Are we sleeping on a giant? - Hytopia

Targeting Minecraft, Roblox and 300+ million montly active users

Dec 07, 2023

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Who?

Hytopia, previously NFT Worlds, is a web3 gaming project that aims at bringing the Minecraft-like voxel experience to the blockchain. They want to rejuvenate the massively popular genre by allowing smoother and more accessible gameplay, a more modular environment and supporting creators with modern tools. On top of this, they will be offering free to play access with efficient browser support, proposing a less restrictive EULA, empowering a player-driven web3 economy all the while maintaining backwards compatibility with Minecraft builds.

The goal is to cater towards the nearly 170 million monthly active Minecraft players and the 200 million monthly active Roblox players to create a dynamic, player driven economy, spanning across many servers and experiences. Once building on Ethereum and Polygon, the Hytopia team has made the decision to build their own, semi-permissioned EVM blockchain, tailored to their own needs.

Originally, under the name “NFT Worlds”, the team wanted to create a layer on top of Minecraft, allowing users to enjoy web3 features without leaving the realm of their favourite game. But following the sudden ban of all NFTs on the platform by Microsoft, the project pivoted and started building their own voxel universe, heavily inspired by Minecraft. New IP, new models, new textures, 100% new code.

The primary NFT - Hytopia Worlds

The now called “Hytopia Worlds” collection was launched in early October 2021 as a free mint. Within Hytopia, creating a server is free and if the experience is monetized, holding those NFTs allows the content creator to reduce the cut they have to pay the platform fron the transaction they generate. While Roblox charges creators 70% (!!), Hytopia charges a 50% fee that can be reduced to 30% by owning multiple worlds. Hytopia will cover all associated hosting costs through that fee. Each worlds gives a discount depending on rarity that can be stacked until reaching the 30% threshold. There is also a 35% token allocation, distributed over a 5-year linear vesting schedule, that is reserved for Hytopia World owners.

The issue of scarcity is crucial when assessing the value of digital real estate. The speculative nature of virtual land, in addition to the early concentration of that type of asset, usually leads to a highly inflated market that heavily benefits the early user. However, the severity of the issue depends on the utility/purpose of the asset and the nature of the platform.

Due to the fact that basic features will be free to access, the demand for Hytopia Worlds will mostly come from creators that want to build a monetized experience. In that case, the scarcity explicitly aims at prioritizing quality over quantity. Only NFT owners and a few select entities, will be able to deploy smart contracts on the Hytopia Chain and will be supported in the creation process of their server. Land will be scarce, but because its value is intimately tied to the quality of the experiences built on it, the incentive is high to deliver high quality builds. Rarity only impacts visibility on the platform, the amount of the fee reduction and the size of the staking pool share (a little more than 3 years to go) while geographical location doesn’t exist. Feature wise, every world is the same.

The Token

The Hytopia token ($TOPIA) will be the global marketplace currency and fuel for the Hytopia chain. It will serve as the most efficient means to transact between the different ecosystems that live on the Hytopia platform, while also being the governance token for the entire Hytopia network. The team recently pivoted from a single token to a dual token model, in order to provide casual players with the option to enter the ecosystem via a much less volatile environment.

Players will be able to onboard and transact via USDC if they choose to, but those transactions will be subject to a higher fee (8%) vs transactions settled in $TOPIA (3%). This provides an elegant solution to drive web2 people that on-ramp via FIAT to use $TOPIA down the line, without forcing them into a volatile environment at first. Every player that spends a little time within the ecosystem will realise that they pay less, if they use the ecosystem token. Clever.

The allocation goes as follows:

❖ 35% for Hytopia World staking, 5-year linear vesting schedule. Started in March 2022.

❖ 20% to the team (up from initially 5% due to flexibility required for the upcoming funding round).

❖ 24% Hytopia foundation (down from 39% and initially allocated towards the P2E faucet). This will be moved to a multisig controlled by the Hytopia foundation, a non-profit entity with the purpose to deploy funds to “foster growth of the Hytopia chain and related ecosystems”.

❖ 10% for liquidity providers.

❖ 10% as an initial World owner claim that ended in February 2022. Unclaimed tokens will soon be sent out to current holders of the world that didn’t claim.

❖ 1% for avatar staking, 5-year linear vesting schedule. Staking for avatars is not live yet.

Hytopia Foundation

The Hytopia Foundation is a non-profit entity that will be entrusted with 24% of the Hytopia supply (current value about $100M), “with the sole mission of fostering the growth of the HYTOPIA Chain and related ecosystem, disconnected from any profit motive or proprietary interests of our business entity”. Furthermore, the Foundation “should receive 30% of all fees collected by Hytopia”.

This approach makes sure that the initial amount of capital is high enough to foster real growth, while also keeping sustainability in mind. The team is essentially sharing 30% of all collected fees to support the ecosystem without profit in mind.

