Kozogor

Kozogor

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Introduction. What does the crypto gaming industry represent?​

Let's get straight to the point. Any play-to-earn game that allows you to earn is a pyramid scheme. Who will pay you for playing? You don't bring any value to society; you don't produce a product, goods, or services. Game developers aren't masochists to simply pay users from their pockets.

And in 99% of cases, the economy of a play-to-earn project doesn't even extend beyond it. For example, StepN, where a user donates to the game, buys tokens/NFTs within the ecosystem, performs some actions, and magically gets back more money than they invested at the start. How does this happen? Obviously, through the redistribution of money from new users.

The Main Problem of GameFi.​

People play traditional games to have fun, pass the time, and enjoy themselves. They like playing games like GTA, Dota 2, CS for free because they derive pleasure from the gameplay.

If we're talking about crypto games and the GameFi sphere that has already received billions of dollars in investment, it's a different story. People play games with the sole purpose of making money. There isn't a single play-to-earn game that would be genuinely exciting to play. If you remove the earning element from all play-to-earn games, none will survive.

Do you understand where I'm going with this? The one who can create a playable play-to-earn product will rise to the top. A game for the sake of the game, not just for quick earnings. The earning aspect should enhance the enjoyment.

Why haven't they done it yet? They're trying. But it's easier to build a pyramid scheme in six months and make millions from it than to spend several years creating a quality game.

Alright, I won't keep you waiting. Let's move on to the most interesting part.

How to Earn by Playing in Others' Play-to-Earn Projects?​

Considering that the graphics of all major play-to-earn projects look something like this:

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...our earning strategy looks very simple.

1 — Find a Promising Project in Its Early Stage​

This is the most important step. Everything depends on it. Find a project here.

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here.
How to do that? Stay constantly informed in the right information sphere.

First of all, monitor the activity of crypto funds. It's important to watch both major players and smaller ones. An interesting project can pop up anywhere.

Use Cryptorank Tracker – download the app on your phone, track investments and new projects.

Of course, you'll find Messari's table useful too. It lists all fund entries.

There are many other websites and programs, but these two are generally sufficient. However, if you still need more, you can use CoinCrap.

Ideally, you should consider a project even before there's any action with the funds.

I'll say it for the thousandth time: you need to build the right information field for this. And do it primarily on Twitter.

Start by following popular influencers, analysts, founders, and advisors. Good news channels won't hurt either.

Make sure to use TweetDeck to monitor multiple news feeds at once. I'll even attach a guide to this service.

All other social media platforms are secondary, including Telegram. Initially, information appears on Twitter, and sometimes it's crucial to get it firsthand. So, keep expanding your Twitter subscription list.

Nevertheless, sometimes it's more convenient to get information from Telegram. So, be sure to expand your information field in Telegram and subscribe to quality channels.

Tokenomics Analysis​

Tokenomics is an interesting and complex field. There are even many companies specializing exclusively in developing tokenomics for projects. But, that's not the focus right now...

The basic thing that everyone should know: the token price is regulated solely by the laws of supply and demand.

There are only two factors that founders need to influence correctly. How can this be done?

Examples of influencing demand

The project released a solid roadmap, invested in marketing, attracted a reputable fund as an investor. People rushed to buy the project's tokens on the exchange. Positive impact on demand.
2)
The project stopped allocating money to marketing, development stagnated, and the influx of new users decreased. There are fewer people willing to buy the token on the exchange every day. Negative impact on demand.

Examples of influencing supply

1)
The project launched staking. Users started selling fewer tokens on the exchange because they began locking them in staking. Or in the DAO, they introduced the ability to vote only with tokens. Users started keeping coins in their wallets to have voting rights. Or in a game, they introduced in-game purchases. Users carried their tokens not to the glass but to skins/advantages in gameplay. Positive impact on supply.

News of the project's insolvency came out, a fad started on social media. People rushed to dump tokens in the glass. Negative impact on supply.
It's easy to guess that the token's value will rise if you increase demand and decrease supply.

We can influence demand and supply separately. For example, if you reduce the supply by launching staking while keeping demand at the same level, the token's value will also increase.

And if we can simultaneously increase demand and decrease supply, the token's value will rise even faster.

But, the tokenomics of play-to-earn projects significantly differ from traditional projects. There are often complex systems with two tokens and so on. But, in one way or another, it all comes down to maximizing the reduction of supply and increasing demand for the project's token.

In the case of play-to-earn, the most crucial thing is the vesting calendar. After all, we need to know exactly when the tokens will be unlocked, how many tokens will be unlocked, and who will receive them.

