Author’s Note: if you have not read the first article DappReview published on Medium, we recommend you go read it first. It’s a long read but definitely worthy. Not that you by now don’t understand what’s written in that article (which back then was quite novel or even mind-blown), but you would find the side-by-side comparison between that article and this quite interesting. Kind of a way to review what was expected versus what really happened.
2018 is special, not just because of the so-called first year of Dapp, but also because of its ten-year gap from the previous financial crisis in 2008. The global economy, by the end of 2018, was about to start a new round of slander (read: vicious capitalist cycle). This systematic risk, on the flip side, also constructed a perfect timing for Dapp to put on its first show. In other words, the opportunity roots from anxiety of survival in the downturn.
Three factors together made this opportunity come to real life: the conventional gaming world ruled by oligopoly, the much-needed applications based off the blockchain infrastructure built, and most importantly, the solid demand of fortune preservation across middleclass.
For the reasons above, people slowly started to join the new wave of Dapp. Whether willingly or not, the hunger game started.
On March 2nd, 2018, DappReview published its first article about the fierce competition of Initial Coin Offering and the potential uprise of Dapp games. At that moment, we already thought the capital injected into the infrastructure was way overflow.
It turns out that we were right about the start; yet, we didn’t expect everything that we observed these days.
The total transaction volume occurred in 2018 was close to $5 Billion, of which 80% comes from the explosion of Dapps on EOS and TRON that we analyzed in detail in the past two months.
100+ new Dapps were created per month; especially in October when the number of new Dapps reached its peak to 216.
In this two-part article, we’ll review the whole year month by month, 6 months each part.
CryptoKitties opened the Pandora’s Box at the end of 2017. Since then they were never forgotten again. At the same time, the Alpha version of OpenSea went live. It is the first DEX of Non-fungible Tokens, or, the first blockchain-based virtual asset market place in the world.
While you could only trade assets in CryptoKitties and Decentraland in the first version of OpenSea, now you can find NFTs of more than 50 games on the platform (and the number is keep growing).
Mid-year 2018, OpenSea received $2M seed investments from multiple venture funds, including Coinbase. With just his co-founder and himself, Devin Finzer told Nirvana Capital that their runway could last at least 2 years (note: even with their office on the lower west side, Hudson Street). So we know their first-mover-advantaged cash-flow business has been doing great.
January 16th, CryptoCelebrities went live. This is the first hot potato dapp that gained popularity in the market. At the same time, CryptoKitties made ERC721 standard asset popular: buzz words like “your only unique asset”, “immutable and unchangeable”, “true ownership of the virtual asset” were flowing everywhere, affirming the value brought by blockchain.
Without real value proposition, all the growth were just speculative bubbles. For example, when user A purchased a Crypto Obama and then sold it to user B with 20% premium, the absolute majority of the price difference went to user A’s pocket, with the rest of the transaction fee went to the developers.
Whoever came before the last round would be profitable. Knowing this, a ton of people were attracted to CryptoCelebrities; the game was able to make a record of 12k+ ETH daily transaction volume on Jan 27th. Soon, various games with the exact same model crowded into the market with different presentation forms. Looking back, the popularity of the EOS Dapps in October and November was almost a repetition of what happened in January and February.
By the end of January, thousands flowers had already blossomed and then withered. Meanwhile, EtherBots started a new mode: presale of the crates. The top-notched User Interface and the slightly more complex gameplay design attracted a large amount of Dapp players.
3900 crates were sold out within less than two weeks. The total sales were 1100+ ETH. We still remembered the afternoon when the crates were sold out, Vincent made a trip to a traditional game development team and described them a bright future of Blockchain-backed games.
As a mainstream content provider, the team was shocked with the presale statistics (sold more than a million USD in 2 weeks without even completing the game), not to mention that players have to go through all the barriers including Metamask wallet, buying crypto currencies, and then trading the virtual assets. Knowing that even the most successful game crowdfunding was only around $300k, the traditional gaming team can hardly be untouched.
The story afterwards, we all knew, was that Fuel Games, the same team that developed Etherbots, created GodsUnchained. Invested by Nirvana Capital, Continue Capital, Coinbase, and Sora Ventures, Fuel Games received its seed round in May 2018 and had even more marvelous presale statistics for GodsUnchained.
February 1st, Crypto Countries went live. While we should have all known that these hot potato games are meant to be short-lived, CryptoCountries was so fortunate to capture the peak.
