Gaming activity makes up 52% of all Unique Active Wallets (UAW), with nearly 1.1 million UAWs in Q2.
Blockchain games are least affected by the bear market as blockchain activity takes a minor setback.
Blockchain games and game-related NFTs have outperformed other crypto verticals during the bear market and have not been impacted as drastically. This stellar performance peaked until June, when the sector witnessed a slowdown.
Many verticals of the crypto industry are reeling due to macroeconomic pressures. The collapse of the Terra ecosystem led to cascading effects which caused a pullback across DeFi and NFT infrastructure. Blockchain games have weathered the storm quite well.
Investors interpreted their resilience as a bullish signal to keep investing in blockchain games. $2.5 billion was invested in Q2, maintaining the pace set in Q1. The investments have already surpassed the annual milestone of 4 billion set in 2021. At this pace, we are projected to have a volume of 12 billion invested by the end of the year.
- VC investments remain strong, with $2.5 billion committed in Q2. Total 2022 investment is already outpacing the 2021 total by 33%
- Splinterlands remains the most played blockchain game with a daily average of 283,729 Unique Active Wallets (UAW) during Q2. Due to a revamp of the reward structure, the game saw 61% fewer UAWs in June.
- Despite a reduction of 29% in organic sales of NFTs since Q1, gaming NFTs saw a 19% increase in sales count year-over-year.
- Axie infinity lost 40% of its users since Q1 due to the Ronin hack and the depreciation of the SLP token. Axie: Origins update attempts to change the narrative.
- Virtual Worlds’ NFT trading volume is up by 97%, and sales have increased by 27% since last quarter.
Table of Contents
- The gaming dapps drive 52% of all blockchain activity
- Metaverse-based tokens plummet while digital lands sell out
- Investments keep the pace of Q1 with 2.5 Billion invested in Q2
- Splinterlands shuffles the deck – weak hands fold
- Axie Infinity attempts a turnaround with Origins
- Wax tops gaming engagement and Top 10 Games Overview
- Galaverse and other news
The gaming dapps drive 52% of all blockchain activity
Blockchain games have marginally increased their already significant share of the blockchain activity by three percentage points since last quarter. Gaming activity makes up 52% of all Unique Active Wallets (UAW), with nearly 1.1 million UAWs in Q2.
The gaming fraction of the total UAW activity has dipped by 7% since the last quarter. This is only a minor setback compared to Defi’s 17% reduction and 24% for NFTs. On a broader time scale, when compared to Q2 of 2021, blockchain gaming activity has increased by 232%, leaving other categories in the dust.
The number of average UAWs engaged with blockchain games has had a pullback across the board by 17%. Blockchain games thrive on smaller and cheaper chains like Wax, Hive, and Solana.
Wax emerged as the most prominent gaming blockchain, with 393,933 average UAWs this quarter, an increase of 14% since the last. Hive, the second-largest gaming blockchain with 283,934 average UAWs, saw a dip in active UAWs by 16%.
Solana has had a record growth this quarter leading the pack by 612%. After multiple investments from Dapper labs in the Flow blockchain, it continued to grow and develop, boasting an increase of 376% this quarter, although the overall activity remains low with only 801 average UAW for Q2.
Binance Smart Chain has historically been one of the largest gaming blockchains but lost a 32% of its userbase from the last quarter with a current average UAWs of 113,326. In the same vein, Ronin lost 40% of its users with a current average UAWs of 22,777 in Q2
The drop in the value of many underlying game-related tokens, such as BSC Ethereum and Polygon, has negatively affected the price of in-game NFT assets and increased their overall sales numbers.
This quarter’s trading volume of NFTs has dropped by 82%, and the sales count has also recessed by 51%. In an unprecedented development, the year-over-year volume has also decreased significantly by 75%, while the sales volume only slightly increased by 19%.
Metaverse-based tokens plummet while digital lands sell out
Many Metaverse-based Land tokens have plummeted across the board. Among the hardest hit were Axie and Mobox suffered a 90% and 95% reduction.