This is the subject of a separate, extensive article. I can recommend a useful video interview on tokenomics analysis.

After watching it, I recommend evaluating it for yourself. Conduct your analysis of Axie Infinity's tokenomics and then open the chart, look at the token's price history and the project's success.

Game Analysis​

It's important to distinguish between AAA games and casual games. The budget for their development varies significantly. And, of course, there's more trust in those who invest more money in development. Typically, such developers are backed by good funds.

But, right now, the only AAA game we see in the crypto space is Illuvium. I think in the coming years, we should expect many fresh AAA projects, as the GameFi industry is currently lacking them.

AAA (triple-A) is an informal term that refers to a class of high-budget computer games. A simple way to understand AAA is to compare them to blockbuster movies.

In my opinion, only high-quality games can attract new users from traditional gaming to the crypto space. And the more new AAA games are created, the better it is for the GameFi sector. I believe market makers, funds, and major web3 developers understand this well, so we are waiting...

32b578ef9e5a12bc2b8de.png

Illuvium beta
Impressive graphics for a crypto game, right? We just discussed the laws of supply and demand. Here's an example of how to influence demand intelligently. The announcement created too much noise.

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Chart after the beta version announcement
It's a shame that this game is being developed not for the sake of the game but for pumping the token/land and enriching new players. Nevertheless, the emergence of such information occasions allows us to profit even from "overextended" and almost forgotten projects.

I'll remind you once again—the key is to notice important news/announcements timely and act quickly.

By the way, there is a surefire way to avoid using a Ponzi scheme and create a Play2Earn game with a solid economy. But no one does it because the profits would be entirely different.

The method itself

Popular traditional games make millions of dollars:

  • on advertising, affiliate integrations
  • on donations, skin sales, subscriptions
Imagine we created a playable game (similar to GTA) that people primarily play for fun. Users have their own characters.

Within the game, we create virtual Rolex stores so players can dress up their characters. Coca-Cola or McDonald's stores where the character can visit and restore their health. We add Qatar Airways advertisements to airplanes, and so on. In other words, we're talking about integrating and advertising familiar offline brands within the game. And if we take, for example, the companies mentioned above, such integration could cost advertisers tens of millions of dollars (depending on the number of users). We allocate 30% of the earnings to users. Players get an additional incentive to spend time in the game. The development team reduces marketing expenses (such a game would quickly spread by word of mouth). And this would be a stable, non-pyramidal play-to-earn project.

Here is the translation of the text while preserving all the BB codes:

From donations and in-game purchases of artifacts, improvements, and skins, we also allocate 30% to the users.

This is perhaps the only model that will allow the game to survive for years, consistently paying $$$ to players.

It is possible to expand the range of income and further strengthen the model.

Example of using the game token beyond its limits.

I think many are familiar with the Steam marketplace and have some knowledge of the skin market. The turnover of in-game items from CS and Dota 2 on the official Steam marketplace and well-known third-party skin selling websites is over $10 million per day. The market is not small at all. And the funny thing is that Steam can shut it down with a snap of its fingers. Users essentially have no control over their own skins. At any moment, a player can receive a trade ban and other unpleasant consequences.

In an ideal play-to-earn game, a system can be implemented where skins are not just images but NFTs that belong only to the user. NFT skins can be bought/sold on a decentralized marketplace for the same in-game tokens.

Well, these are just my thoughts and ideas. But I hope we will see something like this in the future. Perhaps cryptocurrency will closely interact with the traditional gaming industry.

As for the analysis of the game itself, the evaluation rule is very simple: if you enter the game, spend a few minutes there, and don't start feeling any discomfort, the game has passed the test. Even the simplest casual games can gather hundreds of thousands of crypto users with the right marketing skills.


Analysis of the Team and Funds​


It's not as simple as it seems. Undoubtedly, if a renowned team is working on the project and famous funds are investing in it, it means the project is promising. And if you come across such a project, especially in its early stages, you can be 99% sure it's worth getting involved. Money will definitely be allocated for marketing and development. The presence of large funds is already excellent marketing. So, new users (from whom you will earn) will undoubtedly join. But there is a high probability that many other crypto enthusiasts will also come across such a project.

Occasionally, there are also no-name projects, which are often developed with the founder's money and small partners, without the involvement of large funds. But this doesn't stop them from investing smartly in marketing and gradually building up the pyramid they've created. In such a case, we also have the opportunity to earn.

Sometimes, there are quick scams, like SpaceJam (if you remember, it was heavily promoted everywhere last fall). There were no funds or proper partnerships. I believe more than 80% of the investments went into marketing. Everyone who managed to get in on time and get out on time (more on that later) made a good profit.