Around the Chinese New Year, CryptoCountries created a transaction volume of 45k+ ETH. Nothing was changed from the CryptoCelebrities, except that the virtual assets became countries.
Midnight of New Year’s Eve, CryptoCountries made “China” live. Starting from 3ETH, each transaction raised 20% of the price. Within an hour, the price went up to 200ETH. The next morning when people woke up, it already reached 639ETH.
Any rational thinker would well aware that the number could stop changing at any point — the team of CryptoCountries simply did sales better than others by timing the launch around Chinese New Year. Yet, gamblers didn’t care any of that — they just knew one thing: you earn money as far as you were not the last one.
Still, the actual execution process was more or less technical. Why? In seconds, probably there were hundreds of players trying to game the same ERC721. Who could get it? Of course, it depended on how fast you click (lol), but as important as that was how much gas price you’d like to pay. The former decided the transaction initiating time, versus the latter decided how prioritized are you for miners. In other words, whether you were rich enough to pay 100 Gwei.
The key to these brainless hot potato games is Gas War — only the geeky rich could win that. Yet no one was really free from the risk exposure, except for the ETH miners (at that time).
Those early developers, apparently, were benefited by the early-mover advantage. DappReview had an estimation: developers of CryptoCountries reaped 1200+ETH gross profit, yet it only took 2 weeks to develop. Given the $1000 ETH price, we all could calculate how much they made.
Meanwhile, hot potato games also created a jargon in the Dapp world — “Shill”.
By shilling, someone got into a newly developed Dapp, bought certain assets, then actively promoted the Dapp in a larger community like Discord.
More impactful KOLs usually benefited the most. A famous leader “phil” shilled through each of those Dapps, but retail traders were still very willing to pay for the Ponzi game. For example, CryptoCountries trapped quite a few players, including some large ones. The largest amount we knew someone got trapped was more than 2000 ETH.
Soon enough the first Chinese Dapp community was formed. The first Chinese Dapp Ether Water Margin went live on the second day after Chinese Lunar New Year. The lead figure Song Jiang also went as high as 50ETH…The whole February was pretty much inundated by all kinds of hot potato games: paintings, emojis, Lambos, horses, burritos, and even porn stars. Totally a feast of all-you-can-imagine bubbles backed by high-purity air.
Still, the hype curve became shorter and shorter, from two weeks to three days to one hour, and then finally to no time.
March 2, 2018, we published our first editorial. We wanted to become more than an informational channel; we wanted to share our own angles with everyone. After two weeks in March, we launched our first version of website, with only Ethereum and 200+ Dapps. Today on our page, we have six different public chains and 2000+ Dapps with their data analytics; no one else in the world has done that yet.
Mid-March, ETH.Town kicked off its presale. It’s probably the second presale that was considerably successful after EtherBots’ success. The sales totaled more than 1000ETH.
Developed by a traditional game development team On5, ETH.Town had some quality design. Players were all looking forward to the game, especially to the heroes that they could self-customize. Yet, the game kept players waiting for four months before it finally launched. We’ll come back to this game in the next article.
Annual Game Developers Conference (GDC) was hosted in San Francisco late March. This time, Enjin brought something big: it announced its strategic partnership with the big brother in the engine world, Unity. The Enjin SDK would allow Unity developers to create and manage their virtual assets on-chain; those assets could be stored and traded securely in Enjin Wallets.
Meanwhile, Cocos, the largest Chinese gaming engine, hosted its own Devcon in Beijing, marking the kick-off of its own exploration on blockchain. Through its own infrastructure Cocos-BCX, Cocos provided developers a whole suite of development environment to run tests and publish. At the conference we saw the wallet, the account, and the asset trading system.
Soon, with the fear of missing out, other engines all followed steps of Unity and Cocos.
At the end of March, a Dapp called Peepeth went live. It was probably the first on-chain social media. Similar to Twitter where you tweet, Peepeth allowed people to “peep”.
What’s special about Peepeth was its anti-censorship, nor would any peep be deleted. It’s not free to “peep” though: it’s mandatory to pack every 15 peeps into a block, and the cost would depend on the speed of packing, somewhere between 0.000028 ETH and 0.000330 ETH ($0.018-$0.18). Also, one can reward any peep with ETH.
