Around the block Research from Coinbase Ventures reveals key trends in encryption. In this edition, Justin Mart, Connor Dempsey, with Hassan Ahmed Explore NFT games and games to earn economic growth. Also, take a look at NFT marketing activities and Poly Network exploits.
We are at an exciting time in the field of encryption: encrypted networks are booming into a mature virtual economy. Nothing shows this better than NFT games.
The forefront of NFT games is Axie Infinity and its game earning model: a model that pays people cryptocurrency to play interesting video games.With the end 1 million daily active users, Axie Infinity is very popular in emerging markets and has shown its potential to become a Trojan horse for the next generation of encrypted users.
Most importantly, Axie Infinity and games that make money from games have spawned its own booming financial services industry.
The rise of Axie Infinity
In the past 30 days, Axie Infinity’s fee income reached 343 million U.S. dollars. According to Token Terminal, this is more than any encryption application or protocol outside of the Ethereum blockchain.
So where does this income come from?
How Axie Infinity generates revenue
The Axie Infinity economy consists of a governance token (AXS) and another token called Smooth Love Potion (SLP), which is used as an in-game currency, as well as an NFT representing game characters and virtual real estate.
The game itself is often compared to Pokemon, in which players fight with other players’ “Axies” (pictured below). Different Axies have different advantages and disadvantages. The strategy of the game boils down to playing Axies’ advantages better than their opponents. Players get SLP rewards by defeating opponents. In addition, players can get additional SLP by participating in daily missions. Axies can also be “bred” together to create new Axies, and then sold to other players for profit.
Every time an Axie is traded, a piece of real estate is sold, or two Axies are cultivated, the agreement will charge a fee based on a combination of AXS and SLP.This income did not go to the developer, but was deposited in the Axie treasury, which has swelled to nearly $600 million.
Emerging market phenomenon
Although the protocol revenue figures themselves describe the emergence of a new breakthrough encryption application, what is even more exciting is Where Axie Infinity is taking off: In developing countries, players can usually earn more than daily work by playing games and selling SLP in their national currency.
It is estimated that 50% of daily active users (DAU) are from the Philippines, and the game is becoming more and more popular in other emerging markets such as Indonesia, Brazil, Venezuela, India and Vietnam.
Axie was created by game developer Sky Mavis in 2018. After some players realized that they could earn a legal income by playing games, they began to gain organic appeal in the Philippines in early 2020. When the Covid blockade hits and many people are unemployed, more people are encouraged to give it a try.A documentary about the growth of the game is called Make money while playing It went viral in May 2021, and DAU rose vertically shortly after.
Metaverse’s business model
Unlike many mobile games, Axie Infinity is no Play for free. First, the player needs to obtain 3 Axie Infinity characters. In the early days of the game, the average selling price of Axie was less than $10. Based on the game’s rapid growth and broader NFT rebound, Axie’s current average selling price is close to $500. Encryption Slam.
Given Axie’s base in the Philippines and other emerging markets, a $1,500 entry tag is impossible for most potential players. In order to alleviate this barrier to entry, an informal market has emerged in which NFT owners begin to provide players with the NFT needed to play games in exchange for their bonuses. This is done through a QR code, allowing players to use Axie NFT in the game without the lender having to give up ownership on the chain.
This informal market has developed into a formal profitable financial services sector. The largest and most famous participant is a project called Yield Guild Games.
Proceeds Guild Game (ASB)
Founder Gabby Dizon likes to say that Yield Guild Games is part of Berkshire Hathaway and part of Uber.
Just as Berkshire Hathaway is a holding company with many businesses, YGG is essentially a holding company that earns game assets through games. Starting in 2020, they have been buying ownership shares that generate NFT revenue, governance tokens, and promising game projects and agreements.
Similar to Uber matching people who want to make money with people who need to ride a car, YGG matches people who want to make money through the game with the NFT they need to earn in the game. In many parts of the world, people choose to work with YGG instead of Uber simply because it pays more.
YGG recently posted July Assets and Treasury Report This provides an interesting glimpse into the new business model that NFT and game earning games are creating.
There are scholars and community managers in YGG. Scholars receive NFT, and then they put it into work to earn cryptocurrency. Community managers recruit and train new scholars. 70% of the prize money is donated to scholars, 20% is donated to community managers, and 10% is donated to the Yield Guild Games vault.