However, Decentraland and The Sandbox native tokens are marginally better, losing 83% of their value. Although very significant, this setback has not majorly affected the trading volume and sales of the metaverse. Volume sales are up by 97% across the board this quarter.
In comparison, Polygon sales have fallen by 26% since last quarter. Ethereum volumes picked up the slack and have doubled by 102% since last quarter. The sales count painted an optimistic outlook across the board.
Ethereum and polygon sales are up by 17% and 152%, with an overall increase of 27% since the last quarter. Compared to Q2 2021, the volumes are up 2007% despite the bear market, and the sales count is equally impressive with a 220% increase.
This bullish activity indicates that engagement with the virtual worlds is not predicated on their profitability to the end-user. It shows virtual worlds are intrinsically fun to the end-user as the communities remain active despite the devaluation of native tokens.
Investments keep the pace of Q1 with $2.5 Billion Invested in Q2.
Q2 continues to be bullish for blockchain partnerships and investments. $2.5 billion have been invested this quarter, in line with the investments of the previous quarter. Although we are seeing a gradual tapering as June has been the slowest month with only $ 500 Million invested.
Nevertheless, the forecast for total investments for this year has been increased to 12 billion, up by 20% since last quarter.
RLTY – metaverse master of ceremonies
RLTY is a metaverse event company founded in January 2022 to solve conference issues posed by covid-related lockdowns. They help host and organize digital conferences, trade shows, entertainment functions like festivals or parties, and fashion shows.
RLTY has created easy-to-use event-building tools comparable to Voxels, where users create spaces and interact with their avatars. It has recently announced the successful close of a €4 million pre-seed funding round.
The founders of famous projects like Sorare, The Sandbox, and VC funds like Kima Ventures, Blue Wire Capital, Stake Capital, and Monoceros Venture have participated in the funding round.
A16 investment takes a bullish bet on blockchain games
Andersen Horowitz, also known as A16 Investments, is a renowned venture fund specializing in emerging technologies. Last May, they announced the creation of a $4.5 Billion Crypto Fund 4. The list of initiatives that the fund will promote is extensive. The most noteworthy aspects are web3 games, DeFi, layer 1 and 2 infrastructure, bridges, DAOs, NFT communities, and creator monetization. This fund is a part of an ongoing series of investments undertaken by A16, bringing their total to $7.6 billion raised to promote the growth of web3.
Kongregate & Immutable X – Blast from the past takes us to the future.
To many gamers who were acquainted with flash games in the late 2000s, Kongregate will be a familiar name. Kongregate, established in 2006, is a well-known platform and aggregator for aspiring game developers to publish their games.
They have recently announced Bitcerse, a digital library for web3 titles and blockchain games. Kongregate and Immutable X have collaborated to create a $ 40 million fund made of native IMX tokens to grant to aspiring blockchain developers.
Splinterlands shuffles the deck- weak hands fold.
Splinterlands remains the most played game this Q2 with over 283,000 UAW but it has been unseated as the reigning king at the of June. It lost 61% of its user base, dropping to 136,703 UAW.
While the recent license node sale has been a resounding success selling out 2000 validator notes within minutes, burning 14.5 million SPS, and adding $4 million to the game’s DAO, the recent changes to the reward structure perhaps have not.
In mid-June, the devs shifted the reward structure to disincentivize daily log-in rewards and over-reliance on starter cards. They moved the focus on consistently winning games, fulfilling daily tasks, and creating competitive decks.
These changes have flushed many low-effort participants and cut deep into the percentage of users who relied heavily on the free aspect of the game. The present community reflects the active player base for the dapp.
Axie Infinity attempts a turnaround with Origins.
Axie has already been on a downhill since January and suffered another blow this quarter. It lost 40% of its userbase, a trend exacerbated by the Ronin bridge hack, seeing over $600 million stolen.
New developments on the hack story have come to light. One of the leading engineers at Sky Mavis has fallen for a highly coordinated social engineering con.
