Gaming is a fresh, up-and-coming, and exciting enterprise in the world of blockchain technology and decentralized applications, as well as a highly sought-after and fascinating ecosystem inside the digital asset field.
According to a new analysis by Accenture, the total value of the gaming business has surpassed $300 billion. While this is a remarkable figure, it should come as no surprise. Indeed, according to the consultancy firm, the gaming demography has grown by half a billion players in the last three years, with over 2.7 billion active gamers worldwide, and is predicted to expand at a rate of around 10% between 2021 and 2025.
Since 2018, users have spent more than $100 billion on virtual in-game assets such as exclusive unlocking content, unique character skins, and accessories.
As a result, it was only natural to see the emergence of a symbiotic relationship and eventual convergence between the highly profitable, burgeoning gaming sector and the disruptive, cutting-edge infrastructure provided by blockchain technology, sooner or later.
This is primarily because gaming applications built on decentralized frameworks powered by blockchain enable players to take advantage of some of the most cutting-edge Defi and NFT implementation utilities, or ‘NFT-Fi,’ to create an entirely new set of economic principles and financial paradigms.
Thus, in 2020 and 2021, the blockchain-based gaming ecosystem became a real powerhouse in the space, not only because of its gamification of Defi elements, but also because it began merging with the artistic, economic, and immutable nature of non-fungible tokens, bringing life to perhaps one of the most exciting environments in cryptocurrency right now, Play-To-Earn (P2E).
An Innovative Gaming Model: Play-to-Earn
non-fungible assets have progressively structured new mediums to deliver value and embody innovative use cases since their entry into the gaming sphere, and with their entrance into the gaming sphere, non-fungible assets have progressively structured new mediums to deliver value and embody innovative use cases. However, this much-anticipated gaming and NFT combo isn’t a brand-new notion.
The cat-centric collectibles game CryptoKitties notoriously nearly brought the Ethereum network to a standstill owing to record demand and trading volume in 2017. Since then, a slew of additional, probably more sophisticated blockchain games has emerged, with Axie Infinity and The Sandbox being possibly the most well-known.
Axie Infinity has been helping to create a new genre in the gaming vertical since its inception in 2018 and has since concentrated on building the infrastructure essential for gamers to enjoy the benefits of advanced, blockchain-powered games while also benefitting handsomely.
Axie Infinity’s core pioneering power is based on its unique, value-rich, and thriving microeconomic system that revolves around its platform and only its platform.
This is because the game’s proprietary and in-house Play-To-Earn environment has fueled the development of an Axie-native, autochthonous economic model based on arbitrage opportunities in tandem with players battling, breeding, purchasing, and selling Axie NFTs.
Now, the ability to earn money while playing the game has led to the creation of what is known as an Axie Scholarship, a system in which well-established players and in-game NFT holders, known as Managers, lend out their assets to other smaller players or gaming communities around the world in exchange for a cut of the profits based on a revenue-sharing model.
As a result, game guilds, which are more wide, community-based, and gaming-centered economies, have emerged.
Community, Yield, and NFTs in Game Guilds
While gamers have traded virtual assets for years, from real estate in Second Life and gold in World of Warcraft to cosmetic character skins in Dota and Fortnite, these virtual economies have largely operated within ‘walled gardens,’ or enclosed and centrally-controlled marketplaces that prevent players from exchanging their in-game assets for real-world economic value, such as fiat currencies or crypto.
Players have often attempted to circumvent these centralized institutions, resulting in untrustworthy markets prone to fraud and failure. However, blockchain-based gaming has the potential to open up these markets, allowing players to exchange value and gain rewards for their hard work, dedication, and time spent in-game.
Thus, blockchain gamers can profit either by playing a game alone or by forming a community of like-minded players, which has proven to be an enormously more profitable approach in terms of merely producing cash from gameplay.
With the advent of online gaming in the 1990s, especially MMO-RPGs, gamers quickly established social and democratic structures within these virtual worlds, forming ‘guilds’ or ‘clans’ and other gaming communities to coordinate around shared goals, or ‘quests,’ and share in the spoils of victory, or ‘loot.’
The same basic social dynamics may be applied to blockchain gaming and its Play-To-Win structure, in which gaming communities from all over the world collaborate to complete a ‘mission’ and earn some of the huge NFT wealth.
However, unlike traditional gaming guilds, which are made up of gamers who regularly play together in a game on a ‘Free-To-Play’ basis, blockchain gaming guilds democratize the entire process of earning money through games and elevate the concept of online entertainment to new heights.
