Should you change NFT Utility?

Gamified Episode #39 breakdown

Nov 03, 2023

A note from Sam

If you’re reading this, THANK YOU for making 39 episodes of Gamified the best part of my week.

I’m thrilled to have an amazing talent like Gnoc taking the lead on writing this newsletter because he’s knowledgeable enough to add additional insights and value to every topic we cover.

I can't wait to celebrate episode 40 with you guys. I’ve already got 3 different projects lined up for giveaways and I promise it’ll be epic. See you next week!

Re listen to episode 39 of Gamified here

In Today’s Newsletter

State of the Market
NFT Utility, can it be altered?
Gam3s.gg awards - who are your underdogs?
Do Web3 games need their own subnets?
RAID BOSS - East vs West, where does mass adoption come from?
In Case You Missed IT (ICYMI)

State of the Market

We’ve seen a pretty wild change in the Fear & Greed Index (click for more info) over the last two weeks - up ~30 points from a low of 42. So what does this mean? We uh.. don’t really know.

On the back of some regulatory battles, BTC Amsterdam and Solana’s Breakpoint event we’ve seen some massive rallies among top coins:

BTC up 21.4%
ETH up 14.9%
SOL up 62.4%

All metrics shown represent a 14 day change as of November 2nd, 2023.

I can almost feel the crypto tourists coming back. Interesting times ahead. Check out the beginning of Rumble Episode #9 to hear what panelists had to say!

Fixed or Flexible; Can you change promised NFT Utility?

During the 2021-22 bull run, failing to meet some arbitrary objective on your Fiverr made website or not delivering on a piece of utility (often some form of active staking to earn shitcoins) was a death sentence.

Times (and the market) have thankfully changed.

What do our panelists think about NFT utility today?

Lemz reminds us of the nature of Web3. When a user spends money to “enter” your ecosystem they often feel like they’ve invested in your company. A perceived devaluation of their assets (ie. changing utility) can drive users into a frenzy.

(As a PSA; buying an NFT does NOT make you an investor. It’s a dangerous parallel that we need to do away with as an industry).
My favorite one-two punch of the entire discussion comes from Tony (Shrapnel) and Fresco (Metalcore). Non-game related utility must remain rigid; value to users above all else. NFTs should be seen as part of the live service of the game. They’re vehicles to deliver users with new experiences. Whether that be through battle passes, cosmetics or otherwise, If you’re making a change to your promises they should be additive.
Kohji (Parallel) probably summarized this best; be uncompromising on your promise to drive VALUE to NFTs and their holders, but be willing to make changes to what that value looks like. (Don’t kill your game to appease a handful of users, a dead game serves no one).

Unsurprisingly, a panel of mostly game devs and marketplace employees agreed. Not only can you change utility, you should change NFT utility to reflect the evolution of your game.

I think it’s worth mentioning that deciding to not deliver something because of… “reasons” is scummy. I want to make a clear distinction here - changing utility in order to meet new game requirements and better serve users is a GOOD THING.

Changing or removing utility because you don’t feel like delivering, or even worse, because you’ve already got your bag as a developer will only serve to alienate users.

We don’t need more purely extractive behavior in gaming.

It feels like we’re maturing. “Failure” to deliver on some pre-described piece of utility is no longer always seen as a negative. Quality teams are willing to make changes if things don’t work.

To summarize, game devs please:

Deliver value (whatever that might be) to NFT holders
Deliver a QUALITY game with rewarding player progression and core gameplay loops

NFTs, like games, are living entities. Gone are the days of rigid (and often completely random) restrictions.

Flexibility is the name of the game.

It’s awards season 👀 A look at our picks for “Underdogs of the year”

We’ve got a ton of quality gaming teams in this space, many of whom launched playable builds in 2023. We all know (and love) the Shrapnel’s, Wildcard’s, Parallel’s, and Metalcore’s of the world - but who’s flying under the radar?

(Note - these are games that panelists believe are not receiving enough attention. They’re often from small teams not meant to compete with the powerhouses above who’ve raised $10m+).

