Avatar Weekly Research Report: Sector Analysis
Analysis of Crypto Sectors
GameDAO
Projects worth watching: Yield Guild Games & Merit Circle
Yield Guild Games (YGG) provides NFT loans to borrowers. Members can take guild missions to gain rewards. Merit Circle launched a staking pool to reward NFT holders, which shows a transition of NFT. YGG also airdrops NFTs to users who stake more than a given amount. YGG has not yet released its NFT functionality, but there’s a lot to expect.
Gamefi
Gamefi projects launch one after another after many made a fortune in CryptoMines. Bnbheroes and Cryptogodz gamified traditional mining. Current games on the market are less than mediocre in terms of gameplay, but they do offer steadily growing rewards. They adopt lock-up and auto-compounding mechanisms to improve profitability and prevent collapses. It is a bit like DeFi 2.0, or some GameFi experiment. We can wait and see how these game mechanics work.
Metaverse
After a few rounds of ups and downs, we can be sure that metaverse will be part of the next rally. Digital land sales has reached consensus. On the Metaverse Index (MVI), Sandbox (SAND) is worth watching. There is an increasing number of MANA withdrawers at exchanges. A likely explanation is that MANA is withdrawn to be stored in cold wallets or used in on-chain applications. The outlook is good in the long term. The number of wallets holding MANA is also on the rise.
NFT
If you take a look at the figures, you’ll see a dip in NFT transactions and sales volume, but NFT trading platforms are having more customer registration. We can see that the market has expectations of NFT. People find NFTs novel and may be on a wait-and-see stance. The next NFT bull market would require a transformation in content creation. CyberKongz is an interesting project lately. You can buy a Kongz NFT which yields $BANANA every day. There are Genesis Kongz, Baby Kongz, and CyberKongz VX in the CyberKongz universe. Genesis Kongz holders can burn $BANANA to produce Baby Kongz, and claim CyberKongz VX with Baby Kongz for upcoming metaverse environments, which is a new game design.
NFT will be a long-term growing sector, but market liquidity would require better content creation and extended project life cycle.
Essence
GameFi, in essence, is finance under the cloak of gaming. GameFi is DeFi plus games. It’s a money game. For crypto investors, what matters is earning.
Different GameFi projects have different game mechanics and models. Copycats won’t survive long.
New GameFi projects such as CryptoMines, Eternal, and Wolf Games include gameplay, auto-compounding, and multi-layer APYaccelerator. They are closer to gambling than games. Players are expecting explosive growth that arises by chance.
Gambling is an important point here. But GameFi cannot be all about gambling, because everybody knows gamblers rarely win. If you kill an enemy in a game, you will get rewards. But you may suffer a defeat, and that’s the gambling part. So what matters is how you tell the story. Wolf Games has gambling elements. CryptoMines also has gambling elements.
Money games are bad under traditional thinking. Then what about meme coins? Meme coins explode in value for no reason, and we find it awesome.
OHM 2.0 is a money game. Yield farms that offer APY are also money games. They won’t scare us off because we are used to them.
APY 300% from initial mining is ridiculous in traditional finance. If you view GameFi as a traditional gamer, you’ll see problems. But if you take the perspective of a DeFi investor, then it’s just alright.
Then, a window of opportunity. A window of opportunity means something’s taking off. Metaverse is having a window of opportunity, so is GameFi. Actually, consensus is never important.
If something’s going up, then there’s a window of opportunity. Windows of opportunity are driven by hype, by big capital.
The games haven’t been launched yet. They are hyping the buzz worthiness of GameFi. Metaverse projects haven’t been launched, either. A window of opportunity is best when the projects are never launched-project launches, stock price slumps.
A growing sector may have low-performing players, and these projects will be knocked out.
ILV is losing momentum while Genopets is growing at an unbelievable rate. So there’s no problem with GameFi. Some projects are stagnating for their own reasons.
ETERNAL of Cryptomines increased by 160% in 7 days.
Genopets increased by 131.9% in less than 7 days.
As time passes, projects may become less rewarding. The earliest investors saw their assets x40. Later, it may take some time to recover the investment-at first 7 days, then 20 days, and then forever.
A money game dies when the following two things happen. First, largest withdrawals and panic selling. Second, the market becomes too high for new investors.
If you start Cryptomines today, a spaceship will cost 8,000u. Still, many people are entering Cryptomines. So the market is not yet at its peak. When price is moved up, liquidity will come in once again. Things are changing. It’s hard to tell when the market will hit the peak.
The key is not to judge a new sector by old standards. That’s when you can see how things work.
