How is the shadow fund YGG called GameFi valued?

In the past 14 days, YGG has risen by more than 260%. Compared with the IDO final auction price of US$0.49984/unit, the average transaction price has increased by about 16 times, and the monthly price is as high as US$8.62/unit. The market’s attention is greatly increasing. .

Yield Guild Games YGG is a governance issue tokens, Yield Guild Games last label is well-known NFT Games Association, Ethernet Square, the largest chain of travel Axie Infinity biggest game next guild.

At the end of July, YGG ended IDO and completed the transformation from a game guild to a DAO. As the development enters a new stage, more and more investors realize that YGG is essentially an index fund for encrypted native games. Well-known NFT investor Andrew Steinwold (Andrew Steinwold) is one of the investors who pay close attention to the development of YGG. He said that YGG will occupy a certain share in every popular crypto game on the market. Axie, which is currently worth billions of dollars It is the largest chain game, and there will be more than a dozen Axie-scale encrypted games in the future.

Game guilds and funds correspond to different valuation models in the real world. Yield Guild Games is a complete DAO, and the method of segment valuation may be a better choice to help understand its business.

Although determining a valuation model for DAO is not equivalent to determining a governance token, Yield Guild Games officially stated in the white paper that the value of all YGG activities will be reflected in the fully diluted market value of YGG token governance.

Business model based on “play to earn”

Yield Guild Games is no stranger to investors who have followed NFT for a long time, so the basic information will not be repeated in this article.

Judging from the background and development of the founding team, the DAO is not grassroots, and of course they never claim to be grassroots.

The project was originally a game guild, the founders were Gabby Dizon and Beryl Li. Gabby Dizon’s background needs attention. He has a relatively deep background in the game industry. Among them, he served as the chairman of the Philippine Game Developers Association from 2007 to 2009, and he has served as the CEO and co-founder of Altitude Games, a free mobile game company in the Philippines 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 idea of ​​Yield Guild Games is to obtain in-game assets by investing in P2E games. The main ways to generate income are as follows:

Its income comes directly or indirectly from the NFT assets already owned, and helps players enter the game world through a lease plan, so in exchange for in-game rewards (shared with players);

The assets in the game, such as land, income, etc., can be financed by a third party (non-union member) on the land in the game.

After the event;

NFT ownership will benefit from the increase in the economic value of the assets in the game, and will be reflected in the value of the native homogenized tokens on the open market.

This income structure restricts Yield Guild Games’ choice of chain games, so the game must conform to the definition of Play to Earn, that is, virtual land economy + governance token economy + players can get governance tokens in the game by playing games. currency.

On July 27 this year, Yield Guild Games publicly sold 25 million YGG governance tokens on SushiSwap through MISO, raising approximately US$12.49 million, making it officially a DAO. This means that people who hold YGG have the opportunity to participate in the governance of the community and enjoy DAO’s financial asset distribution and benefits. It should be noted that at that time, 32 addresses contracted 2500 YGG and caused a great uproar in the market, but then it was discovered that 32 One address came from a community group purchase, so market suspicions dissipated.

Secondary market risk: Institutional shares will be released intensively after September next year

Prior to this, Yield Guild Games has experienced three rounds of institutional-led financing:

1. Seed round (announced in March this year) : Raising $1.325 million. This round of financing was led by Delphi Digital. Other institutions include BlockTower, Scalar Capital, Youbi Capital, and some individuals.

2. A round (announced in June of this year) : Raised 4 million US dollars. This round of financing was led by BITKRAFT. 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 pointed out that Bitkaft’s investment in the past two years has focused on the e-sports and gaming industry, but the e- sports team is currently not in the investment scope .

3. Before IDO (announced in August this year) : US$4.6 million, led by A16z, and participating in this round of financing are Kingsway Capital, Infinity Ventures Crypto, Atelier Ventures, and gaming entrepreneur Gabriel Leydon. This financing triggered a renewed interest in Yield Guild Games in the market this month.

Through the primary market, Yield Guild Games raised a total of 21.925 million US dollars. The above financing allowed investors to obtain 24.9% of YGG. Among them, 20% of YGG from seed round investors were released when the mainnet went live, and the remaining 80% had a 1-year lock-up period. Level investors have a lock-up period of 2 years and 1 year respectively.

According to the official information provided by Yield Guild Games, from September to October next year, YGG held by institutions will be released intensively. At that time , the risk of YGG secondary market pressure may increase and occupy 45% of YGG’s total share ( The largest share) community release will slow down at the end of next year. Regarding this part of the community plan, the official is currently still planning, with the release of the pledge or reward, the YGG lock-up period will be 2-4 years.

How is the shadow fund YGG called GameFi valued?

How is the shadow fund YGG called GameFi valued?

Use club valuation or asset management company valuation?

Yield Guild Games recently released a report on assets and vaults, which means that YGG may be priced. In some people’s opinion, YGG can be valued with clubs, and since YGG’s business model has the attributes of an asset management company, there is also the possibility of using AUM method for valuation.

Clubs have social attributes and pursue maximization of team performance (rather than profits) to drive club revenue and sustainable business development. This is similar to the YGG business model.

