Insights from Pixels founder Luke Barwikowski
The first era of Web3 gaming was built on bold promises: ownership, interoperability, governance, and play-to-earn as a replacement for traditional user acquisition. Many of those ideas were not wrong — but they were incomplete.
After operating Pixels at real scale through the entire cycle, one conclusion is clear: rewarded play works — but only when treated as a disciplined system, not an ideology.
This article breaks down what failed, what actually worked, and what Pixels is building next.
Early Web3 gaming was driven by the idea of virtual nation building:
Persistent worlds
Player-owned assets
Token-driven growth
Community-aligned governance
On paper, this was elegant. In practice, several assumptions collapsed when exposed to real player behavior, real markets, and real adversaries.
Digital ownership itself wasn’t new. Players have always valued items in games like RuneScape, Diablo, and CS:GO.
The problem emerged when:
Items became fully liquid
Markets became financialized
Players adopted investor expectations
This redirected spending away from developers and toward secondary markets, weakening long-term monetization. “Forever assets” also collided with the reality of live-service games, where balance changes and evolution are unavoidable.
Conclusion: Ownership is real, but the strongest forms of it conflict with sustainable game businesses.
Axie Infinity proved that incentives could attract users at massive scale. It also proved how fragile inflationary reward loops are.
When token rewards repriced, the system collapsed.
The takeaway wasn’t that play-to-earn failed — it was that:
Tokens can buy attention at scale, but poorly designed incentives collapse under market pressure.
Pixels leaned into play-to-airdrop, using points, leaderboards, and delayed token rewards.
The result:
~1,000 DAU → tens of thousands
Zero paid user acquisition
Later growth to 1M+ DAU after Ronin integration
Tokens and rewards functioned as a new growth primitive, not a monetization shortcut.
But this came with an underestimated cost.
