tl;dr: I look at the Top 5 most active games on Immutable’s L2
Disclaimer: nothing in this blog should be taken as investment advice. The writer owns various crypto assets and expresses no opinion on whether the reader should buy or sell crypto assets.
As part of my research into Immutable I wanted to take a look at some of the apps already deployed. Part of the reason for looking at Immutable is the team’s enthusiasm for crypto gaming, which is something I have an interest in too.
Immutable is a Validium layer 2 solution deployed on top of Ethereum. The main use-case that the team is pursuing is NFT trading and gaming. Transactions are faster and cheaper than Ethereum, but it does not offer full EVM compatibility.
See my previous blog an overview of Immutable:
Research into Immutable’s L2 scaling solution
Immutable is a Validium layer 2 solution deployed on top of Ethereum. The main use-cases are NFT trading and gaming.
While the Immutable team claim to have over 100 building projects, it obviously isn’t feasible to investigate them all, so the targets I chose are the top 5 games by activity according to DappRadar (November 2022).
- Gods Unchained
- Guild of Guardians
- Ember Sword
These titles may not truly be the best sampling of the ecosystem since there is a bias towards being listed by DappRadar and that contracts must be deployed in order to measure activity. The best games may not have launched any contracts yet!
Centralization and NFTs
Due to the nature of Immutable’s technology, there is a great emphasis on token trading. As noted previously, Immutable is centralized although game assets (NFTs) are on Ethereum mainnet.
The games are also centralized (like any traditional game) but with added NFTs. While it can be argued that risks are minimized with NFTs being on Ethereum mainnet, it is still worth understanding that risks do exist: e.g. dev company goes bankrupt and the game stops.
1. Gods Unchained
This is a trading card game where the cards are NFTs that are deployed to Eth mainnet. The game was originally deployed a few years ago, but it looks like it has been redeployed to take advantage of the scaling benefits offered by Immutable.
Launch date: Launched
Team: I couldn’t find team pictures on the website. The GU website mentions Immutable, although I thought GU was originally developed by another team.
Decentralization? The game has NFTs that sit on Ethereum, but the gameplay is likely on a developer owned server (centralized).
There is a governance DAO, but this may not sufficiently decentralize power to make the game meaningfully decentralized. Without digging deeply, governance probably allows players to provide input on certain aspects of the game.
Investors: Coinbase, Galaxy Digital, Continual Capital and others.
I believe data on DappRadar shows NFT activity. This is the most active app on Immutable right now.
Date: 1st December 2022)
The market cap is reasonable, perhaps even low, given that many projects without a product did pre-sales of tokens at valuations north of $50 million. The FDV is higher but isn’t terrible.
I use the number of Twitter followers to provide an additional point of comparison between teams. I would also be worried if there was say 1 million followers and a market cap of only $1m.
GODS is described as a token for rewards, but that alone doesn’t convince me that the token is useful or valuable. If we look further down the FAQ page, we can see there is a section for “utility”:
- Use in crafting (if I understood correctly)
- Item enhancement (future utility, not yet live apparently)
- Purchase items with GODS
The above utility seems like demand drivers, while the other points listed in the FAQ don’t (e.g. governance). The FAQ mentions that after launch, tokens will be used when minting new NFTs, buying packs and to access specific game modes or events.
Supply / Staking
- 61.5% of total supply was allocated to the community (“Play to Earn Rewards, Community & Ecosystem Fund and the Community Allocation”). It is likely that this pool of funds is managed under the discretion of the team so this requires an amount of trust from the community.
- 7% of total supply was allocated to a public token sale. Not a huge amount unfortunately, although in the current environment of regulation etc it may be hard to expect more.
- From looking through the documents there is a comment about a staking rewards pool. It suggests that staking rewards will be paid out to active stakers, however, it doesn’t suggest that this will ever come to an end and hence the total supply may be inflationary over time.
Final Thoughts on Gods Unchained
While I’m not a big TCG player I do find this game to look professional in terms of how it looks (see this video on how to play). The lack of lag suggests that the game is centralized.
While the game itself is closed source and centralized, I did see that the NFT contract is open on Etherscan.
I’d guess that there won’t be too many problems with scaling in the immediate future. As the game is centralized, then not all of the actions are on-chain, and therefore very little of the game itself hits the chain.
2. Guild of Guardians
This game looks like a 3D MMORPG and perhaps one of the few blockchain games that looks like a traditional game (gameplay video). To that extent it looks like the most promising game in this report. The graphics are fairly low poly like Ember Sword.
