The industry is expected to reach 1.4 billion users by 2027, so unsurprisingly, there is a concerted effort to expand Web3 gaming as the next frontier.

Yet, Web3 gaming hasn't had a fine start. Many projects raised cash and spent it on questionable expenses, only to launch a poor game that nobody wants to play.

However, there are a few gems in the rough; from what we've seen, Solana is the place for up-and-coming developers.

We think that Solana will be home to the next Activision - but who will claim that mantle?

Let's dive into the Solana gaming sector!

TLDR

• Solana is emerging as the optimal blockchain for gaming projects due to its speed, low costs, and user-friendliness.
• Two pioneering gaming projects in the Solana ecosystem have survived crypto winter and are primed to unveil their full potential.
• We see the potential for a 5x to 19x upside in the first project and a 10x to 29x upside in the second project.
• The third gaming project is in development, but this is another one to watch because it is replicating the gameplay of existing traditional games.
• While fun gameplay remains an issue, sustained development and higher-quality games signal the blockchain gaming space is maturing.

Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results. "One Glance" by Cryptonary sometimes uses the RR trading tool to help you quickly understand our analysis. These are not signals, and they are not financial advice.

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Why is Solana optimal for gaming?

It's really simple—speed and costs. You could easily and at a fraction of the cost of other chains handle every decision a player makes, every in-game item, marketplaces, and all other game-related infrastructure.

Additionally, Solana has one of the most user-friendly interfaces for crypto newcomers. This is bolstered by the huge pool of users already on Solana, especially after the recent memecoin hype and other related ecosystem developments. 

Overall, Solana is the place to be if you are a fledgling game developer looking for a blockchain that is likely to scale your game at minimal costs.

Therefore, it makes sense for any GameFi analysis to focus on the Solana ecosystem.

You wouldn't support an oil prospector looking for oil in central London. Even if they found it, the chances of setting up a drilling operation are slim, and even if they got permission, it'd be expensive to buy the land, never mind the costs of ripping down existing buildings and infrastructure. 

Betting on Solana as the centre of gaming is like backing an oil prospector looking for oil in the Middle East in 1920.

In other words, low-hanging fruit.

Star Atlas

Star Atlas is one of the first gaming projects on Solana actually to do something and survive the bear market until now. The game is a sci-fi, futuristic MMORPG set in a universe not too dissimilar to Star Wars. 

Players can purchase, maintain, and collect resources to further their in-game progress. The game works under the "Play-2-Earn" model, where users can sell their holdings for SOL or use ATLAS in-game currency.

Star Atlas' journey through the bear market has been anything but smooth, with developer layoffs and financial difficulties. Yet, it has managed to navigate these difficulties, retain its place as one of the Solana gaming sector's first movers, and ultimately maintain relevance.

The ATLAS token was launched in 2021 and represents the in-game currency that is freely tradeable with any other token through the Jupiter aggregator or several centralised exchanges.

The inflation characteristics for ATLAS are intended to scale with the game's growth and don't appear to have had a huge effect on circulating supply to date. 

At a current market cap of around $80 million (up 660% since its resurgence at the end of last year), ATLAS has shown some strength but has significantly underperformed many coins in other sectors of the Web3 market.

Still, the game is in development, and new users are likely to find Star Atlas almost immediately after Googling "Solana gaming". 

Additionally, compared to similar successful games in the conventional gaming sector like Starfield, we anticipate that Star Atlas will definitely have a sellable metaverse if the game is developed to its full potential.

With estimated sales of well over 2 million copies, generating between $300 and 400 million, Starfield gives us our first target (bear case).

For the bull case, owing to the actual use of ATLAS as the in-game currency and the tendency for crypto tokens to massively outperform what would be considered fair value, we think a $1.5 billion market cap is achievable.

Therefore, here are our targets:

• Bear case: $400 million valuation at $0.025 per ATLAS, a ~5x from here.
• Bull case: $1.5 billion valuation at $0.095 per ATLAS, a ~19x from here. 

Token: ATLAS

Contract address: ATLASXmbPQxBUYbxPsV97usA3fPQYEqzQBUHgiFCUsXx

Aurory

Aurory is a roleplaying game with characteristics inspired by Pokemon and a dash of Fantasy. Again, they use NFTs to prove ownership of in-game assets and character skins. 

Aurory stands out because it has leveraged its universe to create multiple concurrent games. All games are P2E, but this flexible launch practice allows it to cater to a wider gaming audience. 

The two current games are:

• Seekers of Tokane: an exploration/RPG game where players can collect items, catch Nefties (Pokemon), etc. 
• Aurory Tactics: a more fast-paced, chess-like game where players battle their Nefties.

Both games are fairly basic, but having launched in 2021, around the same time as Star Atlas, they have retained a first-mover advantage.

The AURY token is the centrepiece of the in-game economy. It has much the same functionality as ATLAS and is already well established, with a market cap of $30 million. 

Although the gameplay is simplistic, the lore and the artwork are a well-known recipe for success and fit with the Japanese/Manga narrative that made Pokemon successful. 

In terms of valuation, the game itself isn't as high-quality as it could be. It'll take some work to compete with Skyrim or even Pokemon itself.

Aurory is quite a niche - you either like it or you don't.

But Marmite made that their marketing niche, and the people who do like Aurory REALLY like it. 

Given the circumstances, we anticipate that AURY has the potential to reach a $300 million valuation purely through hype.

For our bull case, a $900 million valuation seems reasonable, considering that the token is actually used in-game and has an implied value other than the USD exchange rate. 

Therefore, our targets are:

• Base case: $300 million market cap at $5.5 per AURY, a ~10x from here.
• Bull case: $900 million market cap at $16.30 per AURY, a ~29x from here.

Token: AURY

Contract address: AURYydfxJib1ZkTir1Jn1J9ECYUtjb6rKQVmtYaixWPP

Epic Games

Epic Games, the brains behind Fortnite, have been low-key testing, developing, publishing, and launching some simple games on Solana. There are a plethora of Solana-based blockchain games on the Epic Games Store.

Epic Games seems to be more supportive of the publishing side for now. In confluence with other factors (development stage and marketing), we consider being listed on Epic Games a good indicator of potential success.

Chain Crisis is a game supported by Epic Games and is one of the most promising up-and-comers in the market. 

Although the CREDS token is not freely available on-chain, and the game is still in pre-alpha, Chain Crisis is definitely one to watch. It is also the first feasible attempt at a high-quality shooter game. 

When considering the success of FPS games in the trad market like Cyberpunk 2077 and Call of Duty, combined with the marketability of blockchain games, support from Epic Games, and the P2E system, it's hard to see this being a flop.

Obviously, the big caveat here is that development continues and remains well-funded. 

We'll revisit Chain Crisis when further developments arise, but for now, Epic Games legitimising them is enough to get our attention.

Token: CREDS

Contract address: Not yet available

Cryptonary's take

The fledging blockchain gaming industry has a ways to go before competing with traditional gaming companies. They don't have the same financial backing, and developers are hardly jumping at the opportunity to build a game on a low budget. 

Still, the core is there, and Epic Games' apparent willingness to support some of these games on its store lends credibility to the idea that the blockchain gaming market has potential.

The key issue with most blockchain games is that whilst they might be Free-to-Play, they aren't Fun-to-Play. 

But having seen sustained development and the willingness to persevere throughout a bear market, and with new, higher quality games in the works, Fun-to-Play doesn't seem so distant a target.