Rise and Fall of Crypto Games — An Insider’s View
In 2014 a fan of my smartwatch game Pixel Miner, who happened to also mine bitcoin, offered to “send me a few”. While I’d heard of this fadish internet money, I didn’t know what it was or how to receive it. I politely declined the player’s offer as I was, I thought, about to make millions on smartwatch games.
This was my first interaction between games and crypto and my laziness meant I passed on over $200,000. However, several years later the blockchain did bring me millions of dollars which I unfortunately squandered. By making games for blockchain. This is that story.
Becoming a True Believer
I didn’t really think much about cryptocurrency other than the occasional story of friend of friend who’d “made a couple of mill from being early”.
Then in 2021 came the Summer of Axie: All of a sudden this weird game from an unknown dev in Vietnam was being played by everyone in Southeast Asia. It was basically a job and could be a Universal Basic Income and was making Filipino Uber drivers millionaires. At my consulting business Department of Play, I was inundated with consulting requests from kids with profile pictures of monkeys who had raised $10 million on an ICO and wanted me to design a game in a week.
WTF was going on? I went deep on Axie Infinity and concluded it was an okay game that had become an accidental ponzi. As a tangent I started to read more on the philosophies of what web3 was: True ownership and control of your data, plus autonomous, democratic development of software and service.
While I was still broadly skeptical about most of what was going on (specifically the ponzinomics and the environmental impact of proof of work), my natural optimism saw this technology as a radical and interesting reimagining of the relationship between player, dev and game. I became what you might call a “True Believer”.
There were lots of concepts I’d seen on the fringes of games and in my days of environmental activism: DAOs (Decentralised Autonomous Organisation) looked a lot like cooperatives and lots of the tokenomics were formalised forms seen in my favourite game, Magic the Gathering Online. Indeed, the infamous early coin exchange Mt.Gox was originally a stock market for Magic cards.
There were also loads of juicy design problems that were at the intersection of human behaviour, business and game design. This is where I like to hang out. So I got together with some founders, raised a couple of million to make web3 Miis called Playkens and set off to take gaming somewhere new and better.
Scammers, Speculators and Rogue Nuclear States
In the mix alongside us True Believers there were two other profiles: Speculators and scammers.
Let’s start with scammers. They were seemingly everywhere in COVID boom years of crypto, pushing out meme coins and pulling rugs. It was a digital wild west for guys in snapbacks who wanted to get-rich-quick.
The anonymity, immutability and vast sums of money made scamming lucrative, irreversible and reasonably risk free. But the scale of the money available attracted big, nasty players. When Axie Infinity dev Sky Mavis lost $600m to hack from a rogue nuclear state who specifically targeted members of their team, it became clear that this was some scary shit. I became increasingly worried about $5 wrench attacks and my excitement for this new digital frontier was tempered with fear.
Speculators, however, are broadly harmless. Indeed most are pretty nice, social people. They had no particular agenda other than to get something today which would be worth something tomorrow. They were driven by crippling FOMO (Fear of Missing Out) and would rush from project to project as a cloud, flooding Discord servers in hopes of snatching a free token of some sort. Once the tokens were dispersed they’d scatter like you’d farted in their faces.
At Village Studios we wanted to build a community that would stick around. I had a lot of fun running the Playkens Twitter account, building an army of “Kennys”, as we called ourselves, by shitposting on Twitter. It was hard, but rewarding work and some of the most fun I’ve ever had making games.
But something became apparent in the community we built: Nobody gave a shit about what Playkens were, how they worked or how they might benefit players. They didn’t read our whitepapers or ask questions. Most didn’t even really play games. They cared for one thing alone: Getting a token that they could sell.
There was a time where it was obvious we could have released some NFTs, hyped the project and made a decent chunk of cash. But it didn’t sit right with me. Games are complex and they change all the time. If we sell something now on a promise, I knew there was a good chance we might break that promise after our tokens had been bought and sold thousands of times.
But there was something that really bothered me: Where are all the people who would play our shit? Soon I’d learn they were trapped on the other side of a culture war.
The Culture Wars
At the same time that there was all of this excitement happening from within crypto communities, there became a series of announcements from traditional games companies about projects involving various blockchains and tokens. The response was rapid and deafening from a vocal contingent in the developer and player community: Get this shit out of games.
