Blockchain Games Face 45% User Decline Due to Sustainability Issues

Blockchain games have seen a surge in popularity, with some titles attracting millions of users annually. However, the sector has faced significant challenges, leading to considerable user outflows. For instance, Axie Infinity's daily active users peaked at over 2.7 million in November 2021 but declined by 45% by April 2022. The primary issues stem from a lack of sustainability and the absence of in-game asset ownership, which have hindered the growth of play-to-earn games. Mythical Games, a pioneer in Web3 gaming, aims to address these issues by providing true asset ownership and simplifying blockchain integration for developers and players.

Despite their initial success, blockchain games have made several mistakes that have hindered their growth. One of the most significant errors is focusing on technology rather than gameplay. Games that require setting up external crypto wallets, managing private keys, or buying cryptocurrency before starting deter many potential players, especially those unfamiliar with crypto. This technical barrier causes drop-offs before players even experience the game. Additionally, games designed entirely around minting, breeding, or trading NFTs often offer shallow or repetitive gameplay loops, leading to a lack of engagement. Critics have even gone so far as to call these games financial products rather than enjoyable experiences. Complex Layer-2 or custom blockchain solutions that require an understanding of gas fees, bridging assets, or staking mechanisms further confuse players and make even simple actions feel like navigating a fintech platform rather than playing a game.

Another common mistake is underestimating the appeal of true asset ownership. In traditional blockchain games, players did not own the assets they acquired, and there was no tangible value in the time spent making progress. Mythical Games has pioneered a deviation from this model by enabling verifiable ownership of land, items, characters, and other in-game assets. Players of FIFA Rivals, an arcade-style mobile game, can own and trade digital collectibles, futuristic designs, and classic looks thanks to a partnership between Mythical Games and Adidas. Players can trade NFTs or build dream teams on the Mythical Marketplace, a platform for trading assets across games within the Mythical ecosystem, including NFL Rivals and Blankos Block Party. This approach eases management and transactions, making the gaming experience more enjoyable and rewarding.

Flawed tokenomics is another significant issue in blockchain games. Axie Infinity’s SLP token, mainly used to breed Axies, is a painful example of play-to-earn’s inflation challenges. The token’s value soared, but the rate at which it was generated far outpaced its use through sinks such as breeding. This imbalance led to chronic SLP inflation, causing the token’s value to decline sharply and player earnings to plummet. Overreliance on the influx of new players was the root cause of the token’s failure. Effective tokenomics involves managing supply through burns, caps, or controlled issuance and creating demand through incentives and utility. Game creators are now designing tokenomics to reward token holders for activities benefiting the project and enable them to benefit from any upside. Tokens are becoming a key lever in project marketing and the management of the stakeholder community.

Fragmented gaming infrastructure is another challenge faced by Web3 game developers. Some developers have been excessively reliant on a plethora of infrastructure solutions, including smart contracts, wallets, marketplaces, payments, and player analytics. This reliance leads to security issues, additional maintenance costs, and potential points of failure. Game development often relies on full-stack game engine solutions, and Web3 development also needs to be full-stack. More and more developers are considering interoperable standards and end-to-end solutions to ensure faster and more effective building and more pleasant experiences for players. Mythical Games makes developers’ work easier by providing a comprehensive solution to integrate a secondary game economy seamlessly. REST APIs are the main integration path, with SDKs available upon request. The technology handles the underlying blockchain infrastructure, including marketplace functionality, NFT creation and management, and player wallet management. It is neither challenging nor costly to build an in-game marketplace.

Transparency is not the same as trust. The transparency of the ledger system doesn’t necessarily engender trust. Platforms believed making data available on the blockchain would increase perceived trustworthiness, leading to higher engagement and more users. Eventually, some of them launched public APIs, whose adoption skyrocketed because they gave developers easier access to the latest data. The majority of developers eventually shifted towards APIs rather than reading data directly off-chain. Trust remained with developers after platforms began providing APIs in an unrestricted and ethical manner.

Storing too much data on the blockchain is another issue. A lot of data must be stored to support a game entirely on the blockchain. However, block space is not cheap, and players have to pay gas fees every time they need to save. Someone who had made a lot of progress would end up paying substantial gas fees. Eventually, platforms realized this was not scalable and stripped down blockchain interactions, including caching more data in servers and storing less data on the blockchain. Gaming communities appreciated the reduction in gas fees. They cared about frictionless gameplay the most, and on-chain data lost its novelty after a few weeks of playing.

Prioritizing short-term gains over long-term satisfaction is another mistake. Monetization may be important for sustaining a game’s growth and development, but the excessive fixation on play-to-earn mechanics at the expense of enjoyable and engaging gameplay ultimately alienated players, even leading insiders to pronounce play-to-earn games “dead.” Earnings-first communities crashed under market pressure in 2022, but the volatility did not affect games that focused on gameplay. Speculative projects, especially those with tokens lacking utility, face a serious risk of market failure. Players value meaningful and authentic interactions. Before building the Mythical Platform, its team wanted to make sure each engineering decision was made with a player-first mentality. One of these decisions was to build a scalable and reliable backend to ensure support for the games. Another decision focused on the experiences that players would associate with their favorite Web2 games, the kind of design that would result in a pleasant and seamless experience. Much of Web3 gaming history has been marred by overly financialized designs to appeal to NFT traders instead of true players. With its fast-paced battle system, NFL Rivals is a great example of a title building on core gameplay mechanics with Web3 elements. The market is observing the acceleration of the attention economy, making it imperative for projects to prioritize player-centric designs. These designs incorporate immersive narratives, rewards based on skill, and gaming mechanics that transcend ‘earn-first’ structures. When these aspects are absent, players rapidly lose interest and turn their attention elsewhere.