Disclaimer: None of this information should be taken as financial advice. DYOR + I will hold some of the assets mentioned in this newsletter.
MARKET TALK
CRYPTO GAMING IS DEAD VOL 7.
In 2025, crypto gaming was announced “dead” at least at 6 different moments. Last week, Grail shared the news that he’s largely divesting from the gaming sector, reigniting this same debate again
Grail talks about how he loves gaming, “but it’s not a market you are going to make any returns on right now”. Adding how he’s been met with a string of disappointments, unfinished products, scammy teams, etc.
And as one of the more (most?) underperforming narratives this cycle, I don’t blame him at all
So, let’s get into the takes from the people who QRT’d his message:
Sean Pinnock (Avalon): Argues that the majority of products we’ve seen have been pretty bad, nor have they been able to leverage blockchain to enhance the player experience. If crypto gaming wants to return to its glory again, the bar needs to be raised, and he still believes a handful of devs can pull this off
Kam Punia (Fableborne): Says that we see this cycle of crypto gaming being dead every 6 months, but it isn’t. “Vapourware BS is dead”. He then mentions how we’re seeing better teams now start to emerge, and compares the stark difference between 21/22 and now to make the point that we’re maturing
Payton (WolvesDAO): Responded that one of the big issues is a misalignment between the crypto and gaming side, adding how lots of gaming founders misunderstood this space. Back then, there was a lot of hope. But now, there are only a few “marbles of hope” left. Yet, he’s positive about the future
Jonah (Sploot): Argues how “crypto gaming cannot sustain as an asset class” as it lacks liquidity and games have lifecycles. Further adding that he predicted this industry would morph into 3-4 new classes: social casino, SocialFi/CCM, arcades, and DeFi apps using games for UA
In GC Alpha 40, we talked about crypto gaming being “dead” as well. Back then, a post by Vader sparked the debate, arguing that billions were invested in the sector, but the gaming and crypto audience didn’t care enough
The counter-arguments back then mainly pointed to how the above has been a builder problem, and the “best shots on goal have yet to happen”. Probably, the most recurring counter-argument throughout the year
Personally, I don’t think crypto gaming is dead (Sam: “a cohort dying =/= the industry dying”). I believe in the “Fork in the Road thesis,” which posits that games can be split into two categories: mainstream appeal (pure gaming with blockchain rails) and CT appeal (like gamified DeFi). In a way, a similar take to Jonah
Many of the games positioned between have faded away. However, I am starting to believe more that there will be a title that can appeal to the best of both worlds
CAN FOOTBALL.FUN RUN IT BACK?
Last Friday, during Sidelined, we discussed the above Tweet from Jxck, talking about the speed at which we’re going through trends on CT. The takeaway being that you need to be extremely early with a narrative (with some exceptions), or it’s better to sit one out instead
To add, I read this Tweet from Otto Suwen (note: a big FDF player as well) today, in which he says that the winners of this cycle have had trouble maintaining their value
“It’s been insane PVP, especially throughout this year” (i.e., for X to succeed, Y needs to die first). Ending with how this will all change now (because of uptober?)
And so, this brings us to FDF, the football speculation app that we’ve been an early supporter of and continue to be a part of. When FDF launched, within 1.5 weeks, the whole of CT was talking about the app, and so it became the #1 app on Base ($53M of volume to date)
During this period of nuclear growth, the valuation of the player market grew over 100x. Around 2 weeks in, the market cap peaked at a valuation of ~$130M, but it’s gone down ever since. Now floating at a ~$30M mc
It is important to add that macro was looking better early August, and ETH touched $5K in that same period
The key growth driver at the time, and the best recipe for virality, was people making tens of thousands of dollars in squad value (and of course sharing it on CT). FDF essentially turned early players into whales (on paper) through aggressive bonding curves
But of course, this is only sustainable if new players keep buying, and the whales are staying in the game
FDF hit its “saturation point” in CT rather early. The app has 13,019 paying players as of September 27. In comparison, Sorare peaked at ~50,000 unique buyers in January 2023. But it took them almost 4 years to get to that point, and it took almost two years to get to 10,000+ monthly unique buyers
A sign of how virality can lead to rapid, but somewhat limited growth. And so telling of how small CT can be in terms of size, despite the incredibly high ARPUs
But this is not to say FDF doesn’t have the ammunition to capture another viral moment (or multiple). Recently, it sold out its Pack Sale 2.1 in 33 seconds, meaning new players are introduced to the market. This also means new “micro-wealth effects” will be created when these become available to trade
Incentives are the best marketing power in crypto after all
Furthermore, FDF announced an aggressive buyback plan, which is starting in early October. The app’s fee model was one of the most-criticized features, because it was filling the team’s pockets and not the community
However, now it’s using the treasury to create alignment with the community instead, like how HyperLiquid does it
Capturing virality the first time is "easy” compared to recapturing it once your app isn’t new anymore. One of the few apps that managed to do so is another “.fun”, PUMP. Whether FDF can do it remains to be seen, but it’s a personal bet I’m making on the resilience of this team
ON THE RISE
The Axie team shared some of its thinking around building Atia’s Legacy
Lumipad: an AI Agent launchpad built on Monad, powered by Lumiterra
Open Loot shifts its strategy: new games in dev and 4 titles leaving the platform