Key Takeaways

• In 2022, the broader gaming market is generating approximately $196.8b in revenue from 3.2b gamers and is expected to reach $225.7b by 2025 while the number of gamers grows to 3.5b.
  • Blockchain gamers account for just over 0.02% of the total number of gamers, indicating that the sector is still nascent and has much room to grow.
• Of the ~1,964 existing games across all blockchains today, 31.1% are active, 63% are in their development stages, and 5.9% are discontinued (the true figure is likely to be higher). The sector will expand as more games deploy over the next few years.
• Alien Worlds, Trickshot Blitz, Benji Bananas, Splinterlands, and Upland, are the top 5 games by unique active wallet interactions over the past 30 days, registering 707k, 473k, 450k, 328k, and 152k players, respectively. Although, it is difficult to differentiate between real and fabricated interactions.
• Immutable X ranks third in 30D NFT sales volume at $22.5m, ahead of Polygon at $12.1m and BNB Chain at $7.6m. Meanwhile, BNB Chain controls 12.9% of the daily active user market share, while Polygon and Immutable X represent 9.5% and 0.22% of daily gamers, respectively.
• BNB Chain is the clear leader when it comes to the market share of games, with 35.5% of all games deployed on the chain. Polygon places third behind Ethereum with 12.6% of the blockchain games market share, and Immutable X controls 1.8%. However, the number of games deployed does not correlate to the quality of the games. Ultimately, blockchains with the best games and user experience will prevail.

Introduction

Gaming Landscape

The second half of 2021 saw an explosion in blockchain games, particularly play-to-earn games, which captured the attention of both retail and institutions. Play-to-earn games and metaverse-related projects such as Axie Infinity, SandBox, and Decentraland were some of the best performers during the period. Despite the sector quickly becoming saturated with low-quality games with poor tokenomics and enormous valuations, the advantages of applying blockchain to games cannot be overlooked.

Benefits of applying blockchain to games for players include:

• Verifiable ownership of assets
• Reduction of counterparty risk (trustless system)
• Value accrual from monetization of in-game assets
• Community governance
• Interoperability

For developers, some advantages include:

• New revenue streams and sources of funding
• Composability and interoperability
• Greater economic alignment with the community

Thus, many blockchains are competing to build the best infrastructure to support game developers as this sector looks to move beyond the fringe of the industry. This report will compare three L1s/L2s emerging as the leading chains for gaming, as well as their ecosystems.

Sources such as Footprint Analytics and DappRadar suggest that there are approximately 800k daily active gamers across all blockchain networks today (although difficult to distinguish between real users and fabricated interactions). A Global Games Market report from Newzoo, published in July 2022, estimates that there are 3.2 billion gamers worldwide. Hence, blockchain gamers only account for ~0.02% of the total pool of players. Newzoo projects the broader gaming industry to generate $196.8b in revenue in 2022, a 2.1% increase year-over-year, with a 4.2% Compound Annual Growth Rate (CAGR) between 2020 and 2025. By 2025, Newzoo predicts that 3.5 billion players worldwide will drive the industry to $225.7b. The continued growth of the sector, and the nascency of blockchain games, mean that there is enormous potential for the blockchain games subsector.

Although the number of unique active wallets (UAW) interacting with blockchain games has declined ~30.9% since the LUNA debacle (which led to a market downturn in May), the sector still dominates the total crypto activity on this front. Blockchain games take up 42% of daily transactions, followed by DeFi at 26%.

Data from DappRadar suggests that the blockchain gaming landscape consists of around 1,964 games across all ecosystems. Using statistics from PlayToEarn.net, fully live games account for almost a third of the existing blockchain games on the market, while games classified as under development take up nearly all of the remaining distribution. Specifically, 10.6%, 15.8%, and 13.7% are in the Alpha, Beta, and Presale, respectively. 22.8% of games are still in early development, which is reasonable considering that the blockchain gaming sector is still nascent. High-quality games take multiple years to design, test and deploy. Incorporating a blockchain and sustainable token design could further lengthen the development phase. As the blockchain gaming industry grows, the proportion of higher-quality games released will rise in the next few years. On the other hand, only 5.9% of existing games have been officially discontinued, and the majority of games have little to no usage or prospects of future success.

In the past month, Alien Worlds, native to WAX, BNB Chain, and Ethereum, recorded the most UAW interactions (706k). Other notable blockchain games, including Trickshot Blitz (Flow), Benji Bananas (Polygon), Splinterlands (Hive, WAX), and Upland (EOS), accompany it in the top 5. Interestingly, the distribution of blockchains represented in the top 5 games by monthly UAW is evenly spread.

