We look at the 5 metrics to analyze P2E games and apply them to DeFi Kingdoms.
Author：April 2022, Vincy；Footprint Analytics community.
Data Source: Footprint Analytics — DeFi Kingdoms Dashboard
With the DeFi market declining earlier this year, crypto users and investors have flocked to the GameFi to grow their portfolios. Subsequently, the number of game projects grew to 1,406 from 693, an increase of 103% YoY.
How should you evaluate a project before investing or participating? In this article, we will outline the top 5 metrics to help you understand a GameFi project’s long-term potential and apply this framework to 1 popular game.
5 Important Metrics for Evaluating P2E Games
Despite the exploding number of GameFi game projects, it’s not the case that all do well. Therefore, users should perform analysis and due diligence to screen projects before investing. Here’s what to look at:
Team Background
- Does the team have a long-term development plan and financial support?
- If the project is backed by a well-known venture capital firm, it can add a lot of credibility to the project.
- It is also important whether the founders and team have experience in blockchain, especially in the gaming sector.
Financing
- A good lead investor can bring traffic and popularity to the project and participate in the design and iteration of the project’s economic model. Also see whether the team has past experience in successfully building and managing projects.
- Focus on the amount and timing of financing. For example, in a bull market or a bear market, the financing amount of different projects is also different.
- The design of the token economy is crucial to determine whether the game’s mechanism can develop with stability in the long term and carry a large number of users’ token transactions.
- The liquidity and stability of the project’s in-game funds can be examined through the single-currency or dual-currency model used by the project.
Project Business Model
- How the project is profitable is directly reflected in the token price and token market value of the project.
Number of Users
- The number of users is the key to the healthy operation of a GameFi ecosystem. It reflects the popularity of the game project among users.
Applying the 5 Metrics to a Real Example
DeFi Kingdoms
Launched on Aug. 23, 2021, DeFi Kingdoms is a Harmony Chain-based metaverse project that incorporates DeFi revenue farming activities into more gamified gameplay.
Team Background
According to the official website, the breakdown is divided into 9 groups of team members, which are back-end development, front-end development, game design and lore artist, model design, community, operation, business and other functions. Since the team members are basically anonymous, it is difficult to judge their professional experience.
On the other hand, the project’s whitepaper roadmap design is very clear, divided into 6 stages. Less than 1 year after the launch, the team has developed to the fourth stage, and launched DFK Chain. DeFi Kingdoms is known for building kingdoms that include games, DEX, pop-up pools, and NFT markets. The game at one point had more trading volume than Axie Infinity.
It can be seen that in a short period of time, the team has managed to progress development and operations as planned.
Financing
As of April 28, there is no public financing information for the project. In contrast, Axie Infinity has raised 5 rounds with a total funding of $9 million. Therefore, the DeFi Kingdoms project is slightly behind in financing.
However, on March 8, the Avalanche Foundation launched a $290 million incentive program to promote the growth of the subnetwork gaming project. And DeFi Kingdoms is the first project to receive a $15 million reward through the Multiverse program, becoming the first major multi-chain game.
Tokenomics
Many GameFi games currently have a multi-token model, although the single-token model is more convenient for players and less difficult for developers. However, multi-token mode can minimize the impact of token price fluctuation on the game in the secondary market.
DeFi Kingdoms uses a multi-token model to promote liquidity and stability of in-game funds.
- $JEWEL as the main value token in the game. Users can purchase the game $JEWEL on the Marketplace and put it into Jeweler for a single-currency stake to obtain the equity token and governance token $xJEWEL in the project, which can be used to participate in ecological governance voting.
- The largest liquidity pool in DeFi Kingdom is $JEWEL and Harmony’s native token ONE to form an LP in the Marketplace. In the past few months, this LP has had about 300% to 400% APY, bringing high revenue to users.
- In order to ensure the long-term stability of $JEWEL, most of the $JEWEL obtained from LP stake are temporarily locked by system settings. Locked tokens will be unlocked gradually and can also be accelerated by mining tasks.
DeFi Kingdoms’ tokenomics and high revenue generation attract many users to the game.
Note that since launching on Avalanche, the game also includes the $CRYSTAL token, which will function similarly to $JEWEL on that chain.
Project Business Model
The project’s business model is directly reflected in its token price and token market cap. As of April 27, DeFi Kingdom’s market cap of $241 million exceeds that of Alien Worlds, the top game on the BSC chain. The overall market cap trend of DeFi Kingdoms is highly correlated with the number of users participating in the game.
In terms of token price trends, there is some volatility in the $JEWEL price. As of April 27, the price is $2.86. Compared to the Splinterlands token $SPS, which currently has the largest number of users, $JEWEL has the edge.
Although DeFi Kingdom has no VC financing, it is possible to build a platform with a market capitalization of over $241 million and a cumulative transaction volume of over $6 billion.
Number of Users
In March, DFK surpassed Axie Infinity in terms of daily active users, averaging about 20,000 users per day. Through their Tokenomics and the team’s planning and promotion of the project, DeFi Kingdom’s overall daily growth is relatively stable.
Summary
From the above five dimensions, it can be seen that DeFi Kingdoms is currently in the early stage, mainly relying on LPs to motivate users or retail investors to enter the market to maintain a stable ecosystem. However, based on the fact that its team members are anonymous and have not received financing, players or investors also need to do security checks when playing to earn and investing in the market.
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