.
- Polygon’s Arc8 tackles the mobile game segment, a space worth $79 billion with over 2.5 billion players; Arc8 attracted 378,000 UAW in the last 30 days.
Table of Contents
- Almost half of blockchain active wallets are connecting to games
- Game collectibles were big contributors to the NFTs record quarter
- Axie Infinity impressive quarter
- Splinterlands’ on-chain metrics skyrocket during Q3
- Metaverse update
- BSC becomes a GameFi referent
- Is Polygon really into games?
- Keep an eye on
- In summary
Almost half of blockchain active wallets are connecting to games
The blockchain industry registered 1.54 million UAW during Q3, growing 25% quarter-over-quarter (QoQ) and 509% year-over-year (YoY). One of the main drivers behind the surge of this metric is blockchain-based games. Propelled by the P2E narrative, the number of unique active wallets connected to blockchain games reached 754,000 in Q3. This amount represents 49% of the whole industry’s usage.
One of the most popular blockchains with high game-related usage metrics is WAX. The World Asset Exchange registered over 350,000 daily wallets on average in Q3. The network is home to the popular dapp Alien Worlds, one of the most played games in the space. WAX enhanced its P2E offering with Farmers World, a farming game where the player manages resources, tools, and land to become sustainable. The game was launched in July and has generated over 10 million transactions since.
Despite the solid player base found in WAX, the network saw its usage dominance decreased by 31% when compared to Q2. At the end of June, WAX concentrated almost 82% of the UAW connected to blockchain games, compared to the 51% registered at the end of July. This comes despite the fact that WAX’s game active wallets increased 53% QoQ.
The decrease in WAX’s game dominance is countered by the expansion of the game space in BSC and HIVE. Blockchains that saw their game dominance grew by 20% and 12% respectively. More on both blockchains later. Yet, this is just another way to prove the expansion the blockchain game space is currently undergoing.
Game collectibles were big contributors to the NFTs record quarter
The NFT space put together an impressive Q3 performance. Overall, the NFT space amassed $10.67 billion in trading volumes from July to September. This represents an astonishing 704% increase QoQ. However, in the midst of all the euphoria around Ethereum collections like CryptoPunks and Bored Ape Yacht Club (BAYC), the role that NFT in-game items played, may be overlooked.
It should be noted that perhaps the main differentiator that blockchain games offer from traditional games, is the fact that most of the playable items in blockchain games can actually be owned by their players. Owning means that players can trade, sell, use or lend those game items as they please.
In Q3, NFT game items accounted for $2.32 billion in trading volume. That number represents 21.72% of the total NFT trading volumes during the quarter. And while the dominance of NFT items from Q2 to Q3 remained almost identical (20.25% in Q2), the trading volume grew 762% QoQ. Even keeping pace with the NFT frenzy.
It is important to note that the whole NFT trading volumes, including game items, saw a slight cool down in September in contrast to August numbers. Nonetheless, compared to the previous quarter, the growth is imminent.
As both spaces carry on with the growth, the blend between games and NFTs will become even more evident. Besides the involvement of NFTs as in-game collectibles, a few NFT projects like BAYC, Galactic Apes, and CryptoKitties have included the development of games in their roadmaps (CryptoKitties is in reality a breeding game per se). Whilst other NFT collections, like Meebits, CyberKongz VX, Fluf World, Clone-X, etc, will become the avatars that players will use inside various virtual worlds.
Axie Infinity impressive quarter
The case can be made for Axie Infinity as the true catalyzer of the play-to-earn revolution. Since moving to the Ronin sidechain, the game has reached impressive levels. During Q3, Axie became the most traded collection ever, surpassing blue-chip NFT collections like CrypotPunks and NBA Top Shot. At the time of writing, Axie has generated over $2.5 billion in trading volume. In Q3 alone, Axie Infinity amassed $2.08 billion in trading volume or 83% of the game’s historical trading value.
The dapp developed by Sky Mavis is already a blockchain game referent. As reported by the team itself, Axie has surpassed the 2 million daily active users (DAU). A different metric than Unique Active Wallets UAW which only considers on-chain data.
In terms of revenue, Axie achieved more than $800 million during the quarter, lagging only Ethereum itself. And to the delight of Axie enthusiasts, the future only looks brighter.
At the end of September, the team enabled the AXS staking feature. This staking mechanic adds a layer of passive income on top of Axie’s play-to-earn mechanics. At the same time, 10,000 of the early Axie adopters were airdropped a reward in AXS, totaling 800,000 AXS that were distributed among all wallets. At the time of writing, there are 17.8 million AXS or $2.15 billion staked on the platform. This represents almost 30% of AXS’s total circulating supply.
The cherry on the cake arrived a few days ago when game studio Sky Mavis received a $152 million fund from a16z, a private Venture Capital firm. This will help the team to develop the game even further. In the upcoming months, Axie Infinity will enable enhanced PVP battles and digital land features.
Splinterlands’ on-chain metrics skyrocket during Q3
Splinterlands is a trading card game hosted on the Hive blockchain. The game dapp may have been flying under the radar amidst the massive trading volumes in NFTs and Axie Infinity. Nonetheless, at some point in September, Splinterlands became the most played game considering on-chain data only.
