Author: Tweakhash

This is a public announcement for the HYCHAIN community that as of February 28th, 2025, we will sunset the HYCHAIN game publishing arm to focus all our efforts on growing HYTOPIA. This decision is not driven by a lack of market potential for game publishing but rather our conviction in our flagship product – HYTOPIA and a commitment to our long-term vision of building HYTOPIA into a global gaming juggernaut.

Over the past few months, we have been evaluating 2 potential paths for HYCHAIN-  

• Expanding the HYCHAIN publishing arm – Acquiring new titles, growing our team, and pushing for a broader market share.
• Consolidating all efforts to grow HYTOPIA – Doubling down on our flagship product with proprietary technology and deeper moats. 

After a lot of internal review and brainstorming, the consensus was clear: by focusing solely on HYTOPIA, we can create outsized value for employees, investors, token holders, and our community rather than dividing our attention across HYTOPIA and HYCHAIN and producing average outcomes across both businesses. Our renewed vision is to make HYTOPIA the centerpiece of our growth strategy.

Key Hypotheses & Learnings

In the spirit of transparency, we are sharing some of the thinking and key learnings that guided our decision to make it helpful for other builders who want to go down a similar path.

We started HYCHAIN with the hypothesis that we could become a leading web3  publisher for Web2 games by building a suite of web3 infrastructure that eliminates onboarding and technical challenges for web2 developers. This was a fair hypothesis but it was contingent on 3 sub-hypothesis :

• Building proprietary Web3 infrastructure
• Helping Web2 Developers and Solving Core challenges for them
• Acquire titles instead of publishing them and own the end-to-end publishing experience 

Building Proprietary Web3 Infrastructure

Hypothesis – We set out to build Hyplay as a suite of web3 tools to enable frictionless onboarding, smart contract accounts, and developer-friendly APIs to attract web2 developers into the web3 space.

Learnings

• Dilution of resources – Since we were juggling between HYTOPIA and updating, maintaining, and debugging Hyplay, balancing development between Hytopia and Hyplay meant that neither received the dedicated focus required to become a best-in-class product. 
• Better offerings in the market – There were better products in the market that were building this with a singular focus and hence had better, more proven tech than Hyplay.
• Commoditisation of web3 infra – All Web3 gaming ecosystems must integrate frictionless tech to attract web2 players, thus making this heavily commoditized in the future.

We therefore concluded we would be better off outsourcing all commoditized pieces which would not create competitive advantages for us, to external players. We recently made an announcement to use Privy instead of continuing to develop Hyplay, which would allow us to offload infrastructure needs that aren’t critical to proven partners, allow Privy to do what they do best, and free up resources for HYTOPIA. 

Helping Web2 Developers and Solving Core challenges for them 

Hypothesis – Game developers struggling with the aftermath of privacy policy changes, rising UA costs, and higher CPIs lead to difficulty in scaling games to profitability, and looking for alternate high capital, high liquidity environments would benefit from transitioning to web3 markets. 

Learnings

• Overall Market Sentiment: Market research, including the latest report from Pocket Gamer, confirms that escalating UA costs are a major concern for game developers, creating significant barriers for scaling games to profitability in Web2 environments.
• Feedback from Developers: We connected with hundreds of web2 game developers over the last 12 months, understood their pain points, and realized a large section of this market echoed this sentiment and was open to Web3. But they had no idea how to operate in this new market. They would either require complete white-glove support or expect us to acquire/license the game. 

Acquire titles instead of publishing them and own the end-to-end publishing experience 

Hypothesis – Acquiring struggling web2 games and launching them in web3 could be a viable strategy to demonstrate the value of our publishing model

Learnings

We therefore acquired Loot Legends, Dragon Legends, and Supercat Idle IP (our 3rd game which we haven’t publicly announced yet). We shipped Loot Legends, and ran a successful P2A with almost 25k+ active players, built a community of over 150 players, launched Dragon Legends on Telegram but learned many important lessons along the way – 

• Operational complexities – Acquiring games and working on another team’s code turned out to be significantly harder than we thought. We thought Loot Legends would take us less than a month to launch but it ended up taking us 4 to 5 months to be in a production-ready state. We thought Dragon Legends was a simpler game and that we would launch in less than a month, instead, it took us over 3 months just to make the code workable and address the major issues.
• Cost Implications – Prolonged development cycles and higher turnaround time led to significantly higher operating expenses which was not justified by the revenue we generated from Loot Legends.
• Scalability Issues – This model was not scalable until we built an internal capacity of resources that grew linearly with each title we acquired and that acquisition would be a key bottleneck to grow the publishing arm. 