A huge fraud alerted the whole Discord Dapp community — it all started with a low-profile-yet-high-transaction-volume Ponzi Dapp, “PoWH 3D”. “PoWH 3D” went live as early as February, and it gradually ranked up to the top. The balance once got close to 20000ETH (back then equivalent to ~$7.3MM USD), and the peak of DAU was near 3000. (This Dapp was created by Team Just; most people only knew them through Fomo3D in July)
The idea of “PoWH 3D” originated from the project PoWH in the early days. Here is how it works: players could buy tokens with ETH; each transaction charges a 10% fee. All these fees will be redistributed across all the token holders proportionally by their holding amount. Such mechanism incentivized players to HODL their tokens and develop more new players. As far as there were more new players and the old players stayed, everyone could all receive dividends. In other words, this game is essentially a Ponzi game.
Within a week, countless POXX games popped up: once PoWH (Proof of Weak Hands) showed up, there came PoWL (Proof of Weak Legs), PoWC, PoWD, PoSB, PoJ, PoWTF, and more…
Moreover, the cost of cloning is super low: you just needed to copy the codes. Some projects simply changed the variable from 1% to 99%, without even changing the note next to the codes. On April 7, all channels on Discord was washed by the referral link of Power of Bubble: speculators and makers all came ready.
10AM on April 8th, 2018, the starting bell rang. Within 10 minutes, the balance of that smart contract went up to 200ETH. Yet the players gradually smelled something fishy: the smart contract wasn’t even open-sourced.
Soon, voices on Discord doubting the game got louder and louder, and all of a sudden it went quiet — the channel was deleted. People all went crazy, they immediately started to sell their tokens or withdraw their ETH — nothing worked. Yes, this game was a fraud. A few minutes later, 227 ETH were all transferred out from the smart contract…and people could never locate the organizer again.
These Ponzi games did not last long. April 14, a game named EtherGoo went live. All Dapp lovers flowed in to try, and of course, Ethereum network was clogged again. Within more than a day, 40000+ transactions were completed. What an interesting idle game — it’s addictive!
EtherGoo had all the great things about idle games — it was probably the first successful blockchain idle game:
- Free Goo token and the production setting in a factory made the entry barrier low. People could play that game without any sophisticated understanding;
- The fighting animals and the PVP mode made the game more strategic and interactive;
- Not to mention the dividend schedule and the lottery. Did we mention that these two components were no-brainers to attract major blockchain gamers?
More recently, the cloned version, TronGoo, appeared on Tron. Many people thought “that’s classy” and then had a try (or some), even ourselves.
During the first week of May, DappReview noticed that Nebulas started its first Nebulas Dapp Incentive Program. This developer competition was probably up till now the one with largest amount of reward: 460k NAS in total. With the exchange rate on May 4, that was approximately $4.8MM USD.
DappReview studied the rule and the program official guide in no time. After going through the developing process, we were assured that the program could be meaningful and productive. Over the two months, our DappReview developer community contributed more than 170 Dapps that passed official approval. Among these developers we had winners of the First Prize, the Third Prize, the Monthly Award, and had other 10 teams receiving Top Performance Award. DappReview also became the largest developer community in this program and received Monthly Promotion Award in both months.
The Incentive Program was a wide screening process for high-quality DApps and developers. Through this opportunity, some great indie-games showed their diverse styles.
In the developer chat groups, we saw a few thousand conversations on daily basis. It was probably the most two active months in 2018 for the technology-oriented chat groups. Many back-end developers even learned front-end well after this competition.
Yet, it was a pity that the Nebulas Dapp ecosystem did not grow strong as expected, due to the lack of continued maintenance of developer community and user community.
Up to this point, Nirvana Capital thought it was interesting to observe all that was happening and get to know the developers. Nevertheless, from an investor’s perspective, not that many games were worthy of handing over capital, not even six months later (we’ll mention later about a conversation that Vincent and Mable had in November, regarding how to define a good indie-game that people would be willing to pay for). Partly it was because of the limit of infrastructure, but more so it was that the high quality content had not been attracted to the blockchain platform yet (if they could easily make money from an available large platform, why bother at this early stage?)
The following is a guest post by Vincent Niu from DAppReview.
The original Chinese article was published on May 11.medium.com
Second week of May, Vincent decided to pull multiple all-nighters for his famous work The Evolution of Blockchain Games and a Peek at What’s to Come, which had received 2700+ claps on Medium. That was probably one of the most holistic and insightful article about blockchain and games at that point, when very few in the world was taking Dapp seriously. Like we mentioned at the beginning, it would be fun for our readers to look back to that article after reviewing this whole year — even ourselves was amazed by some foresight that Vincent had. We are happy that people started to recognize the value of that article, but more importantly is that the cognition ceiling was being broken by a larger number of people.
