Subnets and The Avalanche GameFi Ecosystem

By: Jack Nelson, Defy Trends; Sarah Ewing, Defy Trends

Image Source: GuildFi

Intro to Avalanche Gaming

As blockchain gaming (GameFi) becomes more popular and accessible to the public, one particular network stands out in seeking low barriers to entry and high accessibility for the general user. The Avalanche network, although relatively new within the Layer 1 space, has seen a considerable influx of play-to-earn projects built on its C-Chain and subnets within the past year. We suggest that this growth is a direct byproduct of Avalanche’s lightning fast network speed, enhanced customization, and high scalability features that come with building on an Avalanche subnet.

As of April 2022, there are over 40 GameFi projects already built or in the process of development on the Avalanche C-Chain. Although this is a relatively low number when compared to other GameFi-focused blockchains such as Hive, Wax, Ethereum, and Polygon, Avalanche has made a considerable name for itself in terms of hosting big-name projects on its subnets. For instance, one of the largest play-to-earn crypto games by volume, Crabada, and one of the first transitions from another chain, DeFi Kingdoms, are currently operating on Avalanche subnets. Shown below is a recent snapshot (April 19th, 2022) displaying the GameFi landscape on Avalanche.

Image Source: Avaxholic

Apart from an overall increase in gaming projects building on Avalanche, the AVAX GameFi community has also seen considerable growth in recent months. Community members recently created an Avalanche-specific GameFi Community on Twitter, which gained over 1,000 members within a week of its launch. Additionally, the number of both daily and total gamers on the Avalanche chain has seen a steady uptrend over the past three months, as shown in the charts below.

Source: Footprint Analytics

Avalanche’s subnets and overall network have proven to be a powerful tool for GameFi projects looking to upscale their games and improve the user experience while doing so. Many projects have already seen the benefits of operating on an Avalanche subnet, and their successes illustrate how building on subnets has improved both user accessibility and project scalability. Let’s look at two of Avalanches most successful GameFi projects on subnets: Crabada and DeFi Kingdoms.

Case Study 1 — Crabada

Crabada is Avalanche’s largest GameFi project to date, as it is home to 42% of all Avalanche GameFi users, including over 25,000 active wallets. For some brief context, Crabada is a fully decentralized idle play-to-earn crypto game where players can purchase hermit-crab NFTs and use them for passive activities such as mining, looting, and breeding. The game also hosts an NFT marketplace where users can trade these various hermit-crab NFTs and breed them to form new crabs. In terms of “mining and looting”, crabs can be sent on expeditions to various locations on the map to earn $CRA and $TUS tokens. Because of the game’s structure, it resembles a yield farming and NFT staking protocol more than a video game. There is very little user interaction or actual gameplay, which aligns with Crabada’s main focus as an “idle” or “passive” play-to-earn game. Crabada has experienced success not only due to the lucrative yield and token reward opportunities, but also due to the low barriers of entry for new users and enhanced scaling potential that come with building on an Avalanche subnet.

Crabada recently moved their game from the Avalanche C-Chain to their own official subnet called the Swimmer Network at the end of February 2022. One of the key features of the Swimmer Network is what Crabada refers to as a “fee-cover model”, which is meant to reduce on-boarding friction and decrease barriers to entry for the general user. This model essentially makes Crabada free to play by allowing users to start playing the game without having to acquire gas tokens at first. Using the Swimmer Network, Crabada expects to eliminate around 85% of operational costs for players. On May 13th, Crabada announced the launch of their official bridge from the C-Chain to the new Swimmer Network subnet. This means all Crabada users are now able to bridge their assets to the Swimmer subnet or “Crab Smart Chain” using the Celer cBridge protocol. Early data from Crabada indicates promising initial bridge volume, and it will be interesting to see how the rest of the GameFi community reacts to this novel on-boarding system.

Crabada is very frequently mentioned on Twitter, and each of these Tweets has a sentiment. These tweets were recorded across multiple keywords, and it is evident that the Twitter sentiment is very cyclical with dramatic spikes and decreases occurring roughly every 2 weeks. After the announcement of the bridge on May 13, sentiment has been climbing steadily.

Crabada’s move to the Swimmer Network has already proven successful in terms of acquiring more new players and increasing transaction volume. As of right now the number of daily transactions and trade volume for $CRA has steadily trended upward in the past few months. The recent downturn in the graph (May 11) is most likely due to the current market politics surrounding USDT and Luna.

The amount of trade volume, Crabada tokens, has followed the same trend as the daily transaction count, with an overall upwards trend throughout the last few months.