This meant we had to course-correct our publishing strategy from acquisition to other structures of publishing that would be a lower lift for us in terms of development and would allow us to work on multiple titles parallelly. This would be a big strategic shift and meant that we would likely double down on the new approach or consolidate all efforts to HYTOPIA.

Focus, focus, focus 

Historically we have seen that the most successful companies always started by capturing a large market share in a small market before expanding to adjacent categories. Amazon started small with books, then expanded to other categories until it became the “everything store” we know today. Microsoft began with programming languages before dominating operating systems. Riot Games began with a single game – League of Legends – perfecting it and building a massive community before expanding into other titles like Valorant, Teamfight Tactics, and Wild Rift. Valve mastered game development with Half-Life before revolutionizing game distribution with Steam. NVIDIA focused solely on gaming GPUs for gaming in the late 1990s, perfecting their GPU technology for games before moving into general-purpose computing and launching CUDA programming, which paved the path for the AI revolution we see today, etc. 

If we learn from the greatest entrepreneurs, it’s clear that a singular focus on one core market and product acts as a force multiplier. It’s similar to the power law rule in venture capital where one investment tends to dominate the returns of everything else. That’s true inside companies as well. For most projects, each unit of input creates each unit of output. But there are some projects where each unit of input can create orders of magnitude higher units of output. 

By focusing on HYTOPIA and investing in our core proprietary technology, we believe –

• we can build competitive moats and differentiate ourselves from others thereby creating a convex output curve.
• efficiently use our funds to allocate capital which creates the highest value for all our stakeholders. 

Next Steps

We have therefore decided to sunset the HYCHAIN publishing arm effectively as of 28th Feb, 2025, and reallocate all our resources to bolster HYTOPIA, our flagship product. 

• Resource Reallocation – We are redirecting all resources from HYCHAIN publishing to HYTOPIA. The HYCHAIN team will transition into new roles exclusively focused on HYTOPIA.
• Partner Commitments: All existing obligations will be honored during the transition, and our team will engage with each partner individually to ensure a smooth handover.
• State of HYCHAIN Games: We will continue to keep Loot Legends live as there is a small subset of users who truly enjoy playing the game but we will stop actively supporting and upgrading the game. We will be sunsetting Dragon Legends as it still requires considerable resource allocation to make it production-ready. 
• Future Focus: Concentrate all attention on HYTOPIA and build it into a global gaming powerhouse. 

We are incredibly grateful for the overwhelming positive responses we received from the community for Loot Legends.

This has been a remarkable journey with a lot of lessons learned. By sunsetting HYCHAIN Publishing, we are not closing the door but opening a new chapter dedicated to the long-term vision of HYTOPIA. The love and support shown by our community for Loot Legends only reinforces our commitment to deliver better experiences through HYTOPIA and lead the future of Web3 gaming.

On to the next one,
– HYCHAIN Team 

Frequently Asked Questions (FAQs)

1. Why are we sunsetting the HYCHAIN publishing arm?
Our decision to sunset HYCHAIN Publishing is a strategic move. Rather than diluting our efforts across multiple initiatives, we’re consolidating resources to focus exclusively on HYTOPIA – our flagship product – with a greater potential to deliver transformative value for all stakeholders.

2. Does this mean the market for web2-to-web3 game publishing is no longer viable?
Not at all. We continue to believe that a substantial market exists for web2 game developers to transition into web3. Our decision is driven solely by the need to focus on our flagship product, build competitive moats and enhance our proprietary technology through HYTOPIA, rather than by a lack of market opportunity.

3. What happened to HYPLAY and our web3 infrastructure efforts?
While we developed HYPLAY as a key component of our ecosystem, we learned that splitting our resources resulted in average performance. With better alternatives available, we’ve chosen to outsource this piece to focus on HYTOPIA’s growth.

4. How does this change impact our existing game titles like Loot Legends?
We will continue to keep Loot Legends running for its dedicated community. However, future resources and efforts will be reallocated to enhance HYTOPIA. transition. 

5. Will the HYCHAIN blockchain continue to exist and what will it be used for?
We are not moving our underlying blockchain. We are only shutting down the HYCHAIN publishing arm. We strongly believe we need HYCHAIN as our app chain to manage a high-speed, high throughput, low-cost chain that can scale to millions of players for HYTOPIA.  

6. What does it mean for node holders?
Node holders will continue generating token-based rewards as usual. However, the  HYTOPIA gaming ecosystem will largely drive the chain fees as opposed to acquired titles within the HYCHAIN ecosystem.