Happy Thanksgiving: Gimme Some Loot

VeradiVerdict - Issue #172

A few months ago, Loot, an NFT experiment hacked together by Vine co-creator Dom Hofmann, was launched to the public.

In the span of a week, the project went viral. Twitter was overflowing with commentary surrounding the project—skeptics, staunch advocates, and everyone in between. Many thought leaders, from Vitalik Buterin to Chris Dixon, framed Loot as a paradigm shift in our conception of the metaverse, NFTs, and gaming itself. John Palmer went as far as to say that “we’re in a different era now”; there was “Before Loot and now there’s After Loot.” Others, however, viewed it as nothing more than a speculative pump in an asset with little intrinsic value.

As the hype—and price movement—around the project has died down, Loot has since fallen off of many people’s radars. But I think now’s a good time to check back in on the project. What has the Loot community been building since then? Is it living up to its bold original vision?

But first, what even is Loot?

It all began with a tweet in late August from Dom Hoffman.

The concept was stunningly simple. There are 8,000 total “Loot bags,” which are text files containing eight phrases. Each of the “items” resembles objects you’d discover in a game like Dungeons & Dragons—that’s why Hoffman calls it “adventurer gear.”

These Loot bags are non-fungible tokens (NFTs) on Ethereum that are provably rare, transactable, and composable with other open protocols.

Here is a sample Loot bag, from perusing the listings on OpenSea:

Bag #615

The highest all-time sale of a Loot bag (Bag #6422) was for 19.2 ETH, around $86k. Today, while prices have calmed from the initial boom, the “floor”—or cheapest assets in the collection—hovers around a price of 3 ETH, around $13k.

But what can you actually do with a Loot bag? The answer, to some, is highly unsatisfying. To others, though, it’s what makes the project so special. According to the project description:

Loot is randomized adventurer gear generated and stored on chain. Stats, images, and other functionality are intentionally omitted for others to interpret. Feel free to use Loot in any way you want.

In other words, there is no game for Loot to be used in, at least in the beginning. The “game,” then, is the building process itself; people finding different ways to remix, integrate with, and build upon the Loot ecosystem.

Loot, then, is a set of open-source objects. Their value comes from the way that they can be used in the future. Avichal Garg’s analogy to a deck of cards is a strong way of understanding this novel dynamic:

Put differently, Loot is a first-of-its-kind bottom-up game. There is nobody that owns or controls Loot; the original keys to the contract were burnt after a governance vote. Rather, the community of users, builders, and owners determines what Loot means to them and how they want to use their items.

Source: @tandavas (Twitter)

The building begins.

In the weeks immediately after Loot’s release, there was an early burst of momentum from artists, developers, and other creators inspired by the project.

An early category to emerge was Loot-inspired art. In particular, visualizers allowed Loot holders to view (and own) image representations of their bags. Loot Character, the first “visualizer” of this kind, produces pixelated adventurers.

Source: Loot Character (Bag #6515)

This inspired other artistic styles, from the cute aesthetic of Loot: Explorers to the profile-picture-focused HyperLoot. Lootmart even created AI-generated visualizations for individual bag items.

Source: Loot: Explorers

Visual art was just the beginning. Projects like Loot Sound’s amalgamation of noises and the original compositions produced by Lute (for Adventurers) added an audial dimension to Loot bags. In the future, community members hope that Loot novels, movies, and other types of content are also produced.

Developers also built infrastructure for the Loot ecosystem. One community member, while waiting at an airport, created an ERC-20 token named Adventure Gold ($AGLD), which could be used as an in-game currency for the Lootverse. Loot bag owners can claim 10,000 $AGLD—worth nearly $80k at their peak—but the currency can be bought and used by anyone. 

In addition to a currency, the community also built a native marketplace. Loot Exchange is an NFT exchange, similar to OpenSea, that pulls asset-specific information—such as the Loot Character visualization and the rarity scores described earlier—to give Loot fanatics a more tailored buying experience.

Source: Loot Exchange

The royalties from these exchange transactions fund the so-called Loot Royalty DAO, a pool of nearly 80 ETH (~$350k) to be distributed to projects and builders in the community.

While it’s still early, a few Loot-based games have begun to crop up. Most notable is Realms, an upcoming play-to-earn resource game that has attracted substantial attention. The full game is still in progress, but the Realm derivatives, fictional plots of land, have been released.

Source: Realms (Medium)

As you can imagine, there are dozens of other Loot-based projects that I have failed to mention, illustrating how quickly this “game of building a game” has progressed. But these three broad categories of projects—art, derivatives, and games—more or less capture what people have been building these past few months.

Where we are today.

By almost any metric, Loot building and “user” interest has slowed down. As the initial wave of “Loot mania” has cleared, a lot of industry-watchers don’t know what to think. Is Loot highly undervalued? Or is it dying?

In addition, the community remains very small, even for this industry’s standards. There are only around 2.5k unique wallets holding original Loot bags, which has been a frequent criticism of the project. A number of more affordable Loot derivatives, however, have slightly expanded access—around 5k wallets hold $AGLD, 22k wallets hold mLoot, and so on. 

In short, it feels like the project is at an important moment in its lifecycle. While a small number of die-hard community members remain dedicated to building out the Lootverse, with weekly town squares and intimate meet-ups at conferences, much of the crypto community seems to have turned their attention elsewhere. 

Loot is a truly ground-breaking concept that will undoubtedly be remembered as a pioneer in this space. But the scope of its impact will be determined by whether the community can grow (with Loot ownership limitations) and what that community ultimately builds. These were the same questions from the early days of the project, but, several months later, I think they’re still equally up in the air.

Lore: the next phase?

So, what’s next? 

The frontier, some are suggesting, has to do with the project’s lore.

Last month, two community members (Timschel and Peter Watts) examined the original Loot contract and uncovered some surprising information about the “Big Bang” of the Lootverse. To take a few findings, there’s a class of “Genesis Adventurers,” items have distinct materials and weights, and there are three “character classes.” For a deeper dive into the specifics (there’s a lot there!) check out this thread and this lore page.

At a high level, this unlocks a lot of new opportunities for Loot. This lore can inspire new elements of existing categories—art, derivatives, and games—but perhaps even enable entirely new categories. This next phase of Loot, with lore at the center, will be exciting to watch unfold.

The bottom-line: While the rest of the industry has been looking away, passionate Loot members have been diligently building out the Lootverse. The project’s future, however, is at a crossroads. Developer momentum has slowed down, the community remains small, and outside interest has faded away. It’s possible that the recent discovery of lore could drive the project’s next leg, or it could be something else entirely. Ultimately, the community will decide.

What Loot has achieved already, however, shouldn’t be diminished. The community’s creativity, cross-project integration, and grassroots ethos has been pretty miraculous to watch; it’s a testament to the power of composability and building in the open, two of this industry’s strongest tenets. The experiment of Loot, in my book, has already succeeded for that reason alone.

Acknowledgements. In researching this piece, I relied on a lot of fantastic community resources. Among them are LootWatcher, Loot Herald, Loot Project, The Genesis Project, and Bibliotheca (for Loot).


ABOUT ME

Hi, I’m Paul Veradittakit, a Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing in blockchain companies and cryptocurrencies. I’ve been in the industry since 2014, and the firm invests in equity, early stage token projects, and liquid cryptocurrencies on exchanges. I focus on early-stage investments and share my thoughts on what’s going on in the industry in this weekly newsletter.