Head game guilds in a bear market: Some are growing in the sun while others are quietly falling behind

Author: Scarlett Wu

The roller coaster of YGG prices in the past two weeks has refocused the market’s attention on the game guild track. At the beginning of the rise, the author once shared on Twitter a summary of game guild observations from the perspective of the treasury "Game Guild Treasury Comparison & Valuation Summary: YGG , MC & GF, whose valuation is more reasonable? ", the most promising MC at that time, the price has risen by 50% now, while the price of YGG has doubled and then dropped sharply, returning to the price before the summary was written. This article is the revision and expansion of the summary, and it conducts a complete inventory of the game guild track from four perspectives: business ability, investment ability, risk control ability, and valuation.

Many game guilds, the Quest platform, the game information collection platform, and the NFTfi protocol of pay first, are actually subdivisions of the same service. Because the game project party has and only three requirements:

1. Pull new

2. Promotion

3. Further promote in-game consumption

Web3 players only have 2 requirements:

1. Have a sense of companionship

And due to the demand for advance capital investment brought by ponzi at the beginning of 20-22 (for example, when the price of Axie is thousands of dollars, the guild buys NFT and rents it to Southeast Asian players, and takes a cut from the user’s subsequent income), and the crazy expansion of the economy The wealth-creating effect generated by the system makes people mistakenly believe that the drumbeat of drumming and passing flowers will never stop, which has spawned another important function of the Web3 game guild:

2. Advance payment of principal

The premise of generating companionship demand is that users will spend enough time in the game, which is basically not satisfied by all non-Ponzi Web3 games. The guild invests in the purchase of “shovel” NFTs and rents them to users, and it needs a Web3 game with a continuously expanding economy-if the principal invested two weeks ago has already begun to lose money, any institution that advances the principal will have to worry about it. But the fact is, apart from Axie Infinity, the originator of the crypto game ponzi, there is no game in the circle that has continued to grow its users for more than half a year. Given that the premise of ponzi’s profitability is user growth, guilds willing to advance the principal need to spend two months to find a game that “can make money stably” and observe “this game can indeed make money stably” in two months. After implementing the plan for two months, they It will be desperate to find out that the principal paid in advance cannot be recovered, because “scholars” (the guild’s name for its players) may not be able to return the principal after playing for ten years.

The guild obviously realized this problem earlier, because every Ponzi cannot reproduce the popularity of Axie, and the demand for a sense of companionship in every game is not strong enough to charge through live broadcasts (traditional game guilds’ source of income) Driven by the drive, the guild has transformed from “serving players” to “serving project parties”: on the one hand, the guild holds a large number of player resources (this is actually doubtful now, and will be discussed below), on the other hand, the guild’s treasury There is also a large amount of funds (although the liquidity is likely to be doubtful, which will also be discussed below), which can enjoy the growth dividend of the Web3 game track through investment. Of course, there are also sub-chains such as Merit Circle, which cooperates with Avalanche, and uses the narrative of the game public chain to enhance the valuation imagination.

1. Business data comparison: YGG and MC are still active, and GF has fallen behind in volume

Currently, the traffic positions of several major guilds are mainly:

1. Quest system

2. Twitter

3. Discord

Among them, Discord is very deceptive. Even in the DC group chat with 70,000 people in YGG, without hot games/tasks, there are only more than 100 messages in General Chat every day, half of which are gm and hi, and the other half are team Give the Medium / official website link to answer members’ questions.

And Twitter can find out through the number of views. Even if YGG has 180,000 Twitter followers, Merit Circle has 100,000, and GuildFi has 120,000, the number of views of YGG’s Twitter content is stable at a few thousand-tens of thousands, only major updates There are only 40,000 to 50,000 views; Merit Circle is slightly inferior, with about 5,000 daily content views, and tens of thousands of major updates; There are only ten thousand. In contrast, the tweets posted by the author with more than 2,000 followers have at least a few hundred views, and a little in-depth summary can have tens of thousands of views-under the transparent data display of Twitter, the game guild There is nowhere to hide the moisture in the data.

In the Quest system, you can find out from two aspects: project situation and incentive situation:

YGG Guild Advancement Program

Recently, YGG launched Guild Advancement Program Season 4. Players can share the reward pool of corresponding tasks by completing tasks and uploading vouchers. Among them, Axie’s reward still dominates, with a single reward of up to 2,700 YGG (about $900 at the current YGG price), and the single reward of other games ranging from 30 YGG (that is, $10) to more than a thousand YGG varies. For players who are still able to compete for the Axie Infinity prize pool, the official rewards given by Axie are undoubtedly more attractive (with a maximum value of tens of thousands of dollars), while for players of other encrypted games, the total rewards that need to be shared with competitors Prize pools of tens to hundreds of dollars are not very attractive. Instead of spending a lot of time completing tasks with low ROI, it is better to spend time on airdrops. From a user perspective, it is difficult for YGG’s Quest to attract a lot of attention.

