Introduction

Axie Infinity, having pioneered the concept of Play-to-Earn, experienced a meteoric rise in Q3 of this year. It now sits second only to Ethereum itself in terms of revenue generated. It’s brought significant attention to crypto gaming as a sector and has become a strong indicator for its overall health. The staggering growth of its economy and user base has prompted many to draw parallel’s with the hockey stick growth of games like Candy Crush, at the advent of free-to-play mobile. Axie is actively onboarding millions of players into the blockchain space, validating the thesis that gaming may well be the trojan horse for blockchain adoption globally. For a deeper dive into Axie’s rise, check out our multi-part Axie Infinity report series which explains some of the core mechanics behind this fascinating virtual economy.

In order to capitalize on this new frontier in gaming, we are seeing the emergence of guilds that deploy a number of yield-generating strategies across these economies. Generally speaking, guild activity manifests across scholarship provision, investing in core game assets (NFTs to be deployed + game tokens themselves), and even allocating resources to new guilds, as pioneered by Yield Guild Games (YGG).

Yield Guild founded the concept of a play-to-earn gaming DAO and as such has benefitted from their first-mover advantage. Having found robust institutional backing early on with successive investment rounds led by Delphi, BITKRAFT, and a16z, it has emerged as a strong index play on this emerging sector as we shall explore below. Not only have they managed to establish themselves as a leading scholarship provider in Axie Infinity, their investment arm has secured prime assets across a number of leading blockchain games as well as making seed investments in new projects looking to launch. As the most well-known P2E DAO out there, they are able to secure preferential terms as an early source of player liquidity for games looking to bootstrap.

Since inception, Yield