Competitor Analysis

Market Share Of Users

Source: Cryptoslam, Footprint Analytics, DappRadar Data as of 24 November 2022

In terms of all-time NFT sales volume, Solana ranks third behind Ethereum and Ronin with ~$2.82b transacted. Polygon, Immutable X, and BNB Chain are 8th, 9th, and 10th, respectively. However, these blockchains have recorded more volume than their competitors, such as Flow, Avalanche, and WAX, in the past 30D. This indicates a trend of adoption flowing into these blockchains and emerging as market leaders for gaming infrastructure/base layer.

Unfortunately, due to the recent revelations of the FTX/Alameda fallout, many Solana-based games and NFT collections will likely move to another blockchain ecosystem in the coming months. As a result, this report excludes Solana from the list of most attractive gaming-supported blockchains.

Of the ~800k daily active users (some of which may be fabricated data) across all blockchains, BNB Chain and Polygon have the most users out of the competitors in focus. Specifically, BNB Chain has a 12.9% market share, while Polygon has a 9.5% market share. Lastly, Immutable X has approximately 1.8k daily active users, translating to ~0.22%. According to data from Footprint Analytics and DappRadar, WAX has close to 40% of the market share of gamers. This is mainly due to Alien Worlds, which has 232.72k daily active users alone. Note that these statistics are an approximation across multiple sources, which have some discrepancies between them.

Market Share Of Games

BNB Chain is the most popular chain for games to deploy, with 35.5% of all existing blockchain games choosing to launch on it, followed by Polygon at 12.6%, and Immutable X at 1.8%. Despite controlling a large proportion of games, BNB Chain only accounts for 12.9% of active users, supporting the claim that many are low-quality and will probably fail. Additionally, scams and rug pulls are ample on the chain.

Base-layer Comparison

Data as of 2 November 2022 Note that transaction costs are estimated based on the gas fee at the time of writing.

Pros and Cons From a User’s Perspective

Developer Experience

Immutable X

API Abstraction Layer & Platform SDKs

Immutable X has built infrastructure to ease the onboarding process for game developers, especially those who are not crypto-native, by offering support in the form of APIs and SDKs.

Immutable X's APIs convert asynchronous blockchain interactions into synchronous API calls. In other words, all asset mints, trades, and transfers on Immutable X are reduced into simple API calls, so developers do not need to configure the backend or interact with smart contracts. SDKs, on the other hand, facilitate the execution of functionalities such as creating orders, deposits and withdrawals, minting, establishing a connection to wallets, and signing transactions. In addition, the SDKs are available for different languages and frameworks, aimed to support developers from all programming backgrounds.

Fees

On the developer and creator side, Immutable X gives marketplace developers and creators the option to set an additional fee on top of the 2% protocol fee for asset sales and trades. Therefore, marketplaces can generate revenue and benefit from the shared order book system, and originators can create income from all secondary sales of their work.

Immutable X has one of the most lucrative developer-focus initiatives of any blockchain, aimed to significantly simplify the process of building on the platform and providing the most robust infrastructure to support games. Moreover, the grant program also assists aspiring builders in areas such as design considerations, blockchain technicalities, and marketing, on top of financial support. As a result, the number of early-stage games partnering with and building on the platform has grown considerably.

Polygon

Beginner Bootstrapping

Polygon is also focusing on onboarding developers, breaking down the barriers to entry, and ease of dApp deployment. Firstly, Polygon Academy provides free online courses for beginner programmers to walk through the basics of smart contracts, as well as providing a starter toolkit for building Dapps via an open-sourced GitHub template. PolygonTV also hosts workshop sessions where beginners can follow along.

Developer Tools

Developers can leverage various infrastructure platforms, such as Alchemy, QuickNode, ChainStack, and others, as their developer environment to create and deploy smart contracts. These service providers supply tools such as API endpoints to connect and communicate with the Polygon PoS chain. Polygon's complete set of developer tools also comes with a faucet, Open Wallet API, bridge widget, finality design system, and more.

Polygon has one of, if not the best, developer support systems of any blockchain. Their documentation is robust, detailed, and well-outlined. Moreover, these documents are beginner-friendly and concise, which is helpful to non-crypto-native game developers looking to migrate from Web 2.0.

BNB Chain

Ecosystem Support

Similarly, BNB Chain also provides resources to newcomers on the backend of blockchain technology, smart contract frameworks, and specific implementations, such as a video on how to build a game on the BNB Smart Chain and an introductory video series on building on BNB Chain.

