Hot on the heels of the Play-to-Earn (P2E) movement kickstarted by Axie Infinity’s incredible success in 2021, GameFi projects suddenly became all the rage, unlocking a new opportunity for avid players to earn money through gaming. One of these projects, in particular, was Crabada.
Launched in November last year on the Avalanche (AVAX) network, Crabada’s original premise of idle gameplay was easy to pick up and required little effort, allowing even the busiest individuals to get in on the fun. But now that the hype has (mostly) died down on P2E, is Crabada just a former shell of itself, or is it looking for a much bigger shell? Let’s find out!
What is Crabada?
Expanding on what we mentioned earlier, Crabada is an idle P2E game that is meant for the most passive players. Essentially, players have to form teams of 3 crabs from various classes and factions and send them out to mine, loot, and battle enemies along the way to earn the game’s reward token, Treasure Under Sea (TUS).
Essentially, players can send out different teams of crabs on Mining expeditions to earn TUS rewards. However, these expeditions can be interrupted by looting squads from other players, who are able to steal your rewards if they successfully defeat your team. For a more in-depth view, we’ve written a complete guide on how to participate in Crabada earlier this year.
Source: Crabada
While Crabada’s original iteration offers a more passive experience, their recently launched Battle Game offers a more active approach. Gameplay is almost identical to the Idle Game, except that you can mine and loot more often without the need for calling reinforcements.
Source: Crabada
Successful Mining Expeditions are rewarded with materials that can be used to craft TUS and food to keep crabs in fighting shape. Players will receive an additional 51 TUS (~$0.01) each time TUS is crafted.
Besides Battle Mining and Looting, the Battle Game has three other game modes that players can choose from - Adventure, Challenge, and Arena. In Adventure Mode, players can gain more experience and unlock new mining zones as they progress, but they can’t earn any materials. Challenge Mode allows players to put their TUS on the line by engaging in 1v1 battles. Players can also compete against each other and climb the leaderboard in Arena Mode to earn weekly rewards.
Now, at this point, you might be thinking that Crabada is pretty similar to Axie Infinity (AXS), but not really! It’s easy to draw comparisons when both of these games share some of the same mechanics (energy system, turn order, a team of 3 units with different parts), yet the core gameplay experience between the two is totally different. While Axie’s main premise centres around battling enemies to climb the ladder and earn rewards, Crabada’s gameplay is more towards mining in-game rewards and just making sure your own team is strong enough to repel looters and overcome enemies along the way.
Axie Infinity requires players to engage in gameplay actively by making decisions and casting abilities for every turn in a match. On the other hand, Crabada is more laid back and allows the player to be hands-off, only requiring them to decide their team composition and positioning before every match. However, has this approach attracted more players, and are they sticking around?
The State of Crabada
Source: Crabada (2 May 2022)
Crabada came under the spotlight once word of its eye-popping profitability got around on the CT street. At its peak, players had expected revenue of $11 - $33 per hour from playing the game. For months on end, the play-to-earn game was the leading gas guzzler on Avalanche, solidifying itself as one of the anchor projects on the network.
All these should have translated to a fervent player base but strangely, even at its height in early May, Crabada only managed to usher in ~8,000 daily active users (DAUs). For comparison, Axie Infinity even in its current downtrodden, abysmal state, is still attracting over 250,000 DAUs. That’s 30x more than the Crabada’s peak!
Source: Crabada Marketplace
Part of this was due to the exorbitant cost of Crabs, which meant an extremely high barrier of entry that prevented more players from hopping in. To put things into perspective, the average cost for a team of 3 Crabs would have been around 88.5k TUS (~$11,400) at the start of the year alone! One could argue that that was the real peak of the game, where they only had ~2,000 - 3000 DAUs.
Okay, so the Crabada player base is small, but how sticky are they?
Source: Crabada (1 August 2022)
Surprisingly compared to its other play-to-earn peers, Crabada’s DAU have been fairly resilient. Since its DAU peak in May, Crabada’s DAU count had only taken a -28% dive, which is relatively much better than Axie Infinity’s ~75% cliff drop within the same time period. There are possibly a few reasons for this; 1. Crabada is obviously working off a much smaller DAU base, and 2. It’s an idle game, so it doesn’t take a lot of effort to set it up daily to collect rewards.
Crabada’s marketplace, unfortunately, suffered a worse fate - a -54% dip in users within the same period of time.
Source: P2E Analytics
Things are discernibly worse if we were to turn our lens onto its sales numbers. These days, Crabada’s marketplace is barely cracking above $5,000 in volume, a far, far cry from its earlier days when it was raking in figures in the millions just months before.
