Blockchain gaming faces a reckoning

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Blockchain game developers are pushing forward with their ambitious projects despite what they see as very low sentiment in the space.

At the Game Developers Conference this week in San Francisco, crypto gaming traders, players and builders gathered, attending over a half-dozen side events in venues ranging from bustling hotel buffets to a basement bowling alley bar.

Nearly every crypto side event I went to was jam-packed — including the day-long Sui Gaming Summit — but the vibes at GDC itself were a little deflated.

One attendee I ran into at an Avalanche gaming event told me he’d been to GDC 15 times. This year, things aren’t feeling so great, he said.

At the exhibition hall itself, only three crypto groups had booths this year, and two were small. Arbitrum had the largest crypto booth, showcasing about six different games using its Ethereum L2 chain ecosystem. But even the Arbitrum booth was much smaller than crypto gaming booths we’ve seen at GDC in the past.

Arbitrum builders are pitching it as a gaming-friendly chain, like Avalanche has done. Arbitrum’s Gaming Catalyst is currently in discussions with over 100 game teams at the moment to explore bringing their projects onchain, Arbitrum Gaming Catalyst Founding Partner Daniel Peng tells me. This suggests to me that things aren’t actually “over” despite devs feeling down.

“From our perspective as builders, it feels like it’s been out of vogue for a little while,” says Star Atlas co-founder and CEO Michael Wagner. “I hope we return to fundamentals, things with real utility. Things that produce long-term, sustainable value.”

The Solana Foundation and open-world sci-fi project Unioverse had booths at GDC as well this year, but both were quite small.

Unio CEO Mark Long, who was previously the CEO of Shrapnel developer Neon, also feels disillusioned with the state of blockchain gaming right now, calling the current moment we’re in “the trough of disappointment.”

Long is no longer at Neon, following a legal battle over company funds and a token sale. In 2023, Shrapnel co-founders including Long sued a controlling shareholder, whose own firm, 4D Factory, declared bankruptcy. Just last month, a settlement was finally reached. Shrapnel, once the darling shooter of Web3 gaming, is no longer the promised game it once was.

Source: Shrapnel’s SHRAP price over time, CoinGecko

Now, Long and the Unio team are pushing forward with their public domain sci-fi project — using Coinbase’s Base network and other chains — which aims to let anyone use their characters and game assets to build their own projects. Unio is currently building three games using its own IP, and is looking for a publisher to bring those games to market and support the broader vision.

“I think crypto gaming is still searching for that game, that boon, that kind of holds everyone up a bit,” OpenSea Head of Business Development Oliver Maroney tells me this week.

OpenSea has been working with Off The Grid, the most promising blockchain shooter game right now. Together, they recently launched an OpenSea blue-branded gun skin, sailboat logo and all.

But OpenSea’s also been adapting to the market. The startup announced that its latest marketplace, OS2, is adding token trading into the mix, feeding into that vision of becoming the “one-stop shop” for all things crypto.

“I think…the big takeaway, so far, over the last day here, is that a lot of people have high hopes for the three or four games that are still early-access, not fully launched yet,” Maroney said.

Crypto game devs also recognize that balancing a game economy poses a major challenge. “There’s ways to design your onchain economy where you’re either designing it for rapid growth or you’re designing it for sustainable growth,” Lightning Forge Games CEO Marty Burgess tells me.

“One of the things that we’ve been adamant with [regarding] all of the design work we’re doing at the moment for everything we’re planning onchain with LFG, [is that] we are not the project if you’re looking for 50x, 100x returns,” he added.

Expectations around crypto gaming have largely come back down to Earth — but I also think we could really use a winner.