GUNZ token: Is Web3 Gaming Doomed?
Gunzilla and its leading title “Off The Grid” were conceived in March 2020, when gaming veterans Vlad Korolev and Alex Zoll united forces to create a AAA game that featured cutting-edge technology, immersive storytelling, and player-driven economies. Blockchain technology was the core infrastructure component that they decided could make their vision come true.
Their fundraise showcases the expectations and trust from investors, starting with a first fundraising round of $25M from Gamegroove Capital in 2020, they have consistently onboarded the most prominent investors in the space, including The Spartan Group, Animoca, Jump, and more. After all, having secured $100M showcases the solid credibility and reputation, as well as the hopes behind Gunzilla.
More recently, they pivoted into a gaming L1, allowing them to host not only their leading title, Off The Grid, but also host many Web3 games. The vision is for the GUNZ Blockchain to allow AAA game developers to use GUNZ as the base layer for their games, ensuring the elimination of significant upfront costs and reducing technical complexities, with the blockchain’s core features.
GUNZ Blockchain
Gunzilla’s GUNZ Blockchain is built as an Avalanche Subnet (now deemed Avalanche L1, since the “Etna” upgrade), giving them a customizable, application-specific blockchain with the scalability needed to support high-performance AAA games. Subnets allow developers to configure parameters like gas fees, tokenomics, and consensus rules, providing more flexibility than deploying on a general-purpose L1 or L2.
By building on Avalanche, Gunzilla avoids congested shared blockspace while benefiting from Avalanche’s infrastructure and tooling. This structure also allows GUNZ to operate with near-instant finality and low fees, crucial for smooth in-game experiences, by operating with its own unique validator set.
Physical Validators on GUNZ correspond to a subset of Avalanche validators, meaning that to become a validator, a node must first stake a fixed amount of AVAX on Avalanche’s primary network, since GUNZ inherits the core validator onboarding process from Avalanche. Validators then go through a standard onboarding process to sync with the current network state and eventually participate in GUNZ’s consensus. Although they use Avalanche’s underlying consensus and infrastructure, they earn rewards in both AVAX (for Avalanche-level validation) and GUN (from transaction fees on GUNZ).
- GUNZ provides AAA game developers a range of products to help them developing atop it:
- GUNZ Chain | The core Avalanche Subnet powering Gunzilla’s ecosystem.
- GUNZ ID | A frictionless onboarding system enabling social logins and Web2-like UX.
- GUNZ Wallet | Integrated wallet for managing assets, accessible without needing external extensions.
- GUNZ P2P Marketplace | A platform where users trade in-game assets using $GUN.
- GUNZ NFT Minting Engine | A unique NFT minting engine where 10,000 Validator NFTs play a crucial role in generating all in-game assets
- GUNZ SDKs | Tools for developers to easily integrate blockchain features into games, targeting AAA studios looking to enter Web3
- To power the GUNZ Blockchain, they have launched GUN token, which recently made its debut in Tier 1 exchanges like Binance. It quickly reached a market cap of approximately $60 million to $68 million within hours of its launch
The Gist: Token has lost 56.5% of its value since launch
Despite launching on Tier 1 exchanges and being supported by major VCs with a massive fundraise amount, $GUN has dropped over 56% from its launch price. For context, the token hit a market cap of around $68M within hours, but has since steadily collapsed.
How does the leading Web3 title not manage to sustain some of its price even after launching on a low float, on tier 1 exchanges, and having raised over $100M? One main reasons: Bad tokenomics and user alignment.
Token Utility
The GUN token is part of Gunzilla's strategy to integrate blockchain technology into its gaming ecosystem, particularly for its "Off the Grid" battle royale game, allowing players to trade in-game assets and participate in the game's economy. In the whitepaper, Gunzilla states that the tokenomics were designed to ensure long-term sustainability, ecosystem growth, and fair incentives for all stakeholders. Is this true?