However, valuing a club is a difficult point on a global scale, as represented by football clubs. The current reference is KPMG’s “FootballClubs’ Valuation”. Its core is the market-sales ratio, combined with the weighted adjustment of multiplier variables such as profitability, influence, total value, broadcasting rights, stadium property rights, and the value and profitability of top clubs. irrelevant.

Among them, the RM (Revenue Multiple, revenue multiplier method) valuation method requires that the operating income of the evaluation object is stable, and there is no requirement for profit. According to the KPMG report, currently listed companies and football clubs Manchester United (MANU) have the strongest commercial development capabilities and the highest corporate value, with a valuation of about 3 billion euros, and the corresponding market-to-sales ratio is between 4-5 times.

The July report of Yield Guild Games focused on revenue data. Since the launch is at an early stage and costs are still required, the revenue scale and growth rate of Yield Guild Games require investors to pay close attention.

In terms of revenue data, Yield Guild Games’ revenue in July was mainly from scholars. Scholars (*) The income-generating sharing model is 70% for scholars, 20% for community managers, and 10% for Yield Guild Games. In a single month in July, scholars generated about 1,177 SLP (Axie’s governance token), about 3.259 million U.S. dollars, of which 1.117 million SLP (that is, 329,600 U.S. dollars) belonged to Yield Guild Games. This is the highest monthly income YGG has received so far.

(*Academics refer to the scholarship program winners of Yield Guild Games, the program is essentially renting)

From April to July 2021, scholars have earned a total of 31.9 million SLPs ($8.933 million), and YGG has received a total of 3.119 million SLPs ($582,800).

The current market value of Yield Guild Games is about 700 million US dollars. If you refer to Manchester United’s valuation and take 5 times, Yield Guild Games should get 140 million US dollars in revenue this year. Of course, it is unreasonable to use top football clubs as a reference, because the industry and the stage of development are different. YGG is currently the top chain game game guild. It 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 of chain games and traditional game tracks The gap is huge-this is why many NFT investors currently like to compare Axie’s revenue, monthly activity and traditional game revenue, and use the head item to measure the current capacity of the track.

In addition, Yield Guild Games may still be at a loss. Because its July report disclosed that to support scholars’ demand for scholarships, Yield Guild Games spent three times the cumulative income in a single month in July on breeding costs—correspondingly, the number of scholars in a single month in July has doubled. In addition, In July, the number of members in the Discord community increased by 95% in a single month, and the number of community members exceeded 38,000.

Why is it good to have a look? Because the members of the Discord community cannot directly generate income, there is no commercial value at present, and it only represents the development trend, otherwise it will evolve into a joke that the previous 15 billion valuation of Evergrande Football Club was estimated by a Weibo fan of 3,000 yuan.

In addition, there are some income or potential income that have not been emphasized, but investors need to pay attention, because the assets they hold are star assets, such as League of Kingdoms, F1 Delta Time, The Sandbox, etc. Yield Guild Game has already carried out this The evaluation of market value (Value) is as follows:

How is the shadow fund YGG called GameFi valued?

Yield Guild Game also disclosed the early investment and market appraisal value of the following games. The appraisal value of this part amounts to US$1.405 million.

How is the shadow fund YGG called GameFi valued?

What needs to be noted here is SubDAO, some translators translate this as a sub DAO, and the corresponding Yield Guild Games is a parent DAO.

The sub-DAO is a micro-economy whose main function is to take care of the assets and activities of a specific game. The owner of the sub-DAO can enjoy the benefits of asset appreciation and the benefits generated in productive games.

For example, for example, a certain sub-DAO is exclusively for Axie Infinity players, and one is exclusively for ZED RUN players. The token holders in the sub-DAO can increase their collective income from the game by playing and cooperating together, and can also use the assets in the Vault to better equip their characters and further increase their income potential.

Since Yield Guild Games has not made a more detailed plan for SubDAO at present, it is impossible to know how Yield Guild Games will obtain income from the operation of SubDAO, whether it will be through a fixed fee or a specific share ratio. It is temporarily impossible to evaluate. However, from One thing can be learned from Delphi Digital, an early investor in Yield Guild Games, that Yield Guild Game will become the shadow fund of these GameFi in the foreseeable future.

This provides support for the AUM (asset asset management scale) valuation method, and it is necessary to separate the relevant business into segment valuations (such as SubDAO). The valuation method is applicable to the valuation of asset management companies. The three elements that determine the valuation are AUM, rate structure and rate level. Generally, the financing business adopts the market value/size of loans issued, the reference range is 0.2X-0.4X, and the asset management business adopts the market value/AuM, the reference range 0.02X-0.18X.

In layman’s terms, if the business that Yield Guild Game insists on is a business of lending at the entrance of the casino, then the value of YGG will be greatly reduced.

But don’t worry, it seems that Yield Guild Game may be the right choice, no one knows the game better than them. However, since a large part of the assets held by Yield Guild Game is still GameFi, once the market performs poorly, the Davis double-kill will be faced, and the volatility will also increase.


Posted by:CoinYuppie,Reprinted with attribution to:
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