#29 Maplestory Universe: Web3 Gaming's Last Shot
Note: These articles are posted on my X articles first.
Maplestory is a 22-year old game franchise owned by Nexon (Tokyo exchange listed company). It commands cult-like following especially in South Korea (KMS), Taiwan (TMS), and Singapore (MapleSEA).
Nexon recently invested $100M into the web3 version of Maple, Maplestory Universe (MSU), which is being developed by its crypto arm @Nexpace_HQ, all powered by the Nexspace token ($NXPC).
What exactly is Maplestory Universe?
Maplestory Universe (MSU) is an ecosystem of games and apps utilizing Maplestory's IP NFTs and $NXPC.
Within MSU there exists IP NFTs (e.g., "Ember Sword NFT"). Anyone can create UGC games or apps which utilize these IP NFTs. You can integrate the NFTs into your game by minting them from the MSU Item Universe using NXPC.
The first flagship title in MSU is MaplestoryN (MSN).
Its core game loop is the same as the original franchise - grind your character to lv250 while completing quests, killing monsters and bosses, and doing party quests, to secure the in-game currency (NESO) and equipment.
Nexon basically invented F2P gaming 22 years ago by integrating somewhat gambling-related aspects into (gachapon tickets and % probability upgrades). This has now become the norm that most F2P games nowadays have some sort of blind boxes integrated.
The game devs are incredibly good at dopamine hacking. The game revolves around (i) daily boss raffles and (ii) slot-machine-style equipment upgrades with % chance success rates.
MaplestoryN blends crypto into the game in a way that makes the most sense:
$NXPC acts as a crypto-economic balance system. Games like Maplestory suffer from inflation, continuously decreasing the value of items. In MSU, there is a natural economic equilibrium state as a basket of items can be converted back into $NXPC if there is severe item inflation, or vice versa if there's too much user demand, you can mint the items by using $NXPC. There is also an underlying dynamic pricing system (dutch auction) for improving the Star Force and Potential of your equipment, which ensures the game is not flooded with equipment of high stats. Hence good equipments will retain value.
$NXPC as a payment rail. The original Maplestory games were similar to Runescape in the sense that there was a huge p2p market where players would trade in-game currency (mesos) or rare equipment for real money. The marketplace was rife with scams as one party had to transact first (one tx in-game, one tx via a bank outside the game). It was incredibly common to get rugged.
What is the NXPC token even for?
The NXPC token distribution is healthy - no VC allocations.
80% for Contribution Rewards, i.e. for those who create content for MSU, including the MSN team. Minting of NFT equips and NESO dropped from in-game monsters comes from this bucket
16.3% for the Early Community (incl. 2% airdrop to players and the rest airdropped by CEXs to their customers & ~5% used by the team for Fission to provide equipment NFTs at launch)
3.1% for Team & Advisors
0.6% for Gas Sponsorship and Liquidity Provision
The NXPC sinks / utility are:
Item Enhancements (Potential & Star Force): This is by far the largest token sink. The end-game is to max out the Starforce and Potential of your equipment, and these upgrades resemble gambling where there is only an x% chance for you to increase your stats.
Fees from NFT marketplace (5% fee on NFT volumes)
NXPC Fission (to be launched): You can use NXPC to mint a basket consisting of one of every equipment in MaplestoryN. This is not released yet, but likely to be used only by arbitrageurs / market makers as it will likely require >40K NXPC to mint the equips and sell them in the marketplace. It follows a bonding curve so the Fission price increases as more people mint NFTs.
Gas token for the Henesys L1 which is an Avax subnet (small relative to the first three). Gas used is returned to the gas sponsorship wallet.
The NXPC emissions (faucets) are:
NESO drops in-game from killing monsters / bosses
NXPC Fusion (to be launched)
What do the on-chain metrics show?
To decrease the NXPC circulating supply, you need to ensure the Sinks >> Faucets. Hence, you want "Sinks - Faucet > 0", or...
(NXPC spent on Enhancements) + (Fees from Marketplace) - (NESO Emissions) > 0
The beauty of the blockchain is that you can track the entire economy transparently onchain.
First, let's look at Enhancements. NXPC spent on enhancements keeps increasing as more and more players reach the "end game" (~lv150+) where you have obtained the top equipment and need to enhance them to improve your stats.
