OFR Insight Sharing is a weekly program session presented by Old Fashion Research, joined by other crypto practitioners of multiple notable institutions and media presses. Every week, researchers of OFR Fund will share their research results in the crypto industry for the past week. Recaps take a look back at the sharing sessions and expose a larger audience to the most discussed topics recently.

This week, we are pleased to feature Kevin Kim, COO of Genopets, to share his insights on **Web3 & GameFi’**s outlook and design from a builder’s perspective.

Prior to joining Genopets, Kevin had 8+ years’ experience running operations and customer engagement at FanDuel, one of the world's leading mobile gaming brands, helped to grow the company from startup to $30B+ valuation.

The topics of this week’s OFR Insight Sharing include: 

1. Growth of GameFi;

2. Why Web3 and Gaming;

3. Assessment of What Will Drive Success;

4. The Genopets Approach

Market environment aside, GameFi observed a continued growth to be a dynamic space in 2022.

We saw $4.1B+ in Total Capital Investments in 2022 H1, and 1,551 distinct projects growing worldwide as of June 2022, with brand-name VCs laying down big bets. For example, a16z established a $600 million gaming-focused fund in May 2022, and Immutable established a $500 million Web3 gaming fund in June 2022.

The gaming market is estimated to be around $175B. GameFi currently accounts for 4-5% of the total gaming market. At the same time, some of the biggest established studios in the industry are entering GameFi. 

• Epic Games raises $2B for metaverse gaming

• Square Enix sells $300M worth of IP (including Tomb Raider) to fund blockchain efforts

• Tencent continues to develop and invest in NFT games

So, why Web3 games?

Games have always been the on-ramp to new technologies. We have Pong, Pokemon Go, Oculus, etc.

Meanwhile, Games can give (non-crypto-native) players a reason to want to learn Web3. We saw the start of this with NFTs.

The Appeal of GameFi

GameFi offers players the chance to own the digital assets they play with, whether in the form of decentralized game currency or NFTs. 

Ownership means monetization in many cases, allowing gaming projects to share the value created within these community-driven games–with the very community that spurred their success.

Onboarding players onto these systems means teaching them about the basics of Web3 in an organic way. For example, a player who enters the private beta test of Genopets is exposed quite naturally to the following:

• Setup and use of a token wallet

• “On-chain” versus “off-chain” activity

• Interoperability of tokenized assets

• Importance of community (as a source of news, truth, and alpha)

• Anatomies of marketplaces and exchanges

What does it mean for builders?

Developing a GameFi project is far more than an exercise in minting NFTs. Savvy builders must navigate all of the customary pitfalls and risks of developing a traditional game, while embracing the unique challenges that face those who seek to build the Web3 way.

Namely:

• “Cooking in an open kitchen” with transparency and communication with the community. 

• Rampant and constant involvement of speculators, hustlers, and other “extractor” types.

• Decentralized systems, where player-related data is far more limited.

• Steeper learning curves for onboarding, payment, customer support

What will drive success? 

While many things are different, some things remain the same. What will allow a project to successfully overcome challenges, increase adoption, and (of course) establish a sustainable business model? 

Building the best game in GameFi.

But what makes a game GREAT? A search of critics’ and fan reviews on the best-selling games of all time reveal these most commonly used terms:

• Immersive

• Challenging

• Visually Unique

• Great Art Style

• Story

• Memorable

• Cohesion

Let’s take Minecraft as a case study, which has 238,000,000 units sold, 738 million players, and onboarded millions of children into the digital world.

• Critics have praised Minecraft's complex crafting system, commenting that it is an important aspect of the game's open-ended gameplay. 

• Graphics described as "instantly memorable.”

• Includes adventure elements, creating a good balance between exploring and building.”

• Popular multiplayer feature supporting friendly play and viral growth.

“Intuitively interesting and contagiously fun, with an unparalleled scope for creativity and memorable experiences.” - PC Gamer

To make a meaningful game where players can own the value they create in game, here are the fundamentals of game design, according to Genopets

• Meaningful experience: Create quality content players are willing to pay and trade for.

• Reward skill: Recognize players for dedication and skill rather than how much they are willing to invest and when. This creates value.

• Value exchange: Allow players to transact freely with one another with the value they’ve created.

“Invite the Right People to the Party”

Straddling the gap between product and growth is the idea of the customer proposition. 

Every business has a value proposition they offer to their customers - the core justification why a customer should choose their product or service. For a manufacturer, the prop may be that their products are cheaper or higher quality versus competitors. In some industries, the proposition is the product for sale, such as sports wagering where a made bet by the customer is an acceptance of the firm’s offered odds at that price.

Because Web3 gaming is at the intersection of so many different forces, gaming projects in this space must be careful about who they “invite to the party” and what it says on the invitation. A proposition centered on the Fi aspect of GameFi will attract customers who are primarily interested in exactly that. These customers’ expectations are usually more in line with those of a financial services client; something most gaming projects are ill-equipped to handle. 

Flipping the P2E Model, price ≠ value!

From meaning, comes value. And from value, comes earning.

Paying a ton of money for a NFT does not make it valuable to the buyer. As a result, dumping is all too common.

On the other hand, when the right players come in under the appropriate proposition, all of the benefits of Web3 can be enjoyed for what they are: additive value that enriches the player experience.

How does Genopets do? - Creator Economy

About Genopets

Genopets is the first Free-to-Play and Move-to-Earn NFT mobile game that makes it fun and rewarding to live an active lifestyle. 

• Genopets evolve based on real world actions - as players grind, they are increasing the rarity of their NFT

• Steps power players’ journey: craft, customize, battle, and evolve — earning crypto while they play.

• Nostalgia of proven model - “pet care, training and battle” are the motivating force for players to stay active and enjoy the game.

“Passively played, but actively rewarded.”

Team members

Special thanks to Kevin Kim for presenting the content. Neither OFR Insight Sharing provides financial advice, nor researchers represent the final statement of OFR Fund.

ALL RIGHTS RESERVED TO Old Fashion Research

Old Fashion Research (OFR) is a multi-strategy blockchain investment fund founded in late 2021 by former executive and investment teams from the leading cryptocurrency exchange in the world.

OFR adopts a multi-strategy approach to capture the underlying value of Web3.0 and to build a full-cycle ecosystem to support new-generation crypto native entrepreneurs. OFR incubates promising startups, follows up with traditional venture capital investment and scaling support, and finally supports the projects if they wish to exit through a merger or acquisition.

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