Sky Mavis co-founder reveals crypto gaming’s biggest hurdles

This is a segment from The Drop newsletter. To read full editions, subscribe.

An interesting thread keeps popping up in conversations I’ve been having here on the crypto side of the Game Developers Conference.

What I’m hearing is that gamers and builders have come full circle and changed their stance on Axie Infinity, a 2D creature-battler sometimes criticized for being overly simplistic or having repetitive gameplay.

But these days, general sentiment toward it is more positive than it’s been in years.

A few years ago, aspiring crypto game devs wanted to make a new reputation for the space, for which Axie Infinity had set the stage. AAA game ambitions were running high — and many devs wanted to stay as far from making a game like Axie as possible. They wanted to pull in mainstream gamers and convince enough Fortnite, League of Legends and Call of Duty players that crypto gaming could give you everything in a traditional video game, plus the supposed benefits from “true asset ownership.”

But now, things have changed. AAA-budget games like Deadrop and Shrapnel have faced controversy, albeit for different reasons. Deadrop was shut down entirely, in part because the team ran out of money and faced a scandal with one of its founders, while Shrapnel was wracked by civil war from within as investors sued the company’s then-CEO.

Buzz around Shrapnel — which was so positive and hopeful in years past — has quieted down. Shrapnel was one of those games I had been truly excited about. Today, it feels like the only higher-budget games crypto gaming influencers are really looking forward to now are Off The Grid, Star Atlas, and Wildcard.

But there’s been continued interest in pushing mobile games forward — and figuring out how to balance a game’s financial and gameplay elements. Ronin has drawn continued interest thanks to the pixelated MMORPG Pixels, and the original classic Axie game has seen an uptick in unique active wallets (UAWs) since March of last year.

While wallets don’t exactly equate to players, in the past day, Axie has seen 160,000 transactions and 100,000 unique active wallets. That puts it into the top 15 games by UAWs, per data from DappRadar. Pixels has roughly double those numbers, with more than 200,000 UAWs and over 200,000 transactions in the past day, making it the fifth-largest crypto game by UAWs.

In an interview at GDC in Sky Mavis’s spot at the Four Seasons hotel, Ronin co-founder Aleksander Larsen shared why he thinks Axie Infinity’s success says something about how hard it is to win in the crypto gaming space.

“What does that tell us about blockchain games? It’s really difficult to get right, and even for us, right, it was super difficult. We’ve shipped Axie Origins after, we shipped Homeland. None of those were as successful as the original Axie classic game,” Larsen explained.

Source: Axie Infinity is making a bit of a comeback

Larsen argued that if you’re building a blockchain game, you ultimately have to pick between graphics, gameplay, and financial economy — and that one game can only excel in two of those areas right now.

The Axie team has focused on game economy and gameplay because, for them, those are the most important elements for a crypto game to get just right. Good graphics are a nice-to-have, but are less essential because what draws a lot of players to crypto games are the financial elements, including the tradeability of in-game items.

Crypto gaming has also seen a movement toward more indie and mobile games, with a larger percentage of crypto games being “small indie” games than ever before, according to research from Game7. I think this is largely because VC funding has declined significantly from the 2021 and 2022 crypto boom.

“VC money has dried up,” Larsen said. “But the expectation, the problem here is also that there’s a lot of bag holders, I guess, from 2021 with these NFTs that are expecting a payout when the token finally comes.”

Sky Mavis has largely weathered this storm, despite RON, SLP, and AXS remaining far below all-time highs. The Ronin Wallet has seen over 10 million downloads, but the company laid off 24% of its staff last year, Sky Mavis CEO Nguyen Thnah Trung announced back in November.

“People used to say the only way that we can justify Axie Infinity’s market cap is if we value it as like a country, as a new nation,” Larsen said, adding: “That was crazy. So it was too early, right? The expectation of the game economy and the emerging nation is too big. But what actually did happen is that it gave us capital to keep developing even in the down cycles.”