So, without further ado, let’s take a look at Yield Guild Games, one of the most popular crypto gaming guilds right now.
An Overview of Yield Guild Games (YGG)
YGG describes itself as a “Play-To-Earn gaming guild that brings players together to earn via blockchain-based economies” and as the Metaverse’s ultimate settler of new planets.
The Manila-based YGG is designed as a Decentralised Autonomous Organisation (DAO) for investing in NFTs utilized in virtual worlds, blockchain-based games, and burgeoning Metaverse ecosystems, similar to the bulk of existing P2E guilds.
YGG was founded on the notion that digital economies will one day be worth far more than physical and tangible economies, and it mixes Defi, NFTs, and gaming to create an exciting new paradigm of employment that is governed by its members.
The origins of YGG can be traced back to 2018 when gaming industry veteran Gabby Dizon began lending his Axie NFTs to other Axie Infinity gamers who couldn’t afford to buy them themselves.
By October 2020, it was evident that Axie had developed a cutting-edge employment model that might assist users in the Philippines gain more cash while still having fun with the game.
As a result, in October of 2020, Gabby Dizon, Beryl Li, and Owl of Moistness co-founded YGG, with the primary goal of introducing as many people as possible to Axie Infinity’s play-to-earn revolution, particularly in the Southeast Asian region.
After just over a year in operation, the YGG guild has grown to become one of the largest and most well-known of its kind, with about 250,000 members across its social media platforms and activities in a variety of P2E games.
NFTs in the Hands of Management
YGG administers a treasure of game-related NFTs, digital assets, and virtual land parcels as part of the guild’s investment portfolio, which members can leverage and deploy in-game to produce increased earnings for both themselves and YGG through a revenue-sharing arrangement.
YGG will aggressively look to extend and acquire more NFTs from a set of up-and-coming, promising games in the future, given the predicted growth trajectory for the gaming industry in the near and mid-term view, in tandem with the continued development of the GameFi sector.
How Does YGG Function?
Yield Guild Games’ business model is fairly unique in that it is built on creating real-world monetary value by creating new virtual worlds and supporting the emerging digital economy by purchasing and renting out top-tier NFTs to players.
The ownership of YGG-owned NFT assets is directly tied to the principal source of income for the DAO ecosystem in YGG. Now, in-game NFT ownership has several benefits for both the guild and the players, as the rise in the game’s unique economic value is reflected in the value of its NFTs on the open market, resulting in a sophisticated, dynamic, and cyclical market structure centered on the guild’s primary economy.
Guild members will then be able to extract in-game benefits using these NFTs, either their own or rented, as the proprietary channel and trade currency, bringing the Play-To-Earn framework to life and significantly broadening its use cases.
It’s crucial to note that, while allowing players to farm or rent NFT assets is now possible, the current ERC-721 token standard does not officially allow for such functionality. As a result, the farming and rental of NFTs continue to take place in a centralized and rather compartmentalized setting.
To address this, YGG has created an in-house smart contract architecture to issue ownership tokens and establish a database to maintain and monitor ownership and rental assets, which is a very cost-effective solution because it does not require the implementation of any gas fees. By renting YGG-owned NFTs and engaging in active gaming guilds, users will obtain native YGG tokens.
Axie NFTs obtained from the YGG guild, for example, can be used to produce Smooth Love Potion (SLP) tokens within the game, with the SLP earned during gameplay being returned to the DAO and the player earning a predetermined share of YGG tokens for participating in the DAO system.
Guild members will also need native YGG tokens, which will act as their entry ticket into the ecosystem’s governance framework, to participate in governance initiatives and profit from the DAO’s numerous capabilities.
1. YGG Treasury
The YGG Treasury’s main goal is to oversee the management of YGG’s assets to maximize the value returned to the DAO over time.
The Treasury engages in a variety of economic activities, including the purchase of cryptocurrency assets, virtual assets in the metaverse like land plots, Simple Agreements For Future Tokens (SAFTs), in-game tokens, and new NFTs that can help the GameFi sector flourish more broadly.
The Treasury is also responsible for managing all guild members’ and linked third parties’ locked, unvested, and undistributed tokens.
The Treasury also gives direction in debt, interest payments, and asset acquisition activities, such as buybacks and future fundraising rounds, following in the footsteps of the Axie Infinity Scholarship model.
All key financial operations, such as accounting, audits, reporting, and tax, are also handled by the Treasury. It’s worth noting that the Treasury’s assets are now maintained by the three co-founders through a multi-signature Gnosis wallet, which requires two out of three Trezor wallet signatures to confirm transactions.
