Gaming Guilds- The new way to communicate in gaming.
Guilds not only provides scholarships but also capital and finance for new and upcoming games.
Hello Web3 builders, enablers, and leaders.
Earlier this month, Balaji Srinivasan, former CTO of Coinbase, released his book called “The Network State.” It gives a framework on how to create new countries. The idea is to start with an online community and then materializing it into the physical world.
You see, most tech companies that started in the last few decades in silicon valley usually follow a similar path. Built product> Take it to potential investors > Get funded (if the product is a market fit) > Introduce the product to the end users/ customers > Scale the company.
But web3 startups work precisely the opposite way. It first starts by building a community > Get funded > Build product, just like how Balaji proposed in his book.
Today’s web3 gaming works similarly.
It’s all about COMMUNITY.
If you don’t have a community, you don’t have a web3 product.
Before we dive deeper into this week's newsletter, we have our previous issues on the Evolution of GameFi and the Economic sustainability of GameFi. Do check them out.
Coming to GameFi,
Imagine you are looking for a way to earn money from your gameplay, and you come across the concept of plan-to-earn. You notice this is a cool idea and decided to play the game and earn. But before earning, you need to own NFTs or tokens, which require an upfront investment. At this point, you will back off if you don’t have money, and many gamers as well can’t afford that expensive NFTs.
So that’s the problem for many gamers in developing countries. They don’t have money to afford any upfront investment for most play-to-earn games, as most play-to-earn games require purchasing NFTs or tokens if they wish to earn from the gameplay.
But here is the solution: Gaming guilds.
What is a Gaming Guild?
Gaming guild is not a new concept. A community of gamers has always been there. The difference is that today’s web3 gaming guilds have a specific purpose and mission.
The idea of today's Gaming Guild gets formalized by Axie Infinity Scholarship Program, where Axie owners lend their Axies to players who couldn’t afford to buy Axie NFTs to play the game and share profits.
In 2018, Gabby Dizon, an Axie Infinity gamer, began to lend his Axies to other players who couldn’t afford to buy their own. This helped players to create another source of income during the pandemic. By October 2020, he founded the first Gaming Guild, YGG ~ Yield Guild Games, along with FinTech entrepreneur Beryl Li and developer Owl. YGG was brought to life with the mission of onboarding millions of people into the play-to-earn revolution.
Gabby Dizon & Beryl Li, Co-Founders of Yield Guild Games
Why Guilds?
As more gamers come to play the game, the price of NFTs increases, the barrier to entry gets higher, and most gamers in low-income/ developing countries are not able to purchase their own NFTs upfront. So they turn on to Guilds.
The purpose of Guilds is to give gamers accessibility to gaming and solve high barriers to entry by lending them NFTs. This way, it helps gamers play NFT games like Axie Infinity. Gaming guilds also help game developers to find game communities. Thus, guilds help solve both sides of the coin in gaming.
How are Guilds operated?
Gaming guilds purchase vast amounts of NFTs at discounted prices from the game developers and lend them to gamers. Guilds are governed just like DAOs (Decentralized Autonomous Organizations).
Guilds recruit gamers as scholars and lend NFTs to them to play the games. As guilds are a community of gamers, they support games by being the first players to the game, investing in upcoming games, marketing the games, and popularizing them to more audiences.
As the play-to-earn gaming industry is still at an early stage with not so sustainable economy, guild members from a game that loses its popularity can move to other popular games or support new upcoming games.
Component of Gaming Guilds: Yield Gaming Guild
Today there are already a handful of gaming guilds out there in the market. All gaming guilds work and function similarly. We will look into a bit of detail about Yield Gaming Guild, the first gaming guild in the play-to-earn space, and the top guild by volume and market cap.
Here are the top ten Gaming Guild.
Here are the important Component of gaming guilds. We will explain using the reference of YGG.
Scholarship- The idea of scholarship was first started by the Axie Infinity players community. The Axie owners would lend their NFTs to new players who didn’t own any Axies of their own.
The main purpose of the scholarship is to onboard new players as scholars, lend them NFTs and share the rewards earned from the game.
There will be scholarship managers who will be responsible for recruiting, training, and managing the players. Gaming guilds would provide the game assets such as NFTs or tokens.
Currently, in the Yield Guild Games, the rewards are split into 70% for Scholar, 20% for Manager, and 10% for Yield Guild Games.
According to the report from YGG, the guild has provided over 30,000 scholarships all over the world as of June 2022.
Vaults- Unlike vaults or treasuries in the DeFi ecosystem, typically, tokens are staked to earn fixed-rate interest. On YGG, there are multiple vaults, and each “vault” represents the token rewards from one or all guild revenue sources. This means holders can stack their tokens in any of the vaults.
For example, one vault may stack tokens from breeding and sales of Axies; another vault makes stake rewards from NFT rental, etc.
Rewards from the vaults will be paid out according to:
the proportion of tokens staked by each guild member, and
the current revenue generated by the source assigned to the vault.
SubDAOs- SubDAOs are the interesting part of the guilds. It is a specialized & localized part of the bigger guild that focuses on a particular game or region.
