Move-to-Earn

VeradiVerdict - Issue #171

The surge of crypto-enabled gaming has been one of the most significant developments for our industry in 2021. The year has been packed with activity: the hyperbolic growth of Axie Infinity, the birth of guilds like Yield Guild Games, Loot’s unique “bottom-up” game, Facebook’s Meta rebrand, the recent $100M Solana gaming fund, and interest from legacy gaming studios, just to name a few.

If that wasn’t already enough, the energy at NFT.NYC was intoxicating. Scrappy startups, multinational corporations, A-list celebrities, Hollywood movie studios, and many others came together to discuss and celebrate the disruptive potential of non-fungible tokens (NFTs) on their respective domains. Particularly top-of-mind was the intersection of open blockchains, NFTs, and gaming, a trend that shows no signs of slowing down. 

In line with our strong conviction on the space, we’ve recently invested in Genopets, a first-of-its-kind “move-to-earn” game with ambitious plans to push the industry forward. We co-led the round with Konvoy Ventures and were joined by other industry-leading stakeholders, including Eniac Ventures, Alameda Research, Solana Capital, Spartan Group, and others.

What is Genopets?

In the words of the team:

Genopets is a free-to-play NFT game that combines the nurture and evolution of Tamagotchi, the training and battling of Pokemon, and the crafting and collecting of Animal Crossing, while rewarding players with crypto as they grind through physical activity and mini-games.

If those comparisons went over your head, the gameplay is quite simple to understand.

Users can choose to “mint” their Genopet for free—answering a series of questions to instill in it a unique psychological profile—or purchase one on the open market. Each Genopet is associated with a unique NFT, owned by the user.

Source: Genopets Demo

Now that a user has their Genopet, they can “evolve” it by earning XP, strengthening its performance battling other Genopets and giving it unique properties. XP is earned either through real-world exercise (tracked by a user’s mobile device or wearables) or through in-app cognitive mini-games battling against other players.

Source: Genopets

As the Genopet evolves, it gains higher utility for in-app gameplay and becomes more attractive for speculators or other players in the open market.

While “move-to-play” has found success in the Nintendo Wii, Pokemon Go, and other activity-based games, “move-to-earn” is an entirely new form of gameplay. Players, by exercising and completing step challenges, will be able to expedite the evolution of their Genopets and, as a result, increase the value of their in-game assets. This is markedly different from other play-to-earn games we’ve seen; instead of motivating players to mindlessly tap their screens, Genopets provides a financial incentive for players to improve their personal fitness. 

Genopets is intended for all players, regardless of their past experience with decentralized applications (dApps) or crypto games. As a result, the team has made the gameplay as user-friendly as possible, abstracting away the NFT minting, microtransactions, or any other interactions with the blockchain from the end-user. The goal is for a non-crypto-native player to be able to mint, level up, and even sell their Genopet without having to directly interact with the blockchain or a crypto wallet. All you need is a smartphone to download the app and start moving to earn.

Why is it free-to-play?

One feature that distinguishes Genopets from many other play-to-earn style games is that it is also free-to-play. For example, to play Axie Infinity, the canonical play-to-earn game, users must buy 3 Axies from the marketplace. At one point, this cost thousands of dollars, making it extremely cost-prohibitive for many users. A similar requirement exists for other play-to-earn games. This ended up serving as the impetus for “gaming guilds” (like the aforementioned YGG) to provide scholarships to players in exchange for a portion of their earnings.

To play Genopets, though, no such up-front fee is required. In fact, players can mint their Genopet, evolve it through their exercise and in-game performance, and sell it on the open market for a profit.

This has two main benefits over pay-to-play play-to-earn games. First, it drastically expands the total addressable market of the game. Many casual mobile players aren’t even willing to spend $0.99 on the App Store, much less spend non-trivial amounts on in-game NFTs before even playing the game. By making sure there’s a free-to-play track, games will attract a larger and more diverse set of players. 

Second, it also can improve the sustainability of a game’s economy. Other games, like Axie Infinity, have been criticized for being overly reliant on user growth to fund the earnings of other players. As user growth slows (and less capital is artificially injected into the ecosystem), some claim it could have trickle-down effects for other parts of the gameplay and overall user rewards. By approaching game economics from a different angle (value accrual from engagement, not user onboarding), Genopets is attempting to build an ecosystem that is resilient for the long haul.