MaplestoryN is removing ~76M NXPC from circulation from just item enhancements alone.
Secondly, let's look at NFT Marketplace Volumes.
Anecdotally it's an incredibly active marketplace where even specific equipment such as Earring NFTs transact >300 times a day, way more than traditional PFP NFTs in crypto. The top NFTs in the marketplace go for more than 888M NESO or +$12K.
In the 26 days since launch, they've done ~7.32M $NXPC in volume. The 5% fee they collect equates to ~0.37M NXPC so far or ~5.2M NXPC annualized.
Now for the emissions, which currently only come from monsters in-game.
The best way is to follow the NESO Emissions Wallet on Henesys L1 (0x18) which started with 900B NESO (minted with 9M NXPC from "Contribution Rewards") and now has ~753B NESO, meaning they've emitted ~147B NESO so far. The revenue wallet (0xcd) has also collected ~605B NESO (roughly tallies with the 580B we calculated above).
Hence, NXPC is on pace to remove 65M tokens or 6.5% of total supply (~22% of y1 supply) from circulation over the next 12 months. This is +$100M in net revenues for the game.
This assume zero growth, while games if successful are usually explosive and have exponential growth (remember Axie). The sink could grow exponentially while emissions remain constant, making the net reduction much higher.
At $1.3B FDV, this translates to a mere ~13x P/E, for a growing game that hasn't hit its inflection point yet.
The final cross-check you can do is looking at the net inflow from Henesys L1 to Avax C-chain as CEXs only accept NXPC on Avax-C. The net removal of 4.58M NXPC comes from people buying on CEXs and bridging it into Henesys L1 to spend, which you can clearly see from this Dune dashboard by the chads at @hashed_official.
The best part about this is that they are already burning 6.5% of total supply annually, with more catalysts lined up:
NXPC Fission / Fusion which is a large sink for $NXPC as it'd require 40K NXPC to mint a single basket of equipment, and this price goes up following a bonding curve
Launch of other MSU apps such as character lending (cf. Axie) and the "meta-gaming" layer (e.g., in FIFA apps, adults spend more time modding their team and collecting cards rather than playing the game football game itself). Some UGC has started popping up based on Henesys L1 NFT data (as seen here).
Marketing to their Korean audience (>50% of all South Koreans have a Maplestory account)
It is still very early. The key here is for the team to communicate further about their plans to utilize the funds from the sinks that currently just sit in the revenue wallet. This is similar to the HYPE Assistance Fund. The team needs to decide how much of it to burn permanently or re-inject it into the ecosystem. So far, the team is still quite well-capitalized by Nexon.
Putting the financials aside, the organic user numbers are also looking good. All metrics are up and to the right, including unique actives, user stickiness, and new users.
The Maplestory franchise (GMS + KMS + TMS + MS Worlds) as a whole has 6-10M DAUs. MSN has currently grown to 70-80k DAUs, but if it can reach just ~10% of their DAUs (~600k-1M) just by converting players, that'd be huge for MSN.
New users generally only start engaging in revenue-generating activities (equipment enhancements and NFT trading) above level 100, which will take time for many users to reach.
Hence I think we'll likely see a strong continuation in revenue growth from the cohort of new players who are in the process of progressing to the late game.
Airdrop fractals & MSU's challenges
So you're telling me all the numbers are up and to the right, for a game with growing user numbers (20k -> 50k DAU), +$100M annualized net revenues (sinks) with more catalysts in the pipeline... and the chart looks like that?
Yes, and IMO the biggest mistake the team has made is the CEX catch-22. CEXs ask for large allocations so the CEXs can airdrop to their users. For example, CEX users get NXPC for staking BNB tokens or generating volumes on Binance. They probably don't even know what NXPC is used for, so obviously they'd dump it for cash.
From @Jayyqueu's analysis you can see that 76M NXPC (7.6% of total supply) were given to CEXs and presumably sent to their users free-of-charge. Case in point is that when Bybit's trading competition ended and their users received their NXPC rewards, the charts started printing red candles only.
People complain about VC allocations and forget that retail airdrops with no lockups can be worse.
Even though early signs are looking good, the team is still facing multiple challenges, such as to attract players from KoreaMS, MS Global, and MS Worlds into MSU.