According to the report, 2,058 new scholars joined YGG in July, bringing the total to 4,004. In the same month, YGG scholars generated 11.7 million SLPs through playing Axie Infinity, which is equivalent to more than $3.25 million in direct income. From April to July, Scholars and community managers have earned a total of 8.93 million US dollars.
From all the SLP income received by scholars, YGG’s income in July was US$329,500, and the total income since April was US$580,000. YGG’s current expenditure exceeds income because they spent US$1.62 million in July alone to “cultivate” new Axie to meet academic needs (cultivation can be cost Each Axie ranges from US$200 to US$1,200).
YGG Ministry of Finance
The YGG vault is composed of tokens and stablecoins in the wallet, NFT, and venture capital in various games.This project consists of a $1.325 million seed round By Delphi Digital and others $4.6 million in a round From a16z. They also raised $12.49 million through the sale of YGG governance tokens, while holding 13.3% of their outstanding supply.
As of the end of July, YGG wallet holdings amounted to 415 million U.S. dollars, most of which came from YGG tokens (373 million U.S. dollars). YGG tokens are part of Yield Guild Game’s transition to community management DAO plan.
The price of YGG tripled in August, which means that their treasury currently exceeds $1B.
Most of YGG’s funds are used to purchase NFTs, which can earn revenue from the game. By the end of July, YGG Treasury had accumulated 19,460 NFTs in 12 game earning games, valued at more than 10 million U.S. dollars. Axie Infinity NFT accounts for nearly 90% of this value.
YGG also made early investments in 8 games to earn games through SAFT (Simple Agreement for Future Tokens), and locked in about $1 million for blue-chip DeFi project income agriculture.
Play games in the real world to make money
A key element of the YGG model is that players can lend NFTs with zero downside risk without having to invest any upfront funds. In return, they handed over 30% of the bonus, but retained the majority-this is the key to attracting a new class of crypto users who have historically been overpriced.
In addition to the wealth created by Axie Infinity, the popularity of the game has also become a means to get a large number of new users to use encrypted applications. Since these 1 million users interact with cryptocurrencies, NFTs, digital wallets, and DEX, it is not difficult to treat this new group as natural users of other DeFi and Web3 applications.
Sustainability of playing and making money
If Axie Infinity is its own digital nation, then game developer Sky Mavis is its Federal Reserve. When the Federal Reserve has various tools to influence the economy, Sky Mavis can adjust the issuance rate of SLP and breeding fees to maintain the health of the Axie economy. Just like the real economy, the digital economy must consider the impact of inflation.
Due to the high demand for Axie NFT, ETH has been flowing into the Axie economy. The increase in demand for Axie NFT has led to an increase in the price of Axie NFT. Higher NFT prices make breeding more profitable. Breeding requires payment of fees in SLP and AXS, leading to an increase in the price of tokens. As the price of SLP increases, the game becomes more profitable, encouraging others to join. There is no doubt that this is a strong positive feedback loop-but what if market conditions change?
Winning Axie Infinity battles and missions will generate SLP, thereby increasing SLP supply. And because breeding is priced at SLP, the additional SLP supply equates to cheaper breeding costs to create a new Axie NFT, thereby increasing the supply of Axie NFT. These dynamics may have an impact on the NFT market price, which in turn may have a direct impact on the player’s economy-a possible negative feedback loop.
Ultimately, Sky Mavis must control SLP supply while improving overall gameplay to maintain its player economy and ETH deposit growth. They must also use pure consumer players to offset the number of players seeking profit—that is, playing for fun.
Play long-term games
While Sky Mavis strives to keep the Axie economy strong, Yield Guild Games hopes that the entire game will continue to grow. By copying its Axie Infinity model in the new game, it tried to build a game to earn an empire. In the long run, the founder Gabby Dizon regards YGG as a “metauniverse recruiting agency” and ultimately competes with Uber in the world for labor.A future Ready player one Millions of people make a living in the digital world to pay for the physical world.
The last sentence
With the explosive growth of Axie Infinity’s revenue, the emergence of DAOs such as Yield Guild Games, and the emergence of a large number of games to make money, it is clear that this trend has gained a foothold. With the help of DeFi, NFT and now crypto games, we are rapidly evolving, going beyond the original crypto killer application of speculative trading, and entering the world of expressive new applications and models. We are in a fascinating era because the utility phase of cryptocurrency is advancing in full force.