Key Takeaways

• The Arbitrum ecosystem consists of two live mainnet chains: Arbitrum Nova for gaming and social apps, and Arbitrum One for DeFi and NFT projects. The gaming scene on Arbitrum has seen steady but modest growth in daily active gamers.
• Notable projects within the Arbitrum gaming ecosystem include Treasure, which has significantly expanded its game portfolio and operates the largest NFT marketplace on Arbitrum. There are approximately 60 games have been built on Arbitrum.
• Arbitrum's strategy of adopting new technologies like V3, XAI, and Arbitrum Nova positions it as an innovator in the L2 gaming space.

We are entering the gaming Layer 2 (L2) war.

Driven by the demand for the fastest and cheapest transactions, L2 chains are competing to attract game developers to build games within their ecosystem.

With roughly $5.2 billion worth of TVL, Arbitrum (One + Nova) is currently the largest L2 scaling solution and outsizing other L2 peers. Since Arbitrum was one of the early adopters of optimistic rollups, it has been a go-to plac e for DeFi projects to be built upon.

The team behind Arbitrum, Offchain Labs, has been constantly testing and innovating products to expand their reach. They made a big leap by launching Arbitrum Nova, which is built on AnyTrust technology, to cater to the gaming sector. Generally, Arbitrum operates two separate live mainnet chains: Arbitrum Nova, customized for gaming and social applications, and Arbitrum One, dedicated to the realm of DeFi and NFT projects.

A quick grasp of the Offchain Labs ecosystem:

Gamer Scene on Arbitrum at A Glance

The count of gamers on Arbitrum has remained constant throughout 2023, averaging around ~2,700 daily active gamers. In contrast to some other Layer 2 gaming platforms, Arbitrum’s gamer base appears more modest. Its Polygon counterpart, for instance, leads the Layer 2 gaming race with a DAU count 20-30 times that of the rest.

In general, the Web3 gaming scene hasn't witnessed a substantial surge in user growth, mainly because gamers and investors have become somewhat disillusioned with the potential of this emerging sector. Additionally, factors like the aftermath of the bad actors' collapse have also contributed to the stagnant phase.

Source: Footprint Analytics (Data as of Sep 5th)

Despite the headwinds, many game builders still choose to build games and fine-tune gameplay on Arbitrum for the above-mentioned technical advantages. They persistently work behind the scenes, patiently awaiting the opportune moment to flourish.

Notable projects/games

The Arbitrum gaming ecosystem can be simply categorized into two segments: Treasure ecosystem and non-Treasure games. For Treasure, please check out the in-depth analysis here.

Treasure is at the top of mind when discussing Web3 gaming on Arbitrum. Treasure is a Web3 gaming publisher and aims to create a shared ecosystem connecting games through NFTs and $MAGIC. It stands as a dominant force within Arbitrum's GameFi ecosystem, having expanded from 2 to nearly 30 games (both in-house and third parties) since its inception. Treasure's in-house game, Smolverse, boasts the Smolbrain NFT collection, which serves as the flagship NFT symbol within the Arbitrum ecosystem.

Notably, as a reward for being the early adopter of Arbitrum, Treasure received the largest $ARB airdrop (8 million tokens), strongly bolstering ecosystem growth. Undoubtedly, this grant will attract numerous emerging and established game studios to become part of the Treasure ecosystem.

Treasure has been supporting and onboarding high-quality games since migrating to Arbitrum. In terms of total players, The Beacon stands out as the lead in Treasure, accounting for almost a quarter of the entire player population, followed by BattleFly (20.7%) and Bridgeworld (17.3%).

Total players of Treasure’s games (Source: Footprint Analytics, data as of Sep 11th). 

Note: This sums up all the players since the game’s launch and does not represent current DAUs

Treasure is actively building Treasure marketplace (@PlayonTreasure) as a go-to social platform for players and collectors to trade NFTs and showcase their collections and achievements. This marketplace is also the first and the largest NFT marketplace on Arbitrum. Notably, during the early period of 2022, the two collections Legions (Bridgeworld) and Smolbrains (Smolverse) drove the entire trading volume and spending on the platform, hitting 10% of OpenSea’s volume at that time. As Treasure is continually attracting more games into its ecosystem, it is expected that the trading volume will take off, particularly when the market experiences the next bull run.

Source: Dune Analytics (@treasuredao, data as of Sep 15th)

Mighty Bear Games, a rising Singapore-based game developer, has made a strategic move by transitioning their web3 game, "Mighty Action Heroes," from Polygon to Arbitrum. They join Treasure and aim to migrate $MAGIC to the game’s economy. This shift promises to bring substantial benefits to both parties: a substantial boost to TreasureDAO's existing player base of 125,000 gamers and comprehensive support for the game.

The launch of Arbitrum Nova has enabled fully-on-chain (FOC) games on Arbitrum. Proof of Play Studio exemplifies this with their first FOC game, "Pirate Nation," and also joins Treasure's vibrant ecosystem to boost its growth.

Other games

The gaming landscape within Arbitrum is extending beyond Treasure’s umbrella. Some notable names that are about to debut on Arbitrum One & Arbitrum Nova include BattlePlan, Kitty Kart, TridentDAO and Halls of Olympia. Approximately 60 games have been built on Arbitrum.

Source: Helika Analytics

Here is what builders have to say about their decision building on Arbitrum:

What to Look For/Competitive Advantages

The Offchain Labs is helping to develop XAI, the first Layer 3, to cater to the unique scalability demands of Web3 games to become a “decentralized gaming console”. XAI, powered by Arbitrum Orbit, is the latest offering from the Offchain Labs and offers extensive customization for privacy, permissions, fee tokens and governance. It’s a perfect suit for gaming needs and next-gen on-chain games.

Ex Populus, a Web3 game development studio, will be the first contributor to XAI. Comprising the industry veterans from Pixar, Ubisoft and Activision Blizzard, the team is harnessing the power of the blockchain L3 to develop high-frequency trading cards and battle-oriented Final Form and MMO game LAMOverse.

LAMOverse will be the flagship title to be built on XAI (Source: Ex Populus)

Following the successful release of Arbitrum Nitro (the V2 technical stack that powers Arbitrum products) last year, Arbitrum is gearing up to migrate to the V3 system Stylus. This opens up new possibilities for all developers to build games with their favourite programming languages beyond Solidity and Vyper, including C, C++ and Rust. Builders now can gain access to a rich repository of libraries and tools to streamline complex game mechanics. Stylus’ computational speed and improved cost efficiency can bring existing games written in C++ on chain (game engines like Unity, Unreal Engine and CryEngine are using C++).

Closing Thoughts

Market leaders are defined by their ability to continually innovate their strategies and Arbitrum exemplifies this trait. Their adoption of the new V3 system (Stylus), along with XAI and Arbitrum Nova, is tailored to meet the requirements of game builders. This includes offering ultra-low cost, high-speed transactions and robust security features, which gradually make their ecosystem stay relevant with the market’s needs.

It is crucial to note that while technology is a necessary condition, having the right builders and successful games building on the platform is the key to success. Treasure is leading the Arbitrum gaming wave by example. They were an early adopter of the chain and have gained significant traction in the ecosystem since their inception, making them a role model to learn from. Should any builders choose Arbitrum as a go-to platform, Treasure is likely to be a top choice for collaboration as they can leverage the stability and experience gained from more mature games that came before. With high-advanced technology offerings and experienced builders, Arbitrum is step by step setting them apart from the competition.