What's next for Web3 Gaming?

Market Insight

October 25, 2022

Last August 1, 2022, an article by Time entitled “A Crypto Game Promised to Lift Filipinos Out of Poverty. Here’s What Happened Instead” surfaced. A compelling article about how a once critically acclaimed game called Axie Infinity is now contributing to the stress and anxiety of your average Filipino. Interestingly enough, if you rewind to exactly a year ago, the narrative for this Play-to-Earn game is a complete 360 of what people think of it today.

The date was August 1, 2021. I wake up early in the morning excited to check my axie.management Dashboard, eager to see which of my 50+ Axie Infinity scholars have started out their grind. I hop into a private Discord, densely populated with a bunch of online friends, majority of which I’ve never met IRL. We talk shop about SLP and AXS prices, our favorite team compositions, and the amount of $$$ we were earning by the end of the month.


Fast forward to August 1, 2022. I find myself waking up to several chat groups sharing the article mentioned above. The once exciting conversations on private Discord servers are gone. No price updates, no favorite teams, no more Play-To-Earn conversations. The sentiment about the game is generally bearish. A once thriving game shared by many communities because of its strategic gameplay and economic incentives is now a game that is trying its best to rediscover and redeem itself. Axie Infinity: Origin has been released and it is arguably a great game, but without the economic incentive that the crowd was used to, majority of its users have fled. Nonetheless, the game still enjoys a DAU count that dwarfs all the Web3 games available in the sector.


Hind-sight analysis is always 20/20 and its easy for everyone to say that we all saw this coming because of the cyclical nature of markets, the game’s tokenomics, muh burning, adventure mode, whatever. However, I would like to think that such a phenomenon and speculative mania still has its silver linings — Besides the obvious fact that for those who caught wind early have earned a respectable amount of profits.


Axie Infinity paved the way, challenged, and pioneered the idea of X-to-Earn. Created economic opportunities, and brought together a new generation of gamers, guilds, and crypto users. They took the first leap into Web3 Gaming exploration and navigated the uncharted seas of opportunity and possibilities. We should never forget that. But what is next for Web3 Gaming?


Source: spongebob.fandom.com


If you are an avid timeline scroller of CryptoTwitter like myself, you’ll see a multitude of takes on what should’ve been, what would’ve been, and what could be. I think we should focus more on the latter.


Web3 Games need to be fun, it is a game after all. Now, before you point your pitchforks at me, I genuinely did enjoy playing Axie Infinity myself. And to whoever claims that the game was not fun to begin with, clearly did not play the game strategically. However, in the case of the Axie Infinity Phenomenon, players and investors alike were more focused on the economic incentives of the game, rather that the strategic gameplay it provided. Fair enough, because, as a pioneering game that introduced the concept of earning crypto while playing, of course all the hype and attention will be centered around the profits that could be made. Which brings me to the second ingredient.


Fish are friends not food! In simpler terms and to avoid getting too technical about tokenomics and muh burning, the design of the reward tokens of the game were centered on the fact that new money flow was required to keep it sustainable through breeding and asset purchases. The flywheel lacked additional sources of sinks or where to spend SLPs. I acknowledge and agree with Sky Mavis’ focus to build v3 or Axie Infinity: Origin to create a better product and user experience. But some may argue that certain measures could have been made and additional sinks could have been enforced, mitigating the selling pressure of the reward tokens for v2. But doing so is just delaying the inevitable, innit? Rather, can we explore a means to convert time, effort, and skill into economic value more efficiently?


Play-to-Earn versus Play-and-Earn. Right smack at the sales pitch of the sector, one may have noticed the potential pitfall of the model. The ability of earning economic incentives in a game, I believe, should be a feature. It should not be the be-all and end-all of playing. Deriving economic incentives from games have been existing since the early days of MMORPGs but traversing a grey-area. I remember buying and selling Zeny from Ragnarok Online with my peers back in the early 2000s. We facilitated such trades on the basis of trust. Farming Zeny, which entailed skill, time, and effort, was the old-school proof-of-work. Inherently, especially for MMORPG gamers, we play-to-progress. Can we reimagine integrating these concepts into the future of Web3 Gaming?


Guilds will (still) play a huge part in Web3 Gaming. The scholarship model made famous during the onset of Play-and-Earn will evolve into a more collaborative and competitive vessel to power Web3 Gaming. The initial model was able to onboard, orient, and accustom a new wave of gamers into the ecosystem. I foresee that this will continue as guilds will become more relevant in the important facets of adoption, education, community building, and role expansion for the entire sector.


Other important things: Building gamer habits, paying for convenience, attracting whalers, gacha systems, integrating pay walls, tokenization of items, equips, skills, consumables, and exploring free-to-play. There are tons of existing and effective models from the gaming industry that Web3 Gaming can gather inspiration from. The list goes on and on and on~


Source: Wikipedia.com — The Great Wave of Kanagawa


I guess what I’m trying to say is — I believe that we are in the very early stages of Web3 Gaming and I am quite confident that the sector is here to stay. In the case of Sky Mavis, they are in a great position to explore, experiment, and build at the forefront of Web3 Gaming with the feedback, experience, and war chest that they have accumulated. The waters may seem calm now, but a storm is definitely brewing. The waves are slowly being drawn and are building momentum. It is just a matter of time, just like the cyclical nature of markets, that a huge wave is going to emerge again. And I won’t be surprised to read stories about the sector from media outlets but with a different tune of what we hear today. It’s gonna be music to our ears. Bullish.