GUN is the native currency and is used in all ecosystem transactions. Its utilities are:
Gas Fees
Validator Rewards
In-Game Payments
Smart Contract Execution
Governance (although not deeply explained)
Tokenomics
Based merely on the token allocations, there is an incentive misalignment
Gunzilla wants their token to have long-term sustainability (consistent price action) and for their game to be actively played for the long-term
On the other hand, users want to play a good game, which Gunzilla has, but they don’t inherently care about the token. Sure, having to hold the token is nice if its value appreciates. However, the token going up in price is not of interest for the average player, only for avid Web3 Gunzilla supporters, but not the average player.
On another hand, the token allocations don’t reflect Gunzilla’s desire for long-term sustainability. Investors were allocated a massive 37.8% of the total supply. That’s not only a concern, it is straight-up a red flag, especially for a token that’s meant to power an in-game economy and reward players. In contrast, only a mere 10% was allocated to Platform Rewards for players, the very users who are supposed to bring life to Gunzilla’s ecosystem.
There’s an additional 4% marked as “Community Incentives,” but this was entirely used for Binance Launchpool, not organic community growth or meaningful campaigns (new research coming up). Effectively, players and the community have only been allocated 10% of the total supply for participation and rewards - pretty insulting for users, if we’re being honest.
13% is kept within the Treasury, this is managed by the team and could be used for long-term initiatives
Another 9% for the GUNZ Foundation - which oversees ecosystem growth and fund usage
12.81% for the team and 5.29% for advisors, 18.1% in total for the team.
In the end:
37.8% allocated for investors
14% aimed for community (4% of which is for Binance Launchpool)
3% for liquidity
18.1% for team (founders, team, and advisors)
22% kept within the project (treasury and GUNZ Foundation)
Another red flag in the token design is the vesting schedule. At launch, only 6.03% of the total supply was in circulation, they went for a low float model that typically helps stabilize price early on, at least in theory. But when most of the supply is locked with cliffs, it sets the stage for future volatility rather than long-term sustainability.
The majority of allocations have a 12-month cliff, meaning there’s virtually no unlocking for the first year. But once that cliff ends, a massive wave of selling pressure can be expected around month 12. This kind of delay doesn’t prevent dumps, it just compresses them into potentially a more brutal dump, especially if most of the tranches’ cliffs end at once (which they do).
The team’s allocation comes with a 30-month cliff, which on paper shows long-term commitment. But given that the team has already been working on Gunzilla and Off The Grid for years, it’s more of a symbolic gesture than meaningful or impactful.
In terms of token emissions during the first year, the only two sources are:
KOL Round: 6-month cliff followed by 6-month vesting | an upcoming dump in month 6.
Platform Rewards: 1-month cliff and 12-month linear vesting | aimed at players, but with a much limited supply.
So while the project delayed a majority of token unlocks, the structure doesn’t protect long-term holders, it just builds up pressure and schedules the dump for March 31st, 2026.
Token Flow
1. Once in the game (Off The Grid), users spend $GUN tokens for paying for gas fees, purchasing in-game assets, and crafting or upgrading those assets (such as weapons, skins, etc.).
2. Users can buy and sell assets in the game with $GUN in the marketplace, which charges transaction fees in $GUN.
3. GUN from transaction fees flows into the treasury, which is managed by the GUNZ Foundation, which is a non-profit entity responsible for overseeing and funding ecosystem expansion, governance, and development.
4. Additionally, users or entities may decide to become validators.
- Physical validators are required to stake AVAX on the GUNZ Avalanche L1, for which they earn AVAX and GUN rewards
- NFT Validators must stake GUN, which is slowly deducted by decoding HEXs. They get GUN rewards from transaction fees, and the deducted tokens are burnt.
5. There will be a buyback mechanism that buys GUN Tokens from the market using 30% of Off The Grid’s revenue, and the tokens will be distributed to active players.
6. In the end, token holders can decide whether they want to hold on to their tokens or sell them on an exchange.
GUN Sinks and Faucets
Overall, Gunzilla has come up with predictable sinks, meaning that new supply will mainly come through validator incentives and reward programs. Overall, there’s a greater number of sinks than faucets, but the sinks’ ability to offset the faucets relies largely on actual active usage, whereas the faucets are mainly arbitrary, meaning that a disbalance could happen in usage is not considerable.