From the perspective of the project side, the cooperation between YGG and the game will most likely receive cash or other game assets, while the rewards given to the players are YGG denominated rewards. In fact, YGG replaces its own tokens with other cash/ Behavior of game assets.

Circle Gaming

Compared with YGG Quest’s simple and rough quests, Merit Circle Gaming’s interface is more game-friendly. The official website of this incentive system is divided into four parts: homepage (key game introduction and activity timeline), game (key game display and related information summary), academy (game tutorial and basic teaching of Web3 operation) and task system (completion of tasks, rewards Experience and Game NFT Sweepstakes)

In YGG’s Quest system, players can have a more straightforward ROI calculation (although the ROI is not high, it is still attractive to Southeast Asian people), while Merit Circle’s Quest system is more inclined to information aggregation and game display. Rewards are mostly distributed by lottery.

Merit Circle – Home

Merit Circle – Key Game Display

Merit Circle – Faculty

Merit Circle – Quest Reward System

GuildFi Quest & Achievements

GuildFi uses in-game points to create a task & achievement system. Every time you complete the corresponding task and achievement, you can get the corresponding point reward.

GuildFi Quest & Achievements

Points can be used to redeem gift cards, game tickets, whitelists, treasure chests, NFTs, etc. But at present, the products that can be exchanged for GuildFi experience are quite limited, mainly Steam gift cards (with a probability of issuing gift cards worth 0.5-30 knives, and 15% of the cost may be returned), Genopet, Axie play tickets, Axie NFT and CyBall NFT (distributed in the form of a limited-time lottery). This model of blind lottery box exchange for Steam gift cards/game items has been widely used in traditional game information aggregation and casual game platforms. On the one hand, cooperate with the game project party to distribute game assets (although it can be seen that GuildFi’s BD capabilities are quite limited, and the cooperation is all old projects), on the one hand, directly exchange a small part of the income into assets that players have already valued , join the open blind box mode to gamify and eliminate inflation.

GuildFi Marketplace

In GuildFi’s semi-annual summary, they stated that "in the past year (22nd half - 23rd half), in-platform purchases exceeded 200,000 times, an increase of 42% over the previous year, and it is clear that our community loves us Enthusiasm for game titles on the platform is on the rise. Notably, Diablo IV’s Lootbox campaign topped the list with over 65,000 purchases, while KOF Lootbox had over 30,000 purchases. "Under such cooperation, GuildFi brought a total of 92,000 user pre-registrations to 21 partners in one year-on average, less than 5,000 registrations per game-considering that pre-registration usually does not require Wallet interaction also makes it easy for Lu Maodang to open many accounts on a good project at a time, and the actual number of effective users brought is even more worrying.

Source: GF semi-annual summary

Combining the above, it is not difficult to see that the energy of game guilds in the market has been greatly reduced, YGG and Merit Circle are still relatively active in the market, and GuildFi has fallen behind in terms of business resources and content output.

2. Financial situation comparison: MC has balanced financial and business development, YGG has strong business capabilities but lacks financial standards, and GF’s market value is smaller than the value of its blue chip + stablecoin assets

YGG: game dissemination platform + game investment fund, the national treasury is almost all YGG, and the highly liquid assets on the chain are less than 4.4%

Due to the sharp depreciation and poor liquidity of game NFTs currently on the market, we can roughly estimate the state of the treasury of the project party directly from FT. According to the official address of YGG, 95% of the treasury on the YGG chain is its own token YGG, and only less than 4.4% are highly liquid stable coins and blue-chip assets (USDC / USDT / ETH, etc.), visible asset allocation Pretty unbalanced.

YGG treasury address asset situation Arkham, Mint Ventures drawing*Does not include assets on the non-EVM chain, the amount of this part of assets is about 220,000 US dollars, which can be ignored in the calculation

In addition, in the 2023 Q2 Community Update released by YGG in early August, the calculation of the value of investment/cooperation project assets is given: YGG holds a total of US$27.2 million worth of game assets (NFT, Token, equity, etc.), and the corresponding cost is 1830 Ten thousand US dollars, book floating profit 32%.

Source: YGG Medium

Although YGG candidly disclosed the market price drop from Gaming NFT to the public, the token/NFT valuation of Games may have a certain degree of calculation: even if YGG got a good price at the time of investment, under the current market conditions, the first-level investment The book value of the game token is likely to shrink significantly after listing. Under the current situation of extremely poor NFT liquidity, if you want to withdraw the NFT in hand from liquidity, you need to sell it. The same applies to Merit Circle and GuildFi.

