Can Web3 Gaming Weather the New Crypto Winter?
After the last “crypto winter” ended in late 2020, the growing global industry had been abuzz with activity. One sector that received considerable attention was gaming, due to its capacity to effectively combine the core aspects of Web3, including NFTs, blockchain, decentralization, and the metaverse.
But with the recent crash in prices for the world’s most widely traded cryptocurrencies – now frequently described as another crypto winter – the future development of the once burgeoning field has yet again been cast into doubt.
Coinbase, one of the world’s leading cryptocurrency marketplaces, announced earlier this month that it would be laying off 18% of its total workforce. Meanwhile, other key benchmarks for the crypto industry have indicated drastic downturns.
The price of Bitcoin, for instance, has fallen nearly 59% in the past six months, now sitting at $20,877 apiece, compared with $47,733 at the beginning of this year. The trade of NFTs has also witnessed a significant decline. On OpenSea, the biggest online marketplace for NFTs, daily users fell to 4.35k on June 22 from 32.97k at the beginning of the month, according to statistics compiled by DappRadar.
Despite such developments spelling doom and gloom for the near future, there is reason to believe Web3 gaming may have what it takes to weather the current storm.
“The [previous] frigid crypto winter didn’t extinguish the crypto flame,” wrote entrepreneur Yat Siu earlier this month in a Medium post discussing the 2022 first-half performance of Animoca Brands, a Hong Hong-based firm which he co-founded in 2014 and now chairs.
Just before the cryptocurrency downturn began earlier this year, Animoca Brands announced its completion of a new funding round that gave it a valuation of over $5 billion – more than triple than last October. As the owner of a vast portfolio of Web3-related products, including leading NFT-based game The Sandbox, the firm is regarded as one of the world’s leading entities in the race to bring about the metaverse.
“Although nearly everyone who goes online today does so in centralized and controlled Web2 structures, the shift to Web3 is already underway,” wrote Siu. “This is evident in blockchain gaming, which has emerged as the main driver of broader blockchain adoption globally.”
Animoca Brand’s faith in the solid future of Web3, particular in the field of gaming, is predicated on a few key features. Several avid users of Web3 games told Pandaily that the main game-changer brought about by the technology is the concept of digital ownership, which enhances stickiness and offers a new type of incentive to play.
It’s not only in-game value that users are amassing. The “play-to-earn” model has seen a wave of games emerge in which players are encouraged to participate in order to obtain NFTs, which can then be transferred into cryptocurrency through transactions on various online marketplaces.
Alien Worlds – the biggest blockchain game in terms of active users – is one example of a successful blockchain game based on the play-to-earn model.
Saro McKenna, the Co-Founder of Alien Worlds, told Pandaily in written comments that other CEOs tell her they’ve never seen a company grow as quickly as hers has been recently.
“In a single year, we went from having four employees to having about 80,” says McKenna. “Our player numbers went from 10,000 at the beginning of 2021, to millions and millions at the end of that same year. We were the first blockchain application in history ever to exceed 100,000 users, 500,000 users, a million users, and so on.”
Among the core features of Alien Worlds are its decentralized autonomous organizations (DAOs), which are a consequential outcome of the blockchain era, and which serve as the building block for the community.
“I think 2022 will probably be the year of the DAO,” says McKenna, also writing that Alien Worlds is “the only project in history that puts DAOs into competition with each other as game objects as teams.”
Some hail the play-to-earn approach as the shining future of the gaming industry. Others are more wary about the financial stability of such products, pointing to some of its apparently Ponzi-like features.
One popular game in particular, StepN, has been a main target of such scrutiny. The central promise of the game – earn cryptocurrency by recording your walks and runs within the program – indeed seems like wishful thinking.
Green Satoshi Tokens, StepN’s in-game currency, has recently collapsed by 97% from its all-time high of over $9 on April 28, and is now trading at just $0.18.
SEE ALSO: STEPN Closing Services in Mainland China
Saro McKenna, however, is confident in the more complex model pursued by Alien Worlds: “For us, the community is a major source of growth and user support.” The blockchain executive also referred to a recent report by Cointelegraph, which asserts that “ultimately, great gameplay and strong in-game economies with a high degree of economic freedom can help GameFi weather the difficult market conditions of 2022 and continue to attract new users.”
The multifaceted and all-encompassing nature of Alien Worlds is likely one of its core strengths. “Alien Worlds is both a platform and a Metaverse, which involves all of the tokenomics, the fungible token, the NFTs and the DAOs themselves,” writes McKenna.
As broader economic pressures continue to mount, market analysts forecast a severe downturn in the blockchain industry for the foreseeable future – a period marked by low investor interest and falling user participation. Nonetheless, Web3 pioneers are steadfast in their conviction that the ice will inevitably thaw.