Source: Genopets (Medium)

If users, however, would like to buy in-game items, there are a number of opportunities for them to enhance their Genopet’s performance (and the player’s earnings). Refined Crystals can be purchased to temporarily alter your Genopet and affect its future evolution (e.g., a “Fire Genotype Crystal”). Habitats, too, are plots of land where Genopets can live and evolve; players can even lease their Habitats to other players to earn XP rewards.

What is the game’s architecture?

Solana’s high throughput, fast settlement, and low transaction fees have made it an attractive candidate for many new blockchain-enabled games, so it comes as no surprise that Genopets has selected it as its primary layer-1. 

There are two main categories of Genopets’ on-chain elements. The first is NFTs, which encompasses the Genopets themselves, Refined Crystals, Habitats, and other (forthcoming) unique elements. These are fully owned by the user, which means they can be transferred between wallets, made composable with other games, or sold on the open market—all of the powers of the open economy are afforded to Genopets players. The second category is the in-game currency system, which includes the $GENE (governance) and $KI (utility) tokens.

Source: Genopets (Medium)

For a deeper dive into each of these elements and how they factor into gameplay, I’d recommend you read the project’s whitepaper.

What’s the long-term vision for Genopets?

Moving forward, there’s a lot to be excited about. Whether it’s mini-games, leaderboards, social mechanics, prediction market integration, or other new features, there’s no shortage of exciting game functionality in the pipeline.

Source: Genopets (Whitepaper)

As Genopets gears up for its public beta launch in the next few months, the project has experienced an outpour of interest from the community. They already have over 100k members in their Discord server and more than 120k followers on Twitter.

Most of all, we’re excited by Genopet’s bold experimentation on the nature of a game itself—i.e., the unique fusion of free-to-play, play-to-earn, and move-to-play into something entirely new, move-to-earn. And if the game’s early traction numbers prove anything, it’s that there’s real user demand for games, like Genopets, that challenge these conventional models.

If you’re interested in learning more, make sure to join their Discord and check out their Medium for more in-depth articles on the game. And if you’re ready to mint your own Genopet and start earning, join the waitlist for their public beta launch!

Share

- Paul Veradittakit


DIGESTS

What the heck are ‘social tokens’ — and why would anyone want to use them? 

Platforms have emerged that make it easy for artists, musicians, and other creators to issue crypto-tokens specifically designed for use by their community of fans.  

The Investor’s Perspective on the Bitcoin Taproot Upgrade

Taproot is the most significant upgrade to the Bitcoin network since the activation of the block capacity enhancement of Segregated Witness in 2017.


NEWS

Former FanDuel Executives Launch BetDEX, the World’s First Decentralized Sports Betting Protocol, and Secure Largest Ever Seed Round by a UK Startup

$21m seed investment round led by crypto investment firm Paradigm and cryptocurrency exchange FTX

Ethereum Layer 2 developer StarkWare raises $50 million, now valued at $2 billion

StarkWare has raised $50 million in a Series C funding round and is now valued at $2 billion.


REGULATIONS

India to Ban Crypto as Payment Method but Regulate as Asset: Report

The Modi government will also ban active solicitation from crypto firms, such as ads.

Some Chinese Crypto News Sites Appear to Go Dark as Crackdown Continues

ChainNews, Odaily and Block123 were unavailable on Nov. 17.


IN THE TWEETS


NEW PRODUCTS AND HOT DEALS

ConsenSys closes $200 million raise at $3.2 billion valuation

ConsenSys, a company that develops and invests in the ethereum blockchain, has raised $200 million from investors including HSBC, Coinbase Ventures and Marshall Wace. 

ConstitutionDAO Raises $27M on Eve of Sotheby’s Auction. $PEOPLE Could Be the Reason

What started as a long shot to buy one of the original copies of the U.S. Constitution is looking more and more like a lock.


LETS MEET UP

Los Angeles, Nov 22-26

Coffee meetings or walks in San Francisco


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.