“The foundation will be structured and run by a community-curated set of directors. These directors could initially include some Hytopia team members, and the majority remainder as other individuals (such as creators and players) who have independently aligned interests in the Hyptopia ecosystem.”

MetaFab

The Hytopia team introduced MetaFab in September 2022, a “free, end-to-end, self-serve solution for games and gamified apps to integrate powerful blockchain infrastructure in minutes, not months”. The team has since made it open source and MetaFab has seen 2000k+ unique API calls to date, of which 450k+ came just within one month (information is a few months old).

To put this into perspective, create 1 new player within the game would be 1 unique API call for example. Mint a player item would be another one. MetaFab is used by almost 1000 registered indie games and projects like TreasureDAO, TOPIA and ExPopulus.

Current State of the Hytopia Project

Since the ban, they have been building. Having already worked on a lot of problems like seamless wallet integration or execution of batch transactions in their early mission to complement Minecraft with their web3 solutions, they have been able to build on top of that foundation and progress towards their own platform very quickly.

Within 1 year, they have created a new competitor, ready to tackle two industry giants, that have been dominating one of the biggest genres in gaming for well over a decade now. Before having been tested by a large public audience, there is no knowing as to how innovative, fun and robust the experience truly is. Their alpha opened up in Q4 of 2023 and should allow a much better perspective on how things are going as they open it up to more players. While I remain cautious, the released material so far shows promise.

The teams consistent and transparent efforts are reflected in the price action. In the last few weeks, the value of Worlds and the value of the token have risen dramatically. After the initial announcement of the token system being remodeled, the community panicked. Worlds fell to 1.3 ETH, while the token lost over 30% and hit $0.022. But here comes the important part: the team quickly realised and openly agreed that the communication was flawed and proceeded to further explain the changes, the motives behind them and the path forward. This restored trust and gave the entire project an uplift.

You will need to iterate towards success, not blindly hold on to one single idea that put you on a certain path as a founder. The ability to understand where you are wrong, fixing the problem and reevaluating afterwards is crucial for sustainable success at a larger scale. Maybe you were even right at the time of making the decision, but improving tech offered up new and more efficient paths. Flexibility is a huge strength in a cutting-edge environment like crypto.

Since then, the $TOPIA price soared and hit $0.088, while worlds are settling at a 4.5 ETH ($10.1k) after briefly touching 5.5 ETH ($12.3k).

Key Statistics

❖ Minecraft and Roblox have 350+ million monthly active users.

❖ From 2015 to 2021, Minecraft netted an average of about 400,000,000$ in revenue.

❖ Minecraft mobile alone has generated over 100,000,000$ in revenue in 2022.

❖ Roblox expects over 2 billion in revenue this year while being valued at about 17 billion dollars.

❖ Minecraft consistently ranks in the top 5 most watched games on YouTube. As stated in a YouTube Gaming report, in 2020 it ranked #1 with 201B views. Minecraft surpassed 1 Trillion total views in 2021.

❖ The Market Cap of the Hytopia Token has been fluctuating between 5,000,000$ and 30,000,000$ for a long time. Within the last few weeks, the market cap rose sharply and is now close to $100,000,000 with a 200%+ move.

❖ The max supply for $TOPIA is 5,000,000,000 Tokens of which about 680,000,000 (13.6%) are in circulation. Due to their contract migration and rebranding, there are still a lot of $WRLD tokens that can be swapped for $TOPIA 1 to 1. Adding both we get around 1,200,000,000 (24%). A detailed tokenomics breakdown can be found here. There also is a V1 and V2 of $WRLD so the true circulating supply may be a little higher.

❖ The overall volume for Hytopia Worlds stands at about 60,500 ETH at the time of writing. This amounts to over 100,000,000$ in secondary sales.

❖ As NFT Worlds, from April to July 2022, they onboarded 100,000+ active players to their ecosystem.

❖ 100,000+ pre-registrations for the Hytopia Beta within 24h and almost 250,000 within 72h. After more than a month, the number is sitting north of 1,000,000 registrations. This was highly incentivized by offering free lootboxes for both, the person referring and the one signing up via the referral link. This has most definitely impacted the numbers and while the team tries to filter out botted accounts and fake profiles, they will not be able to detect and ban everything. The numbers from the alpha playtest will be a much more meaningful metric.

❖ Additional information on Minecraft and its market

❖ Additional information on Roblox and its market

Below the advertised advantages of Hytopia vs. their competition:

❖ Free to play vs. paid (Minecraft).

❖ Cross compatible vs. single-platform.

❖ Open developer environment vs. mostly closed source.

❖ Optimized on low end hardware vs. old architecture.

❖ In-Browser play at near-native speed.

