Author: daniel@footprint.network

Blockchain games have a retention problem. For all the talk about being the future of gaming, 90% of blockchain games go inactive within 30 days.

Without players enjoying the games for a long time, most GameFi projects today are still just DeFi protocols with nicer graphics and some interactive elements.

But is that changing? And, are there ways that blockchain games can tap into on-chain data to boost retention, creating a more complex answer than, “just improve the gameplay?”

Footprint Analytics joined Siddharth Menon from Tegro, Alex Wetterman of Shima Capital, and Geezee, CMO of Yeeha Games to discuss.

One way blockchain gaming and crypto radically differ from Web2 is the volatility element. Yet, volume is still the most common metric in the industry. If the volume goes up, the game becomes popular, heightening the hype cycle of the project.

Top Weekly Retention GameFi Projects

However, how valid are MoM volume and retention metrics when hundreds of thousands of new users are coming online concurrently?

“Eventually, I think this will settle down, and the main metrics will be about playing,” said Siddarth. “That’s why I think it’s really, really important that games focus on good gameplay, essentially making it much more fun. Eventually, we want to become more independent from this volatile market.”

Siddarth noted that you could use percentage-based metrics to mitigate the issues of measurement caused by volatility. For example, track what percentage of active users a game has out of all total active users on a chain over time. Can you grow that on a week-on-week basis?

Unlike traditional, unmonetized games, blockchain games are often driven by whales investing much liquidity into a project. Games will increasingly have to consider tokenomics to retain the most valuable players in their ecosystem.

“I think tokenomics is very important,” said Siddarth. “Good design will incentivize and retain skilled players more. It will also capture the value of gameplay. Most of the gameplay we saw in the last two years revolved around inflation, with little control of the tokenomics or the secondary market.”

In some ways, the GameFi whales of tomorrow are being made in today’s bear market.

“I draw a correlation in the crypto world to when you had people mining crypto and Ethereum back in 2013. People had whole houses full of graphics cards — I was one of them. Back then, it wasn’t very profitable, but you could still mine during the bear market, and they were mining, mining, mining. Eventually, when the markets changed, a lot of them made tons of money.”

Just like in Crypto 1.0, it took consistent believers toiling away to keep the system running. And those people earned their rewards. “I see that in the Web3 space. The players playing games are still actively doing it, mining a lot of assets by playing these games or minting; I think those kinds of rewards accumulate. And hopefully, when things are right, we’ll see the rewards coming in.”

Airdrops, the practice of sending NFTs or tokens to particular wallets as gifts or rewards, have become the norm in blockchain marketing.

Real Time NFT Airdrop Monitoring

However, this form of marketing, which can both be used to generate hype for an early-stage game or promote retention, has several significant downsides.

For example, titles that have regular airdrops for users based on activity inevitably face a flood of bots gaming the system.

According to Alex, the problem is fundamentally about balancing the extraction vs. input of value from a user.

“Now that you can extract value from these ecosystems, it’s really important to create compelling core loops within the game itself and the metagame that incentivizes players to provide more value than they extract,” he said.

“Airdrops are extremely value extractive, but there are ways to design these core loops, vertical slices and alphas such that players are required to provide value into the ecosystem before they can earn those tokens and pull them out.”

One example mentioned of a game that requires an input of value upfront is Paradise Tycoon. To be potentially whitelisted, you have to provide value in the form of playtesting the game.

Thus, they require players to provide value. If there’s a botting issue, they’re still providing value.

Gaming monetization and tokenization have created very different categories of participants and players in Web3 than in Web2. To segment these users, it is necessary to recognize how they differ and serve their needs.

On-chain data allows you to differentiate participants of projects, e.g. holders vs traders. From Holder Profile List

Siddarth breaks it down into 3 user types:

1. High-frequency players. They spend more time plying, but not more money. They’re pretty skilled, and do a lot of hard work.

2. Asset-buyers. They buy the assets and bring economic value into the game. They’re an important category that balances out the first type.

3. Investors. They don’t play at all, but buy assets and trade. They provide capital for the game.

For each of these types of participants, the incentivization might be different. For example, for the first type, you might focus on entertainment and leveling-up/achievements for the second.

“I try to dive pretty deep into what the segments of gamers in these ecosystems. In Web3, you now have investors, you have scholars, you have people that are taking advantage of certain loops to look for arbitrage within games,” said Alex.

“It’s important to understand that there are archetypes of gamers that will be participating in Web3 games, and then to understand with granularity how you can break up the different types of gamers to fit within each of these archetypes, and then design core loops within the game that help you understand how people interact with the game.”

Web3 gaming provides both unique challenges and opportunities for developers when it comes to user data. Whereas the data can seem discombobulated and disorganized (without tools such as Footprint Analytics, of course), the entire mass of data is significantly more accessible to everyone and anyone.

“You have more data. You have on-chain data. You have what users are doing through their wallets. You know a little about their history, of how they interact with different things. That’s all data that allows you to make better decisions on how to incentives and create different services in the game to get them more engaged,” said Geezee. “Once you have this on-chain data, it levels the playing field. In traditional mobile games, the data is very centralized… Now, based on my own analytics and my understanding of the game, I can go out and target these users.”

This piece is contributed by Footprint Analytics community.

The Footprint Community is a place where data and crypto enthusiasts worldwide help each other understand and gain insights about Web3, the metaverse, DeFi, GameFi, or any other area of the fledgling world of blockchain. Here you’ll find active, diverse voices supporting each other and driving the community forward.

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