The engineer in question has been approached by people on LinkedIn with a very lucrative job offer and has undergone multiple interviews with the supposed employers. In the end, he received a PDF containing the job offer, which executed a malicious script that took over the validator notes and hijacked the system.
In some good news, Axie is trying to turn things around by finally allowing Axie land owners to stake their lands and receive AXS tokens. The reward amount is highly dependent on the rarity of the land staked, but it varies from 0.08 to 32 AXS, which is as much as $473!
Moreover, Axie intends to overhaul the system with Axie: Origins update completely. The basic premise of assembling teams and fighting in PvP or PvE remains the same. However, almost everything else has been changed.
While the list is vast, some significant changes include free Axies, revamped crafting system using Moonshards and SLP, a rework of skills, and deeper customization mechanics using runes and charms.
All these changes have put Axie on the right track as the average UAWs count is up by 247% in June.
Wax tops gaming engagement and Top 10 Games Overview
As mentioned previously, the recent developments in tokenomics have profoundly affected the rankings among the top 10 games played this quarter. Despite the significant pullbacks for many game tokens, the player activity remains more or less the same. It is a bullish indicator re-affirming that blockchain games have inherent appeal beyond monetary rewards that they provide to the players.
Alien Worlds remains the beacon of stability with only a 4% reduction in average UAW since last quarter with a slight increase of 4% since Q2, 2021. These are good news; however, the overly simplistic gameplay of the underlying game leads some to doubt the number of actual players participating in the game. The repetitive nature of clicking a few buttons while they are off cooldown can be easily automated. It gives way to speculation that a portion of the on-chain activity is artificial.
Farmers world is still in third place, gaining 33% more users this quarter than the last. Growth seems to be slowing down, as the game had a reduction of 4% in monthly average UAWs in June.
Much like Alien World, Upland has found itself a comfortable niche from which it doesn’t see itself moving in any direction. The overall amount of users has dropped slightly by 17% since last quarter; however, the broad player base remains stable oscillating between low and high 40,000 from month to month in the second quarter.
Defi Kingdoms continues to slide further into decline as it lost 32% of its users from Q1 and 20% since May. BombCrypto lost 71% of its users since last quarter. Mobox is part of the same negative trend as its Q2 results are 33% lower than the previous quarter, and June has been the worst month so far with just over 9000 average UAW.
Not all is doom and gloom as old giants make way for new upcoming projects. This quarter we saw the rise of the Mining Network. It is a free-to-play and play-to-earn game that allows players to simulate the mining experience.
The game provides players with a free ASIC chip NFT used to mine shares, the game’s internal currency. These shares can then be exchanged for BTK tokens or used directly to upgrade the ASIC chip.
The BTK tokens can acquire new ASIC or be traded in the open market. This intricate positive feedback loop allows devs to adjust the number of shares generated as more people are connected to the network. The price of BTK peaked in mid-June at $0.80 and currently sits at $0.20 per BTK.
Sunflower Lands is Polygon’s answer to Wax’s Farmer’s World. It has made a significant turnaround from its parent project, Sunflower Farmers, which was hacked in its early development stages and forced the devs to restructure.
Since the beta launch for Sunflower Lands, the project has been growing tremendously. It started with only ten wallets in April to over eleven thousand recorded in June. The quarter-over-quarter growth has been measured at over 9,000%, the fastest growing game this season!
Finally, we also have a new kid on the Solana blockchain that is gaining traction – Gameta. Gameta is a dapp comparable to Mobox. It is a fun box filled with many different sub-dapps that make up its ecosystem.
Players who connect to Gameta pay a small connection gas fee and gain access to many play-to-earn games, tools for editing videos, making fonts and other creative applications, and learn-to-earn materials, which reward users for completing tutorials.
The economy of Gameta consists of the HIP token, which is acquired by completing actions, and the W3G token, which acts as a premium currency. Furthermore, players can receive in-app NFTs, which boost players’ luck, energy, and efficiency attributes. These attributes increase the production of tokens but cannot be transferred between dapps.
The platform is made to target a broad audience and ease onboarding people into the world of web3. The dapp was released on Solana in late May and registered nearly 30,000 average UAW in June.