2. YGG Vaults
Unlike standard Defi platforms, which entail staking tokens to earn a predetermined interest rate or contributing tokens to a liquidity pool to receive a percentage of the collected money, the YGG DAO uses a slightly different process in which tokens can be staked in a variety of YGG Vaults.
Each Vault is a compartmentalized collection of token prizes obtained from one or more of the guild’s revenue streams. For example, one Vault may be dedicated to the distribution of money from Axie NFT breeding and sales, while another could be dedicated to the distribution of revenue from NFT rentals.
This effectively implies that, rather than offering a typical fixed interest rate on staked assets, YGG Vaults allow YGG holders to invest in the success of specific revenue-generating components of the guild.
This could be an appealing proposition for investors, as it allows YGG token holders to stake their YGG tokens in a Vault built specifically for that purpose, allowing them to participate in revenue from the DAO’s Axie breeding program or the soon-to-be-announced Monkey Ball NFT rental program, for example.
3. The SubDAO Ecosystem of YGG
SubDAOs are one of the most cutting-edge components of YGG’s DAO structure. In essence, a SubDAO is a subset of the YGG DAO ecosystem focused on the activities and assets of a given game. For example, one SubDAO will be dedicated solely to Axie Infinity gamers, while another will be dedicated to League of Kingdoms, another to Zed Run, another to Monkey Ball, Illuvium, The Sandbox, Star Atlas, and so on.
Furthermore, token holders in a SubDAO become “citizens” of the game with which the SubDAO is affiliated, playing and cooperating to maximize their collective yield generated through gameplay. Furthermore, users in a SubDAO can spend assets from the main DAO Treasury to better equip and enhance their in-game characters, enhancing their earning potential while also improving the quality of their gaming.
Now, because the primary goal of a DAO structure is to automate an organization’s tasks, SubDAOs can intrinsically streamline this automation process by compartmentalizing it into highly-specialized fractions, hence increasing the overall efficacy of the DAO’s original architecture.
Furthermore, the guild will provide a series of incentives to encourage SubDAO involvement, such as increased DAO contributions to high-performing individuals from a certain SubDAO. This means that the better SubDAO members perform, the more they may contribute to the overall DAO and, as a result, the more they are rewarded.
YGG is expanding its horizons, literally, by developing regional, DAO-affiliated, geographical partner entities like the YGG South East Asian SubDAO, or YGG SEA, in conjunction with these game-specific SubDAOs.
4. YGG SEA Regional SubDAOs
YGG SEA is aligned with Yield Guild’s roadmap to help extend and offer Play-To-Earn experiences to the worldwide gaming community, beginning in Southeast Asia.
And with good reason! According to YGG SEA’s documentation, the South East Asian region now offers greater return opportunities than other areas, primarily due to its large community of gamers and play-to-earn aficionados, making it the ideal environment for a localized SubDAO structure.
This is because nations like Indonesia, Thailand, Vietnam, and Malaysia, among others, have an extraordinary youthful working population that has historically lacked buying power due to regional politico-economic instabilities and, now, due to the pandemic in 2021. The recorded penetration of play-to-earn ecosystems in the area is currently among the largest and most significant, owing to the huge financial upside given by P2E. As a result, according to its Roadmap, YGG SEA will initially focus on Indonesia, Vietnam, Singapore, and Thailand in Phase 1 before expanding to the rest of Southeast Asia in succeeding Phases.
Members of the YGG SEA SubDAO will be associated with game production behemoths like Electronic Arts, Unity, Axie Infinity, and Yield Guild Games, and will form a team of Local Operations Experts with deep networks in the South East Asian gaming sphere.
In addition, the SubDAO aims to create a geographical ancillary entity to Yield Guild’s Main DAO ecosystem by establishing multi-country local operations and translation houses, hiring regional community managers, establishing localized strategic and marketing partnerships, as well as tech integrations to ensure efficient fiat on and off-ramps, and eventually creating a geographical ancillary entity to Yield Guild’s Main DAO ecosystem.
YGGSEA SubDAO Token
YGG SEA will use its own SubDAO native token, dubbed YGGSEA, to allow users to vote on governance proposals, ecosystem reward distributions, local strategic partnerships, LP staking, and more, in a similar way to YGG.
Too far, YGGSEA has received $15 million in funding from top-tier blockchain venture capital firms such as Crypto.com Capital, YGG, Infinity Ventures Crypto, Animoca Brands, MindWork Ventures, and DCG.
