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CoinEx Research

CoinEx Research: A Boon to Wage-Earners Against the COVID-19 Epidemic --The Rise of Gaming Guilds

2021-12-28 11:29:30

The global finance, service, and manufacturing industries have been hit hard by the COVID-19 outbreak in 2020. Frequent quarantines and restrictive exposure measures have devastated most industries that require human contact. Many workers, most of whom are breadwinners, have lost their jobs, and are not well protected by local governments, especially in Southeast Asian countries.

In the Philippines with labor export and tourism as its economic pillars, a large number of unemployed people earned valuable income through Play-to-Earn (P2E) games during the epidemic last year. But as the game gains popularity and the competition grows, players have to deal with such challenges as high investment and low return, reduced revenue, and increased difficulty in gold farming. Take Axie Infinity as an example, a player needs three NFTs to begin playing the game, which equals 8,000 dollars at the current market price. This is almost an impossible barrier to entry for ordinary players. At the same time, the choice of breeding and gold farming strategies is also crucial for players. This is when an organization is needed to lower the entry fee and guide the subsequent gameplay. Blockchain gaming guilds are born out of this unique opportunity.

According to the United Nations, “the world’s population is expected to increase by two billion people, from 7.7 billion at present to 9.7 billion in 2050, before reaching a peak of nearly 11 billion by the end of the century. Half of global population growth between now and 2050 is expected to come from just nine countries: India, Nigeria, Pakistan, the Democratic Republic of the Congo, Ethiopia, Tanzania, Indonesia, Egypt and the United States of America (in descending order of increase). The population of sub-Saharan Africa is likely to double, while the population of Europe is likely to shrink.”

It is clear that third-world countries are the biggest contributor to population growth, and they are the main targets of P2E, with a huge potential for player growth. Some of these countries have very little disposable income per capita, and the 1-2 dollars gained through two hours of P2E video games is very important to them in real life. Public data shows that Axie Infinity has 2.5 million DAUs, while guilds YGG, Ready Player DAO, Merit Circle, and GuildFi have 5000, 1800, 1500, and 1500 players respectively. Axie Infinity's game token, SLP, has been accepted by some merchants and renters in the Philippines. Blockchain games have the potential to make cryptocurrency available to 6 billion people, and players are allowed unbanked access to financial infrastructure through DeFi. 

Unlike the play-for-fun model in traditional games, the P2E model of blockchain games can help gaming guilds grow quickly. Guilds bring an easy-to-play experience to players through NFT lending, scholarships, automated tutorials, gold farming strategies, breeding tutorials, and cloud services, which are the main source of income for guilds. Gaming guilds grow as blockchain games expand. A large number of players and abundant funds make it convenient to enter a new game. Guilds can participate in the game from the private placement round and start the game's ecosystem construction later. Once the game ecosystem is built, guilds can get additional income from the token price and NFT revenue or early mining rewards. Like the blockchain, guilds mostly adopt decentralized governance, and DAO becomes a no-brainer, which means an open and fair fund process. Guild earnings are often reinvested in NFTs or tokens for eco-development, achieving a positive fund cycle. 

Next, we will introduce several mainstream gaming guilds.

YGG (Yield Game Guild)

YGG, a beacon, and a leader must be mentioned. YGG's rise must be credited to the blockade during the epidemic. In May 2021, YGG released a short documentary film titled "PLAY-TO-EARN | NFT Gaming in the Philippines", which tells the stories of Filipinos improving their lives through blockchain games during the pandemic. Seeing playing blockchain games become a way to earn income for Filipinos, the project owner with rich experience in the gaming industry seized the opportunity to establish a gaming guild and complete DAO transformation gradually. YGG's vision is to involve more players in P2E. Through NFT lending, gold farming training, member recruitment, and game profit distribution, it solves some substantial problems for ordinary and new players.

Meanwhile, YGG is also one of the key participants of the Axie Infinity Scholarship program. Responsible for managing and training new players, it lends each new player three NFTs to start the game at zero cost. After the players earn certain SLPs, Axie's reward tokens, the revenue will be redistributed through smart contracts -- 70% goes to the player, 20% to the community manager, and the remaining 10% to YGG. The distributed tokens will be used to purchase NFTs again for attracting more players and expanding the business. That's how a positive cycle of operation is built. This model allows players, guilds, and game owners to get their fair share of the revenue.

YGG is the largest gaming guild in Axie Infinity, and its presence has been expanded to other popular games such as League of Kingdom, F1 Delta Time, The Sandbox, Star Atlas, Illuvium, Thetan Arena, and ZED RUN. YGG adopts a Guild of Guild model for the management of subDAOs. The flexible model allows self-management of subDAOs, which means they can issue their own tokens. But they have to pay a certain fee to YGG. 