Developer Tools

Developers can deploy and test their smart contracts on the BNB Chain using Integrated Development Environment (IDE) providers, including ChainIDE, Remix, Truffle, HardHat, and Replit. Builders can also deploy NFTs on BNB Chain through Truffle and Black IDE. Additionally, BNB Chain has an array of infrastructure tools, such as APIs and language-specific SDKs, to support its developer ecosystem, explained in their canonical developer documentation along with video tutorials.

Solana Smart Contract Migration

Shortly after the FTX/Alameda fallout, BNB Chain released an in-depth explanation of the primary difference between Solana and BNB Chain to attract builders and projects previously on Solana to the ecosystem. This signifies that the BNB Chain is looking to quickly grow its developer base and gaming ecosystem value by absorbing the Solana ecosystem and clearly directing its efforts to gain market share over its competitors.

Similar to its competitors, BNB Chain also provides essential developer tools to support its builders. Recent efforts tailored toward bringing in existing projects from other ecosystems suggest a push for growth quantitatively rather than a bottom-up quality approach. One of their main advantages is the abundant developer grant programs available for aspiring developers due to the immense capital that Binance has.

Ecosystem Overview

Many of the existing blockchain games are multichain, but in this instance, the term multichain can be interpreted in various ways depending on the game's design and mechanics. For example, Galaxy Fight Club avatar NFTs are native to Ethereum. However, the game's utility token and in-game assets, such as weapons, exist on Polygon due to lower gas fees. In contrast, games such as Alien Worlds are fully functional between WAX, BNB Chain, and Ethereum, depending on the user's preference. The game revolves around mining and staking TLM, the native governance and utility token, which is designed to be cross-platform.

The variation in design considerations implies no single correct evaluation method for ranking games on a particular blockchain. Some of these metrics are NFT sales volume, native token market capitalization, and unique active wallet interactions. While ideally, combining these metrics would give the most detailed insight into the game's true adoption, it is unfeasible.

Due to the design mechanics of each game, some games rely heavily on their NFT assets, while others revolve around the native token, and some games do not have a fungible token. Moreover, the native token can be propped up to higher valuations from investors prior to unlocking, in addition to speculation from traders, and does not truly reflect the game's adoption.

Hence, assessment via unique active wallets, as opposed to NFT sales volume or market capitalization of the utility token, gives the most accurate estimate of a game's actual activity. Based on this analysis, the rankings are curated based on the number of unique active wallets over the past 30 days.

Immutable X

Top Games In The Past 30D

Source: DappRadar Data as of 17 November, 2022

The top 5 games on Immutable X by 30D UAW are shown above. Gods Unchained is the most popular game by some distance, attracting 14.3k gamers and $21.3m in volume over the past month, followed by Guild of Guardians, Illuvium, Highrise Creature Club, and Goons of Balatroon.

The statistics for live games on Immutable X are impressive, considering that the chain only launched its Alpha mainnet on April 8, 2021. Moreover, high-quality games that can attract a coherent user base take multiple years to develop. With this in mind, it is evident that the Immutable X ecosystem is rapidly growing and is one of the most promising infrastructure providers in the blockchain gaming industry.

Developer Grant Program

Immutable X's developer fund consists of two segments; ventures and grants, totaling close to $500m. The venture arm was established in association with the likes of BITKRAFT, Animoca Brands, AirTree, King River Capital, and GameStop as a channel for additional investment opportunities.

Unlike other grant programs, in addition to monetary support, the Immutable X grants program also offers resources, expertise, and advisory in areas such as tokenomics, game design, and marketing initiatives to accelerate the game's development and uphold quality standards. Applications from aspiring teams are subject to approval, and the funds are distributed based on completed milestones throughout the development cycle. The fund is expected to be distributed to various developers over the next 4 years.

Ember Sword was initially developed on Polygon but recently transitioned to Immutable X and is now part of their developer grant program, along with Delysium. Meanwhile, Deviant's Factions Undead Blocks repositioned themselves on Immutable X following the implosion of Terra earlier this year.

The various initiatives geared towards attracting top-tier talents and seamless integration has seen Immutable X's developer base explode. In Q3 alone, Immutable X has onboarded 50 games, and over 1,000 are currently in a “testing environment”. The developer-focused vision, user-friendly interface, and grant program that assists aspiring games with funding and expertise make Immutable X one of the most exciting blockchains for gaming. As more games go live and Immutable X pursue more partnerships, they will take up more market share of games and user base from their competitors.