In terms of upside potential, YGGSEA’s future value will be contingent on the expansion of its ecosystem in both economic and social dimensions, as well as the percentage of regional value collected by the SubDAO, as with the majority of tokens in the crypto market.
YGGSEA, like YGG, is a wager on the long-term viability of play-to-earn environments and the growing presence of non-fungible tokens in our daily lives and online markets. While the YGGSEA SubDAO’s native token has yet to be released, its use cases and utility could prove to be an intriguing prospect in the long term.
YGG is the Yield Guild Games ecosystem’s native ERC-20 governance and utility token, with a circulating supply of 69 million. Staking in YGG Vaults, voting on governance ideas, supporting the DAO Treasury, rewarding P2E gamers, and Yield Guild’s advisory team will all be done with YGG.
YGG has a total circulating quantity of 1 billion tokens, which will be distributed in numerous phases at different times and for diverse purposes.
YGG has a market capitalization of $370 million and a fully diluted market capitalization of $5.3 billion at the moment. YGG is now trading above $5, down more than 50% from its all-time high of $11.50 set in November of 2021. YGG is currently available for purchase on some of the most liquid cryptocurrency exchanges, including Binance, KuCoin, Huobi, and Uniswap.
In terms of price potential, the YGG token’s potential gain is dependent on several things. To begin with, if YGG continues to bring on top-tier games that prove to be long-term successes, then the future seems bright for YGG token holders.
Second, YGG’s rental options are unique and one-of-a-kind in the sense that few NFT or gaming NFT platforms offer this type of service.
When you combine this with the YGG Vaults’ continued development, holders may be enticed to deposit their assets in these Vaults to gain extra staking benefits from the YGG ecosystem as a whole, which is a win-win situation for both holders and YGG.
Furthermore, considering the predicted explosion of the GameFi market in 2021, revenue from P2E games is only expected to expand in the long run. Assuming that YGG is on track to become the ultimate, go-to gaming guild in the sector for players and investors to earn rewards, it is reasonable to expect that YGG’s market and ecosystem value will rise over time.
Heavyweight VCs such as Animoca Brands, Sparq, Delphi Digital, and Scalar Capital helped YGG raise $1.3 million in its Seed funding round in March 2021. Yield Guild then received another $4 million in a Series A round-headed by BITKRAFT Ventures, ParaFi Capital, and Animoca in June.
Finally, Yield Guild Games raised $4.6 million in a funding round led by digital asset behemoth a16z, with participation from Kingsway Capital, Infinity Ventures Crypto, Atelier Ventures, and gaming entrepreneur Gabriel Leydon in August of 2021.
The money was intended to assist YGG to build and grow its community of play-to-earn gamers and guild members by allowing them to extend their digital asset portfolio.
YGG has an extraordinarily powerful and seasoned founding team, with individuals who are long-time gaming and blockchain gaming veterans as well as deep crypto enthusiasts.
As previously stated, the YGG Team is committed to the continued growth of the GameFi ecosystem and to facilitating user onboarding into the worldwide play-to-earn experience.
GameFi is currently one of the most enthralling and exciting businesses in the digital asset space, and considering its predicted development trajectory over the next five years, its future potential remains largely unexplored.
The proposition of blockchain-powered gaming projects appears to have taken the markets by storm in the last year, ushering in an entirely new set of financial paradigms and investment theses revolving around Metaverse worlds and interactive gameplay, thanks to the newly discovered match and symbiotic relationship between Defi, NFTs, and gaming.
In-game NFTs, on the other hand, has been a hot commodity for a long time, and as a result, the barrier to entry into some blockchain games is high, and it just isn’t a cost-effective or realistic alternative for many gamers around the world.
Gaming guilds like YGG, for example, allow players to gain access to some of the hottest, top-tier in-game NFTs in the space at the moment, allowing them to generate yield while enjoying the innovative gameplay offered by GameFi and blockchain technology, thanks to their sophisticated DAO and appealing revenue-sharing model.
While the future of the GameFi sphere is undoubtedly uncertain, guilds like YGG could prove to be the ultimate, go-to solution for social gaming communities around the world looking to generate additional revenue streams that can improve, enhance, and ultimately change lives, particularly in areas plagued by political and economic unrest.
As a result, while the future of Yield Guild Games, its YGG token, and its expanding regional SubDAO ecosystem are still uncertain, the future of Yield Guild Games, its YGG token, and its growing regional SubDAO ecosystem appear to be quite bright indeed.