After dedicating a few dozen hours to researching the crypto gaming space, I’ve distilled my investment thesis in this post. If you are new to the space I hope some of the thinking below can give you a structure to assess the landscape better.

Investment opportunities can be split up into 5 layers:

Chains - this is the infrastructure layer so the blockchains that games are built on Tools - these are vying to be part of the crypto gaming dev stack Funding Platforms - these are trying to be the crowdfunding platforms Games - these are the actual games and networks around them Game Assets - these are items, land and other in-game assets

I believe the investment risk increases in my list from top to bottom. For instance buying into the infrastructure layer (i.e. chains) is clearly less degen than buying a buttload of coins of your favourite crypto gaming project (i.e. games).

I don't want this post to devolve into me shilling my own bags so I will just give a few examples of Chains, Tools, Funding Platforms and Games sticking to biggest market cap examples. Full disclosure I will probably own tokens of some of the examples I'm giving.

Chains The infrastructure layer that is most amenable to crypto gaming is one with low TX (transaction) fees and a high TPS (transactions per second).

Currently Solana, Polygon are platforms of choice for many developers of games. There are smaller cap and newer entrants like for instance Immutable X which is built to be the first L2 focused on NFTs and crypto gaming (high TPS, zero TX fees). There are plenty more here but I’ll leave you to do your own research.

Tools There are a lot of examples for companies that are building exciting tools and infrastructure to make crypto game development easier. The space is still early but fast moving so I will add to this list over time.

Enjin is an example of a tool that seeks to be embedded in games to enable them with NFT functionality that is shared across the Enjin ecosystem.

Ultra is an example for the equivalent of a Steam (game distribution) Twitch (media distribution) hybrid for the crypto era.

RMRK is a tool that allows devs to build complex NFT smart contracts with more ease enabling more complex game design.

*Sidenote: pretty much all the more elaborate games are based on unreal, unity engine. I wonder when we will see an open source game engine. It might potentially be spun out of one of the Metaverse players as they will have to build a complex stack.

Funding Platforms Seedify, Gamefi are crowdfunding platforms have their own tokens that need to be staked to participate in IGOs (initial game offerings - note the rebranding from the notorious ICOs of 2019). They essentially provide you an allocation to buy in pre launch based on the number of crowdfunding platform tokens you possess.

The issue of course is that the appreciation of the crowdfunding platform token will make it harder for you to buy and stake many tokens to get access to a bigger percentage of the pre-sale. In essence the early token holders (that bought many cheap early) will make the bulk of the degen gains while newcomers might get priced out or rather priced down to comparatively small gains (given the smaller slice). In other words, if a new legit crowdfunding platform emerges it might pay off handsomely (if the platform becomes successful) to buy their tokens early (like with many things in crypto).

*Sidenote: funding platforms allow to buy into tokens for hype games at a 10-100x discount before they hit a DEX or centralised exchange. By buying into projects at the crowdfunding stage during a bull run a chance for degen gains is pretty likely. However, what goes up must come down and this is the case with most crypto game graphs. They start high taper off as speculators, investors or the team realise gains and then move back up as the game dev team executes/launches. It is, therefore, worthwhile to understand lockup periods of big investors and the dev team to understand sell side pressure on the token price in advance for projects you plan to take a big stake in.

Games There are a few different categories here:

Metaverses - Decentraland, Sandbox - these host a collection of game experiences, social spaces, market places etc.

Game Studios - Gala, Mobox- these are creating a variety of games whether full feature or casual. Note that these are tokens for the studio that can also be used in their individual games.

Gamer Guilds - Yield Guild Gaming, Merit Circle - these guilds are focused on creating opportunities and more inclusion for play to earn players

Games - Axie Infinity, Illuvium - these are the actual games. These two are the highest market cap games out there but there is a sliding scale of games with super low market caps that can pump or dump massively over night. As per usual research into the team, game idea and white paper pays off to identify some great projects before they pump.

Game Assets Most crypto games will have a native token that runs the game economy. Depending on the game the tokens will be used as part of the core game mechanics or to buy assets in the game economy. Obviously the appreciation of these assets will depend to a large part on the success of the game. Also remember that the in-game assets are usually less liquid than the game tokens themselves if they are solely tied to the particular game. Therefore, my suggestion is to only invest in game assets for the large cap games (land in Decentraland or Axies) or to pick a game you believe in / enjoy playing to buy assets for.

I hope this post helps as a starting point to frame a conversation about the investment opportunities in the crypto gaming space.

Onwards and upwards.

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