❖ Creator monetization systems are emphasized by the team.

❖ Integrated developer kit for easier access to building on top of the platform.

❖ No-code tools to reach a wide audience of content-creators.

❖ Robust collaborative API layer.

❖ In-game creator item marketplace.

❖ Friend list & group chats (not available in native Minecraft).

Additional insights

In-app purchase flow needs to be as low friction as possible if you want to scale player spending. Minecraft and its cumbersome purchase system heavily impact the readiness of players to spend money in-game. And Hytopia has built their UI/UX with this in mind. Users will be able to transact with a very low amount of clicks, while never having to leave the window, making the purchase flow much easier for spenders.

The team also decided to build with Rust. The goal was to create a modular engine that runs smoothly, even on lower tier hardware. Minecraft tends to be very laggy on older hardware because it is written in Java and poorly optimized. The approach of the Hytopia team should translate to better accessibility, as more devices will be able to run the game at an acceptable framerate. The way they designed their engine and platform also focuses on empowering creators by allowing easy access to tools for modding, asset creation, etc. without necessarily expecting the user to know how to code.

Introducing backwards compatibility with Minecraft should also be a strong move to ensure frictionless marketing. There is an incredible amount of Minecraft content already out there, that can now be leveraged by their own engine. This allows them to capitalize on countless hours of work already done. People running servers on Minecraft can try out the new environment without the need to build anything. They will be able to plug in their work and see how the engine performs. Hytopia would allow all those experiences to coexist with one another and be interconnected via the marketplace and native token. Joining hundreds, if not thousands of different servers within one ecosystem powered by a single token would dramatically improve liquidity.

The target demographic is a diverse one. As it targets both, the audiences of Minecraft and Roblox, the platform aims at capturing the Gen Z and millennials that make up the largest share of Minecraft players, but also the very young audience of Roblox. While the average Minecraft player was about 24 years old in 2019, almost 70% of Roblox users are under the age of 16 and only 14% are over 25 years old. This gives Hytopia a wide demographic base to attract.

Hytopia recently raised $3 million in a small equity round led by Delphi Digital, one of the most respected VCs in the space. Pivoting towards the creation of their own platform, they passed a unanimous proposal, that increased the token allocation for the team from 5% to 20% in anticipation of their fundraising efforts that started in July 2023.

Having Delphi on board is a huge asset to the entire team. The funding gives them the freedom to build and iterate efficiently, without the pressure that comes with a drained treasury. On top of that, Delphi will advise Hytopia with their expertise and vast network, helping smooth the process of scaling a platform of that scope. One could assume, that they will look to raise another round after having proven that their platform works. The team specifically stated the following in a discord announcement on October 23rd 2023:

❖ $3 million have been raised, at a valuation in the mid double-digit millions.

❖ They specifically chose to raise less now to raise a significantly larger round once they have proven traction.

The Team

The two founders, ArkDev and Temptranquil, have been building Hytopia since 2021. While ArkDev leads the dev side, Temprantquil is the art lead and head of marketing & operations. Here you will find a (long) thread about ArkDev. He built an MMORPG-like game in 7- 8 th grade, created over 100 apps for Android and iPhone in the very early days, managing to amass over 20 million installs with millions of active users and also was the engineer behind the #1 website for Pokemon Go, locating and displaying Pokemons in real-time on a map (15 million users).

It is to note, that the information about the rest of the team is not easily accessible across the board. You have to search through the discord server, check out the profiles of users with the team member role and look through their respective X profiles. The founders stated that the team does not want to doxx anyone that wants to remain publicly anonymous. Team transparency remains a concern until addressed, but they have been consistently delivering for over 2 years now, which helps with trust (and I would also expect a VC like Delphi to thoroughly check the team they are investing $3 million in.

Outlook

The public alpha has opened its doors to a small, select group of individuals in Q4 2023. Hytopia World owners will slowly get access to the build, as the team continuously opens it up to a larger crowd. So far, the team has shown to be able to build innovative solutions and scale a web3 game to 6-digit users within months. After a very sudden, potentially company-life threatening ban, they pivoted fast, made good use of their then $4,000,000 treasury and started to create their own version of the product they got banned from. They are on track to bring it to a public audience within 18 months.

Having secured funding from a well respected entity, the additional funds will help scale their platform after overcoming the alpha and beta phase. If they deliver on what they promise, there is incredible potential in a platform that offers a smoother, lower-cost, higher performing and less restrictive alternative to Minecraft and Roblox with their 350 million combined MAUs. Considering the current state of the market and the volatile nature of this space, I would remain cautious though. When everything is pumping, it is very important to keep a clear head. The alpha and then beta test should speak for themselves and show whether the team can uphold their promises or not. In any case, Hytopia is one of the most interesting projects out there and should be watched very closely.

Gaming Chronicles