GameFi | Lesson 1
Hello Bubble Riders!
I’m trying a bit of a new format right now. My goal is to try to turn the guides I’ve been making into articles with accompanying videos. So, here is my first lesson on how to invest in GameFi.
This is the start of the GameFi series that I’ve been researching since @Dontask6 changed my mind about the investment viability on this topic–it must have been during our meeting in NY. Later, @deepdroppler1 set me on the path to finding some better land-based games.
Here’s the context for this study. If you’ve been following me for a bit, you know that during a crypto winter (or whatever we’re in right now) the AOTB algorithm shifts into yield farming. You can beat Warren Buffett even just by using Anchor.
In the Yield Farming guide, I outlined how to do that, and how to think about smarter choices in the space. Yield isn’t the most important feature, as there are a lot of unquantifiable risks in that space. Ultimately, the strategy that I think would work best for most people is to use a version of synth farming on the Spectrum protocol.
That should get you 20% – 40% annually, and I think that’ll hold as a stable range longer term. The trick is that you need to pick your positions carefully, and that’s why I have the yield farming report available to subscribers.You also get a weekly video update–typically it covers my analysis of the state of the market.
While 20% – 40% good, is there a way to earn higher returns during a crypto winter? Is there a way to find something that’s at least at an equal range of return but that can provide results in an uncorrelated way?
Two other popular strategies include rebasing (OHM forks) and master node yield farming. For a variety of reasons, those don’t look like long-term successful strategies. Node yield farming will work, but those returns decline parabolically. OHM forks are problematic because I’m still not sure how they’re not Ponzi schemes.
GameFi, the combination of crypto tokens, gaming NFTs, and yield farming tools, looks far more promising. And the HUNT project, which Cross-Chain Capital pioneered, looks to have outlined what that path might be like going forward.
The returns on the right are HUNT’s weekly returns–$168,000 in a week!
Not everyone makes money doing this though. Here’s a report from the obviously reputable Chadzilla on PEAKD with his experience in the GameFi space.
Granted, he didn’t lose a lot, but for 60 hours of work, that’s not a great outcome.
So, why do the pros make money but casual gamers don’t?
- Well, part of the reason is that casual gamers like Chadzilla don’t do the things that make the money (he found that “grindy”).
- Another part is that the competitions where people make real money are skill based and pros will naturally do better.
- A third part is that much of the earnings come from consistency over time–7 days a week is more achievable for a pro team than an individual player.
- Finally, you need some investing skill (note how Chadzilla had 1500 SLP tokens stranded).
To explain the skill, look at the following image of the price of SLP tokens–the ones you get for playing Axie Infinity (AXS).
Those two peaks are something that an investor with a strategy for trading bubbles might do well at capitalizing on. Maybe someone with an algorithm could perform better than a casual gamer.
So, that’s the purpose of this series on how to invest in GameFi. We’re going to go through how to pick sound games and review the strategies it takes to building and executing a successful GameFi strategy.
If you wanted to buy a competition team, I think $50k might be enough to start. If you had $250k you’d be set for sure–and that’s not a bad target for a community based DAO project.
Here’s how I’m thinking of this series at present.
•Lesson 1 – This Overview
•Lesson 2 – How Aren’t P2E Games Ponzi Schemes?
•Lesson 3 – How Aren’t P2E Games MLMs?
•Lesson 4 – 3 Top P2E Game Reviews (AXS, ILV, MAVIA)
That 4th lesson could obviously turn into 3 separate lessons, but that’s the current plan. Axie Infinity is the model for this entire space, so it’s worth understanding in some detail. ILV and MAVIA are innovating in interesting ways, and they are possible future investments as they aren’t fully released yet.
I’ll probably also include an ongoing series on gaming reviews in the basic DIY-er plan, as they all make interesting moonshot targets too. For the Crypto and Bubble Riders, I’ve already been including these in those every-other-day updates you’ve seen for the crypto market (example pictured below).
To be clear, this is really just the “top level” of the 3 Stage algorithm. But if you wanted to execute on the crypto maxi strategy, you could just pick 5 coins that are beating BTC on the right and rotate those out on a regular basis.
This week I wrote a number of pieces that are related to this post, so you might want to have a look if you’ve missed them.
That’s it for this week. Remember to join us on Discord if you haven’t already.
This newsletter is provided for educational and entertainment purposes only. Robin Technologies and Analytics LLC is the firm that distributes The Art of The Bubble products. The firm does not provide individually tailored investment advice and does not take a subscriber’s or anyone’s personal circumstances into consideration when discussing investments; nor is Robin Technologies and Analytics LLC registered as an investment adviser or broker-dealer in any jurisdiction.
You should expect no financial returns one way or another based on statements contained herein. These points hold equally for any statements that could be attributed to The Art of The Bubble or any related business entities or personnel operating in association with Robin Technologies and Analytics LLC. If you decide to buy or invest in anything, then your returns and potential losses are your own. No statements about taxation are taxable advice and you are encouraged to consult your own tax professional. You are also encouraged to do your own due diligence before investing in anything.