Web3 gaming has exploded over recent years. With play-to-earn games being the first major breakthrough in terms of waking the world up to the possibility that gaming could be more than killing time and a fun hobby – you could potentially earn money from your favourite pastime.

The market has eventually moved away from the term "play-to-earn" as outlined in this Defiance article with more nuanced approaches now being brought to the forefront.

The problem however is that there are a multitude of blockchains all offering different trade-offs for projects building on top of them. This creates a scenario where web3 games are scattered across multiple blockchains and ecosystems.

This article aims to explore these ecosystems and helps to understand what the "picks and shovels" are of the blockchain gaming landscape.

What is meant by this statement is that the right business to be in when the gold rush started was not to go out looking for gold – but to sell picks and shovels to those going out looking for gold. Sure 1/100 people may have struck lucky and found gold, however, 99/100 could have made a good business selling the means to do so.

How does this apply to web3 gaming?

As mentioned previously, the blockchain space is very sporadic – there is no 'one-stop-shop' such as the Steam store for web3 games. This creates different solutions to house these types of games. We see everything from teams building their own dedicated blockchains specifically for gaming – to gaming ecosystems building on established blockchains – all the way to games going it alone and building straight onto a native blockchain.

Whilst it may be hard to pick emerging individual winners in terms of games in this space. It may be much more beneficial to pick the ecosystems where users will be interacting in the future.

The overall market participants across web3 gaming at the time of writing are around 1.8 million users. This trend is likely to increase over the coming years as more traditional gamers are onboarded to the space.

Where will these gamers flock to? Let's dive into some current solutions.

✨ Treasure

The Treasure ecosystem has been exciting to watch over the past couple of years. From humble beginnings of being a Loot fork, they developed and came into their own on the Arbitrum blockchain.

Building on Arbitrum means the treasure ecosystem inherits the native transaction speed, transaction time, and security that this blockchain offers. Treasure prides itself as one of the most established ecosystems that have built onto a native blockchain.

Boasting 13 games this ecosystem is working on interoperability between the apps with its native $MAGIC token being a key driver behind the platform.

This is a more crypto-native community of builders and users so game economies reflect that within this ecosystem.

Whilst there are an array of games on offer here it still seems to be only a tight-knit community playing them, with weekly active users slumping to below 10,000 as seen in Fig. 2.

Investable asset

The investable asset from here would be the aforementioned magic token. This generates fees by charging players in the native token to use the marketplace to purchase NFTs. The Average weekly volume of their marketplace is around $500,000 with 4% going back to the treasury – it means since inception the marketplace has made close to $7 million in fees (1.5 years).

By investing in Magic you are making the bet that teams or indie developers would prefer to build with an established community of crypto native gamers as John Patten (co-founder of treasure ecosystem) points out.

🦜 Gala Games

Equating to 3% (53,000) of all users in web3 gaming at the time of writing – Gala has developed its own layer 1 blockchain solution to entice players to its ecosystem.

Its focus in 2023 is on the mobile gaming market and it has already deployed $150 million of funds to help kick-start this endeavour. One of the novel ways Gala aims to solve the mostly extractive nature of 'P2E' economies is the development of an honour system that it has introduced in one of its flagship games – spider tanks. The honour system creates a dynamic whereby the user can claim more rewards if they are seen to be doing positive actions in-game. This change in mechanism puts a greater emphasis on playing rather than value extraction.

Investable Asset

The investable asset for the Gala ecosystem is the Gala token – an ERC-20 token currently residing on the Ethereum blockchain. The token is used to power gas fees across the Gyri network and for purchases of in-game items across the ecosystem. Even if a specific game has its own in-game currency – marketplace purchases and transactions buy and burn the gala token.

Another way a user can get exposure to the ecosystem is by purchasing a node to secure the network and earn rewards in the form of Gala. A node costs 2.2 million Gala tokens which is $88,000 at the time of writing. At the moment there are around 30,000 node validators with a max supply of 50,000. The emissions that are divided between node operators are 8,561,643 gala tokens per day which put the nodes at an average earning APR of about 4.5%.

