Web3 Gaming Thesis
QMG Labs' Thesis on Web3 in Gaming
Our thesis is that these three crypto processes/tools create a Web3 gaming product.
DeFi/GameFi
NFT
DAO
Separately, each of these crypto processes is actually still Web2.0 based, in that, they give greater or direct digital ownership or access, but they do not align the community to form a digital asset-based ownership network. A cynical view of most DeFi projects is that they are financial trading mercenary networks. When the returns, staking and liquidity is sufficient, participants stay, but if either the return or liquidity is insufficient, participants will seek out the highest possible returns.
But when all three are properly combined into a Web3 game, the result is a community network of nodes who are all owners, consumers, and traders simultaneously. As long as the game/product can put out sufficient 'content' as entertainment and that 'content's' value can be then distributed through the network, then the focus is no longer on finding the best financial deal, but simply growing sustainable network effect value in this Web3 network. We'd like to call this the "Web3 Game Community Value Creation Network" (Web3 GCVC Network).
How we see the Web3 GCVC Network operate is that DeFi creates the initial liquidity of both the game governance token and the in-game token.
The value of the NFT increases with the increase of gameplay (content generation) as there is a mechanism that links the value of the NFT to the gameplay (leveling up, in-game gold for breeding, etc.). The NFT now acts as an asset as it captures the content value created through its gameplay utility in the game.
While the DAO allows for the existence of a game governance token that at a minimum gives some type of ownership right over the entire game's treasury and therefore ecosystem network. But linking the utility of the governance token to the NFT through the act of purchasing the NFT, NFT breeding, or the right to buy governance tokens by staking or holding game NFTs, ties the NFT's value to the game's overall finances.
The issue with governance-only token models is that once you trade them away, you no longer are part of the network ownership.
The issue with DeFi is that you are a mercenary that chases the best returns only.
The issue with NFTs is that without utility, the majority will be an illiquid asset and are totally dependent upon market sentiment for price appreciation and provide no source of income until its capital sale; which then also kicks you from that particular network.
But in the case of the Web3 GCVC Network model; the governance tokens are invested into the asset value of the NFTs while the in-game gold provides an income bearing asset, and the ability to stake the in-game gold or game governance token and then farm the LP token, back to investing the gains into the NFTs creates a more consistent compounding return as the value created by the gameplay content or player-generated content is folded into each step.
This ultimately means that if the gameplay is not sufficiently entertaining enough or the NFT does not capture the gameplay enough, then this model will eventually die as the gameplay value is not being folded into the transactions and then the current Web2 Crypto mercenary incentives will kick in. In this respect, we could also call this the "WAGMI Network Model."
This thesis is only clear to QMG Labs in the context of games and not yet applied to other industries, but it may be reasonable to assume that if another industry has a game type of structure (actual game structure, not gamified), then the same model could be applied.
Creativity is just connecting things. When you ask creative people how they did something, they feel a little guilty because they didn't really do it, they just saw something. It seemed obvious to them after a while. That's because they were able to connect experiences they've had and synthesize new things. Steve Jobs
This thesis is entirely the result of the pioneering efforts of Axie Infinity as the 1st and only truly Web3 game now currently in existence. The contribution of Axie Infinity to this space will never be understated. The analysis and thesis come from developing our own Play2Earn game as well as our background in the global poker industry and gaming, but there would have been nothing to analyze if not for the visionaries at Axie Infinity.
Last updated