Let's Analyze the IguVerse Project​


In the CIS (Commonwealth of Independent States), this project has been gaining a lot of attention in the last month. Surely, many have heard of it.

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Let's see... There are no funds here. Instead, we see little-known companies, some of which have roots in the CIS. Among the partners are developers of tokenomics solutions, market makers who create cryptocurrency charts, and so on. In general, the list is not particularly inspiring.

Nevertheless, when evaluating the project's marketing, there was initially a strong focus on the CIS, and there were extensive partnerships with Telegram channels, crypto bloggers on Instagram and YouTube.

And it was quite possible to ride this hype. The project is still afloat, and I won't predict its fate. I won't say that it's too late to get in. But definitely, those who noticed the game in time (for that, you need to immerse yourself in the right information environment) probably managed to make some money from it.

Regarding tokenomics. Often in p2e, they use such a trick. For example, they write that the team will receive tokens only by 2024. Some may think, "Ah, the team will receive tokens only in 1.5 years. Probably, they will invest money in marketing, development, and project growth for all 1.5 years." Of course, this is not always the case. And we will never know what methods the team has for withdrawing funds from the game, other than directly receiving tokens.

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In general, in all "playbooks" for p2e founders about marketing budgets, it is written as follows:

  • For AAA games, it is customary to allocate the marketing and game development budget in a 1:1 ratio.
  • If we're talking about casual games, marketing usually accounts for 25%-50% of the development cost.
The main rule for promoting GameFi projects is to get as many people into the game at the initial stage, right after the launch.

Why?
Word of mouth plays a significant role in promoting the project. It's logical to launch a powerful word-of-mouth right from the beginning. And then strive to retain users to the maximum by improving the game and providing constant updates (which positively affects the token's value).

How does this word-of-mouth work? A sudden influx of users at the start = a sharp token pump. As soon as this happens, and the first news about earnings appears, news about it starts spreading from all sources (usually for free for the project).

If such an impulse is not started and the advertising budget is evenly spread over the years ahead, there won't be organic hype in the information space.

Entry/Exit

Alright, we've found the project, conducted the analysis. Now, the most important thing is left: start playing and timely realize profits.

Entry Point​

Here, it's all quite obvious... You assess at which stage the game is currently. Afterward, you evaluate its financial potential. If, in your opinion, the team has enough financial potential to continue attracting a larger audience each day than the previous day until you recoup your investments and break even, then start playing. The proposal might be complex, but the essence is incredibly straightforward.

For example, if the game itself is of decent quality (even without funds), and the project is just beginning to advertise with bloggers and influencers. It's probably a good time to get into the game. The team is unlikely to spend a lot of money and time on development, making it challenging for early players to recoup their investments.

Or, if you see that news about the project is gradually spreading, it means the organic growth is just starting. Enter the project.

If you go to YouTube and see a popular video about the game from two months ago, made by a well-known crypto blogger, it's probably too late to enter. A significant influx of new users likely occurred about two months ago. If you don't see strong promotion in the information field at the moment, the pyramid will likely start to decline.

Exit Point​

This is more complex. It requires intuition and experience. Experienced traders and even NFT flippers know how to feel the market, so if you want to develop this skill, become one of them :)

If we have open data on the number of project users or the amount of money users have invested in the project, then it's much simpler. Once there's a slowdown in user growth (or their investments in the game), it means the project is nearing its peak. Most likely, the team, investors, and other participants will also notice this and gradually exit the project.

If the project is popular, like StepN, it's also logical to monitor user sentiment in various social media chat groups.

When you start to feel a decline in hype and a slowdown in various metrics (even though they might still be growing actively, but not as fast as they were yesterday), that's the first sign it's time to exit the game.

Of course, the game's lifecycle is strongly influenced by overall trends. During a bull market, many new users flock to crypto, and a percentage of them transition to games. So, any p2e during a bull market will likely have a longer life.

In Conclusion. What to do?​

Dear friend, after reading our article, you should have your own individual action plan.

However, in 2023, I would advise, first and foremost:

  • Monitor renowned founders on Twitter.
  • Monitor fund inflows into new projects.
Most likely, closer to 2024, we will finally see a rising market. Until then, it makes sense to focus on developing new games to successfully launch them during the bull market. Many will be doing the same.

And actually, my friend, it wouldn't be a bad idea for you to find a team, organize the development of a p2e project, and attract investors...

Creating a large-scale project is challenging, especially without crypto connections and substantial initial capital. But there's WAX, where you can practice. But that's a completely different story.
 
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