Launch date: H2 2023. Alpha H2 2022
Team: GOG is being developed by a company called Stepico. Fortunately I can find pictures of their leadership on their website at least, unlike the other projects I reviewed for this document.
Github? I don’t see any links to GitHub.
Decentralization? The developers state that the game will be decentralized, but that’s not possible with current Immutable technology. Even adding a DAO to an otherwise centralized game doesn’t make it decentralized in reality.
Investors: I didn’t immediately find information about investors, although I know that there was a presale.
As previously mentioned, the game hasn’t launched yet so the activity metrics from DappRadar are in relation to trading and likely in relation to NFTs.
The level of activity and their value is notably lower than Gods Unchained.
Date: 1st December 2022
The market cap is in-line with a pre-launch blockchain product. As always, it is worth being aware of the FDV and how that could impact the price later as more tokens unlock.
From the whitepaper we can see a number of intended items of utility for the GOG token. Things such as staking and governance I mostly ignore as demand drivers. However, the team states that the token will be used for payments within the game, and for minint NFTs.
Supply / Staking
- A page on GOG staking.
- There will be a maximum of 1 billion GOG. Currently around 328 million. See Supply Schedule. Supply won’t be peak until 2027.
From the graph, it looks like a large unlock is due soon (January 2023 perhaps). This is the unlock of the developer tokens, however, it wouldn’t be wise to see too many tokens at current prices.
Final Thoughts on Guild of Guardians
The videos suggest it could be a fun game. I have pretty much no expectation of it being decentralized.
The latest version of the whitepaper is a gitbook and it looks fairly comprehensive. There are considerations for technology as well as from a business perspective, the latter is always refreshing to see and feels often forgotten in this space.
- Seasonal NFT — limited editions. Will be usable in game.
- Trading fees from the marketplace. (guessed to be main revenue)
- In-app purchases
The team is looking at some inorganic growth with paid ads, initially at least and it also looks like they’ve understood that a referral system is necessary for sustainable growth later (probably a mix in the long-term).
The team a belief that NFTs in games can improve the 30 day retention rate (rate at which new users keep playing after the first 30 days):
“Peer analysis shows that NFT gaming can already increase D30 retention from a typical 20–30% up to 80% (source: Axie Infinity, My Crypto Heroes).”
I suspect this may be true at the moment, although I wonder if this eventually changes if / when the novelty of NFT items wears off.
I struggled to figure out what this game was from looking at the official website. I came across a blog that mentions the “top 4” game on Immutable, the author managed to provide something I could understand:
“In Highrise, players are tasked with building and managing a skyscraper. The catch is that players only earn money if their skyscraper generates enough income to pay for itself.”
That really wasn’t obvious from looking at the website multiple times.
Token name: None, and no further details found.
Launch date: possibly already launched.
Platform: Mobile & Web
Team: There is a team page on the company website. There are a couple (non-portrait) pictures of the leaders, then a bunch of team pictures.
Decentralization? No clear mention that I could find. Also given that the game is mobile-centric, it is unlikely.
Investors: A number of high profile investors apparently: Y Combinator, Bitkraft, Canaan, and others.
The following shows some key activity data from DappRadar:
Final Thoughts on Highrise
I struggled to understand what this game was about and I struggled piecing information together from the various resources. I can’t see myself spending further time looking at this project.
Initially I feared this game was something between a TCG and an idle RPG, but on digging deeper it seems more like a proper MMO. The mention of “auto-battler” in the description suggests that the combat is non-interactive, so I suspect the battles are instanced.
The graphics of the open world (as seen in recent videos) look decent enough. I don’t think we should expect the very top level there.
Launch date: Not announced. Currently closed beta.
Platform: PC / MAC
Team: It was easy to find pictures (link) — I like this as a point of transparency.
Github? Nothing found.
Decentralization? No mention from what I could find.
Investors: Quite a few big ones. IOSG, Delphi, StakeDAO.
The activity shown on DappRadar shows activity around NFT trading. Note that the game hasn’t launched yet.
Looking over the past 30 days we can see that the number of interactions is fairly low. This makes it hard to provide any statement about the future of the game based on the numbers shown.
Price statistics (Date: 1st December 2022)
A valuation of $70m pre-launch is an acceptable value. Greater concern would be the Fully Diluted Valuation.