⛓ Ronin

Sky Mavis has created their own permissioned EVM sidechain to house the hugely successful Axie Infinity game and many others that are now in the pipeline. Akin to Gala – Ronin is also going after the mobile gaming market which is the largest player base in the gaming space by orders of magnitude.

The rise of Axie infinity really sparked the play-to-earn phenomenon in 2021. It was very successful – at its peak bringing in nearly 3,000,000 active players. The game still has over 80,000 monthly active users making it still one of the most successful games in the space.

The Ronin network did have a bumpy start (to put it lightly) with a $600m bridge exploit in 2022 – the largest exploit in crypto history at the time. Since then, however, it has gone from strength to strength, implementing a delegated proof of stake network (DPOS) where there are now over 22 daily validators competing to create blocks and earn rewards, thus creating more security on the network.

With a combined total value locked from the Katana DEX and validator staking, the network has over $200m in TVL spread between delegators and liquidity providers on the dex.

Investable asset

With a market cap of $280m the $RON token powers this ecosystem. Users can earn this token by delegating to the 22 validators to earn daily emissions or they can use it to create LP positions on the katana dex.

Supply is set to double over 2023 (year 1 - year 2). Not all of this supply may hit the market however as the team will be looking to create partnerships in exchange for tokens as they have already onboarded 5 new game studios to build on top of Ronin.

🖇Immutable

With over 100 games on offer and a huge $1bn in ecosystem funding – Immutable is one of the largest players in web3 gaming.

The immutable ecosystem is built on top of Ethereum on its bespoke layer 2 blockchain. Recently it partnered with Polygon to create a zkEVM to scale transactions on the network meaning more power for the IMX token as this translates to the token being used for gas fees on the network.

Immutable is aiming its sites at traditional gamers with flashy AAA games to onboard new users. As can be seen from games like Illuvium, the budget for these types of games is much bigger than most games coming out of web3 at the moment so this network could be the catalyst to show traditional gamers that blockchain games are not just "defi with extra steps".

Investable asset

As seen from the Dune dashboard the number of users interacting with the $IMX (the token powering the ecosystem) has reached over 100,000. IMX is used for gas fees on the network with 2% of all sales from the NFT marketplace going to the treasury.

According to data from CryptoSlam, the network has about 15,000 monthly active users trading assets across the marketplace, with an average of about $20 million in trading volume per month which is equal to the protocol earning $400,000 per month on a 2% fee.

The whitepaper states there is no entitlement of protocol fees if you hold the IMX token, however, holdings can be considered to receive staking rewards if you hold the token on the L2 and have either traded or also hold an NFT on the network.

The token inflation is outlined below. Most of the tokens are under the 'Ecosystem' category and will be used for liquidity provisions, grants and marketing purposes.

🔲 Ultra

Ultra is aiming to be a one-stop shop ecosystem for a frictionless entry to web3 gaming.

The Ultra blockchain runs on a fork of the EOS blockchain – it has its own wallet and NFT marketplace called Uniq. It is aiming to abstract the user experience of current wallet setups and give gamers a version of what they're used to with a type of 'Steam store' experience, which could be considered a web2.5 approach.

Users can launch the game store on April 25th with titles to buy including RPG games and a trading card game amongst others. What makes this marketplace unique is the fact that the player can re-sell their game into the market much like you would a physical copy of a game in a traditional game store. This article from the

Ultra website explains how this may be revolutionary to online gaming.

It is clear the ultra team are going after traditional PC gamers with their take on a PC game store with most of the digital assets being the games themselves as an NFT token that could be re-sold.

Investable asset

The investable asset within this ecosystem is the $UOS token. Currently an ERC-20 token with 23,000 holders. Once the store and ecosystem are fully up and running it seems reasonable that this asset will be bridged across to the ultra network for use within the network.

It is hard to find updated information on the tokenomics however the whitepaper indicates that all purchases – whether through a credit card or UOS are denominated in dollars with 5% of the transaction accruing back to the treasury on each transaction.

