CryptoKitties

Market position

Described as the first major game to use blockchains and, by its developer, as the world's most used consumer blockchain application outside exchanges, with 3.2 million smart contract transactions and tens of millions of dollars transacted as of late 2018. It is commonly credited, alongside CryptoPunks, Bored Ape Yacht Club and the Beeple "Everydays" sale, with catalysing the 2021 NFT market, and its ERC-721 standard underpins the broader NFT industry. Activity later declined substantially, with fewer than 100 sales a day by 2022.

CryptoKitties combined true on-chain ownership with a lightweight, approachable consumer experience at a time when fungible ERC-20 tokens and ICOs dominated the blockchain space, and it introduced the ERC-721 non-fungible token standard. It avoided the ICO funding model in favour of shipping a product, and its breeding mechanic produced unique, inheritable genomes rather than a fixed collection. It also offered an unusually permissive artwork license ('Nifty') and an open platform that third parties such as KittyHats could build on.

Technology

The game runs on Ethereum. Each cat is a non-fungible token implemented with the ERC-721 standard, authored by Dapper Labs CTO Dieter Shirley, and ownership is tracked by smart contracts, meaning cats cannot be replicated or transferred without the owner's permission, even by the developers. A cat's visual appearance ("phenotype") is determined by immutable genes ("genotype") stored in the smart contract as a 256-bit genome; the artwork itself sits off-chain and is owned by Axiom Zen. Third-party developers extended the platform: KittyHats, built by Dan Viau and Jordan Messina, issued ERC-20 accessory tokens that CryptoKitty owners could assign to their cats, an early demonstration of tokens owning tokens that helped inspire the ERC-998 composable NFT standard.

Go-to-market

Direct-to-consumer launch of a playable web product following a hackathon debut and closed beta, amplified by viral growth and mainstream press coverage (The Wall Street Journal, BBC, The New York Times, Fast Company, VICE). Growth tactics included limited-edition "Fancy Cats" and "meowtations" discoverable in the genome, celebrity-branded cats such as the Stephen Curry collaboration, brand and entertainment partnerships pursued by Dapper Labs, a developer program and public API, and a launchpad and seed fund for third-party teams.

Consumer players and collectors, including audiences new to blockchain, who hold Ether wallets; the game was positioned to appeal to a broad mainstream audience rather than crypto specialists. Third-party developers also build on the platform via its public API and developer program.

Geography

Developed in Vancouver, Canada, where both Dapper Labs and Axiom Zen are based; the game is accessible globally via Ethereum. Following its November 2018 financing, Dapper Labs said it would expand locally and globally, including establishing a U.S. subsidiary and adding hires to its Canadian office.

History

After the October 2017 hackathon debut and the November 2017 public launch, the game's December 2017 popularity congested the Ethereum network, driving transactions to an all-time high, slowing processing and raising gas costs; at one point it accounted for about 25% of Ethereum network traffic, and miners raised the gas limit in response. Genesis, the first high-selling cat, sold for 246.9255 ETH (about US$117,712) in December 2017. In March 2018 the project was spun out of Axiom Zen into Dapper Labs with a $12 million raise, and in November 2018 Dapper Labs raised a further $15 million. A CryptoKitty sold for $140,000 on May 12, 2018. In May 2018 the first celebrity-branded CryptoKitty was launched with basketball player Stephen Curry, who received three specially imaged cats and auctioned the first; the company later suspended the auction, saying Curry was less involved than initially thought, and was subsequently sued for trade secret theft over the Curry collectibles, with the court ruling in the company's favour. By October 2018 one million cats had been bred across 3.2 million smart contract transactions. In 2018 the game was used by the German museum ZKM Center for Art and Media Karlsruhe to showcase blockchain technology. Until November 2018, Axiom Zen intended to keep releasing a new cat every 15 minutes. By 2022 activity had fallen to generally fewer than 100 sales a day, totalling less than $10,000.

Risks & controversies

The game's December 2017 traffic congested Ethereum, slowing transactions and raising gas fees, and raised concerns it was crowding out other businesses on the network. The May 2018 Stephen Curry celebrity cat auction was suspended after the company said Curry was less involved than it had initially believed, and the company was sued for trade secret theft over the Curry collectibles; the court ruled in the company's favour, finding the defendant, not the plaintiff, had first developed the idea of licensing digital collectibles using celebrity likenesses. The artwork for the cats is held off-chain and owned by Axiom Zen rather than by token holders. Trading activity declined sharply, to generally fewer than 100 sales a day worth under $10,000 by 2022.