Merit Circle (MC)

Merit Circle (MC) is very similar to YGG in terms of functions and operating model, but its DAO governance, profit distribution, and the role of tokens are slightly different. MC originated from Axie 420 Scholarship program, which was designed to make Axie Infinity affordable to those in low-income countries.

In early August 2021, the program raised 200,000 dollars from Flow Ventures and established an incubation platform and partnership. Later, another 1.25 million dollars was raised to cover the scholarship. In September 2021, the program owner officially rebranded the scholarship program as Merit Circle and began operating the guild with another 4.5 million dollars, including 175,000 dollars from YGG. Attention drawn to MC must be credited to 100 million dollars raised on Copper with over 4,500 participants.

Regular players can apply to Merit Circle to join the guild. After a brief interview by DAO managers, they will receive training and tutorials to get started quickly. Meanwhile, MC provides plugins to track player activity for process optimization. MC DAO distributes SLP tokens once every two weeks, 70% of which goes to players and the rest 30% to MC Foundation. In addition, MC creates many subDAOs for different games including Star Atlas, Illuvium, and Nyan Heroes. MC adopts the SuperGuild structure in which subDAOs and main DAO use the same token. This helps to empower MC tokens the best.

AAG Ventures (AAG)

AAG is a fast-growing gaming guild, and the project owner has a favorable background in machine learning, data analysis, basic operations, and web services. What is remarkable is that the guild grows to have 1,500 scholars in Axie Infinite in just seven weeks. With scholars from seven countries in Southeast Asia, South America, and India, AAG boasts an annualized revenue of nearly 6 million dollars. Paid services of AAG include manager commissions, performance reviews, AXS breeding, and NFT trading strategies. An exclusive advantage of AAG is that its wallet supports the conversion of any tokens obtained from any game into AAG tokens, and then into fiat money for one-click withdrawal. Although not yet launched, this feature will be favored by new players who have not been exposed to the blockchain. In other words, they can play games, farm gold, and trade gold without learning blockchain knowledge.

Avocado DAO

Avocado, an upstart in blockchain gaming guilds, has attracted 18 million dollars in its early Series A co-led by Animoca Brands and QCP Soteria NODE (QSN), the highest P2E guild funding ever. Its valuation hits 200 million dollars. The program is expected to offer scholarships to 12,000 players by the end of 2021, and it already has more than 7,000 members mainly from the Philippines and Malaysia. Similar to other guilds, the program focuses on the profit-sharing between players and the guild. A unique thing is that Avocado pays more attention to community education, which includes not only knowledge about blockchain games and gameplay, but also the basics of blockchain, DeFi applications, the development of the metaverse, etc. Instead of being a leading blockchain gaming guild, Avocado has a bigger vision to be a blockchain evangelist. 

GuildFi (GF)

GuildFi (GF), the third key project incubated by Alpha Launchpad, is designed to interconnect games, NFTs, and ecosystems. GF brings players' all achievements and rewards in the metaverse in one place for settlement. GF tracks player activity and establishes Proof-of-Play rewards, which analyze player activity in the game to provide desired rewards. Metadrop Launchpad issues NFTs and tokens according to the player's ranking on GF. As an intermediary to connect all players, blockchain games, and gaming guilds, GF offers them a platform for mutual distribution and profit-sharing. There is a fundamental difference between it and those operation-only guilds mentioned above.

Uber is a good example to understand.

Passenger = Player

Vehicle = Game

Vehicle Owner = Guild

Uber = GuildFi

GF's job is to engage users by subsidizing them in the early stages. When passengers want to go to a certain location (farm gold to make money), the first thing they want is to open GF and find a suitable vehicle (game). The system discovers a suitable vehicle nearby (a game with the right gold farming efficiency and affordable cost). The vehicle owner (gold farming guild discovered) follows the guidance to pick up and drop off customers and provide follow-up services including evaluation, scoring, etc.

We have evaluated these guilds in terms of the number of scholars, number and quality of games, the geographical distribution of scholars, the amount of financing, and the background of institutions and project owners, with a score of 5 out of 5.

Good Games Guild (GGG), BlockchainSpace(GUILD), Rainmaker etc.

There are also many quality gaming guilds that have not been mentioned yet, including UniX Gaming (UNIX), Good Games Guild (GGG), BlockchainSpace (GUILD), Rainmaker, to name just a few.

These gaming guilds are homogeneous, and the key to winning a larger customer base (scholars) still depends on offering quality services. The basic services, games involved, and target customers of these guilds are almost the same, and the only difference is the derivative services available. Improving the structure and logic of DAO, enriching the services provided, covering more regions, and finding and investing in better quality games are key drivers for these guilds.

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