They have some major partnerships including AMD and Ubisoft so it will be interesting to see the developments of the platform from the 25th.

✖ XPLA

Whilst not 100% a gaming blockchain platform – XPLA is aiming to be a blockchain for multimedia with its focus initially on gaming. XPLA is built through Tendermint and the Cosmos SDK, it will also enable an EVM chain to take advantage of users and developers coming from Ethereum-based blockchains.

XPLA incorporates a game launcher whereby a game development team has to submit a playable demo for users to vote it into the ecosystem. This may create an interesting scenario where users feel like they have control over a game publisher which could foster a deeper connection to an ecosystem.

There seem to be 6 indie games launched through XPLA at the moment with more in the pipeline. Com2us the South Korean mobile gaming giant is the service provider for the XPLA project – with their experience in the mobile game sector, this could push Web3 gaming in South Korea.

Investable asset

There are potentially 2 tokens to consider in this ecosystem. The first is XPLA, with a holder count of 27,000 this will be the native token of the network and used for transaction fees as well as governance and staking to validators.

The next asset specifically for gaming is CTXT – this will be used for governance of the gaming side of the platform and for games to distribute once they receive the provider settlement.

🌴Oasys

With gaming giants such as Ubisoft and Square Enix as validators for its PoS blockchain – Oasys is establishing itself as one of the more serious contenders for attention in the web3 gaming space.

Oasys is set up as the layer 1 blockchain, whilst games and gaming ecosystems can build on top of this using optimistic layer 2's called "verses" as detailed in their whitepaper. Whilst it is not a permissioned blockchain as such, it is costly to build a verse on Oasys (1 million $OAS tokens) which may prove to weed out the scams wanting to deploy here.

There are currently 5 verses totalling 28 projects building on Oasys. Much like Ronin, Oasys is targeting the Asian market initially with founders from Japan and being also based out of Singapore.

Investable asset

The $OAS token is the asset that holds the ecosystem together. This will be used for transaction fees on the network and for governance. Verse builders also need to purchase these tokens to create their own ecosystems on top of the layer 1 blockchain, so in time if this is the place developers want to build – these tokens will have to be bought.

As can be seen, the total supply of OAS is 10bn with supply being fully vested after 6 years. This puts it at an extremely large FDV of $1bn compared to $35 million $SOAS (current stake-able OAS tokens).

🌊 Myria

Myria is a Layer 2 solution to Ethereum built using starkware. It is aiming for a permissionless blockchain meaning anyone can build on top of it – targeted at gaming teams.

Myria will host a roster of games if all are to make it out of development. There are over 100 games on their ecosystem page that are tagged as 'in development' with currently no games playable just yet, however, there are some early access alpha tests coming up for some.

Investable asset

The Myria token is the currency NFTs will be bought and sold through on the Myria network and associated marketplaces. Interestingly it is not used for gas fees. Games may also use it as part of their economy – which remains to be seen yet.

Users can also purchase nodes with Myria tokens to secure the network and also earn daily rewards in Myria. A node is currently $4505 with incremental price rises as more nodes are purchased. There are a total of 40,000 nodes available for purchase with 6000 sold in a private sale and around 245 currently sold in the ongoing public sale.

💠 Iskra

Iskra launched in Q4 2022 and has developed its own blockchain called the Iskra Hub. It aims to be a layer 1 where game-specific chains could build on top of it and create their own economies all whilst harnessing the community and interchain economy of Iskra.

Iskra only has 1 playable game out at the moment called 3 Kingdoms Multiverse which is available on Android and has had about 10k downloads. 5 other games are tagged as in development on their website. So how does this explain 1.5 million wallets interacting with Iskra as seen from the Dapp Radar rankings screenshot below?

This can be explained by a wheel spin minigame that is playable on the Iskra website. Once signed up a user can spin the wheel for a chance to win Iskra tokens or an NFT. it seems most of these 'unique wallets' will be controlled by a much smaller number or more likely – bots.

