In the evolving world of Web3 gaming, "whales"—individuals or entities with significant assets— play a pivotal role in shaping a game's economy and trajectory. These influential users can encourage competitive gameplay, weigh in on governance, and serve as indicators for investors gauging a game's potential. As gaming integrates financial layers through blockchain, understanding the multifaceted impact of whales becomes crucial for developers, players, and investors alike.

Introduction

We all play video games for different reasons and this results in different player types:

• The elitist hardo looking for the glory of getting to the top rank

• The social gamer looking to in-game items and chill with their friends.

• The farmer looking to perform repetitive tasks or quests to grind for items of value.

There are many player types, and a successful game will ensure that entertainment and value are brought to all those across different profiles with the hope of building critical mass and revenues.

Web3 and blockchain gaming bring a financial layer ingrained into the gameplay, and with asset ownership, one player type comes to the forefront - the whale. Whether or not current gaming models will remain is another question, but for now, we have seen economies rise outside of traditional titles.

CSGO is often the reference point of many web3 believers through their skins market. Whales take the form of prominent collectors and traders stacking up multimillion-dollar inventories. In some cases, these accounts may be owned by an exchange, and as a player, you may only get value from these guys when you look to refresh your loadout in CS2.

Before jumping into the whale's role - we need to know what they are.

What are whales?

Whales are individuals, entities or organizations which load up on assets related to a project. In the gaming world this means stacking NFTs or other ecosystem tokens. Just like with player profiles - all whales are not the same.

Token Millionaires and Hoarders (Individuals)

These whales have made their money trading the crypto ups and downs and are looking to load up on their next moon bag. They are not affiliated with any more significant cause. They may buy into an ecosystem for pure financial speculation (and they might play the respective game). The above chart shows one of the top 5 wallet balances holding Smooth Love Potion (SLP) is, a token millionaire who has been trading the token for about 2 years.

Trading or Investment Companies (Entities)

The largest investment firms or funds, such as VCs, invest in game projects, receiving equity or ecosystem tokens. Of course, they want to invest in a game before it hits critical mass and starts to blow up. Still, they also benefit from tapping other companies in their portfolios to help boost the project or dive into an established player base. It's noteworthy that exchanges will have significant holdings due to their token liquidity. If a fund starts moving its tokens to an exchange, it could indicate they are looking to exit its position. (also, please don't keep long-term holds on exchange - remember "NOT YOUR KEYS, NOT YOUR CRYPTO.)

DAOs (Organizations)

The last type of whale you can think of is almost like a World of Warcraft guild bank, providing a stack of assets that members can use. In return, the whale will receive earned rewards, sharing with the players earning them. The largest Axie Infinity guild, Yield Guild Games (YGG), innovated this model, leading to a token sale and lots of VC backing. Could your World of Warcraft darlings Method do the same? In a more recent title, ParagonsDAO is the largest holder of Parallel TCG assets, empowering gamers to build their best decks and returning value to holders.

Of course, whales are drawn by the potential growth of an ecosystem and their bottom line, but there are more considerations on a whale's role in the gaming ecosystem.

The Provider

Of course, with large bag holders in any asset, as they control large amounts of supply, they can quickly impact price positively and negatively. It's not a secret that many investors use this as a buy or sell signal for their investment strategies, but this impact drives a bigger lever - game sentiment.

I recently listened to a podcast by 0xKepler (great newsletter insights too) where he talked about creating in-game economies. One of the topics in the talk, even used as the podcast intro hook, discusses the role of the whale as a provider rather than just a speculator.

Whales like to be respected in their guilds, and they provide for all the group members. They aren't spending to get an advantage but to support the game and its players. But how does this value trackback?

In the guild sense, this allows guild members to access games or gameplay they might not have had access to and, in return, generate payout for themselves and the whales. This reduces the barrier to entry for new players.

Why should we care?

1. Project Sentiment: If you have a whale accumulating during a down market, this is probably a good sign that your project is doing well (shout out to Wazza B). On the flip side, if they start dumping at the bottom, they can begin a market frenzy of people looking to hop out while they still can.

2. Governance is A big topic we haven’t covered in this post (but we will soon), but it plays a massive part in decentralized economies. Whales can become large owners of games they genuinely enjoy and help guide the future game state through its voting power.

3. User Acquisition & Gameplay Enhancement: As a provider, whales reduce the barrier to entry of your game. Whether that be through providing assets to get you started in gameplay or being able to access the best possible in-game items to ensure you are competitive against the rest of the player base.

4. Stability of Ecosystem: With great power comes great responsibility, and being the thermometer to game sentiments, whales may be able to hold the line on asset values on their own accord or through game incentive structures.

This is all to say that your game’s growth is not sustainable if trading volumes are just built off of financial speculation. Studios and game builders need to address the bigger question: How do we stabilize in-game economies? I dare to say content creator and UGC incentivization may be better in the long run. Once again, here comes the most based take on gaming at the moment: