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Why Arbitrum Could Flood Crypto Gaming With $200 Million – DL News
- Arbitrum DAO is voting on a proposal to create a $200 million gaming catalyst program.
- Critics have expressed concern that the sum is too high.
- Cryptocurrency-based video games have fallen out of favor with investors.
The Arbitrum DAO is ready to give blockchain-based video game developers more than $200 million in cryptocurrencies.
The vote to fund a new “Gaming Catalyst Program” with more than 200 million ARB tokens received overwhelming support as of Wednesday, with more than 149 million votes in favor and nearly 31 million votes against.
If approved, the program would have 135 million ARBs worth about $150 million to invest in game developers and studios and another 65 million ARBs to be distributed in the form of grants.
The vote, however, has also drawn opposition, with critics calling it a disproportionate sum for an industry that has produced few blockbusters despite receiving billions in venture capital.
“It’s too much money to spend in a niche category,” said cryptocurrency influencer and investor Eric Wall he wrote on X.
“I’m not sure we need to fund this project with a quarter of a billion dollars. Who helps?”
Wall, a delegate from the Arbitrum DAO, was one of many to vote against the proposal.
The Arbitrum dispute highlights the precarious state of web3 gaming.
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While supporters argue that it is “not a bubble“, the absence of success stories combined with a brutal crypto winter have minimized the investment flow into web3 games.
In 2021, web3 gaming projects raised $2.3 billion, according to DefilLama. Last year, that figure fell more than 70% to $576 million.
Web3 gaming projects have raised just $213 million so far this year, despite venture capitalists returning slowly to the cryptocurrency sector.
An “aggressive budget”
Karel Vuong, founder of video game developer Treasure DAO, is co-author of the Gaming Catalyst Program.
He pitched it as a way to boost game development on the largest Ethereum-based layer 2 blockchain.
“As a network, Arbitrum lags behind several major competitors in total games migrated, games launched, and total players,” the proposal law.
“We believe allocating an aggressive budget to attract builders and retain talent will result in some major wins.”
The scheme would funnel money to game publishers and developers over a three-year period.
The “core of this initiative is to create an investment arm for the DAO that makes investments instead of just giving out grants,” said Krzysztof Urbanski, a member of the Delegate Arbitrum L2BEAT. DL News.
“The revenue for the DAO does not necessarily have to come [just] from the sequencer revenue, could come from the return on those investments.
Criticism
Several Arbitrum delegates, members who use other people’s tokens to vote on their behalf, expressed concern about the size of the Gaming Catalyst program.
Governance firm DAO GFX, a proxy of the Arbitrum, led a belated campaign to scuttle the proposal.
“This is a huge amount of money for a vertical with no visible winners,” GFX wrote in the Arbitrum governance forum. “This is highly speculative and seems like a YOLO.”
The commentary highlights how few web3 games have reached and retained a wider audience.
The most popular, Axie Infinity, has already found an audience in the Philippines crash amid a $600 million hack and a broader lull in cryptocurrency markets.
Despite a returnaccording to data from DefiLlama, deposits in the Axie blockchain, Ronin, are still a fraction of what they were at their 2021 peak.
The value of cryptocurrencies stored on the Ronin blockchain has increased steadily since October.
Arbitrum delegate Lito Coen voted against the proposal because the advance sum was too high.
“I would prefer the financing to be for one year and/or a third of the amount and then for the GCP group to apply for new financing,” he said he wrote on X.
Support the game plan
However, most of the Arbitrum’s leading delegates support the program.
“For me the point of reference is not Elder Scrolls but rather games like Stardew Valley,” Urbanski said, referring to a big-budget video game series that has sold tens of millions of copies worldwide.
“Or games like Forge of Empires, Travian or Eve Online. These may not be your cover headlines, but they are money machines.
And Arbitrum DAO is not the only one ready to invest heavily in crypto games.
Recent games funds raised by Andreessen Horowitzas well as Arbitrum’s competitors Starknet AND Polygonall exceeded $100 million.
“In web3, an initiative like this is not extraordinary,” Urbanski said.
Aleks Gilbert is a DeFi correspondent at DL News. Do you have advice? Send him an email at aleks@dlnews.com.