Investable asset

The token associated with the network is $ISK.

The total supply is 1bn with yearly vesting from different tranches. The biggest portion of distribution rewards goes to Pioneer NFTs – these are the second investable asset in the ecosystem.

The Pioneer NFTs act as the nodes securing the network. There are 40,000 NFTs with 6,000 being sold in a private sale and at the time of writing 800 being sold in an ongoing public sale where prices are currently at $7,600.

🔥 WAX

Wax is the OG gaming blockchain. Launched in 2018, its use case was very cheap microtransactions where games could come on-chain. However, it doesn't seem to have kept its market share.

With that being said it still has some of the most adopted games in web3 with 3/6 of the top games on Dapp Radar being from the Wax blockchain.

It is a DPoS blockchain meaning users can stake their WAX token to validators to secure the network. Prior to the blockchain – the team had experience with game marketplaces such as Opskins and WAXpeer where users could sell items such as CS:GO skins.

Investable asset

As previously mentioned WAXP can be staked to validators and used for transaction purposes on the network. It is also used for governance.

As can be seen, Wax exists on both its own network and Ethereum for Defi purposes. It makes revenue by charging fees on sales and transaction fees. The reason why Wax seems to have fallen by the way could be explained by its NFT sales volume. In half the amount of time it has been around – Immutable seems to have done nearly the same amount of NFT volume that WAX has according to Cryptoslam. This gap only seems to be growing, as within the last 30 days Immutable did $26 million worth of volume, compared to $2 million on WAX.

📺 Beam

Merit Circle – the gaming guild has recently pivoted to building its own blockchain for gaming. The blockchain is housed on Avalanche's network of subnets.

4 games have been slated for launch when Beam is live as well as an AMM and NFT marketplace to house the in-game tokens and non-fungible assets associated with the games.

MC will be the token used for gas fees on the network meaning if the chain is used then circulating supply will be taken off the open market to pay for transactions.

🍎 Magic Eden gaming

Originally developed as an NFT platform and marketplace, Magic Eden recently launched its gaming arm of the platform.

Originally launched on the Solana blockchain – Magic Eden has become an NFT marketplace giant and it's clear where they want to push into next.

The marketplace has cleared$1.9 billion in secondary sales volume and could become a hub for gaming assets to congregate.

🔼 Fractal

Fractal is a game aggregator originally built on Solana but has since integrated Ethereum and Polygon blockchains. Users can discover games on these networks and take advantage of tournaments regularly held on the platform.

It also boasts gaming NFT trading for the games featured, where players wouldn't necessarily need to leave the platform to trade their rewards or purchase new items for their games. The volume hasn't matched Magic Edens' however, so it still seems users prefer this marketplace to trade on.

Justin Kan – founder of Twitch is also behind this platform so if his track record is to be trusted then this platform could have the potential to take off.

🚀 Tavaera

Building on zkSync era – Tavaera is creating its own ecosystem on zkSync technology including its own game and blockchain specifically for web3 gaming. I expect more ecosystems to crop up building on zk technology as many transactions can be processed at greater speeds with the security of the Ethereum layer 1 blockchain.

🔽 Versa Games

Versa is a gaming DAO built on Polygon to get users to interact with web3 games by providing a sort of storefront approach. Their services include liquidity as a service – by providing games with some defi solutions, the developers can focus on the game itself by abstracting their economy to a certain extent.

Conclusion

The race is far from won with who will take the most market share in web3 gaming. With new ecosystems coming to the market, there may never be one place in which gamers will interact with blockchain solutions.

Partnerships are also being forged on a monthly basis which is great for the industry as a whole because composability is one of the main advantages of web3 gaming.

So can we point to undervalued solutions in the gaming sphere?

Whilst it may be too early to call what is 'undervalued' at the moment because a lot of these ecosystems have just launched. It is clear from the data available that comparatively Ronin comes out to be the most undervalued. This is mostly because Axie Infinity catapulted Sky Mavis to the top of the rankings – it will be interesting to see if they can continue to stay on top.