At the same time we noticed more interesting Dapps. Here are some examples:
1. Cell Evolution by Xiao Wu. Not an idle game or a Ponzi, Cell Evolution is probably better called a puzzle game: for the individual game part, the game is close-sourced, more like a sandbox; for the world game it’s partially open-sourced. Through the survival logic that could be publicly seen, one could demystify the metamorphosis in the individual mode. Such mechanism is a very cool direction for blockchain games to explore.
2. EtherOnline. We could probably say this safely: before May no game had smart contracts more complicated than CryptoKitties. EtherOnline could be considered the first one. The game was more similar to some webpage games in the early days (for most Dapps this is definitely a compliment). Most gaming play was completed on chain — so the game was for sure more sophisticated (and more decentralized), but had longer waiting time for users (aka worse user experience). A takeaway is that fully-on-chain deployment is not the best solution, at least not now when the infrastructure was still in its early days.
3. Ether Shrimp Farm. Each month inevitably has some popular themes — farm game is the one for May. The earliest version in this category is called Ether Shrimp Farm. The game was another idle game: at the start each user could claim 300 free shrimps, each shrimp produced an egg per day and the eggs would grow into shrimps eventually. Players could trade their eggs in a free market. Yes, even as simple as that, the game still hyped. Just like before, all types of dupes came along, frog farm, fish farm, ant farm…the Ethereum network, of course went clogged for another time. These games have no differentiation from each other other than the types of animal — very unsophisticated idle games, in a word.
Why are there so many sleepless nights in 2018? Blockchain, and the World Cup. In June, tens of soccer betting Dapps popped up. Yet most of them did not have great UI (read: looked sketchy), nor did they have interesting game mechanism. As a result, needless to say, these games did not gain as much popularity as World Cup itself, and they died out immediately after the game.
One time, Vincent got to know an ex-Blizzard-er Rudy, who later became the co-founder of Mythical Games. Vincent was invited to the Unity Shanghai HQ early in the month; as the big brother engine in the world, Unity was still conservative about what “blockchain + games” could bring. Yet, from Nirvana Capital’s source of information, we knew that the leaders at Unity had provided some angel checks to relevant projects in the Valley. It delivered a message that, while as an organization, Unity decided to take a more cautious approach, the leaders were at least quite interested in exploring the potential.
Mid-June, EOS Mainnet finally went live. The Supernodes election almost felt like a global social experiment. The EOS RAM bubble kinda overshadowed the supposedly exciting news of the birth of first EOS DApp — MonsterEOS. To be exact, the Dapp should probably be called a demo, or a mini-viable-product (MVP), since the in-game function was really minimal. Were we back to this point, we could hardly project the explosive growth of EOS Dapps.
Meanwhile, the first blockchain-based card game by Loom Network kicked off its presale on Kickstarter, crowdfunded 320k USD within two months. At the same time, ETH.Town, a Dapp we had not heard from for a long time, published another mini-game, trying to gain some popularity for its July alpha release.
Looking back at the first six months in 2018, it was more like a solo show of Ethereum. Admittedly, most Dapp was simple as nut; still, you can hardly ignore how fast the new game play and mechanism kept coming along. Let’s look forward to our review of the latter half of the year.
This arcticle is written by Vincent Niu, and first published on DappReview Wechat Channel on Jan.15th 2019. Edited and translated by Mable Jiang @ Nirvana Capital.
More Readings —
The unsettling EOS ecosystem midst the lackluster capital marketmedium.com
Deep data analysis of users, miners and churners on the EOS Dapp ecosystem. Insights on Dapp Devs income and futuremedium.com
To answer these questions from friends, we put together this straightforward piece ; with the data, you’ll know what…medium.com
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As one of the leading media dedicated to blockchain technology and DApps, DappReview provides professional reviews on new DApps and industry insights. Most of our articles are in Chinese, but we will translate the featured ones and publish on Medium.
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About Nirvana Capital
Nirvana Capital is a San Francisco/Beijing based blockchain fund that focuses on primary market investment and exploration in edging ideas of technology and economics. Its founding partners are also early supporters of Ethereum. To bring together ecosystems that revolutionize the social productions and labor relations with the communities underneath, Nirvana Capital provides end-to-end strong support to its portfolio projects, including advisory on strategies/operations and resources matching.