What retention rate can (and can’t) tell us about GameFi projects

This month, something unexpected happened. 

Despite persistently grim macroeconomic conditions that have been kryptonite for GameFi volume, user numbers, and token prices, the retention rate of players has swung up for many of the most prominent blockchain titles. 

Currently, Footprint Analytics tracks short-term GameFi user retention. The platform counts a new user as retained if they interact with the protocol’s smart contracts in the two weeks after the first interaction. This method lets analysts and developers see how users react to recent changes, features, and tokenomics in the game.

Top 5 Active Projects Weekly Retention Trends

However, there is also the option to zoom out and see the retention over months, thereby analysing user drop-off.

AVG Weekly User Retention of Top 5 Active Projects on Different Chains

Why does the retention rate matter so much in blockchain games?

Marketers and product managers across industries conventionally see high retention rates as one of their top goals. In blockchain gaming, retention rate is the circulation that keeps the lifeblood of the project—new users—going. Why is this?

In traditional mobile games and online video game industries, you hear more about MAU and paying users than retention rates. This is because conventional gaming is based on different revenue models than GameFi.

Players of off-chain video games either have a cloud gaming subscription (e.g. Stadia) or buy a game outright. Mobile games are more similar to blockchain games and usually have paid user tiers. In other words, only paying users can access certain levels or parts of the game.   

There are several revenue models in GameFi. These include the developers earning a percentage of the revenue of transactions, the development team banking their hopes on the token in which they are vested continuing to increase in price, or selling in-game digital assets (NFTs). In any case, it is far from enough to have a player try the game once—it is a significant adoption funnel to have the player invest in a GameFi project. The project must: 

• Be stable enough for long-term survival
• Have security auditing in place
• Have a convincing roadmap to generate FOMO
• Work within the player’s preferred ecosystems (e.g. Solana, Ethereum)

All this, on top of:

• Being fun to play

While regular games only need the latter to retain players, blockchain games must have efficient tokenomics, excellent security, and an ambitious roadmap—all on top of being fun.  

No wonder so few GameFi projects can manage this juggling act for long. 

Does higher retention correlate with fewer users? 

Do the recent 10-20% increases in some blockchain games mean the quality of titles has drastically improved? Or is it something else?  

One common-sense explanation for the increase in retention rate is that fewer new players are onboarding. An influx of new players jumping on the hype train during peak bull led to many hitting once and quitting. 

Does the data agree with this hypothesis? 

Select Chain Avg Every Week New Users Retention Rate

DeFi Kingdoms New User %

The chart above would seem to confirm a negative correlation between the number of new users and the retention rate. On the other hand, this correlation does not hold in the case of Era7, one of this month’s highest gainer. 

Select Chain Avg Every Week New Users Retention Rate

New User – Era7

These above examples gained a significant number of users who then stuck around. 

Therefore, there is no easy explanation for why several blockchain games found themselves with significantly higher retention rates last month. 

Summary

On-chain GameFi analytics is a new practice, recently made possible by platforms such as Footprint Analytics. Unsurprisingly, as with any new investigatory endeavor, there are far more questions than answers. However, as more people explore charts, dashboards and datasets, there will be more and more thought-out hypotheses to explain trends in GameFi retention and other indicators. 

This piece is contributed by Footprint Analytics community.

The Footprint Community is a place where data and crypto enthusiasts worldwide help each other understand and gain insights about Web3, the metaverse, DeFi, GameFi, or any other area of the fledgling world of blockchain. Here you’ll find active, diverse voices supporting each other and driving the community forward.

Footprint Website:  https://www.footprint.network

Discord: https://discord.gg/3HYaR6USM7

Twitter: https://twitter.com/Footprint_Data