Here's what was mentioned:

The Bornless - A truly horrifying FPS experience.
Alchemy - Turn based Discord RPG built by Alliestraza and team
Draw Tech - A simple but ingenious social game created by Small Brain Games
Champions Ascension - An arena fighter RPG - think WoW Arena x For Honor
My Angry Yakuza Girlfriend - A Worms inspired competitive blow em’ up.

In the same vein; here are the creators that panelists believe deserve MUCH MORE attention:

Dub - The man who’s played every web3 game. Who better to talk about games?
Iceyyy - Host, creator, business man, writer. What more can you ask for?
Apix - Great threads, better alpha. A MUST FOLLOW for web3 gaming enthusiasts
Raiden - Game breakdowns, a top tier newsletter and so much more.

You can vote for your favorite creator, game and so much more at Gam3s.GG! Show some love to all the awesome people in our community!

Layer 1s, Layer 2s, Subnets? Do games NEED to build on a subnet?

“Where do we launch” is the single most common question I get from teams in the pre-blockchain stage of development.

Historically speaking, choosing a chain would depend on (in this order for most teams):

Who’s going to pay us the most?
Who has the most users? (and can we access them?)
Who will give us the most marketing support? (and by extension, who has the most partners that will give us marketing support)
Who’s going to pay us the most? (This is NOT a duplicate entry…)
Which chain makes the most sense for us to launch on?

I’m sure by reading the list above you can see why so many teams are in an absolute blender when it comes to blockchain deployment.

There is a bit of a universal truth in the eyes of developers; truly monolithic blockchains like Bitcoin or Ethereum, despite all of their security benefits, just will not work for gaming.

Enter Layer 2s, side chains and alt chains (AVAX, Polygon, Solana stand out to me as excellent choices). Chains with significantly higher throughput (how many actions can happen in x amount of time) give devs, in theory, the tools they need to develop everything from traditional database games that use blockchain tech as a ledger, all the way to FULLY on chain games - shoutout Pirate Nation.

Following so far?

But wait… there’s more!

Subnets have become increasingly popular over the last ~6 months. Fully customizable “replicas” of the main, public chains. The idea is to allow game developers to get very granular when it comes to the rules and requirements of their blockchain. (Seriously, read the link - this is a subject a little too complex for 2 sentences).

The promise of subnets is intriguing, and for many developers they’re an absolute necessity… but should ALL games build their own subnets?

Here’s what the panel had to say:

Fresco and Kieran believe that MOST teams shouldn’t even consider the idea.
- Maintenance and other added technical costs can sink teams that are already struggling with the length of their runway (how long the money they’ve raised can keep them going)
- Building on a subnet adds a ton of complexity to the development cycle
- Subnets and chain migration can create a ton of unnecessary friction for existing blockchain users - and can be an outright blocker for new users.
Taking things back a step - Kohji stresses the importance of doing what makes the most sense for your game and your ecosystem - ignoring what “pundits” have to say. Tony and Paul echo this sentiment. Shrapnel chose to build on AVAX subnets because they needed more control over the risk-reward system extraction shooters are known for.

Wildcard on the other hand chose to use the Polygon POS (public blockchain) in part because of the fewer barriers to a quality user experience. (A quick aside - Paul acknowledges that the tech has changed and that they are considering building their own subnet, for many of the same reasons listed above).

FROM THE TOP ROPE (the Gamified audience) comes Head of AvaLabs Gaming - Ed Chang. Ed emphasized that subnets are becoming more accessible and cost-effective, thanks to products like AvaCloud and Avalanche’s teleporter (a really clever piece of tech that allows for seamless asset transfer).

He acknowledged that building your own subnet may not be necessary for many games, but it's essential to provide options for those who do require the technology. (AVAX is certainly a leader in this regard).*

*Disclaimer here - the Gamified show is sponsored by Avalanche but this newsletter is NOT. This is my genuine opinion and is not financially incentivized in any way

A spirited conversation to be sure - but let’s break this down a bit further.