The market cap is based on the circulating supply (~1.7m tokens) which is notably lower than the total (minted) supply of circa 7.3 million tokens. While the total max supply is 10 million. A high FDV compared to the MC suggests that price could take a hit after a big unlock.
The MC of ILV is higher than GODS (a launched game). Worth noting quite a big difference in the number of followers on Twitter: Illuvium is a more popular project.
One blog from the community gave an overview of the amount of funding left and there is at least some cause of concern (funds to run out in 2023), although the same blogger notes that another fundraiser may occur.
One statement that I found concerning is that ILV isn’t needed to play the game. That removes a barrier to entry, but removes a demand driver for purchasing the token.
From looking at the FAQ, I can only see one item of utility that I expect to drive demand:
- Vault Distributions — this is a form of staking where the underlying pool will collect fees in ETH, then that ETH will be used to purchase ILV.
The theory is that more activity means more in-game transactions (which are conducted in ETH?) and hence a bigger pot of ETH is collected. Rather than pay ETH to the holders, it is used to collectively purchased ILV then distribute that ILV to all stakers on a pro-rata basis. This seems like a neat mechanism, but the complexity makes it harder to reason about.
Supply / Staking
- Key information in a Tokenomics blog and a Staking blog.
- Circulating supply (~1.7m tokens), notably lower than the total (minted) supply of circa 7.3 million tokens. Total max supply is 10 million.
- While most tokens have been minted by not, most are locked.
Final Thoughts on Illuvium
I’m generally a fan of MMOs, although the look of the graphics are not so appealing to me. The combat style is also not something that I typically enjoy either.
Pending a capital raise I do have some concern that the game can be built in time, although I do lean towards the team being highly motivated to sort their funding issues. The bigger concern would be the difference between the circulating supply right now and the total supply. Large unlocks over the next couple years are something to watch for.
Mitigations to supply issues would be to ensure tokens have utility and perhaps a burning mechanism. I feel somewhat undecided about the Vault Distribution program being a demand driver. Having just read a recent blog from Andre Cronje who manually performed buy-backs of the FTM token using rewards earned elsewhere then perhaps this idea can work. Here, it seems the collection of fees and the purchases of ILV would be automatic at least.
5. Ember Sword
Billed as a sandbox MMO. It has low polygon cartoon graphics and is probably inspired by Old School Runescape. The demo video does suggest that combat could be smoother/ faster than OSRS.
The game is supposedly free-to-play and offers land (NFTs). There is a claim of “no patches” which immediately suggests it is a browser game, although upon further reading there is going to be a desktop client.
The project is still in a fairly early stage so it is difficult to say much about it. This in itself means it carries a higher risk than a project that provides a lot more public information.
Token name: No token (ERC20) yet, but will be coming (see FAQ): $Ember (future ticker). NFTs: Land + Badges.
Launch date: Not fixed / announced. Want to complete game before released.
Platform: MAC or Windows. Browser or dedicated client.
Team: Some info plus links to LinkedIn, but no pictures on the website. I didn’t dig through LinkedIn profiles as it would be too much effort on top of everything I have done so far.
Github? No. Team declares that they have proprietary code.
Decentralization? No clear commitment to decentralization. While there is a blog with the word “decentralization”, it is not clear that the word has been understood.
Investors: I couldn’t find anything in this regard.
Activity of the NFT Badges according to DappRadar.
While activity is low and mostly explained by the lack of a product, the team has managed to gain a decent following on Twitter (84k followers).
Demand Drivers / Supply / Staking
- Very few details about the projects future token, so it doesn’t seem possible to discuss either the supply or staking.
It is difficult to say much on this project without seeing more details. I couldn’t easily find a whitepaper (perhaps I missed it?) so it is difficult to start the process of trying to understand the project on a deeper level.
My initial impression is that it isn’t a game for me.
The most promising game from this list is Guild of Guardians. I don’t mean to say anything about the token price of GOG here, but just that the game itself is the most appealing. It also had some of the most detail about how the team plan to run a business. That is encouraging.
Gods Unchained is not the type of game that I typically play, but I can see an angle of appeal for many people.
Illuvium seems ok, but probably not for me. Highrise is a pass. EmberSword I could perhaps be convinced of if I see more information.
Lately, I’ve been investigating the buzz around Ethereum’s L2 scaling solutions. I’ve been exploring blockchain gaming for a number of years nad have a keen interest in decentralized gaming.
I’m on Twitter: @EAThomson.