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
LESSONS FROM INVESTING IN CRYPTO GAMING
Grail, one of the largest (former) buyers of tokens and NFTs in crypto gaming, shared two long posts last week about his “Misadventures in Web3 gaming investing”.
The posts cover how he invested in certain game projects, in what category of failure they fit in (soft rug, subpar product, or couldn’t find PMF), and end with some lessons to reflect on
About a month ago, Grail also shared he’s divesting from the gaming sector, which we discussed in GC Alpha 67
In total, 18 different gaming projects are listed: Battlebound, Metalcore, Nyan Heroes, Valeria Studios, Pirate Nation, Revolving Games, Delabs, UltiverseDAO, Tatsu Verse, CityVerse Tycoon, Infinigods, L3E7, Gunzilla Games, Youmio, Chronoforge, and Pixelmon
The majority of these have already shut down, pivoted, or are bleeding dry. The (horror) stories are entertaining to read. I won’t get into them right now, but encourage you to read them…
What we will get into right now are some of the lessons, patterns, and common themes:
Tokens are launching far too early:
“The biggest mistake is to launch a token with no product paired to it.”
There are multiple examples, including Pixelmon, Hytopia, Revolving Games, and Infinigods
More specifically, the issue is that the tokens were launched before there were any users to sink them. Plus, they didn’t have any or significant enough utility to sink them in the first place
Generally, tokens need to be introduced later in the lifecycle. Alternative options can also be to start with stablecoins to experiment with player rewards, start monetizing, and later transition to a native token
Another point to add here is that tokens are often merely used for fundraising, and not built with the game design from the ground up:
“The number one way to absolutely destroy your token. Launch your game, find a real PMF there, then throw in the blockchain layer”
Trust is everything, but often not upheld:
“Founders f*cking lie through their teeth to get funding.”
In crypto, there’s a strong (monetary) incentive for founders to lie, manipulate numbers, and overpromise. And the dishonest ones will definitely make use of that. There’s a reason why there are “number people” to provide you with fake vanity metrics
Furthermore, Grail added plenty of examples of how teams managed to betray his trust and the trust of the community through breaking social contracts (i.e., promises)
“Silent pivots” killed the last bit of belief
Multiple teams went radio silent when their TGE collapsed and pivoted back to Web2, without accountability. The crypto side often gets abandoned at a whim after there’s no viable business model anymore
On the topic of timing:
“Gaming was not ready for a breakout moment. I invested too early.” + “You can be right about a thesis, but wrong about the timing. And so far, I’ve been painfully wrong on the timing part”
Grail invested in many of the teams that emerged in 2022 - 2024, and since then, we haven’t had another gaming cycle
Investing in gaming has a very low hit rate. Add a new tech layer that doesn’t have a proven blueprint, and your success rate becomes less than 5%
It wasn’t only timing, but the incompetence of many of these teams to create a good (or even decent) game, while also doing something interesting on the crypto side
The current cohort of builders is building products of much greater quality, and the shots on goal are much better
There are more lessons in Grail’s post, and overall, his stories signify how eager we have been (including myself) to give these companies our own hard-earned money and look stupid in hindsight. Let’s hope for a better future…
RAGNAROK: MONSTER WORLD CLOSES DOWN
Last Thursday, Ragnarok: Monster World (RMW) announced its shutdown: “We’ve done our very best to keep the project alive, but in recent months, we’ve faced financial challenges that made operations increasingly difficult.” Another one bites the dust…
Originally, RMW was a Ronin game. However, it unexpectedly migrated (or expanded) to the Korean CROSS Protocol in April this year (GC Alpha 46)
At the time, this decision came with a lot of friction, not only from the community, but also from Ronin leadership:
From Psycheout at the time: “The team behind the game ignored our advice and has since lost favor with the community. To make matters worse, they secretly signed a deal with a separate blockchain, breaching our agreement”
From Jihoz: “tried to go web 2 against our recommendation. then tried to pivot back to web3 but done poorly. at the end of the day, nothing unique and just a mediocre clone of clash royale with some small nft implementation”
Of course, the team itself argued that no contractual obligations were breached
Another originally Ronin-based game, Pixel Heroes Adventure (PHA), moved to CROSS in August this year, after the Z5 Games studio was acquired by the Protocol
After moving to CROSS, RMW lost much of its support from the Ronin community, and seemingly couldn’t find similar support from its new Korean-based “home”. According to SensorTower data + its Google Play page, it couldn’t find its footing in Web2 either
RMW officially launched in October 2024 and will close on the last day of 2025
The game was simply not good enough to compete with incumbents like Clash Royale, and the Ragnarok IP couldn’t carry them, because it’s too diluted (both in Web2 and Web3)
Inhuman had a large exposure to the Ragmon NFTs (on Ronin) and was a big fan of the game (until they migrated). With the move away from Ronin alignment in April, his position essentially got wiped out, and this was the nail in the coffin
Luckily, RMW didn’t end up launching a token before it closed up shop. And, this example serves as another reminder of how fragile “investing” in the crypto gaming space is