YGG Partnered Games (holding assets, including primary investment and secondary market purchase, chainplay.gg incomplete statistics)

Merit Circle: The business is stable and stable, the balance of treasury funds is the best, stable income and high-risk assets are halved

On the official website of Merit Circle (hereinafter referred to as MC), it defines itself as a Gaming DAO with four functions: investment, game studio, reward system, and infrastructure (creating the game chain Beam through the Avalanche sub-chain). In terms of communication transparency, MC is also better than the other two guilds: the treasury fund board is updated in a timely manner, not only includes FT/NFT data that can be checked on the chain, but also discloses non-current assets such as primary investment. Here, we mainly analyze two parts: the situation of investment and incubation, and the distribution of treasury funds.

Merit Circle Official Website

First look at investment and incubation. According to the data released by MC Treasury, until June 23, MC held a total of 79 equity/tokens of game projects, including large projects with good team background and financing background, such as OhBabyGames and Xterio. These assets Its value is 45.4 million US dollars, of which 1.6 million US dollars has been publicly traded, 43.8 million US dollars are non-current assets, and 300,000 US dollars in MC. In addition, according to the publicized purchase price, the total cost of these assets is 29.9 million US dollars, with a book profit of 51.8%.

Incomplete screenshot of MC investment project

The quality of MC treasury funds on the chain is also significantly stronger than that of YGG. Only 27.4% of the wallet is its own token MC, and 69.5% are highly liquid stable coins and mainstream assets.

Merit Circle Treasury Address Assets, Arkham, Mapped by Mint Ventures

In addition, Beam, the Avalanche sub-chain that MC has launched on the test network, is also an important event in the follow-up trend. Beam will adopt the Proof of Stake model, adopt MC as the gas token, and adopt LayerZero as the cross-chain infrastructure. Three games are currently being developed based on Beam. On August 14, the team proposed a draft in the community governance section and opened for discussion:

GuildFi: Weak business ability, better balance of treasury funds on the chain, 13% GF, 46% stable currency, 41% stETH seeking stable income

Since many of GF’s assets are LPs on Uniswap, it is difficult to directly display them through Arkham. The following figure shows the asset statistics on the ERC-20 asset chain of the publicized wallet: it can be seen that 46% of GF’s on-chain treasury are stable coins. 41% ETH/stETH, 13% GF, and some small game-related token investments, totaling $57.7 million.

Compared with the data released by GF’s semi-annual financial summary, the official on-chain assets have shrunk by 19% compared to the 71 million US dollars at the time of the summary release, mainly due to the decline in token prices and the transfer of 8 million USDT to Binance. The official team stated that the assets stored in cex are mainly used for daily operations and repurchases from investors.

Source: Debank

Source: GuildFi

However, when further asking “whether there is a public repurchase mechanism & repurchase history”, except for the two-day “please wait patiently”, no reasonable answer was given.

Discord Q&A recording

In the semi-annual summary, in addition to the assets of $71 million in Reserve (a total of $57.7 million on the chain), there are primary market investments worth $15.9 million and other game tokens, and NFTs worth $4.8 million.

GF cooperative game

3. Comparison of DAO construction and governance capabilities: Merit Circle is far stronger than its opponents

Although both YGG and GuildFi expressed their hope in the white paper released in 2021 that the ultimate goal of this gaming guild is to become a Gaming DAO, in fact it is Merit Circle that actually achieves this goal.

Clicking on the snapshots of YGG and GuildFi, we can only see a few votes with a long history:

YGG: Proposal for SubDAO two years ago.

GuildFi: Three online proposals and details about staking eight months ago.

Merit Circle will allow users to see how a Gaming DAO / Investment DAO with a complete operating process and awareness of risk control should operate: In the past two years, Merit Circle’s Snapshot has voted for 26 proposals, including DAO governance, investment Risk management (authorization mechanism for exit and investment quota), game development, etc. The more important proposals are:

2022.01 MIP-7, determine the profit distribution and token burning. 20% of the proceeds are kept in the treasury in the form of USDC, 5% of the proceeds are kept in the treasury in the form of ETH/WBTC, and 60% of the proceeds are used for repurchase at low prices at appropriate times to maintain the stability of token prices (less than 7 days When the average price is 10-35%, repurchase is carried out. This part of MC mainly enters the pledge reward, and can also be sold to strategic investors who are willing to lock the position for a long time), and 15% of the proceeds are used for direct repurchase and destruction of MC. In addition, since most of the unlocked tokens are released to “community incentives”, it is decided to destroy 75% of the unlocked “community incentive” tokens every month (the ratio can be modified by community voting). Providing enough tokens for the DAO’s treasury to cover any major community proposals also turns mCap into a more realistic FDV. It is hard not to be amazed by MC’s foresight and calmness in the face of great temptation - it is not an easy decision to actively destroy 75% of the tokens released to the community. The completeness of the mechanism is the basis for the balance of MC’s treasury funds.

