Featured Image

Pegaxy’s Journey, Bear Markets, and the Road to Recovery 

October 27, 2022
5 min read

Web3 games need to evolve to survive the bear market storm. Here’s a summary of our recent conversation with Corey Wilton, co-founder of Pegaxy - where we have covered:  what makes Pegaxy unique among Web3 games (spoiler-it’s treating your customers better), the challenges of building a Web3 game, and what it takes to succeed in this new paradigm of game development.

First off, if you're not familiar with Pegaxy yet, let this be your intro: It's a popular NFT-based horse racing game in which players collect and breed stallions and race them against each other. Just your homely horse racing inside the metaverse—hee haw!

Also, these horses are called Pegasus or Pegas in the game.

Images Credits: Pegaxy

Understanding Pegaxy

  • Pegaxy’s economic loop is pretty similar to Axie Infinity, wherein players buy, breed, and battle out their virtual fantastical characters to earn digital rewards. However, the game has introduced some new concepts like fusing, which makes it unique among P2E games.
  • Fusing refers to the concept of merging two virtual horse NFTs into one. The result of this merger is an NFT horse that is rarer and more valuable in Pegaxy’s economy.
  • Along with giving the players an option to increase the rarity of their digital horses, fusing also serves as a deflationary function in Pegaxy by decreasing the population of these horses in the game.
  • In a simulated economy, a large population is generally not desirable. This is because the increasing population of these virtual horses would ultimately decrease the value of a single one in the economy. It’s Economics-101 friends-if you have more of something in the market, it's usually valued less.
  • Pegaxy currently has 70000 daily active users. An important detail to note here is that these players are not making money with the game as its token price has fallen dramatically in the last few months.
  • At the peak of the crypto/Web3 bull run in 2021, Pegaxy observed a transaction volume of over $5 million in a single day. However, the speculators seem to have deserted the project in the bear market, leading its daily transaction volume to come down to near normal levels for a "simple" horse racing game.

Building a Web3 game 

Image Credits: Pexels
  • According to Corey, creating a Web3 game is akin to being a passenger on a carriage. Instead of actively steering the development, it's more about acknowledging what the community wants from the project. This mode of game development contrasts starkly with traditional games, where the community members are merely observers, not active participants in the creation of the game.
  • A lot of games in Web3 are not fun to play. That’s a hard truth to acknowledge, but a necessary one if web3 game developers want players to take web3 games seriously. Pegaxy’s thesis is that game developers need to evaluate the necessity of using certain technologies in the game based on what they add or remove from the user experience. Buzzwords like blockchain and NFT were the reason that Pegaxy, which is a 2D auto horse racing game, saw $200 million in transaction volume in the last year. This is not normal, and Corey acknowledges it. He says moving forward, game developers have to bring it back to the foundations of building a real game, but those take time, and in the crypto/Web3 space, people don’t like to give you time.
  • Game developers should go back to building games for broader demographics instead of zooming in on a really niche audience.
  • Timing matters a lot in Web3. A project launched at the right moment in time can be propelled to superstardom.
  • Providing 24-7 live support. Most of the new players on Pegaxy came from the Ronin network. Corey says that onboarding players to a completely different network represents a resistance that’s unique to Web3 gaming. Builders should anticipate this friction and either guide users through the onboarding process or create seamless rails.
  • It’s essential to move fast in Web3. Players will abandon a project if they have to wait 24 hours just to get a reply from the team. Convert them while they are hot.
  • What it ultimately comes down to is recognizing what is real and what isn't, what is sustainable and what isn’t. What is a true business fundamental and what isn't.

Considerations on the Bear Market

  • Markets and projects will continue to slide further. The bear market scared a lot of players. They won't only leave Web3 gaming, but also crypto until the market recovers. In the next 6–12 months, builders should focus on experimentation and creating a project that doesn’t depend on hype and speculation to survive.
  • The bear market is when the rationalization kicks in as FOMO subsides.

Designing for the long run

  • Gaming studios that are planning to build a play-to-earn game should consider what blockchain and related technologies add to the gaming experience.
  • Most Web3 games are based on speculation. People love to play the speculation game. The visual game, or the "real game," we should say, comes second. This can’t be the guiding principle for future Web3 games.
  • Providing ownership rights is not the ultimate goal of blockchain; it's the creation of an economy in a system.
  • Just as a real economy can be destroyed with reckless financial policies, a bad tokenomic structure can tank a good Web3 game. Design with sustainability in mind.

Building blockchain games is hard, and convincing gamers to adopt these games is harder. Web3 game developers will need to bring their A-game on all fronts from gameplay, to design, to customer service, if they want the players and the gaming industry at large to accept them. We need to come clean with the things that are not working and fix them. It’s reassuring to see Corey and the Pegaxy team do just that.

Listen to the original Twitter Spaces here, We host similarly insightful conversations every week. Follow us on Twitter or join our amazing Discord community to catch’em all. Plus, you’ll get an insight into how Tegro is building the biggest Web3 gaming ecosystem in the industry.