Token Sinks
These are the utilities that will reduce GUN’s circulating supply by consuming or locking it temporarily through activities. In GUNZ’ case, there are five main sinks:
1. Gas Fees: All on-chain actions and smart contract executions on the GUNZ chain require $GUN, which users must pay to validators. This constant demand provides a baseline sink for GUN, but is largely based on user activity.
2. In-Game Payments: Players use $GUN to purchase in-game assets or upgrades, creating recurring transactional demand as gameplay activity increases.
3. Smart Contract Execution: Every interaction on the GUNZ chain consumes $GUN through gas, adding friction to spam and reducing token velocity.
4. Buyback Model: Gunzilla will use 30% of Off The Grid’s revenue to buy back GUN tokens from the market. However, these tokens will be distributed to active players, eventually acting as a faucet.
5. NFT Minting Engine: the most innovative sink for GUN, fully explained below, but it’s not only a sink, it reduces the supply too.
Token Faucets
Faucets are all the mechanisms that introduce new GUN tokens into circulation:
1. Validator Rewards: Validators earn $GUN for processing transactions and maintaining consensus on the GUNZ subnet. These rewards come from gas fees paid by users.
2. Platform Rewards Pool: 1 billion $GUN (10% of total supply) is allocated to platform rewards, likely distributed over time to incentivize player actions or participation.
3. Community Incentives: A designated portion of the supply is reserved for airdrops, onboarding campaigns, or gameplay incentives to grow the user base and drive activity (as mentioned before, only 10%, or 1B tokens).
NFT Minting Engine
GUNZ features an NFT minting engine that consists of 10,000 Validator NFTs, which are responsible for generating all in-game assets and represent a validator slot on the GUNZ subnet. NFT Validators are non-transferable and are earned of granted, and basically, it gives an entity or user the right of running a validator node on the GUNZ Avalanche subnet.
Validator NFTs have five rarity levels, each with a different power level that determines its chance of being selected for a decoding transaction. Additionally, each Validator NFT tier has a varying hashpower and commission rate.
In the game, players must decode a HEX in order to mint in-game items (NFTs).
When a player decodes a HEX, a validator is randomly selected to process or mint the item.
For this transaction, the selected validator earns a commission paid by the player. The total validator rewards are approximately 30% of all revenue generated by Off The Grid.
Interestingly, Validator NFTs require to stake a specific amount of GUN tokens from its activation. Every time the validator is selected to decode an in-game item, a portion of its staked GUN will be automatically withdrawn from the validator and burnt, effectively making the economy as deflationary as the user base is active. Once a Validator NFT runs out of GUN tokens, it becomes ineligible to decode new HEXs
What Did Gunzilla Get Right?
We’ve focused on the bad, has Gunzilla done anything good developing these tokenomics? To be fair, not everything’s bad:
The NFT Minting Engine is an innovative token sink through which in-game assets now have a cost for creation, denominated in GUN. This sink also means that token demand will scale with actual user activity.
Using an Avalanche L1 is a smart move to avoid shared chain congestion and maintain control. It’s a permissioned chain, meaning that only quality games will be able to launch on the GUNZ Blockchain, ideally creating the most high-quality gaming ecosystem in Web3.
The long Cliff for Team (30 months) signals long-term commitment, even if it’s unclear how impactful it really is.
There’s a circular token loop since the token is used across spending (in-game), validating (staking), and governance. Additionally, it will also be used by any new games that build on GUNZ.
GUNZ Products like the GUNZ ID, Wallet, and minting engines help bridge Web2 game developers to Web3.
In the end, Gunzilla built a solid game, a decent tech stack, and got the backing. But the token design is still, favoring investors and the core team, leaving minimal upside or reason for real users to hold $GUN
If a project with a AAA game, top-tier infra, and a $100M+ bank struggles to design sustainable tokenomics, what hope is there for smaller Web3 games?
Web3 gaming isn’t doomed. But Gunzilla is the prime example that tech isn’t enough. You need user-aligned economics and above all, tokenomics that incentivize long-term engagement, not just favor your investors.