Is Tether killing Ethereum gaming?



Times are hard for developers of Ethereum gaming dapps

Despite criticisms of onboarding complexity and gas fees, the Ethereum blockchain has generally provided developers with the best tools and most opportunity when it comes to users and creating valuable dapps.

Certainly, this is true for the ever-growing DeFi category of dapps, which continues to gain momentum. 

Times are not so good, however, for developers of Ethereum gaming dapps

It’s always been well understood the daily activity of gamers is strongly related to the Ethereum gas price. 

As a proof-of-work blockchain, Ethereum requires users to pay a small amount of the ETH cryptocurrency to save any transaction into a block. This ETH is paid out to the miners who created each block and secure the entire Ethereum blockchain.

https://www.youtube.com/watch?v=RWJRKU0_aRA

In general, the quicker you want your transaction saved, the more gas you pay. This usually isn’t a problem as the average block time for Ethereum is less than 20 seconds. But as activity on Ethereum increases, there are more transactions to be stored, and only so much space in each block. 

In order to deal with this issue, the gas fee increases. In this regard, gas acts as a priority filtering system. If you want to move $1 million of ETH or lock $100,000-worth of BAT into a MakerDAO Vault, paying – say – $10 in gas isn’t a big issue. 

However, if you want to buy a $10 character for your favorite game, or spend $20 a monthly in-game subscription, a $10 fee is a large additional cost. 

The result is when the gas price is high, Ethereum gaming activity drops. 
Previously, high gas prices have lasted for days or perhaps a week. But as can be seen via Etherscan, Ethereum has been experiencing very high gas prices since mid-April 2020.

The reason is the growing use of the Tether stablecoin on Ethereum, combined with activity from a number of high-risk dapps, which are effectively spamming the Ethereum blockchain. These are listed as the top gas spenders on the ETH Gas Station website

The result has been a collapse in the daily activity of Ethereum games. 

On 1 January 2020, the top 5 Ethereum games had a combined total of 5,476 daily active unique wallets, which peaked at 7,355 on 2 February. By 25 May, however, it had dropped to a mere 946 daily active unique wallets.

That’s down a massive 83% from 1 January and down 87% from the 2 February peak. 

Significantly, we can check this trend only impacts Ethereum games by comparing the activity of the top 5 Ethereum and non-Ethereum games. 

Clearly, we can see that during May, the top 5 non-Ethereum games have slightly increased their activity, up 14% to a combined total of 13,785 daily active unique wallets. 

Ethereum 2.0 can’t come soon enough. We will continue watching this space. Make sure you bookmark DappRadar and sign up to our newsletter below to get updates direct to your inbox.

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