Galaverse and other news
Gala fulfills a trifecta of Games, Film, and Music.
Gala, known for hit games such as Spider Tanks and Echoes of Empire, held a Galaverse event this June, announcing many of their plans and upcoming projects.
As part of their gaming projects, they showcased the new mechanics in the Mirandus with the archery test minigame. Access to this minigame was only available to those who owned a Mirandus Exemplar NFT in their wallet.
Furthermore, they unveiled games like Freestyle Football 2, a third-person soccer game, Champions arena, a turn-based RPG, and of course, their first foray into the spotlight of traditional gaming with GRIT. A wild west-themed battle royal to be featured on the Epic game store.
Besides the games, Gala created their own metaverse with the creation of Gala Film and Gala Music to explore possibilities of art, entertainment, and NFTs.
The Sandbox Migrates to Polygon
The Sandbox prepares to migrate to the Polygon blockchain to reduce transaction fees and speed up processing times. The move is significant for polygon, which will likely see substantial growth in its average UAWs in the upcoming months.
Animoca Brands, the owners of The Sandbox and its subsidiary Quidd has launched a minting/un-minting solution – Mintables. Mintables simplifies the process of creating NFTS and allows users to ‘un-mint’ their digital collectibles in order to be minted on other blockchains.
Animoca Brands further expands its roster of developers with their latest acquisition of Notre Game, a Czech developer known for the NFT-based card collectible game Scratch Wars.
Scratch Wars is a game released in Czechia and Slovakia that generated $3 million in sales. Notre Game is currently developing a successor to this game with similar mechanics called Scratch Lords.
Illuvium land sale
Illuvium has sold its first land sale of NFTS, and it was a resounding success. All four tiers of 20,000 land plots quickly sold out a total income of 72$ million.
Thanks to the dutch auction, people could purchase the plots at a price point they were all comfortable with, resulting in no gas wars. Furthermore, Illuvium has announced that in the near future, they will release the sale of Ultivars.
Ultivars are customizable avatars of the player’s favorite creature, which can be adorned with all clothing articles and minted to be used as an in-game avatar.
The release date for the Ultivars has not been announced, but 100% of the sale will go into the Illuvium vault for revenue distribution, according to the official website.
Ember Sword challenges and migration
In June, Ember Sword had a month-long community campaign. During the campaign, twenty land plots were offered as prizes for week-long community challenges and raffles. The game has also finally enabled players to migrate to Immutable X to boost Ethereum activity and allow gas-free transactions.
It has been a mixed quarter for blockchain games. While gaming activity still dominates the overall landscape, we have also begun to see the first cracks appearing in the industry, and many top blockchain games started to show weakness at the end of June.
For some, this may be an opportunity to sound the alarm and run for the hills. While these numbers should not merit concern, other factors can easily explain them.
For one, this June has been the harshest month regarding macroeconomic data. The FED rate increased, and inflation peaked at levels not seen since the 1970s.
Crypto markets are more volatile than traditional capital markets and thus react more sharply to economic events. On the other hand, we are also during the peak of the summer holidays. Many people are out on vacation, so naturally, not as many people are playing games as they were during the colder months.
Overall the outlook remains bullish. Investments are still pouring in at the same rate as the previous quarter, while we have already set a new record in investments and are seeking to climb to 12 billion by the end of the year.
In a recent appraisal from Citi bank, the Metaverse is set to grow into a 13 trillion dollar industry in the next eight years. Blockchain games are slowly poaching veteran talent from the traditional gaming industry.
For example, developers from Blizzard, Bungie, and Activision all transition to work on web3 projects, and blockchain games get featured on mainstream storefronts like Epic Games. This phenomenon will ease adoption and safeguard the quality of experience.
Finally, despite the scams and the negative press that cryptos get during these difficult times, there is still a positive sentiment regarding cryptocurrencies and NFTS. A recent poll by Mastercard shows that 47% of the 35,000 participants expressed positive opinions about NFTs and the crypto industry.