- Arbitrum DAO is voting on a proposal to create a $200 million gaming catalyst programme.
- Critics have expressed concern that it is too high a sum.
- Crypto-based video games have fallen out of favour with investors.
The Arbitrum DAO is poised to give developers of blockchain-based video games more than $200 million in crypto.
A vote to fund a new “Gaming Catalyst Program” with more than 200 million ARB tokens has received overwhelming support through Wednesday, with more than 149 million votes in favour and almost 31 million votes in opposition.
If approved, the scheme would have 135 million ARB worth about $150 million to invest in game developers and studios, and another 65 million ARB to distribute in the form of grants.
The vote has also attracted opposition, however, with critics calling it an outsized sum for an industry that has produced few blockbuster hits despite receiving billions in venture capital.
“It is too much money to spend on a niche category,” crypto influencer and investor Eric Wall wrote on X.
“I’m just not sure we need to fund this for a quarter billion dollars. Who is it helping?”
Wall, an Arbitrum DAO delegate, was one of several to vote in opposition to the proposal.
The Arbitrum quarrel highlights the precarious state of web3 gaming.
While backers contend that it’s “not a bubble,” the absence of success stories combined with a brutal crypto winter have ground the flood of investments into web3 games to a trickle.
In 2021, web3 gaming projects raised $2.3 billion, according to DefiLlama. Last year, that figure dropped over 70% to $576 million.
Web3 gaming projects have only raised $213 million so far this year, despite venture capitalists slowly returning to the crypto industry.
An ‘aggressive budget’
Karel Vuong, founder of video game developer Treasure DAO, co-authored the Gaming Catalyst Program.
He pitched it as a way to turbocharge game development on the largest Ethereum-based, layer 2 blockchain.
“As a network, Arbitrum falls behind several major competitors across total games migrated, games launched, and total gamers,” the proposal reads.
“We believe that earmarking an aggressive budget to attract builders and retain talent will result in a few major wins.”
The scheme would funnel money toward game publishers and developers over a three-year period.
The “core of this initiative is to create an investment arm for the DAO that would be making investments instead of just giving out grants,” Krzysztof Urbanski, a member of Arbitrum delegate L2BEAT, told DL News.
“The revenue for the DAO does not necessarily have to be coming [just] from sequencer revenue, it may be coming from the return on said investments.”
Criticism
Several Arbitrum delegates — members who use others’ tokens to vote on their behalf — voiced their concern with the size of the Gaming Catalyst Program.
DAO governance firm GFX, an Arbitrum delegate, has led a late campaign to scuttle the proposal.
“This is an enormous amount of money for an industry vertical with no visible winners,” GFX wrote in the Arbitrum governance forum. “This is highly speculative and looks like a YOLO.”
The comment highlights how few web3 games have reached — and held onto — a wider audience.
The most popular, Axie Infinity, found an audience in the Philippines before crashing amid a $600 million hack and broader lull in crypto markets.
Despite a comeback, deposits in Axie’s blockchain, Ronin, are still a fraction of what they were at their 2021 peak, according to DefiLlama data.
Arbitrum delegate Lito Coen voted against the proposal, on the grounds the upfront sum was too great.
“I would prefer if funding was for one year and or one third of the amount and having the GCP group apply for new funding after,” he wrote on X.
Backing the gaming scheme
Nevertheless, most major Arbitrum delegates back the programme.
“For me the benchmark 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. Those are maybe not your cover-making titles but they are money machines.”
And Arbitrum DAO isn’t the only one poised to invest big in crypto gaming.
Recent gaming funds raised by Andreessen Horowitz, as well as Arbitrum competitors Starknet and Polygon, all topped $100 million.
“In web3, such an initiative is not extraordinary,” Urbanski said.
Aleks Gilbert is a DeFi Correspondent at DL News. Got a tip? Email him at aleks@dlnews.com.
