How does YGG value the shadow fund called gamefi?

Published on 8/26/2021   659 views   0 Comments  

In the past 14 days, YGG has increased by more than 260%, and compared with the final auction price of IDO of US $0.49984/piece, the average transaction price has increased by about 16 times, up to US $8.62/piece in the month, which is greatly increasing the attention of the market.

YGG is the governance token issued by yield guild games. In the past, the label of yield guild Games was the famous NFT Game Association and the largest game association under the largest chain game of Ethereum axie infinity.

At the end of July, YGG ended IDO and completed the transformation from game guild to Dao. As the development enters a new stage, more and more investors realize that YGG is essentially an index fund for encrypting native games. Andrew steinwold, a well-known NFT investor, is one of the investors who pay close attention to the development of YGG. He said that YGG will occupy a certain share in each popular encryption game on the market. At present, axie worth billions of dollars is the largest chain game, and there will be more than a dozen encryption games like axie in the future.

Game associations and funds correspond to different valuation models in the real world. Yield guild games is a complete Dao. The method of segment valuation may be a better choice to help understand its business.

Although determining the valuation model for Dao is not equivalent to determining the governance token, the value of all activities officially called YGG in the white paper will be reflected in the fully diluted market value of YGG token governance.

Business model based on "play and earn"

Yield guild games is no stranger to investors who have long paid attention to NFT. Therefore, this article will not repeat the basic information.

From the background and development process of the founding team, the Dao is not grassroots. Of course, they never flaunt their grassroots.

The project was originally a game guild, founded by Gabby dizon and beryl Li. It should be noted that the background of Gabby dizon has a deep background in the game industry. Among them, he served as the chairman of the Philippine Game Developers Association from 2007 to 2009 and the CEO and co-founder of the Philippine free mobile game company altitude games since 2014 (battle racers on decentraland and mushroom mandia on sandbox were developed by the Philippine mobile game company).

Millions of players form the guild and generate cash flow by playing games. The main purpose of yield guild games is to obtain in-game assets by investing in p2e games. The main ways to generate income are as follows:

Β·Its income comes directly or indirectly from the owned NFT assets and helps players enter the game world through the leasing plan, so it can exchange rewards in the game (shared with players);

Β·Assets in the game, such as land and income, can be economically controlled by a third party (non trade union members) on the land in the game

Generated after the activity;

Β·NFT ownership will benefit from the increase in the economic value of in-game assets and be reflected in the value of native homogeneous tokens in the open market.

Such a revenue structure limits the choice of chain games by yield guild games. Therefore, the game must meet the definition of play to earn, that is, virtual land economy + governance token economy + players can obtain governance tokens in the game by playing the game.

On July 27 this year, yield guild games publicly sold 25 million YGG governance tokens in sushiswap through miso, raising about $12.49 million to officially become a Dao. This means that people holding YGG have the opportunity to participate in community governance and enjoy the financial asset distribution and benefits of Dao - it should be noted that at that time, 2500 yggs were contracted by 32 addresses, which caused an uproar in the market, but then it was found that 32 addresses came from community group purchase, so the market doubts dissipated.

Secondary market risk: the institutional share will be intensively released after September next year

Prior to this, yield guild Games has experienced three rounds of agency led financing:

1. Seed round (announced in March this year): it raised US $1325000. This round of financing was led by Delphi digital. Other institutions include blocktower, scalar capital, Youbi capital and some individuals.

2. Round a (announced in June this year): raise USD 4 million. Bitcraft is the leader in this round of financing. Other investors participating in this round of financing include A. capital ventures, atelier ventures, fabric ventures, Greenfield one, IDEO colab, mechanism capital, parafi capital and third prime capital. It should be noted that bitkaft's investment in the past two years has focused on E-sports and game industries,But the e-sports team is not within the scope of investment at present。

3. Before Ido (announced in August this year): USD 4.6 million, invested by a16z. Kingsway capital, infinity ventures crypto, atelier ventures and game entrepreneur Gabriel leydon also participated in this round of financing. This financing triggered renewed attention to yield guild games this month.

Through the primary market, yield guild games raised a total of US $21.925 million. The above financing enables investors to obtain 24.9% of YGG, of which 20% of the YGG of the investors in the seed round are released when they are on the main line, the remaining 80% have a one-year lock-in period, and the class A and class B investors in round a have a two-year and one-year lock-in period respectively.

According to the official information provided by yield guild games, the YGG held by the institution will be intensively released from September to October next yearThe risk of pressure on the YGG secondary market may increaseThe community release, which accounts for 45% (the largest share) of YGG, will slow down at the end of next year. As for the community plan, it is still officially planned. The YGG lock-in period released with pledge or reward will be 2-4 years.

Club valuation or asset management company valuation?