Polygon

Top Games In The Past 30D

Source: DappRadar, Nansen Query Data as of 17 November, 2022

Polygon's gaming ecosystem is vibrant with many upcoming games. Most notably, Benji Bananas, a mobile game by Animoca Brands that was launched in 2013 and has shifted to a play-to-earn model. The game has attracted over 449.4k unique active wallets in the past 30D, a 6.16% increase from the previous month. There are 17.6k daily active wallets at the time of writing. Games such as Ar8, Planet IX, Ultimate Champions, and Sunflower Land have drawn in 84.1k, 64.9k, 62.5k, and 29.3k unique wallets over the past month, respectively. Sunflower Land has the highest month-over-month user growth percentage out of all the top games on Polygon, recording a 269.5% jump in active users.

These newer games have taken some user market share from the biggest games in the ecosystem, like Zed Run, Crypto Unicorns, DeRace Horses, and more. This suggests that there is no single dominant game in its ecosystem yet, which is attractive for builders to capitalize on.

Developer Grant Program

In July 2021, Polygon announced a $100m fund along with its gaming and NFT-focused arm, Polygon Studios, with the intent to solidify its status as a leading infrastructure provider for blockchain games. Similar to Immutable X, Polygon's initiatives are geared towards bridging and onboarding traditional Web 2.0 gaming houses to Web 3.0.

Polygon Studios consists of two factions; Polygon Gaming Studio and Polygon NFT Studio. The gaming studio aims to assist aspiring games in their development and marketing initiatives, whereas the NFT studio helps projects build and launch their brand and IP.

Polygon is paving the way for Web 2.0 giants to onboard its ecosystem. Some of the biggest brands and companies in the world, including Adobe, Atari, Stripe, Disney, eBay, Robinhood, Meta, Reddit, Starbucks, Adidas, and most recently, Nike, are already building on its platform. On top of that, SandBox and Decentraland are also deployed on the chain.

BNB Chain

Top Games In The Past 30D

Source: DappRadar Data as of 17 November, 2022

In terms of gamers over the past month, BNB Chain has a much more even distribution of active players across its games in comparison to Polygon and Immutable X. P12 Arcana, Tiny World, WAM, Era7: Game of Truth, and MOBOX: NFT Farmer have all attracted more players than other notable games on BNB Chain, such as Theta Arena and Metamon, which ranks 8th and 11th in monthly UAW interactions, respectively. It is also important to consider the possibility that the data is manipulated via bot interactions.

It is unlikely that these games will be able to retain their user base. As mentioned, even though BNB Chain controls a large portion of existing players and blockchain games, it is clear that many games on BNB Chain are severely lacking quality.

Developer Grant Program

When it comes to supporting projects on the BNB Chain, Binance is one of the most supportive blockchains for developers. Most recently in October, the BNB Chain Builder Grant is open to registrations, seeking projects who want to build or migrate to the BNB Chain. This new grant will seek to invest up to $500k a month. Previously, BNB also ran an Accelerator Fund to accelerate the development of projects on its chain.

Binance Labs also raised $500M in June 2022 for incubation, early-stage venture, and late-stage growth investments. This however is not specific to the BNB Chain as they invest agnostically across various chains.

Closing Thoughts

• While blockchain games represent a trivial portion of the gaming economy, the sector is showing a lot of promise, attracting both crypto-native and non-crypto-native builders to the industry. Even though Immutable X, Polygon, and BNB Chain have strengthened their positions as the leading base layers for games, no single blockchain has materialized as the clear leader within the sector.
• Many projects are building with a multichain vision, and no blockchain can fulfill all developers' needs and design parameter configurations. With that in mind, the future of blockchain gaming is likely to be multichain with multiple dominant infrastructure providers.
• Immutable X's ecosystem is relatively small compared to its competitors. Despite that, their novel technology and features specifically configured for blockchain games, combined with their developer grant program and high-profile partnerships, are reflected in the NFT sales volume and a growing number of high-quality games deployed on the platform.
• Polygon's initiatives are geared towards growing and retaining its developer ecosystem through its concise documentation and comprehensive set of developer tools. Its ecosystem is quickly catching up to BNB Chain in terms of games deployed and daily active users, with Benji Bananas representing the Polygon in the top 5 games in monthly UAW. Polygon has also established itself as the leading ecosystem for onboarding Web 2.0 giants and some of the world's biggest brands.
• BNB Chain is one of the most popular gaming blockchains. However, it is evident that many of these games lack quality, and there is no dominant game on the blockchain. On the other hand, BNB Chain is initiating efforts to lure builders from the Solana ecosystem to the chain, which could see its ecosystem supplied with more games and talent.

Key Terms