Pegaxy 2.0 – can a hybrid Web3 game succeed?

Corey Wilton knows where Pegaxy, the Web3 game he co-founded in 2021, went wrong. Launched in the middle of the play-to-earn (P2E) craze, it fell victim to problems common in both gaming and crypto development.

Within weeks of the launch, an unexpected surge in the number of players swamped the servers, stretching transaction times from seconds to hours. Engineers had to focus on keeping the game running instead of developing new content.

The demand for Pegaxy‘s in-game NFTs soared, which drove the price from double digits into the thousands of dollars, limiting new player growth.

Caught off guard by the frenzy, Wilton posted a message telling players to – in short – have some perspective and patience. The message backfired; players left, causing NFT prices to crash.

Pegaxy’s boom-to-bust lasted less than five months. But according to Wilton, the game saw hundreds of millions of dollars in transactions during that period. It brought the company that developed it – Mirai Labs – over US$8 million in revenue.

Now he wants to try again – but this time, the company is taking a very different approach. It is launching three games on mobile app platforms that combine elements of Web2 and Web3. Cryptocurrency is not required to play.

Whether it will work is still anyone’s guess, but Wilton is now in the driver’s seat. Previously Mirai’s chief marketing officer, he became CEO after co-founder Ken Pham stepped down due to “management issues.”

Is Web3 gaming still viable?

But perhaps the biggest barrier to success is the market itself. The Web3 gaming model that was popular in 2021 – commonly called GameFi, play-to-earn, or, more sardonically, pay-to-play-to-earn – is nearly dead. It was already dying an ugly death in early 2022 due to poor, often inflationary, tokenomics.

The crypto winter is putting the final nail in its coffin. The word “Ponzi” will likely appear in the obituary.

But Wilton hasn’t given up on Web3 gaming. Instead of making it a primary feature, the three upcoming titles will focus on revenue from in-game purchases and advertising. Over the last nine months, Mirai has been hiring staff with experience in Web2 gaming so that it “can monetize without the Web3 element.”

“We still truly are very bullish on the blockchain crypto industry for gaming because that’s where we see a lot of market opportunity,” Wilton tells Tech in Asia. “However, fundamentally Web2 traditional game design – free-to-play mobile game design – is how you get the distribution, is how you get in-app purchases and app advertising. And if we had that with our first scenario, we might have made US$50 million instead.”

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