Crust of the Matter
Crabada like many others has been buffeted by the headwinds of bearish macro outlook and ill-fated (very loose) ties with the Terra collapse. The market meltdown may have ignited Crabada’s decline, but the root of the problem goes deeper than that.
On the surface, the Crabs’ spectacular fall in their prices can be interpreted as waning demand for the game, which is true. But fundamentally, it seems that the Avalanche game is also plagued by the same affliction that felled its predecessor, Axie Infinity - hyperinflation.
Source: Crabada Tracker
Looking at the Crabada population numbers, it’s no wonder that the price action of the NFTs has played out the way it has. At the beginning of the year, the number of in-game crab NFTs sat just above the 10k mark, the same time when a single Crabada could command close to $4k on the marketplace. Today, that same population has ballooned 20x to over 200k, and well, we’ve seen how the Crab prices are holding up (it’s now at about ~$15 to form a team of 3, compared to ~$11,400 in December 2021 as mentioned above).
The initial low supply of Crabs, which probably served to prop up the price, also served as a bottleneck for Crabada’s DAU growth, since you’d need a team of 3 Crabs to start playing the game. For a traditional game, a growing player base is great, but is not without risks for a play-to-earn game like Crabada. Having an influx of new players also means accelerated NFT and token minting, and if the tokenomics model falls to hyperinflation, that would mean a mass exodus of players.
In Crabada’s case, the Crab population picked up in pace just slightly after January, as the price of TUS rose to its peak, as more users started piling in. However when the price of TUS started to fall percipitously starting end-Jan, the population of crabs continued to rise. This was likely driven by hopium from latecomers, but also lowered TUS price allowed more players to enter the game due to the lower starting cost. On the supply end, the lower TUS price encouraged Crab owners to engage in breeding since the cost of that significantly reduced over time. More crabs, more players, more TUS, lower TUS price, cycle repeats.
Source: Crabada Tracker
More crabs led to more TUS being minted, and this has caused an unabating inflation of TUS supply, which shows no sign of slowing down despite the team’s efforts. The supply of TUS has ballooned from 0.12B in March 2022 to 1.87B at the time of writing, more than 15x in 5 months.
The dev took steps to revise the tokenomics of the game to try to make it more sustainable. For example the migration to Swimmer Network (which uses TUS for gas) was designed to increase the burn rate of TUS; the 15% reduction of in-game rewards for Idle Game on 1 June was instituted to slow down the minting of TUS; various in-game token sinks such as the Battle Game’s food system were also introduced. Ultimately it was to no avail, as supply continued to grow. Combine all these with super-thin liquidity and buyers drying up in the current market, and the TUS price, just like the price for Crab’s, has been crushed, registering over -99.9% cliff drop since its all-time-high of $0.35 in early February 2022. TUS is only trading at $0.00023096 at time of writing.
Source: CoinGecko
Crabadians will also not find any solace in the price action of Crabada’s governance token, CRA. Compared to TUS, CRA has weathered the storm marginally better, only dipping by -99.4% since its all-time high.
Conclusion
Instead of a mass-market approach like Axie, Crabada’s devs went the other way, creating a game with a high barrier of entry but also high rewards. This created a fairly exclusive, and relatively sticky player base. The high upfront cost, plus the fact that it was an idle game that could be easily self-managed by the NFT owner, meant that it limited its mass-market potential for player base growth. In comparison, Axie Infinity’s scholarship system opened the floodgates for throngs of players hailing from developing countries , which helped the game to cast its net far and wide for a large user base. By the time Crabada became more accessible to a wider audience, it was already on a decline.
In any case regardless of the player acquisition model, both Crabada and Axie fell into the same tokenomics trap of hyper-inflation. As more players enter the game, the massive net inflation of TUS rewards resulted in increased selling pressure, making it more unprofitable for newer users to participate. While the team is clearly trying to move away from the Idle Game and alleviate this situation with the introduction of more token sinks for TUS, it might have been too little too late. With the hype surrounding P2E passing for now, coupled with the bleak state of the crypto markets, players are quickly turning away from Crabada.
The underlying issues of Crabada are not new. Time and again we’ve rapped about the economic and game model of Axie Infinity and many other play-to-earn games. Most play-to-earn games can be likened to fishing with bait and no hook. You can attract swarms of players as long as you have bait (i.e. $$$), but what happens when the bait runs out? Is your ‘game’ fun enough to hook players, even without the bait?
Is your ‘game’ even a game? Or is it merely DeFi (or God forbid, ponzi) with extra steps?
This article was written in collaboration with Win Win. You can follow him on Twitter at @0x5uff3r.
Dillon is an Operations Associate at CoinGecko with a weakness for 3-digit APYs. As an ex-consultant, he now finds joy in laughing at consulting memes unironically.
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