This last cycle I lost money trading a play-to-earn game that at its height had more active daily debate (wallets) than many medium sized cities. The Discord was deafening. The YouTubers were breaking out in a chill. I took a gander at the numbers and thought that must be true (at first), and real quick enough found a price at which I felt it might be in to get. Four months later, the token price was more than 80% down, the Discord channel was a dying 4 month old graveyard of questions, and on-chain activity levels were like an empty bathtub. It didn't lose in value, they left because there was no mint to be made. The users stopped playing because there was no money, and you know there were no incentives, there were no reasons to be there.
I think about that game each time I think about $pixel and the Pixels game spaces; it's an interesting game, and one that makes analysis more difficult. Pixels is a browser-based, social farming RPG on the Ronin Network, where you gather resources, quest, have NFTs as land and build a metaphorical economic life. The tokens ($PIXEL) themselves are the primary utility/ governance token - you need it to be a VIP, to be able to mint NFTs, to participate in guilds, to be able to withdraw significant value from the game. All straightforward to understand, compared with scammers coins that have no utility and solely exist to be created and sold. It's also good what the team has done with a $vPIXEL token that is a spend-only token and can be withdrawn for free whereas there is a Farmer Fee of 20-50% that is charged if you directly withdraw $Pixel stakers: This is no small decision. But it is the team recognising the need to game the economics of retention versus internal goodwill for pixel farming.
But it is the retention that I am not sure about because MUIB (Most Used Indicators Being), is the biggest LIE in web3 gaming. In the middle of 2024 the game boasted more than a million daily active users, which is by no means the highest reported such statistic we have seen for a blockchain game. But a million active users in the middle of the craze and yield is not a million people playing the game on a quiet Tuesday afternoon in April when there will be no airdrop. The real value of any gaming network is retention following the run off - these are the players who are there for the "play" and not "the play". At end of April 2026 (according to CoinMarketCap data) there are still about 6.5 thousand still holding the token, a market capitalisation of 25m USD, and a 24hr volume of 8m USD (which is a very high volume-to-cap ratio, which means a lot of speculation). 52 thousand total transactions since it started, according to Coilore. A tremendous decline since the project took off and now it's actually 99% down on its original value of $1.02 in March 2024.
So I'll list some of the risks, as far as possible. For starters, token dilution. There is a supply of five billion PIXEL, of which only a fraction has been released into the market. The tokens will have periodic unlocks: the next one is May 19, 2026 for a new set of private round tokens. A low (relatively) market capitalization and unscheduled unlocks (with big supply) looks like you want the demand of the ecosystem to grow faster than the supply - well, history has proved that it is not that easy as it might be planned on the roadmap. Second, there are the bots. If you compensate people for their time playing a game you're going to have bots - just look at Pixels. Alas, bots inflate the number of blockchain transactions, so the number of actual human activity is probably lower than indicated. Third, the broader question is how well is the overall web3 gaming ecosystem converting non-gamers, who are just "crypto-curious", into a gamer, and Pixels is part of that problem, for better or worse. Fourth, becoming a multi-game platform (which means five or six games supposedly in production) is a real issue. Which is cool, but new games are like new experiments, and retention strategies. Lastly, the Farmer Fee is an interesting concept, but might actually help to reduce retention for the kind of users who would be particularly well suited to ongoing value creation on the blockchain, because if people think they are paying a fee to "withdraw" money they don't want to play as much because they can't spend that money.
I am not interested in the very public metrics, I want to see the vanilla stuff. I want to see the number of transaction fees from VIP memberships in the weeks before and after the last time the project announced something, and the number of airdrop recipients or (AI especially) influencers paid to praise. I want to see the number of repeat transactions (users who have completed at least two transactions) steady or rising in quiet weeks as that's the most likely way I'm likely to see real constant use rather than the human equivalent of kibble. If the number of wallets doing the in-game tasks on a normal Wednesday look close to the number doing so on the most important week before the launch of a new Chapter that's significant. If the difference between these two counts is a 10x, then you have all the information you need on the real flywheel.
Let's be clear frans, Pixels is not about the game, it will likely be good. It is an engineering hit about how well they can keep people and learn about metered rewards to get them through the first month or so before the extrinsics kick out. The RORS and vPIXEL prompting system suggest they have thought about this more so than other GameFi projects. But thinking well and doing well across many game titles (vPIXELs), on a time schedule to get tokens, in a space where there is a lot of trust issues. Above all, timing of the reward is the key - you must feel good that you "stayed another day" even if it was the last day, much better than feel-good that you "went on a holiday".
Here's two questions for you. If Pixels suddenly announced they would continue the game, but without staking rewards, how many wallets that are staking the game now, will remain staking next month? And, if you are also going to invest here, are you investing in the game, or just buying up the current staking cycle? You can do both, but they are not the same and most investment losses in GameFi have been due to the conflation of the two.
@Pixels #pixel $PIXEL