As the members of the guild grow more extensive, to give more focus and build better relationships with players, SubDAOs streamline the process by categorizing it, increasing the effectiveness of the DAO’s overall operation.
SubDAOs can either be Game-Specific DAOs like YGGLOK for YGG League of Kingdom, YGGSPL for YGG Splinterlands, or Region-Specific like YGG SEA for Southeast Asia, IndiYGG for India, OlaGG for the Hispanic community, etc.
Community Program- Guilds have community programs for their members, where guilds allocate portions of their funds reserved for their community.
For example, in YGG, up to 45% of YGG tokens are allocated for community programs, including airdrops, awards, and bonuses for game victories.
Token- Guilds give their investors exposure to the value created by the guilds through tokens. Token holders have privileges to participate in the governance and voting in the DAOs-related activities.
For instance, YGG token holders get the following benefits,
Stake for token rewards related to overall DAO activities.
Stake for rewards related to specific activities.
Stake for access to exclusive content.
Use it to pay for services within the network.
Micro-Guilds
Currently, larger guilds like YGG have thousands of scholars, and these scholars are not directly managed by Guilds but by managers who take care of all the work like Sourcing, Selection, Onboarding, Monitoring, Sending QR codes, and Making payments for scholars.
For a single manager to do all these works for a group of guilds scholars is a huge task and will result in the inefficiency of work.
There are Micro-Guilds made up of fewer than ten player members that are designed to handle scholars and their work more efficiently. Micro-Guilds entrepreneurs recruits, train, and manage scholars directly without any additional managers.
A gaming guild startup BlockchainSpace is actively looking into this space by providing insights, tools and infrastructure, and investment to Micro-Guilds.
Guilds as VCs
One of the most exciting developments within the Gaming Guild space is that guilds are the new VCs for games and gaming companies.
As the game issues NFTs, guilds buy and breed NFTs, creating more demand for token/NFTs, resulting in higher token/NFT prices -> more hype around the game -> higher user growth -> higher protocol earnings -> higher valuation and thus, token price.
Big players in the space like YGG and Merit Circle are actively involved in the game's investment and development apart from managing their scholars. In the case of Merit Circle, 34% of their treasury is venture-type bets that will generate an average of 2,700% returns.
Guilds: A way forward.
As we are seeing massive development in the gaming guilds space, what are the more things we can look for that would make the space more promising? And what are the areas game developers, builders, and publishers can tap?
Here are some areas we think will make the space more sustainable and promising-
Scholar Marketplace- Creating a marketplace where scholars can update their gaming profiles so Guilds can find and recruit them.
Scholar Scoring- A Scholar Scoring system to reward skilled and top-performing scholars while encouraging low-performing scholars.
Unsecured DeFi Lending- As Guilds will record the data of their members, Guilds managers can use the “in-game data” to lend loans without collateral for the top performing scholars, akin to how banks provide loans through a person's “credit score” history.
Game Discovery Platform- As more play-and-earn games are getting developed, a platform where guilds can discover all the upcoming and correctly developing guilds will serve a great purpose, just as how product managers find great products on product hunt.
Fee Share Structure- Coming up with a more dynamic fee share structure instead of a fixed one where some % is collected to reward top performers while also helping other new players by incentivizing their participation.
Conclusion:
Every week and month, we see more development taking place in this space; while developers and builders continue to build, gamers and participants look for more ways to spend their time and engage.
We are experiencing a tectonic shift.
Since when did a community of gamers get interested in Investing, Developing & Incubating startups, and Working for social benefits?
Not only in terms of gaming and investment, but communities from this space are also making the world better. Early this year, Yield Guild Games raised $1.45M for Philippine typhoon relief to help families and affected communities buy medicines, food, and power generators.
Gaming guilds are still at an earlier stage, and they will grow bigger; in the next few years, we will see guilds not just providing scholarships but also capital and finance for new and upcoming games.
What’s Happening?
Two Top Gaming Guilds, Merit Circle and Good Games Guild have joined SIDUS HEROES with over 5 thousand experienced gamers.
SIDUS is an AAA-level RPG game based on blockchain and crypto philosophy that transports players to a world based on crypto and blockchain philosophy in which a major technological transformation has taken place.
IndiGG Partners up with GuardianLink to offer scholarships for Web3 Cricket Game, Meta Cricket League.
With the help of GuardianLink, IndiGG, a SubDAO of YGG, is giving scholarships to more than 1000 people for their game Meta Cricket League.
Winners of MCL's most recent beta received incentives worth $500 in just two hours, allowing online gamers to experience the life and spirit of cricket in the meta-realm.
Minecraft bans all integrations of NFTs and blockchain technology in the name of inclusivity.
Where is the money?
ZEBEDEE secured a $35 million investment to scale operations to meet growing demand.
A series B funding event for ZEBEDEE, a bitcoin-only game developer, raised $35 million towards the expansion of circular economies in virtual worlds.
Zebedee claimed to have developed a framework that makes it simple for any game creator to incorporate programmable currency into their works. A payment, which is given instantaneously and for almost no cost, can be triggered by anything that occurs in a game.
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I will write to you again next week; until then, happy building, gaming, and investing.