BEAM: A Better Web3 Gaming Index

A Decentralized Gaming Venture Fund

The web3 gaming sector continues to attract a significant following of enthusiasts who believe in its potential to revolutionize the gaming industry. The core appeal lies in the blockchain's ability to provide true ownership of in-game assets and facilitate real in-game economies, coupled with the immutability and verifiability inherent to the technology. While some early models, such as virtual land sales and NFT-gating, have faced adoption challenges, the industry is pivoting towards more accessible approaches. Free-to-play games incorporating microtransactions are emerging as a promising direction, with platforms like Telegram experimenting with blockchain-enabled mini-apps that explore these new paradigms. This shift is driven by both individual and institutional investors seeking exposure to the category, motivated by the potential for outsize returns similar to Axie Infinity's remarkable performance in 2021. A prime example of this evolving landscape is Merit Circle, now known as Beam, which has transformed from its origins in the Axie420 Scholarship to become a key investor across top web3 gaming and related cryptocurrency projects. Beam's journey reflects the sector's broader shift from pure play-to-earn models to a more comprehensive approach to web3 gaming ecosystem development. Positioned as an index bet on web3 gaming, Beam leverages chain-agnostic infrastructure and marketplaces alongside a diverse portfolio of investments. This strategy creates a potential flywheel effect where partner projects utilize Beam's tools, marketplaces, and community, further driving the ecosystem's growth. Ultimately, Beam exemplifies the evolving nature of web3 gaming investments, functioning as a decentralized crypto gaming venture fund with built-in mechanisms to capitalize on a gaming sector boom.

Pure Infrastructure Models are Unattractive

The current landscape of blockchain gaming infrastructure reveals significant challenges in value capture through traditional blockspace rent/fee models. This is evident in Avalanche's Pay-As-You-Go model, where an average subnet implementation costs approximately $320/month – a figure that would require either massive subnet adoption or significant validator increases to generate meaningful revenue. Similarly, Immutable has only generated around $14M in protocol fees from NFT trading across its lifetime volume of ~$700M on Immutable X, and they are also currently fully subsidizing the gas costs on their zkEVM chain to encourage user and developer adoption. Ultimately, these models rely heavily on a “come for the tool, stay for the network” framework where the goal is to establish a network effect centered around a vibrant ecosystem of games, onchain economies, and most importantly users and communities. 

Moreover, a fundamental challenge lies in the concentration of value within the gaming industry itself. Historical data from the U.S. market demonstrates this clearly: between 2009 and 2022, the best-selling game title came almost exclusively from either Call of Duty or Rockstar Games franchises. This concentration is equally apparent in mobile gaming, where the top three games per genre typically capture about 40% of that genre's revenue. Successful game titles can monetize through multiple channels – from initial purchase prices to microtransactions and marketplace fees – while infrastructure providers compete primarily on cost, consider our recent DA review. In line with the “Fat App Thesis”, these trends imply that infrastructure projects without direct stakes in successful games may struggle to capture significant value as top game developers will attract a majority of users and revenues and are not necessarily beholden to a particular blockchain stack, execution environment, or DA provider. While Beam is also developing web3 gaming infrastructure and tools, we see this as somewhat additive and synergistic to the treasury investment portfolio.

Beam’s Multi-Pronged Approach