During September, Splinterlands attracted more than 245,000 UAW on average per day. Compared to the end of Q2, the game grew its player base by 3,267%. Additional metrics prove that the demand for the game is certainly growing. For instance, the game registered over 153 million transactions during the quarter, 177% up from Q2. Meanwhile, the game generated $1.18 million in transaction volume, a considerable 1,200% increase QoQ.
Perhaps the main driver behind the game’s surge was Splinterlands Shards or SPS, the game’s governance token. SPS was launched in August and will allow token holders to vote on the future of the game. To learn more about SPS and Splinterlands in general, I’d recommend reading this detailed article.
Splinterlands has become an important part of the blockchain game landscape. As of now, the game constitutes almost 98% of Hive’s network usage. The highest of any dapp in the industry.
Moreover, as the player base for the game increases, Splinterlands will enhance its game mechanics. The game will expand the existing card supply with the Chaos Legion card series. The new set of cards will be available starting from October 18th. Players can obtain vouchers to buy these card packs by staking SPS, adding utility to the governance token. These new cards will earn players Dark Energy Crystals (DEC), the main in-game currency, at a different ratio than the original cards, bringing not only the in-game strategy to a different level but the P2E strategy as well. In addition, Land mechanics are expected at some point within the Splinterlands universe.
One of the most fascinating concepts of the blockchain game space is the metaverse. The metaverse is a network of virtual environments where players can move around value and data freely without needing to switch their online identity. The importance of these virtual worlds is exponentially growing as they aim to become the place where individuals form communities to create, play, trade, and socialize.
In Q3, virtual worlds generated over $56.37 million in trades, with The Sandbox leading the way. The Sandbox is one of the most important virtual land games in the space. It has confirmed important collaborations with the likes of Atari, The Walking Dead, and most recently, Snoop Dogg. The latter helped The Sandbox achieve over $17 million in trading volume in Q3 thanks to its land sale.
Besides The Sandbox encouraging developments, mainstream signals started to flash into metaverse projects in visible quantities. For instance, Coca-Cola partnered with Decentraland to launch its first NFT collection inside the virtual world. Burberry and Blankos joined forces to launch an NFT collection based on the fashion brand that sold out in a matter of seconds.
All in all, the metaverse is one of the most exciting concepts around the industry. It is highly probable that the metaverse becomes a place where fashion brands monetize their assets in a digital way. And also, the metaverse could become home to some of the most highly anticipated games.
BSC becomes a GameFi referent
BSC is a blockchain often associated with decentralized finance. However, since July, game activity within the Binance-branded network has increased significantly. During Q3, BSC attracted 608,000 daily UAW on average. 168,000, or 28% of those UAW, connected via game dapps. Analyzing the same scenario that unfolded in Q2, less than 2% of BSC’s UAW came from blockchain games. The 168,000 UAW represents an impressive 1,701% growth QoQ.
In fact, BSC’s game exposition is more visible within the whole industry. The number of game-related BSC UAW in Q2 represented only 3% of the industry’s total, whereas, in Q3 BSC contributed almost 23% of the industry’s total.
The GameFi – or gamification of DeFi – factor in BSC games improved the network’s perception as a blockchain where games can thrive. Perhaps the first BSC game to put up massive numbers was CryptoBlades, a battle game where users engage in PVE battles to gain SKILL, the in-game currency. SKILL can be staked within the CryptoBlades platform adding the GameFi element.
At one point in August, CryptoBlades became the most played game measured only by UAW. On August 6, it reached its peak with 406,000 UAW connected to the game dapp, yet, after that point, everything went downwards and the game crashed 95% during September in terms of usage. The negative downtrend experienced was closely related to the price of SKILL, which is also 90% down from the July 28th price. With the massive fall, the potential earnings that players were earning were diminished, causing the game to lose engagement within the community.
Nonetheless, the game attracted over 60,000 UAW in September and generated 1.3 million transactions. It still remains one of the three most played games in BSC along with Mobox and CryptoBay.
Speaking of which, Mobox: NFT Farmer, has experienced one of the most organic growths in the BSC network. Mobox attracted over 30,700 daily UAW during September whilst generating almost $67 million in transaction volume. Overall, the usage in Mobox increased 335% QoQ, and the volume during Q3 ascended to $280 million, 28% up from the previous quarter.
Financially speaking, the dapp seems even more solid. The price of MBOX, the game’s native currency, increased by 641% QoQ. While the dapp’s Total Value Locked (TVL) has more than doubled since July. At the time of writing, Mobox’s TVL sits around $315 million.
BSC games will try to carry the momentum gained in Q3. Mobox is one of the top 5 most played games in the industry and feels like an established player with its GameFi components. Whereas CryptoBlades Team has announced CryptoBlades Kingdoms (CBK), a standalone sequel that will introduce strategy-based land building. The CBK universe will include digital lands, guilds, and new game mechanics that include PvP battles, and PvE events like 1-on-1 environment battles, raids, and dungeons.
