Play-to-earn games are a major Web3 trend, often referred to as P2E games, and let players earn a living in virtual worlds.
There is a developing ecosystem around these games which goes something like this:
1. The game.
Axie Infinity is the biggest P2E game right now. The studio behind the game, Sky Mavis, raised
raised $152M in a Series B round led by a16z.
Axie Infinity is the largest NFT project in terms of total trading volume, with more than $2.2 billion to date.
To play the game, you need an ante, or in this case an NFT in-game asset. Many players can’t afford these to play the game. So enter another party into the supply chain => =>
2. The guilds.
Guilds like Yield Guild Games (YGG) which is a decentralized gaming outfit based in the Philippines that invites players to share in the company’s revenue by playing games like “Axie Infinity,” a blockchain-based game where players breed and battle digital creatures named Axies in order to earn tokens called “Small Love Potion.”
YGG helps players who want to play P2E games but don’t have the cash to buy the NFT. The guilds offer players “scholarships,” or in other words, front the cash to buy the NFT so the player can start playing, and take a cut of the players’ earnings to pay for the buy in.
a16z led a $4.6M investment in the tokens of YGG.
But incredibly, demand for the NFTs to play the games is starting to outstrip supply, so enter the next hub in the chain => =>
3. The NFT factory
Because the guilds can’t get NFTs fast enough to lend to players, BreederDAO, the NFT factory of the metaverse has grown rapidly.
BreederDAO is another Philippines-based startup that is a manufacturer of sorts of the NFTs that have to be used in blockchain-based games and virtual worlds, including “Axie Infinity.”
They just raised a $10M Series A funding via a token sale that was co-led by a16z and Delphi Digital.
According to a16z data, guilds like YGG and Earn Guild attracted $532M in funding last year. But even so, the players they are currently funding represent less than 2% of the nearly 3 million daily active users that Axie Infinity has.
BreederDAO says it’s shooting to work with 5,000 play-to-earn groups by 2025.
Arianna Simpson of a16z says to think of the whole process like a supply chain, where “you don’t necessarily have one company producing everything end to end but rather you have different companies at different parts of the supply chain [that produce] a fully finished product.”
BreederDAO is a part of that ostensible supply chain and centers on making NFTs for Axie Infinity as well as other play-to-earn blockchain games, including Crabada and Pegaxy.
The company is selling the NFTs at set prices right now, but per Simpson, “fractionalization is not something that they’re doing right now but down the road, who’s to say?”
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