To do this, they need to slowly make MaplestoryN more feature complete (rolling out new jobs progressively), advertising to existing Maple players (currently zero marketing spent in Korea due to regulations), and catching headlines with high payouts (MapleLands in MS Worlds went viral because of this).
The high payouts are difficult to balance as you need both farmers and whales to join to maintain the equilibrium. Hence you need a strong unique selling point to migrate KoreaMS whales to MSU.
I've met few whales in-game who've spent +$50K across multiple years in KMS who have moved over to MSU and spent +$10K since launch. Their reasoning is straightforward.
KoreaMS has infinite item creation (as with most web2 games), so the price of items trend to zero very quickly. Because of that, KMS devs introduced a trade count restrictions for each item to ensure there are item sinks (e.g., "sword" item can only be traded 10 times). This is a temporary solution as items with fewer "trade counts" remaining depreciate very quickly.
As a whale, a game with guaranteed limited supply enforced my smart contracts with unlimited trade is way better.
You can tell the demand for MSU equipment has been high and has recently found an equilibrium. This Noble Ifia Ring (boss equipment set) has increased in price from ~150k NESO (~$6) at the launch of the game, to ~7M NESO (~$80) now.
Whatever you spend in web2 Maple, you might walk away with 10-15% of what you spent when you quit / decide to sell. Within MSN, it's likely 80%+ or even profitable, considering the demand for the limited number of rare items. - some whale I met in-game
Another huge issue is around botting / hacking. This has always been a constant cat-and-mouse game in the original Maplestory franchise but now that a lot more real money is involved, the stakes are higher. There has been recent reports of botting and hacking, but the team's swift responses to the incidents have been super impressive. Even the community is impressed.
And finally, the UX. The game requires a VPN (US, UK, Korea banned), a Metamask/Rabby wallet, a Windows PC, and a complex process if you wanted to spend money (i.e., buying NXPC via CEX to withdraw to Avax-C chain, then bridging to Henesys L1 to convert to NESO).
The team is already working on their own wallet with improved UX, but the VPN requirements are due to regulations. However, there's been some tailwinds on that front as South Korea just got a new government last week and the new government's Chief Policy Officer is the former CEO of Hashed Open Research (@hashed_official).
Final Thoughts
Nexon and Maplestory are the perfect candidates to pioneer web3 gaming. They created F2P gaming which is now the most profitable and common game monetisation method.
Maplestory has a diverse and global user base that has generated +$5B in lifetime revenues through digital item sales and all the users are used to using "digital currency" in the form of Gift Cards ("NX Cards") you buy at a physical shop (eg CVS).
Nexpace is also in an extremely advantageous spot because they can focus 100% of their time on game mechanics and design, instead of building out the game because they have a battle-tested off-the-shelf game and IP that can be deployed off the shelf.
Despite facing multiple challenges in the few weeks post-launch, user metrics are looking good and up only. The game has already generated +$100m per year in profits / net revenues at this rate and there's still insane room for growth.
Ultimately, I think MSU is Web3 Gaming's only hope. If it doesn't work, perhaps Web3 Gaming is truly fubar. But if it works, MSU could become the poster child of web3 gaming, and be one of the real world use cases of crypto.
If you're keen on following MSU updates, follow them: @MaplestoryU, @nexpacetime (Chief Strategy Officer), @msu_boss, @towelholderA (Nexpace CEO), @domidom88.
The MSU Community is also incredibly active. Also mostly @cowooding (leader of the #1 guild @limelight_gg), @eth_apple, @kss4319, @scv0510, @universeguild yapping.
Shout out to fellow MSU enjoyers for some great discussions: @mattmaximo1, @cptn3mox, @JayQueu, @0xlaiyuen, Gabriel @ Republic Digital.
Also if you're in game add me on the Ain server, ign is noobie
Disclaimer: This post is for general information purposes only. It does not constitute investment advice or a recommendation or solicitation to buy or sell any investment and should not be used in the evaluation of the merits of making any investment decision. It should not be relied upon for accounting, legal or tax advice or investment recommendations. This post reflects the current opinions of the author and does not necessarily reflect the opinions of the author’s employer. The opinions reflected herein are subject to change without being updated.