Multiplayer blockchain games with open economies (what a mouthful) have a lot of challenges to deal with. They need:

Enough players to ensure matchmaking times are reasonable
Enough trading volume to ensure users are able to quickly buy/sell items as needed.

With each layer L1 -> L2 -> Subnets it will (in theory) get more and more difficult to achieve those things.

Okay so obviously subnets are a no go right?

Well… as mentioned above there are certain, well funded teams building massive experiences that would GREATLY benefit from having full control. These teams with great games have a certain gravity around them; they create the network effects required to achieve equilibrium.

Gnoc’s take?

Teams that can actually benefit from their own subnets are few and far between. Teams that will deliver games that can attract players from anywhere are even more rare.

The reality is - 99% of teams will probably never:

Deliver a mass market game (think millions of players)
Need to use anything other than a public blockchain
Survive if they add to their burn rate (ie. staffing a team to maintain this)

Now, all of that being said. I’d wager that most of the truly era defining games that will come out of the first half of this decade will find subnets a requirement for their success.

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RAID BOSS: East vs West - Where is the next blockchain hit coming from?

For the uninitiated, Raid Boss is a staple gamemode on Gamified. Two captains (usually Fresco and Sinjin) will “draft” their teams and fight on either side of an argument. It can get pretty spicy and this week was no different.

So, who’s going to deliver the next hit? Let’s dive into it.

Team East came out HOT with both anecdotal evidence and cold, hard facts:

Major Asian developers are already building in Web3 - the same can't be said for major western devs:
- Com2us
- Nexon
- Kakao
- Bandai Namco
- Wemade
- Square Enix
Consumers in countries like Japan, Korea, China, Singapore etc. were early adopters of cryptocurrencies - leading to early and effective regulations aimed at combating scams and other fraudulent activities. (let’s ignore Luna…) Much of the west is still fighting this battle, slowing down innovation.
The overwhelming majority of top grossing games on ALL platforms come out of Asia - coupled with the fact that two of the largest games in web3 history (Axie Infinity and STEPN) both game out of Asia and it becomes pretty clear that Asia is the most likely location for the next major hit. (No seriously, like 70% of the top ~20 games by revenue last year came from the east - click through the link above for the full chart)

To summarize team East’s POV in a single point; Web3 excels at collectibles, gaming, and gambling. The East DOMINATES all three of those categories. Team East believes web3 will be no different.

Compelling right? Let’s see what Team West had to say:

Many Asian countries have very strict regulations (Korea, China, etc) leading to many teams leaving their home countries to set up shop in places like Singapore. A tense regulatory environment could potentially cause harm to young teams as they’re getting started.

Western markets have excelled at amplifying culture. Most of the world’s largest streamers and gaming content creators come from western markets. Team West argues that creators have significant influence over most consumers and by extension - a breakout is more likely in the region that has the loudest megaphone (Western markets like Canada and the USA).

Western teams are farther behind in terms of development stage. Meaning, they’ve already seen what the first wave of success in web3 gaming has looked like. They have the benefit of knowing what has worked and more importantly what hasn’t. Western teams generally speaking are obsessed with distribution, something that this market has dominated in recent years. (An interesting argument that I’m personally inclined to agree with).

At the end of this segment I was asked to give my honest take on the topic. I believe that the next major title will most likely be developed by an eastern market team - BUT I also agree with the team's west take that distribution is done best on this side of the world.

My prediction?

Eastern game gets amplified by western distribution channels = MASSIVE game in 2024.

For the record - the audience poll had Team East winning by a landslide… where do you stand?

In Case You Missed It - A spotlight on our favorite content from the week.

A note from Gnoc

If you made it this far - THANK YOU. We were excited about the idea of breaking down Gamified in a more intimate setting.

We’re blessed with an insane panel every week and really felt that the conversation deserved to be expanded upon. I hope I’ve done a decent job of making this entertaining!

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