As someone who was in the trenches of the F2P culture wars I was used to this kind of turmoil and debating the merits. But in the intervening years social media had really cranked up social division and so the battle lines got quickly drawn and everyone just dug in. There was no room for discussion or nuance or even fact. People made claims and counter claims. There were ad hominems, bullying and just generally fuckery everywhere.
My position on crypto gaming was subtle and nuanced. In one week I got called both a crypto bro and a soy boy by the opposing sides. There was simply no room in the middle. Even the games business press refused to cover news related to web3 gaming in case they were somehow legitimising it or something. I never really understood it but it defines the climate of the time.
For the true believers we were kind of a bit shocked that we couldn’t get our points across, meanwhile speculator communities memed it up against the right clickers, stoking the flames while scammers kept on scamming in ignorance.
It got to a point where it didn’t matter what the reality of the situation was, the player and development community seemed so against anything that looked like a blockchain anywhere near a game. At this point it became clear that the more interesting applications of blockchain, like interoperability or DAO development, wouldn’t soon be attracting broad audiences.
This left a swathe of speculators for projects to fight over. Projects would build some hype with grand promises, hit critical mass, drop a token, prices would rise as tokens passed between hands, gather more hype, prices get more pumped, then it would all be too much to sustain and the house of cards would collapse. Ultimately there were too few people actually playing the thing and making use of it for there ever to be value to sustain the speculators.
Getting Out
I took the decision to pivot Village Studio out of web3 in the summer of 2023, having spent about half of the cash we’d raised to make Playkens. This generally felt good. On top of all the noise and the scams and the culture wars, it became really apparent that just interacting with the blockchain was stressful and complicated. I think the Village Studio team was pretty relieved. Ultimately we never put any token on the chain outside of testnets, so there was no sense we were pulling the plug on player’s money.
We had a bunch of peers in the space who’d raised rounds at about the same time as we did. Some ran hard, hired fast, and have now hit the wall, the rest seem to have split into two camps: The maximalists and the hedgers.
The blockchain maximalists are doubling down and are all in. They often talk of surviving the “crypto winter” and that the good times are imminent. I have a lot of respect for their dogged adherence to what they’re building despite all the headwinds they face. Some are doing interesting stuff that I don’t really understand involving “zero knowledge rollups” and other such wild jargon.
Meanwhile, the hedgers rode the wave of web3 funding and are sort of non committal on blockchain moving forward. They’re making games that might, maybe, have some coincidental blockchain element that they can either ramp up or down depending on the player and investor climate at any given time. This might not be as noble but it certainly is smart.
The Cryptogaming Undead
There’s been a lot written about the death of cryptogaming and its often legless bedfellow “the metaverse”. Indeed there is a sentiment amongst the cultural war generals of total victory. With 93% of these games now dead and having lived only four months on average, it appears they are right.
The new cryptogaming posterboy Pixels celebrated the huge milestone of a million active wallets in Spring, but today that wallet count figure looks to be significantly down at around 250k. Likewise, with recent layoffs, Sky Mavis’ Axie Infinity trundles along with around 100k DAUW (Daily Active Wallets), way off its multimillion peak.
It would be easy to think of crypto games as some fad, to be assigned to the cultural dustbin alongside fidget spinners and dabbing. But both Pixels and Axie Infinity, as well as a handful of other cryptogames, still have thousands of players and millions of dollars flowing through them. Are the players here the last to leave the party or are they the real True Believers?
The reality, I think, is complex: For some, the money is the game. In Magic the Gathering the buying, selling and trading cards was what gave some players the most joy. Yes, they played a little, but it was playing the card stock market or being net positive is where their true focus belonged, purchasing and flipping cards that would shift the strategic meta or trading up from a paperclip to a house. Similarly MMOs through the decades have been blighted with various farmers and traders, making real money from the virtual.
But in all of these traditional games there was an inherent demand through real players that allowed the speculators to operate. I think what we’re likely to see in the remaining crypto games is them reaching a sort of equilibrium, where some players are willing to spend enough in the game to support the few who want to speculate and extract.
The death of the hype, which drove so many to these games only to take, alongside the death of culture wars, which scared off many real players, is a blessing to crypto gaming. It has returned to a relative niche and a playground for experimental models for the relationship between players, devs and their games. No doubt there will be more bad actors, hacks, mistakes and woe, I also expect there to be new and interesting things spinning off. Perhaps things learned from, but not built atop, the blockchain.
While I have no immediate plans to return to making crypto games, I’m watching, interested.
