After scoping the overall crypto market, it is clear that play-to-earn gaming is the hottest sector. By leveraging the power of NFTs and blockchain technology, P2E games are providing opportunities for players and network stakeholders to create multiple income sources. This is inspiring the birth of a new industry that can replace DeFi in terms of market cap. It is possible because earning yield from playing video games is an attractive idea that can drive mass adoption faster and develop a revolutionary model of employment in the metaverse.
A real-life example of this would be Axie Infinity. The NFT-based video game is the leader in the P2E market. Axie’sAxie’s dual economic model incentivizes players and allows them to trade in-game NFTs on secondary markets. Not only that, but players can also stake native tokens to claim voting rights and rewards. We also saw Axie Infinity change thousands of lives in third-world countries like the Philippines. People who could not manage day-to-day expenses during Covid now earn the same or more income by playing video games.
While the growth of Axie is unquestionably impressive, it’s still only the tip of the iceberg for the blockchain gaming industry. It is expected that the gaming market will be valued at nearly $320 billion by 2026. So, there is no reason why play to earn blockchain games in the metaverse can’t match or surpass that number, given the functionality is far superior.
However, it is impossible to keep up with every single blockchain game in the P2E space and actively spend time playing. For some users, it is even hard to access a play-to-earn game. It is mainly because the entry price is too high. In the case of Axie Infinity, you need to spend at least $1000 to start earning, as each Axie NFT costs between $300-$500.
To overcome these challenges and remove entry barriers to the P2E metaverse industry, decentralized autonomous organizations (DAOs) create new platforms to help players with scholarships and give investors exposure to the best performing P2E projects. This article will deep dive into how DAOs like Yield Guild Games (YGG) and Merit Circle (MC) are building the best digital gaming economy with play to earn.
DAOs Focussed on P2E offer an intersection of Capital, Expertise, & Players
DAOs based on gaming and metaverse continue to be at the forefront of growing the play-to-earn economy. And it makes perfect sense because a community-led DAO can engage with different emerging projects that can maximize earning potential for all stakeholders involved.
Buying into a P2E DAO is like taking a diversified investment approach to gain exposure to explosive growth in the blockchain gaming industry. That accounts for the intersection between capital and expertise. For the players, DAOs provide scholarships. They also help players increase their earning performance. More money for the scholars means more revenue shared among token holders.
Even in terms of staking, P2E DAOs are proving to be superior to most DeFi platforms. It is mainly because of the DAO structure. Most of the yield guilds out there adopt a non-conventional approach to staking. They create subDAOs that represents a specific component of the guild’s revenue stream. For example, if you believe NFTs like land on The Sandbox or Axies in Axie Infinity are going to skyrocket in value, you can directly stake your tokens in a vault created for NFTs.
The best part about investing in DAOs like Merit circle or YGG is that every dollar spent turns into working capital for increasing overall revenue. So, as the DAO treasury grows with assets including Axies, Axie Land, Sandbox Land, and Zed Run Horses, the revenue made from each guild activity also increases significantly.
Yield Guild Games
YGG is one of the biggest community-led DAOs in the blockchain gaming space. When you own the native token of Yield Guild Games, you are investing in the NFT gaming index. Over the years, the DAO has invested in many blockchain games, including Axie Infinity, Sandbox, Iluvium, Zed Run, and League of Legends. More projects are growing under YGG support, but the main income-generating game is Axie Infinity. The treasure DAO of YGG holds more than 26,000 Axies and 240 parcels of Axie Land. Here is a better breakdown:
The DAOs and SubDAOs of YGG use these NFTs and other assets to create multiple revenue streams. Few NFTs appreciate their scarcity, while others generate revenue from rents or earnings from scholars. The community of YGG alone has more than 5,000 Axie scholars. With a large user base and expertise, the DAO owners have all the necessary tools to raise capital for investing in early-stage projects.
The DAO structure of YGG allows flexible franchising of other guilds. It gives other projects to leverage YGG’s brand by paying a 10% take rate. This approach is called guilds on guilds. Even though the DAO gets direct value from sub guilds, it does not own any of its assets, which means token holders will not benefit from any price appreciation. This also increases the chances of a SubDao leaving the main DAO.
To overcome some of these challenges, a new P2E-based DAO is formed with Merit Circle. Yield Guild Games also invested in Merit Circle to expand its scholarship program in developing countries. I include this project because it broke all BLBP records, raising more than $105 million in less than 72 hours.
Merit Circle DAO has flown under the radar for the past couple of months, but its recent MC token auction grabbed the attention of every P2E and metaverse crypto enthusiast. Like Yield Guild Games, Merit Circle also develops the play to earn economy by scaling the scholarship program and investing in more nascent projects. In its recent Balancer Liquidity Bootstrapping Pool (BLBP) launch, it sold more than 41 million tokens to nearly 4000 participants. The team will use these funds to own a stake in many games and accumulate more NFT assets.
The key difference between Merit Circle and YGG is their DAO structure. As mentioned earlier, YGG follows guilds on guilds approach, but MC follows a SuperGuilds approach. In this way, $MC token holders have exposure to all SubGuilds under the main brand of Merit Circle, as they are directly integrated into the ecosystem. Also, the take rate is much higher than YGG at 30%. Meaning, the DAO has a 3x better profit margin. Additionally, a SuperGuild can ensure higher standards because there is a more uniform leadership that sets the criteria.
The fundamentals of Merit Circle show us that they are trying to do everything in-DAO, which will likely build a more engaged and loyal community. It can already be seen through staking. Meric Circle considers the time-weighted element while calculating the staking rewards, ensuring the float is always extremely tight as most of the supply will be locked in staking.
DAOs like Merit Circle and YGG are not competitors in the NFT gaming space. They aim to collaborate and develop the play to earn the economy. And it is expected to see more such DAOs forming moving forward. As companies are heavily invested in the metaverse and blockchain-based gaming projects, we will see rapid advancements in this space. Also, the rate of adoption will outpace other crypto market segments. When that happens, people will flock to gaming-based DAOs to gain exposure and earn high yield through staking.
Born and brought up in India, Karthikeya Gutta is a crypto journalist and freelance contributor for ItsBlockchain. He covers various aspects of the industry with in-depth analysis and research. His passion towards blockchain and crypto ecosystem is mainly because he believes it can really change the world and help millions of people.
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