Yield guild games recently released asset and treasury reports, which means that YGG may be priced. In some people's opinion, YGG can be valued by club, and because YGG's business model has the attribute of asset management company, it is also possible to use AUM method for valuation.

The club has social attributes and pursues the maximization of team performance (rather than profit), so as to drive the sustainable development of the club's income and business, which is similar to YGG's business model.

However, the valuation of clubs is a difficulty all over the world, represented by football clubs. At present, we can refer to KPMG's football clubs' valuation, the core of which is the market sales rate, which is weighted and adjusted in combination with multiplier variables such as profitability, influence, total value, broadcasting right and stadium property right, and the value of top clubs is not related to profitability.

Among them, RM (revenue multiple) valuation method requires that the operating income of the appraisal object is stable, and there is no requirement for profit. According to the KPMG report, at present, the listed company and football club manu has the strongest business development ability and the highest enterprise value, with a valuation of about 3 billion euros and a corresponding market sales rate of 4-5 times.

The July report of yield guild games focuses on the revenue data. Since the launch is in the early stage and needs to bear the cost, the income scale and growth rate of yield guild games need to be closely watched by investors.

According to the revenue data, the revenue generated by yield guild games in July mainly came from scholars. The sharing mode of scholars (*) income generation is 70% for scholars, 20% for community managers and 10% for yield guild games. In July, scholars generated about 1177 SLP (axie's governance token), about US $3.259 million, of which 1117000 SLP (i.e. US $329600) was owned by yield guild games. This is YGG's highest monthly income so far.

(* scholar refers to the winner of the scholarship program of yield guild games, which is essentially a lease)

From April to July 2021, scholars generated 31.9 million SLP (US $8.933 million) and YGG obtained 3.119 million SLP (US $582800).

The current market value of yield guild games is about US $700 million. If we refer to the valuation of Manchester United and take five times, yield guild games should earn US $140 million this year. Of course, it is unreasonable to use top football clubs as a reference, because the industry and development stage are different. YGG is currently the top chain game guild and is in the initial stage of development. The market sales ratio may be greater, but this is also limited by the capacity of the chain game track. Now the capacity gap between the chain game track and the traditional game track is huge - this is also the reason why many NFT investors like to compare axie's revenue, monthly life and traditional game revenue, Measure the capacity of the current track with the head project.

In addition, yield guild games may still be in the loss stage. Because its July report disclosed that in order to support scholars' demand for scholarships, yield guild games Β  In July, three times of the accumulated income was spent on breeding costs in a single month, which doubled the number of scholars in a single month in July. In addition, in a single month in July, the number of discord community members increased by 95%, and the number of community members exceeded 38000 (if there is a problem with this corresponding method, just have a look).

Why just look? Because discord community members can not directly bring income, they can't see any commercial value at present. They only represent the development trend, otherwise it will evolve into a joke that the previous valuation of Evergrande football club was estimated at RMB 15 billion by a microblog fan of RMB 3000.

In addition, some income or potential income are not emphasized, but investors need to pay attention to it, because the assets they hold are star assets, such as League of kings, F1 delta time, the sandbox, etc. yield guide game has evaluated the market value, as shown in the figure below:

Yield guild game also disclosed the early investment and market evaluation value of the following games, which totaled US $1.45million.

It should be noted here that subdao is translated by some translators as a child Dao, and the corresponding yield guild games is a parent Dao.

Sub Dao is a micro economy. Its main function is to host the assets and activities of specific games. The owners of sub Dao can enjoy the benefits brought by asset appreciation and the benefits generated in productive games.

For example, a sub Dao is dedicated to axie infinity players and a sub Dao is dedicated to zed run players. Token holders in sub Daos can increase their collective benefits from the game by playing and cooperating together. They can also use the assets owned in the vault to better equip their characters and further improve their income potential.

As yield guild Games has not made any more specific planning for subdao at present, it is impossible to know how yield guild games will obtain revenue from the operation of subdao, whether through fixed handling fee or specific sharing proportion. It is temporarily impossible to evaluate. However, we can learn from the views of Delphi digital, an early investor of yield guild games, Yield guild game will become the shadow fund of these gamefi in the foreseeable future.

This provides support for the Aum (asset management scale) valuation method. It is necessary to separate relevant businesses for segment valuation (such as subdao). The valuation method is applicable to the valuation of asset management companies. The three elements determining the valuation are AUM, rate structure and rate level. Generally, the market value / loan scale is adopted for financing business, with reference to the range of 0.2x-0.4x, and the market value / AUM is adopted for asset management business, with reference to the range of 0.02x-0.18x.

Generally speaking, if the business that yield guild game insists on is a business of lending at the gate of the casino, the value of YGG will be greatly reduced.

But don't worry. At present, the yield guild game may be the right choice. No one knows the game better than them. However, because a large part of the assets held by yield guild game are still gamefi, once the market performance is poor, Davis will be faced with double kill, and the fluctuation will also expand.


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