Deep Dive into the Philippines: An Important Window to Observe the Development Trends of Web3 Games

Original author: Leah Callon-Butler

Original compilation: Deep Tide TechFlow

The Web3 gaming sector is about to explode again, and by focusing on the situation in the Philippines, we can see how Web3 gaming is developing.

The Philippines is leading the world in the development of Web3 gaming.

Pixels is a farming game on the Ronin blockchain that recently became the first Web3 game to surpass 100,000 daily active users (DAU) since Axie Infinity. Within a week, daily active users surged from 4,000 to 111,000, although some skeptics pointed out that this data might be inaccurate, suggesting that these users could be bots. Even the CEO of Pixels admitted that only about 40% of these daily active users might be real people.

However, at the YGG Web3 Gaming Summit held in Manila last month, Sky Mavis co-founder Jeffrey 'Jihoz' Zirlin pointed out that Google Analytics data showed over 82,000 visitors, accounting for more than 25% of Pixels' website traffic, came from the Philippines. He boldly claimed that these players are not bots, but Filipinos.

For any game with financial incentives, bots are always present. And daily active users (DAU) is a metric that can easily be exaggerated, as it is difficult to distinguish between bots and real people. But I have reason to believe that the player base of Pixels is indeed more likely to be real people rather than just bots. Because in the early stages of the last cycle, around mid-2020, when I lived in the rural Philippines, I first learned about the popularity of Web3 gaming in the country.

Axie Infinity - The Beginning of Web3 Gaming

At that time, I was living in rural Philippines and heard that a family in a neighboring province was banned from playing a little-known blockchain game called Axie Infinity. The reason was that the game developer Sky Mavis discovered that up to 20 accounts were playing around the clock from the same IP address, so they banned this family from playing the game.

To restore their accounts, the family shared a video showing their large family sitting on the floor in a circle, all battling in the PvP arena. It turned out that they were all real people playing. In retrospect, this video might be the first evidence of a multi-generational DeFi user in the world.

Despite the low interest in the game at that time— in July 2020, Axie's daily active users were less than 500— I thought that earning income through playing blockchain games was a very interesting use case, so I decided to write this story for an opinion column. I could not have imagined what would happen next.

After news spread that this game could allow people to earn money, millions of non-bot Filipinos joined the game. By July 2021, Axie's daily active users approached 3 million, with at least 40% coming from the Philippines. According to our calculations, their gaming revenue for that month was about 2 billion Philippine pesos, equivalent to 40 million USD— the same amount sent back to the Philippines by all overseas Filipino workers from Hong Kong.

As a result, Filipino gamers began to refer to themselves as MFWs (Metaverse Filipino Workers). Axie's utility token SLP was used for cross-border remittances, listed on all major local licensed exchanges, and widely accepted by merchants—from dentists to dumpling shops. Hundreds of Web3 gaming guilds were established across the Philippine archipelago, with the first being Yield Guild Games (YGG), which raised over 21 million USD in venture capital, becoming the first Philippines-led startup supported by A16z Crypto. By November 2021, 17% of MetaMask's 21 million users were in the Philippines.

This craze triggered media frenzy, and other emerging economies like Indonesia, India, Venezuela, Brazil, and Nigeria gradually began to pay attention to blockchain gaming. Soon, every country followed the path that the Philippines had once taken. I learned that anything happening in the Philippines is a precursor to global Web3 gaming adoption.

The Philippines is Ready for Web3 Gaming

According to CoinGecko, for three consecutive years, the Philippines has ranked first in the world in interest in Web3 gaming, attributed to its young population structure, high level of digitalization, a largely unbanked population, and a strong remittance culture.

Thus, around 2015, the main use case for blockchain was remittances supported by crypto assets, which reduced the cost and time for overseas Filipino workers to send money home. So when Axie broke through, people in remote areas of the Philippines needed almost no guidance or support, as they were already using and understanding cryptocurrencies.

Even so, the savvy nature of early Axie players surprised even the most enthusiastic supporters of blockchain in the Philippines. On any given day, players might exchange pesos (the Philippine currency) for ETH through official exchanges like Coins.ph or PDAX. Then, they might transfer ETH to MetaMask to purchase NFT assets on the open market, send them to the PvP arena to battle for SLP tokens, and exchange their winnings back to ETH through DEXs like Uniswap before cashing out.

Axie Returns to the Philippines

However, in the Philippines, even after Axie stopped financial rewards in 2022, a small group of people continued to play the game for entertainment. This is why Jihoz chose to announce the return of Axie Classic with financial rewards in Manila. Because Filipinos are the leaders in Web3 gaming. Moreover, the original version of Axie, despite facing harsh criticism from other parts of the world for its low entertainment value, has always been beloved by Filipinos.

After the return of Axie Classic, some of my Filipino friends were very excited. Because this was the game that changed their lives; it was the game that showed them the possibilities of future gaming.

The Market is at a Critical Moment

Based on past experiences, I believe this is a critical moment, and we are about to witness explosive growth in the Web3 gaming sector again. The earliest stages of the cycle will be driven and fueled by Web3-native innovations, just like we saw with ERC-6551. Then, once new games or models gain attention, there will be thousands of imitators— for example, I have already seen some proposals for GameFi versions of Friend.Tech.

Just like we saw in the last cycle, many projects will emerge. As the market approaches its peak, everyone who switched from Web3 to AI during the bear market will return to Web3 with a glamorous investment plan. This time, some will receive funding and experience significant but unsustainable growth. When the market inevitably declines, the prices and popularity of good projects will drop, but they will not fall to zero.

Anything that rises will eventually fall back, although at a significantly higher step than the starting point— with more community members and more daily active users. This is a familiar path for more experienced cryptocurrency travelers, but it may be the first experience for Web3 enthusiasts in the current cycle.

Looking back at the beginning of the last bull market, I remember a Filipino family playing Axie on their living room floor. Now, as we are at the beginning of the next bull market cycle, the daily active users of the top Web3 game Pixels have surpassed 100,000, and the debate about bots versus non-bots is in full swing.

This time, the rise in prices and the development of Web3 gaming may be astonishing, but all the signals are the same, and they all originate from the Philippines.