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😴 Up and at ‘em

Are we really about to see GameFi take off?

It might be slightly too early to tell — though I hosted an hour-long X Spaces the other week that ended up primarily focusing on gaming — but I gotta say it looks far more promising this cycle when compared to the last time around. 

We’ve previously written about Off the Grid, but I want to zoom out and look at GameFi as a whole. Right now, the sector is facing a “pivotal phase of expansion,” according to a report from Nansen and Slice Analytics. 

I caught up with Slice co-founder Tim Conrad on gaming, given the attention bump it received from not only Off the Grid but announcements from huge players like Ubisoft, which are angling for exposure through their own releases.

Although, the recent shift in popularity hasn’t come without its hurdles.

“So last cycle, you had the hype phase of the curve, and nobody had enough time to invest the money and time to build a really good game. I think Axie infinity was probably well above its time, and that's probably why it drew so much attention,” Conrad said. 

“But it still really lacked that AAA kind of gameplay and experience there … I think that that [the bear market] was the best thing that could have ever happened in the GameFi space. It allowed these triple-A games … to spend that time building, and now we're seeing the fruits of those labors. And I think it's drawing a lot of attention.” 

A report from Grand View Research estimates that the sector could hit $301 billion by 2030. 

Conrad explained that the figure may not be that far off. He said it’s “basically” based on the  “acceleration that we're seeing from 2021 and the kind of investment that we're seeing, in addition to the teams joining, the amount of games that are launching — all that combined, looking into a projected outcome.”

It all depends on a few things, including communities. 

“I think that's really important to build that community, especially with gaming,” Conrad told me. 

“We're seeing the Epic Game store start working with Web3, this is all fantastic. One thing we took a closer look at is what type of community all these games are really growing. And one of the biggest challenges [was] when a new game that hasn't even launched yet has like a million followers on [X]. It's a little suspicious, and it makes you realize that a lot of these metrics really need to be scrutinized further,” he explained. 

“Metrics can be changed like that, but we have to do our best to kind of filter through that noise and really evaluate what is a real metric, and what is something that we shouldn't put so much weight into.”

Now as to what metrics matter the most, well, that might all be figured out once there’s a bit more maturity in the space.

— Katherine Ross

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• BTC is back above $68,500, about where it was this time last week. 

• ETH dropped around 5% over the weekend to almost $2,400. It has since rebounded to $2,520.

• RAY leads the front page with 39% weekly gains amid record trading volumes on Raydium.

• Arbitrum and Polygon bridges are seeing the highest weekly inflows: $146.98 million and $69.98 million, respectively.

• The GUNZ testnet, utilized by Off the Grid, is processing 2 million transactions per day, down from nearly 5 million when the public beta launched.

 🌊 Memecoins must flow

Ethereum and Solana will go down as one of crypto’s greatest rivalries.

ETH bears would say Vitalik’s modular scaling roadmap — which has now spawned more than 100 satellite blockchains — is doomed to accrue little value to the base asset. 

After all, what’s the point in pushing onchain activity away from mainnet and onto smaller networks, if that activity doesn’t somehow translate to higher ETH prices?

Solana has otherwise made huge strides concentrating its community on just one chain — to the point that Solana’s DEX volumes have now eclipsed that of Ethereum mainnet plus 13 others.

The chart above shows Solana’s DEX volume market share against Ethereum and 13 layer-2s over the past 18 months, including Base, Arbitrum, Optimism, Scroll, Mantle, ZKSync, Polygon, Polygon zkEVM, World Chain, Zora, Linea, Blast and Arbitrum Nova.

In the past two weeks, Solana DEXs have handled $45.1 billion in volume, largely propelled by all-time highs on Raydium. Ethereum and its orbiting networks have seen less than $40.2 billion (only!).

We know that memecoin traders are driving a huge portion of that volume, whether it’s within the Ethereum context or on Solana (over 80% of weekly DEX volume on Solana is memecoins, per Blockworks Research data).

It’s however the first time that Solana has handled more weekly DEX volume than this particular slice of the Ethereum ecosystem.

What this means is that the public perception of both SOL and ETH (and to some extent all the other layer-1 base assets out there) rests on whether:

1. Memecoin traders will gravitate toward those ecosystems, and

2. Prices for the native cryptocurrencies will go up as a result.

With bitcoin — which leads the market right now — perhaps range-bound until the US election plays out, tracking price growth can be a noisy process. 

So, tracking price ratios between two assets can show more realistic trends. The ETH/BTC ratio, for instance, is at its lowest point since April 2021. That reflects a market that has bought into the Bitcoin value prop more than it has for Ethereum’s, at least during our current bull cycle.

Meanwhile, both the SOL/ETH and TON/ETH ratios have hit new highs in the past few months, as shown by the chart above, with the former still at those levels.

One wonders, then if crypto markets are really so efficient that they’ve picked the right winners.

To which I’d say: Do you want to be right, or do you want to make money?

— David Canellis

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• Coinbase product developer Lincoln Murr shared a lo-fi app for building “Based Agents” — AI chatbots that can trade onchain via Base.

• Banco BISA, one of the largest Bolivian banks by assets, reportedly announced custody services for USDT.

• The FTX estate agreed to drop its Bybit lawsuit as part of $228 million settlement, per The Block, which will go toward repaying FTX creditors.

• The Russian government reportedly has new powers to curtail crypto mining.

• Vitalik Buterin wants to address Ethereum data bloat with “The Purge.”

Q: Will memecoins always be such a big deal?

Consider this: Nasdaq exchanges are seeing more than $220 billion in trading volume per day right now.

At the same time, Raydium has never processed more than $2 billion volume in a single day. 

It was commonplace earlier this year to deride memecoins as extractive, useless behavior that detracts from more legitimate projects solving real problems. 

That was short-sighted. Memecoins are essentially the only stand-in assets that can properly serve as a proof-of-concept for blockchains, particularly within the context of converting the legacy financial system to crypto rails.

It may be hyperbolic, but for the Nasdaq to ever consider moving all of its exchanges over to Solana, for instance, then memecoins would show exactly how much activity its blockchain can handle. 

Now, if Nasdaq really did deploy its trading platforms to Solana — along with their $220 billion in daily volumes — then memecoins as they stand would make up a much smaller part of the onchain space. 

That’s the idealistic timeline. More likely is that memecoins, and the rest of crypto, would expand along with that kind of adoption: Stand-ins for “real” economic activity today, persistent crypto lotteries in the future.

— David Canellis