Yesterday, PIXEL, the main on-chain utility token for Web3 game Pixels launched on Binance and KuCoin. The token launched at $0.5 and after 24hrs is sitting at just above $0.55, putting the current circulating market cap at $450M with ~$1.5B in trading volume.

For perspective on some other gaming market caps:

Illuvium (ILV): $380M

Parallel (PRIME): $330M

Hereos of Mavia (MAVIA): $250M

Fusionist (ACE): $240M

Pixels has raised the bar for future gaming token launches and will be used as a benchmark heading into the bull market for measuring market sentiment toward gaming-relating liquid assets. I figured it might be useful to quickly share my thoughts on what made the Pixels launch successful and whether or not it can be replicated.

Why PIXEL?

Pixels is a farming sim where all players ultimately look to gain access to land NFTs (mint or rent) and the in-game content they unlock. There is a free-to-play flow for players but there are plenty of better options in Web2 so fair to say 99% of users play to get exposure to Pixel’s on-chain assets. Once you have some land, you manage resources, craft and upgrade items, and complete quests — all with the end goal of earning more NFTs or the rewards token(s*).

The game first launched in early 2022 to little fanfare and struggled to maintain a DAU of more than 50 for about a year. This all changed when the project pivoted from Polygon to Ronin. I’ve discussed the Ronin effect on Pixels many times before (see the Year Ahead report for a review), but the TLDR is through a mixture of community funnels and financial incentives, Ronin helped Pixels go from 0 players to >150k in a matter of weeks.

Despite its flaws, Pixels has a handful of great social features that have helped create strong partnerships with other projects and content creators. This, in conjunction with the Ronin pivot, built a strong narrative behind Pixels as Ronin’s next flagship P2E title after Axie Infinity.

The other big catalyst was the fact that PIXEL would launch on Binance Launchpad. For those who remember, Fusionist, an Asian-based blockchain gaming ecosystem, also launched on Binance and had the most successful gaming token launch in 2023.

The hype for the PIXEL launch has been building up for a while now and expanded beyond core Ronin stakeholders. Pixels’ entire GTM is testament to the impact the right mixture of strong community building and aligned incentives can, and is by far my favorite aspect of the project.

*Note that BERRY used to be the main P2E currency but was recently abandoned in favor of PIXEL (originally just a governance/cosmetics currency) due to  the difficulties in managing a 2 token economy

Who’s Next?

There are two clear takeaways from this case study that the market will be on the lookout for when searching for the next PIXEL.

• Is the game launching on Ronin?
• Is the token launching on Binance?

The relatively less-appreciated factor that ties the two together is market sentiment. The market had long decided that Pixels was Ronin’s next Axie. As such, users who had never created a Ronin wallet before or even played Axie Infinity were now signing up for the Pixels play-to-airdrop campaign out of fomo. Even those not interested in farming the airdrop gained exposure to PIXEL by staking RON (a feature we will likely see many gaming ecosystems leverage in order to lock up player liquidity).

Ronin’s current task is timing the following big game launch to soak up a lot of the new liquidity created by the Pixels airdrop and redirect it to other Ronin games. If they act too early, the launch is less likely to make as big of a splash as attention becomes divided (which hurts the Ronin narrative long term). Act too late and that liquidity will be sucked up by a competing ecosystem or game.

In terms of actual projects worth tracking:

I  will be keeping an eye on The Machines Arena or Apeiron as potential candidates for Ronin’s next hit.

Outside of Ronin, market sentiment seems to be leaning toward Pixelmon’s MONProtocol, and to a lesser extent, Overworld.

Words of Warning

We did see a 60% increase in Pixels DAU in the lead-up to the PIXEL launch. However, I suspect that this was mostly users checking in on their airdrop eligibility. I will be watching how this metric changes in the coming days, or more specifically, how many players Pixels is able to maintain now that the airdrop campaign has ended.

Based on previous case studies, such as Big Time, if the price of PIXEL doesn’t crash in the short term, extractor-type players will continue to play for profit. Meanwhile, the price of crucial in-game assets, such as Land NFTs or key resources, will gradually increase. This will increase the entry barrier and will result in either stagnating player numbers or a critical change in the game economy that lowers earnings and causes many to leave for greener pastures.

When looking at Google Trends for search terms such as “pixel,” “ronin,” and “pixel airdrop,” there was a clear uptick in searches at the time of the airdrop. The regions that ranked highest for all of these terms over the past seven days were Pakistan, the Philippines, Nigeria, Sri Lanka, and Nepal. It should be noted that these countries typically rank as tier 3 regions when it comes to game monetization.

There are no clear indications yet on how much Pixels is making in player revenues (certainly not as much as the ~$400M they airdropped to players). As it currently stands, the game’s economic model is unsustainable but nothing is stopping the team from leveraging this newfound momentum and development funds to build a compelling product that offers a superior experience to traditional incumbents. In the meantime, this is not leagues ahead of what we saw last cycle and will only go as far, or as high, as market speculation allows it.