Is Polygon really into games?
Polygon is another DeFi concentrated network that has been improving its game outlook. Although to a lesser extent than BSC. In September, the blockchain registered an average of 30,000 daily UAW connected to game dapps. A 373% increase from Q2. But what’s the main driver behind the latest surge in Polygon game wallets?
As covered by DappRadar, Gamee, a subsidiary of Animoca Brands, partnered with Polygon Studios in an effort to enhance the game outlook within the Layer 2 network. As a result, Gamee launched Arc8, a blockchain mobile game dapp, along with GMEE, the game’s governance token into the Polygon ecosystem.
Arc8 started with the right foot. The mobile game has become by far, the most used dapp within Polygon, attracting more than 378,000 UAW in the last 30 days.
The business model proposed by Arc8 is definitely one to keep an eye on. It tackles a segment that is still somewhat unexplored in the blockchain game landscape, mobile games. According to Statista, the mobile game sector is expected to generate north of $79 billion in revenue in 2021, whilst attracting over 2.5 billion users. The potential is massive.
Besides Arc8, Polygon hosts interesting game options like the GameFi dapp Aavegotchi, and the racing game Revv Racing. In a quick turn of events, Polygon might be in an ideal position to further strengthen the network’s popularity beyond DeFi. It’s not without reason that upcoming virtual worlds like The Sandbox and Ember Sword, but also card games like Doctor Who: Worlds Apart announced to integrate Polygon into their ecosystem.
Keep an eye on
Solana games — Solana has made quite an entrance in the DeFi space. The blockchain hosts a robust DeFi ecosystem and a complete NFT market. And the blockchain games are not behind. Star Atlas, one of the most hyped games, is expected to launch at some point in 2022.
But not everything is about Star Atlas. Aurory, another RPG game that will feature PVE and PVP monster battles, is expected to be one of the blue-chip games to launch on Solana. Project Seed, an ARPG game will involve interesting tokenomics around the future game’s DAO whilst battling the beasts or Zeds that populate the game’s virtual land. Cryowar, another game that will rely on the Unreal engine, aims to become a real-time multiplayer PVP arena NFT game. And finally, Ninja Game, another ARPG, will provoke some nostalgia for people that grew up playing Diablo.
Land sales — We can’t stress out the importance of metaverse games, let alone virtual lands within games. Virtual lands will allow owners to boost their mining power, yield extra resources, and many other features. In upcoming weeks, projects like Ember Sword, The Sandbox (Snoop Dogg’s private mansion), Aavegotchi, and My Neighbor Alice will have land sales on their respective platforms.
Immutable X games — As Polygon, Immutable X is an Ethereum layer-2 solution. Immutable X relies on Zero-Knowledge (ZK) rollups to optimize the network’s latency. The project made headlines in 2019 with Gods Unchained, one of the (blockchain) trading cards pioneers. The network is also home to Guild of Guardians, a blockchain mobile RPG. The game has attracted over 150,000 followers and will soon have its third wave of NFT sales, which is worth keeping an eye on. Illuvium, one of the most expected blockchain games, moved over to the Immutable X network. Illuvium is labeled as a AAA game and was covered in more depth in August BGA’s report. Also, there is My Crypto Heroes, among other interesting options. The battle of the layer-2 solutions as true game platforms will get interesting.
Gala Games — The startup led by Zynga’s co-founder Eric Schiermeyer is focusing on building truly decentralized blockchain games. Players can own nodes, which will ultimately become their own decentralized network. So far, the startup has only launched Town Star, a play-to-earn farming game that rewards players with GALA, the network’s native utility token, and TOWN, the game’s own token. In addition, Gala will launch Mirandus, a fantasy RPG that will take place in a massive digital world, the battle arena game Spider Tanks, the space epos Echoes of Empire and the tower defense game Fortified However, all these games are still in development.
Q3 was probably the most important period in the history of blockchain games. The play-to-earn movement is in full display, and some of the game dapps are dominating their respective ecosystems. Furthermore, the positive trend within blockchain usage was catalyzed by the game sector. As the number of UAW connected to games grew to become almost half of the industry’s Unique Active Wallets.
Also, the importance of game items as NFTs should be noted. In Q3, game NFTs accounted for more than 20% of the record $10.6 billion in NFT volumes. The crossover between both spaces is imminent. In fact, as previously mentioned, important NFT collections will include games to one extent or will become our portrait within the Metaverse. Speaking of which, the importance of metaverses just keeps growing. In mainstream media, we’re hearing about virtual spaces already, but blockchain games will catalyze our digital lives into multiple platforms, shifting the community paradigm forever.
Moreover, the play-to-earn movement has become one of blockchain’s main headlines. Besides Axie Infinity, which has reached stratospheric levels, games like Splinterlands, Alien Worlds and Upland, might become important players in the search for mass adoption. BSC games also took a big step forward during Q3, while Polygon raised its hand as well. If the other Layer 2 solutions like Immutable X, or other relevant game networks like Gala, are added into the equation, it feels like there has never been a better time to be involved in blockchain games.