Polychain Capital among group betting $20 million that first-person shooter ‘Shrapnel’ can succeed where other Web3 games have failed

The round, which also saw investments by Griffin Gaming Partners, Brevan Howard Digital, Franklin Templeton, IOSG Ventures, and Tess Ventures, has been allocated almost entirely to developing the game, CEO Mark Long told Fortune. The company also raised $10.5 million in late 2021.

A paid early access version of the game is set to launch in December, said Long, with a free-to-play open beta expected by August.

The team, which was spun out from HBO Interactive in 2020, has doubled to nearly 70 members over the past year, and it’s put significant effort behind building out blockchain-based features to help distinguish the title from others in its category, such as Escape from Tarkov.

The first-person shooter puts players into an uninhabitable stretch of Earth called the Sacrifice Zone, where nations and corporations have assembled teams to recover a mysterious material. The object of the game is to collect loot and escape via an extraction without being killed.

Although not all features will be immediately available, players will be able to stake crypto to participate in the development and promotion of unique maps that players can create through a limited version of Epic Games’ Unreal Editor, Long explained. The blockchain also enables players to create tournaments where prize pools are divvied up automatically via smart contracts.

That infrastructure similarly backs transactions on the Shrapnel Marketplace, where players can mint in-game items that can be traded for cryptocurrencies or fiat. Using the company’s proprietary Web3 API, GameBridge, players also can deconstruct items, for example, like taking the scope off a gun and selling it individually.

Despite widespread pushback from gamers resistant to blockchain integration, especially when it came to NFTs, Long said the company isn’t downplaying its Web3 identity.

“Our blockchain integration is all about the creator economy—it’s not about monetization of the player,” he said.

He added that the technology is a great fit for gaming, especially given that millions of dollars are being spent annually on in-game items. Without the blockchain, Long points out, those millions are being spent by gamers on items that belong to the game creator, not them.

“I think it’s just proof of the need for the digital security and protections that blockchain will provide,” Long said.

The full capabilities of the Shrapnel Marketplace will be available abroad, but in the U.S., players will have to go through a know-your-customer process before selling items for fiat currencies. U.S. players can still use in-game items they’re awarded, but they can’t fully participate in the blockchain-based economy without a KYC check.

“It can be a big friction,” Long said. “Players just don’t put up with anything like that, but if you have a big economic incentive—like $20 to $60 worth of stuff—I think they’ll decide it’s okay.”