Case Study 2 — DeFi Kingdoms: Crystalvale

Another major play-to-earn crypto project that has seen success using an Avalanche subnet is DeFi Kingdoms (DFK). For some brief context, DeFi Kingdoms labels itself as a game, decentralized exchange (DEX), liquidity pool (LP) opportunity, and market of rare utility-driven NFTs. DeFi Kingdoms originated on the Harmony network with their initial realm, Serendale, and gained solid traction as a play-to-earn crypto game since its launch in August 2021. However, DFK has experienced a number of major issues on Harmony over the past few months including a significant price drop in the game’s native token, $JEWEL, and an in-game mining exploit that led many players to lose trust in DFK developers. Somewhat in response to these issues, DFK launched their new and improved iteration of the project, DeFi Kingdoms: Crystalvale, at the end of March 2022 which runs on an Avalanche Subnet as opposed to Harmony.

The launch of DeFi Kingdoms: Crystalvale on the Avalanche subnet corresponds with dramatic spikes in the daily transaction count and trade volume as seen in the two graphs below.

DFK is mentioned on twitter, and each of these tweets has a sentiment, while a score of 0.1 is not meaningful, what is meaningful is that over the past 3 months the overall sentiment of DFK across multiple keywords has remained constant.

This is a clear improvement from the original Harmony version of the game, as Avalanche’s subnet feature allowed for the creation of the “DFK Chain”, which is essentially DFK’s own network that uses the Ethereum Virtual Machine (EVM) subnet. This subnet also allowed DFK to use their native token, $JEWEL, for gas fees on the Crystalvale network. Ideally, the price of $JEWEL will recover as people start switching over to Crystalvale from Serendale. Additionally, half of the $JEWEL used for transactions will be burnt. DFK on Avalanche has already seen a massive increase in bridge volume, or transfers of $JEWEL assets from Harmony in recent months. DFK partnered with chain bridging protocol, Synapse, to allow for this large migration, and in total over $650 million has been bridged through ~170,000 completed transactions.

DFK’s decision to expand onto an Avalanche subnet is also logical as Avalanche is a much more widely utilized network than Harmony overall. For example, data from DeFi Llama ranks Avalanche as fourth-highest for Total Value Locked (TVL) out of all blockchains with nearly $10 billion locked. Additionally, according to analytics from Avaxholic, TVL of DFK on Harmony has dropped by over $60 million, while the TVL of DFK on Avalanche has increased by $120 million within the same time frame. This represents the “migration” of DFK users and their assets from the Harmony chain to the new Avalanche subnet, which is significant given the increase in TVL. Data from Footprint Analytics also shows DFK as the highest ranked crypto game by daily volume for four out of the five most recent calendar days, shown below.

Source: Footprint Analytics

Conclusion

Seen through both case studies of Crabada and DeFi Kingdoms, Avalanche is certainly making a name for itself in the GameFi sector. More and more crypto gaming projects are taking advantage of the benefits associated with building on an Avalanche subnet, and seeing considerable success while doing so. Overall, there are three main reasons that GameFi projects have added an Avalanche subnet on their roadmap:

  1. Scalability

Using an Avalanche subnet comes with many benefits in terms of scalability. The Avalanche Virtual Machine (AVM) subnet boasts a capacity of over 4,000 transactions per second (TPS) with an average transaction fee of around $0.08 depending on the dApp. For comparison, Ethereum’s Virtual Machine (EVM) has a capacity of 14 tps and average fees of over $20 per transaction. Additionally, Crabada’s move to the Swimmer Network Subnet has allowed for the creation of their own Crab Smart Chain, which comes with enhanced customization and scalability for the project. Similarly with DeFi Kingdoms’ new DFK Chain, more people are now able to build and develop on the project while also improving overall scalability.

  1. Customization

GameFi projects using an Avalanche subnet can freely choose their gas fee token. This gives projects the option to use either $AVAX or their own token (such as DFK using $JEWEL), and distribute it for the game’s economics. Crabada uses $AVAX as their gas fee token and currently takes up roughly 16% of total gas used on Avalanche, according to Smart Liquidity. The customization of gas fees can allow for users to pay cheaper gas and have access to quicker transactions. GameFi projects using an Avalanche subnet can also choose which virtual machine they would like to use.

  1. Successes of Crabada and DeFi Kingdoms

Crabada and DFK have both seen numerous benefits in regards to their move to an Avalanche subnet. With the recent launch of the Swimmer Network, Crabada has significantly improved ease of access and expects to drastically reduce onboarding costs for new users. For DFK’s Crystalvale, the project saw a massive influx of $JEWEL tokens bridged over from Harmony along with an uptrend in daily users and transactions. Crabada and DFK remain two of the most notable GameFi projects on Avalanche to date, and their stories showcase the true power and capabilities of building on an Avalanche subnet.

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Defy Trends provides advanced analytics and actionable insights for cryptocurrencies and NFTs. Created by a female-led team of data scientists and global markets experts, Defy Trends brings together crypto, NFT trading, and research operations. The goal is to empower everyday individual investors and institutions ranging from exchanges and marketplaces to research firms. Defy Trends is committed to making crypto accessible to all. Dare to Defy.

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Disclaimer: This article is for educational purposes only and must not be treated as financial or legal advice.

Please conduct due diligence and manage your risks accordingly.

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