Play-to-earn gamers form ‘subDAOs’ to maximize crypto profits

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—by Protos Staff
Play-to-earn fans are forming game-specific DAOs to decide the best way to grind the burgeoning crypto-powered entertainment industry.

Years ago, enterprising gamers played World of Warcraft to earn in-game “gold” to sell for cash on dodgy third-party sites. Today, play-to-earn (P2E) fans win crypto assets in-game and dump them daily.

In fact, gamers are now forming multi-layered crypto collectives powered by decentralized autonomous organizations (DAOs). The goal? Maximize profit and distribute revenue fairly.

Many play-to-earn games combine NFTs with gameplay. Players can generate revenue by evolving their in-game assets into more valuable iterations, as well as levelling up accounts.

Those looking to maximize their revenue are often sponsored by wealthy investors, who award “scholarships” to aspiring gamers who join “yield guilds.”

Scholars pay back their benefactors over time with a percentage of their earnings.

The top five play-to-earn tokens by market cap have all outperformed Bitcoin and Ether over the past year.

Wealthy token holders also generate on-chain activity for their favored projects by paying gamers (in Axie Infinite’s case, from the Philippines) in a bid to boost credibility of their investment pitches.

Ultimately, sponsors benefit by scouting and selecting precocious, hard-working gamers — capitalizing on exceptionally cheap labor abroad with wage arbitrage.

Play-to-earn crypto guilds are neat but their tokens underperform

Last April, P2E games counted about 88,000 users overall. That number had grown to 1.33 million by October.

P2E-related transactions now generate more than $500 million worth of crypto assets daily. The industry’s rapid growth has attracted seed investors and venture capitalists.

Organizations like BlackPool (BPT), Merit Circle (MC), AAG, and Yield Guild Games (YGG) have positioned themselves as leaders in crypto gaming.

  • Last year, Yield Guild Games generated 100% of its revenue from Axie Infinity, which soared in popularity after investors exploited wage arbitrage.
  • Axie’s well-funded Vietnamese maker Sky Mavis created three sets of tokens for Axie Infinity: AXS, SLP, and Axie NFTs.
  • BlackPool earns 70% of its revenue from Sorare, an NFT-powered fantasy football platform.

To help solidify its position in the P2E ecosystem, Yield Guild Games is proposing a new subsidiary DAO class, the “subDAO.”

Yield Guild Games is itself a DAO. It was first formed last year to play one game: Axie Infinity. However, it now employs workers across multiple games.

SubDAOs assist in organizing participants, governance, and voting on how to approach particular games. And within yield guilds, they can help batch transactions and optimize gameplay for server availability.

No top-five guild token by market cap has outperformed Ether over the past year.

Read more: [‘A slow rug pull’: Traders reject play-to-earn crypto shilled by Ice Cube]

With play-to-earn gamers now numbering in the millions, many players need to transact, log in, or otherwise use the game’s central computing resources at the same time. This spikes transaction fees and lag times.

One particular subDAO, Yield Guild Games’ Splinterlands collective, divides its tokens between active players, the community, as well as related treasuries.

But while the top five P2E tokens by market cap have outperformed Bitcoin and Ether in the past year, native tokens for top DAO guilds have generally returned less than the blue chips.

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