Blokchain gaming tokens have been getting a lot of attention in recent weeks due to the outsized returns compared to other asset classes during this bear market.
We started off with the sci-fi TCG Parallel and the launch of its ecosystem token, PRIME. If you timed your entry perfectly and sold just after the beta launch, you could have made as much as 280% ROI. It should also be noted here that you would have made considerably higher returns if you had also followed the advice in this report.
PRIME was followed by the BIGTIME airdrop, which caught many off guard when the token pumped almost 300% in 24hrs.
We then saw the social metaverse platform ZTX ride the wave and airdrop ZTX tokens to NFT holders who had played as little as 2hrs in a recent playtest. These fortunate stakeholders received an average of 5,200% returns for their efforts.
I would now like to share my thoughts on 3 crucial questions many are asking themselves:
- What are the key criteria in identifying these projects early, and how long will this remain meta?
- What projects could yield similar returns in the near future?
- How sustainable are these token pumps, and what long-term effects will they have on the assets and the game’s future success?
What do all 3 projects have in common?
- They all have at least one pre-allocated medium of exchange token
- Web3-style community building
- Strong social metrics
- Generous community token allocation/unlock at TGE
These will act as the core criteria for evaluating other gaming projects.
It is important to note that, similar to the gaming bull of late 2021, the most important factor for success has been a mix of FOMO and hype. If this is simply a trend born out of bear market boredom, it could die out at any moment. I will be looking for several other tokens to perform similarly based on the above 4 criteria before increasing my conviction.
This is a tricky question and without further validation, I am hesitant to recommend any projects.
That said, based purely on the above 4 criteria, the projects I will be closely keeping an eye on are:
- Matr1x: Fire (T2)
- Fusionist (T2)
- Mahjong Meta (T2)
- Shrapnel (T2)
- Midnight Society / Deaddrop (T2)
- Grapes (T1)
- Memeland (T1)
- Digi Daigaku (T3)
T1 = Token launch imminent (these will be the projects I use to validate whether or not this trend continues)
T2 = Token estimated for Q4’23 – Q2’24 (they may move up the token launch if multiple projects have a successful token launch)
T3 = Speculation (you best believe Gabe is watching what’s going on and will adjust his GTM strategy accordingly)
Note that if there is demand from our readership, I don’t mind putting some more time into finding more potentially successful tokens (subject to how long this trend continues).
The short answer is “very unsustainable.”
This is not to say these projects have terrible token/economy designs. The main concerns I have are that they either have too large of an impact on the core player experience or the valuations are a misrepresentation of the project’s current performance.
As highlighted in my previous AF post, Bigtime’s airdrop completely changed early playtester motivations from fun into work. The team has since gone on to make 2 significant nerfs to earning, but the damage is done. Current player cohorts are all focused on maxing out their potential earnings.
Similarly, although Parallel’s token model is completely optional and will have minimal negative impact on the core player experience, at a current FDV of $357M, Parallel is valued at 22% of Konami Group Corp ($KNAMF: Mkt Cap=~$7.7B, Qtrly Rev=~$484B), a publically listed developer of 2 of the largest TCGs. Konami’s Yu-Gi-Oh! Duel Links and Yu-Gi-Oh! Master Duel are by no means massively successful, sitting at roughly 3.2k and 17.1k MAU, respectively, but they have certainly performed much better than a blockchain game currently in open beta (bear in mind this comparison is between 1 TCG – Parallel, and the entire Konami Group, with its more than 20 subsidiaries).
Ultimately, the more unsustainable the model or valuation, the higher the likelihood that asset prices are the result of speculation. As demonstrated during the previous cycle, speculative price pumps and a lack of solid fundamentals eventually lead to crashing asset prices.
In summary, although the market is likely irrational, speculative hype and FOMO may lead to future (short-lived) profits. Degens should try their best to remain diligent and wait for further validation before apeing in.
I hope this post provides you with a little more context as well as some projects worth keeping an eye on. I’ll likely follow up on this in a month or 2 to see what’s changed. Needless to say, none of this was investment advice, and I hold no material positions in any of the projects listed above.