MC repurchase and destruction announcement

2022.05-06 Refund of YGG investment. Termination of relationships with investors who do not provide substantial assistance.

2022.07 DAO structure reorganization.

2022.12 Merit Circle Grants proposal. Set aside 150k USDC every quarter for small incentive research and game development. Research Grant does not exceed 10k, and Development Grant does not exceed 25k.

2023.07 Cancel the subsequent staking rewards of Uni V2, and destroy this part of future rewards. The main reason is that the existing staking model does not bring much benefit to Merit Circle, but there are clear use cases for subsequent staking on Beam (the game chain MC intends to build, proof-of-stake). Therefore, the V2 rewards were cancelled, and the staking rewards were subsequently concentrated on Beam.

Through the analysis of several proposals, we can see that although the proposer is mainly a team and the number of voters is not large (basically around 5 million MCs), the Merit Circle team has a clear strategic thinking and does not hesitate to give up short-term interests To safeguard the long-term interests of the community, governance is relatively transparent.

4. Summary and comparison: business ability, investment ability, risk control ability and market value comparison

4.1 Business Capabilities: MC has more diverse businesses, YGG has a wider user base, and GF lags behind

In addition, from the perspective of organizational structure, YGG’s model is a product of the Axie era - a regional sub DAO is extended under YGG, which is convenient for regional members to reach and manage, and lacks a risk control system that keeps pace with the times. Merit Circle, on the other hand, is more like a major game company, with investment (and a complete risk control system), incubation, publicity, and infrastructure, doing well in all dimensions. GuildFi’s investment ability and market activity are inferior to the former two.

4.2 External cooperation and investment capabilities: MC ranks first, followed by YGG scale and rate of return, GF is the smallest scale, and rate of return is unknown

4.3 Risk control ability: MC ranks first, GF takes second place, YGG performs poorly

The evaluation criteria in this part are two aspects:

Whether the team’s transaction, management and control of assets is open and transparent, and in line with the pre-established mechanism, in this regard MC >> GF/YGG

· How much influence does the asset token have on the total asset price? If the proportion of “self-token/total assets” is too high, it is a sign of poor risk control ability. Position management GF>MC>YGG.

Overall, MC ranks first, GF is second, and YGG is doing poorly.

4.4 Valuation comparison: MC has entered a high level, YGG has fallen normally, and GF’s weak business has caused the market value to < the total value of treasury stablecoins + blue chips

Due to the nature of the association’s business, the treasury assets of the project can partially reflect the business situation. As mentioned above, the current core functions of the guild are:

1. Relying on the players at hand to serve the game project side

2. Investment incubation

Some of the project assets corresponding to these functions will enter the book value of foreign cooperation and investment (NFT, FT, equity), and some may have been converted into stable coins and blue chips and remain in the treasury. Therefore, the comparison of treasury assets can partly reflect the valuation of Guild projects.

Before the start of the YGG pull, the daily trading volume of YGG was only several million dollars per day, and the liquidity was quite limited. However, YGG accounted for as high as 82% of the YGG treasury, which means that once it is sold, it will only cause a devastating blow to the price, so here we will compare “mCap/book value of total assets” and “mCap/assets other than its own tokens” at the same time. Total Market Cap" for objectivity. Under comprehensive consideration, the value support GF > MC >= YGG (please note that both “book value of total assets” and “total market value of assets other than its own tokens” include “stable currency + blue chip” and “investment/external The FT / NFT brought about by the cooperation”, the latter’s valuation is not the fair value of the market, but comes from the financing valuation. If the token is listed or the project does not develop smoothly in the future, there will be a greater risk of asset write-down. And, for “ FT/NFT brought about by investment/foreign cooperation”, except that Merit Circle published the cost and book value of all projects, the other two did not give specific algorithms, so there may also be statistical problems.)

Since the unlocking of MC has been mostly completed, but YGG and GF still have a large number of tokens that have not been unlocked, from the perspective of FDV/mCap, the potential downside risk YGG>GF>MC.

Except for MC, which has a clear token repurchase mechanism, none of the other projects have a token repurchase mechanism. GF has a staking mechanism with a fixed reward release amount, and YGG does not even have a staking mechanism. Coupled with GuildFi’s weakness at the business level, even if GF’s market value is smaller than the total market value of its on-chain stablecoins and blue chips, it is difficult to draw the conclusion of “undervalued”.

Observing from the future Upside, MC will follow up with the narrative of the game chain, and the POS chain will naturally capture the value of staking profit, while the follow-up given by YGG is to open a new Quest on Base. GF has no breakthrough in business narrative for the time being.