Proposal discussion: PLAY index creation

[alexintosh]

Disclaimer: this proposal is only the initial draft for community discussion. The analysis below is only based on the last 15days of data.

Rationale

Blockchain gaming and metaverses, in particular, are an ambitious category of the crypto ecosystem in general and within ethereum. The combination of virtual reality and crypto, where ownership inside the virtual world is retained by users is a match made in heaven. By some, this is considered to be the natural evolution of MMORPGs and more generally social games, especially in the intersection of e-sports, online betting, and the ownership economy.

Take into consideration these data points:

• +$55 million on metaverse digital land / in-game items to date.
• +$150 million in total NFT sales volume. (digital land / in-game items accounts for 1/3)
• Atari planning to launch the VCS console a blockchain-enabled console. (link)

At this point in time, there are no clear winners just yet, as a matter of fact, a diversified allocation to get broad exposure to the blockchain gaming industry would be extremely compelling.

Index composition

The draft composition for PLAY includes some of the most relevant projects in the segment, including metaverses and infrastructure like L2 solutions which enable this new generation of games possible. Following a brief description, to be expanded if the proposal gets momentum.

1 - $MANA from @decentraland: One of the holdest project in the space, which has been consistently building and now approaching maturity with a growing userbase.

2 - $AXS from @AxieInfinity: Those cute little monsters people are going crazy to collect. The game is beautifully designed and most recently they reported over 16,000 daily active users.

3 - $SAND from @TheSandboxGame: It’s a sandbox virtual world Minecraft-style. They have a Game Maker that anybody can use to build their own game on top of their land with pretty quests, grades, equipment and combat.

4 - $GAME from @gamecredits: It’s an old project which did not gain much traction in the past, however most recently the project has been acquired and pivoted to a e-sport platform powered by MATIC for the ownership economy.

5 - $RFOX from @redfoxlabs_io: A Southeast Asian focused venture builder company. In their umbrella, they have a few different branches from live streaming to mobile-first collectibles/trading games.

6 - $MATIC from @maticnetwork: A scaling solution for Ethereum which most recently had been affirming as a strategic partner with game-related projects such as Decentraland, Game Credits.

7 - GHST from Aavegotchi: A closed-loop DeFi-staked Crypto Collectibles powered by Aave. The project also collaborates with Matic.

8 - ENJ from Enjin: Enjin is all-in-one blockchain game development platform comprised of the Trusted Cloud, Blockchain SDKs, Platform API, and the Wallet Daemon.

Allocation

Here some additional details on the proposed index allocation, as you may find in full on the spreadsheet

The current max allocation proposed (cap) is 20%, computed using the 30 average market cap, with weights capped at 20%.

The 20% cap provides good scalability to the Pie until the $40M range, an even higher cap could be considered, see the stress test below.

Good news from a risk perspective as the risk analysis presents a very-low cross-correlation between assets which overall minimizes the portfolio risk, not very common on crypto (yaay!).

Below a visualization of the % risk contribution for each asset of the index, compared to their % allocation.

The entire portfolio in the (very-short) back-tested period shows low standard deviation, high Sharpe ratio, and returns. A must-have for crypto exposure.

Details

Specifications are easy, no specific strategy has currently being envisioned for the pie.

Smart-contract: PieVault
Rebalance: Quarterly
Cap: Unlimited
Strategies: None for now

Resources

• The Metaverse Is Blooming
• Atari CEO on crypto token and blockchain gaming: ‘We know this is going to work’.
• War of The Virtual Worlds: A Look Into The Metaverse Economies
• Metaverse Wars Vol 1: The Five Worlds

[jnova]

Great proposal.

I have two related points I’d like the community to discuss, but don’t have strong views yet on either:

1. Does the inclusion of $MATIC and $ENJ dilute the value of this pie, vs. for example a separate dApp infra pie?

2. In a pie that has 2 holdings with a 20% allocation, is there much value in a 1% allocation? Perhaps it’s worth setting a minimum allocation, just as we set a maximum allocation, to ensure that the pie holders are able to benefit from strong performance in the smaller cap holdings. Perhaps set the minimum allocation to (1/n)/4, which would be 3.125% for this proposal with n=8.

[haredog]

I love this Pie,

There is no question that gaming is continuing to increase all the time. In fact, my son is a programmer for Epic games. He works out of San Diego. Jnova, to your two points:

1. I do not think the inclusion of $MATIC and $ENJ dilute the pie’s value. I believe the more exposure early is better.

2. I agree with your suggested minimum.

[gabo]

big fan on this $PLAY! I would move this forward asap.

Re point 2 raised by @jnova, I agree that a min allocation would provide a better exposure to the potential upside of smaller caps. Still through the PieVault design allocations won’t be continuously rebalanced, so any upside deriving from small caps growth would be progressively locked in the Pie, potentially increasing the small caps allocation over time.

Furthermore, taking the case of $GAME i’m not sure it would make sense to upgrade it to a 3% allocation from start, given its current micro-cap ($3.9M as 30days average) that could represent a scalability bottleneck for the entire pie (in the scenario of $PLAY reaching $ 10M TVL, approx 8% of circulating $GAME should be locked in the index).

[chris]

Love the proposal! Looks like an awesome starting point for $PLAY.

[williambrealey]

I would support Play PieVault and am looking forward to seeing the active farming strategies it would be able to tap into.

I think we should include NFTX who are producing NFT indices. NFTs are in my view the leading revolutionary development for Ethereum gaming.

Their products allow users to gain exposure to high-value NFT gaming assets, e.g. Mystic Axies and and Cryptokitties, as well as collectables like Punks.

The NFTX token is already seeing massive growth going from $22 to $80 in the last month ($34m market cap).

This would strengthen our communities and pave the way for PieDAO to be the home of the NFT meta pie in the future, which could be a diversified index of high-value NFT indices once liquidity allows.

[btsfav]

sounds FUN!

[Cryptouf]

100% for !

Same comment as above.
I’m not sure I understand the 1.38% allocation

I don’t know much about it, but there is some hype around this project also: https://ultra.io/

[alexintosh]

I’d rather remove GAME

@jnova

In a pie that has 2 holdings with a 20% allocation, is there much value in a 1% allocation? Perhaps it’s worth setting a minimum allocation, just as we set a maximum allocation, to ensure that the pie holders are able to benefit from strong performance in the smaller cap holdings. Perhaps set the minimum allocation to (1/n)/4, which would be 3.125% for this proposal with n=8.

In that case I rather remove GAME for the time being and re-add it later when the market numbers show an organic +3% allocation.

[alexintosh]

NFTX is very cool and I definitely think there is a place for it, however we should be mindful to add tokens which are so young just yet. I don’t think it’s the case of NFTX but waiting at least 3 months since token release is the bear minimum for price discovery.

[Shubiwubi]

Since you mentioned the Atari comment in the Resources, aren’t you considering adding Atari ($ATRI) to the list as well?

The token is quite new, but given the large history with Atari, and their aggressive stance towards blockchain gaming, this seems like a natural fit into this index.

[alexintosh]

Good suggestion, I think ATRI would be interesting. Just found out more about their plans, they are getting closer to the ecosystem.

Decentraland (decentraland)

[Shubiwubi]

Cool, I wasn’t aware of this development!

Definitely very bullish on this index as well as a whole. I think this is a fantastic investment opportunity if you like games, but might not have the time or energy to look at all the different projects, which for gaming often seems even more extreme than for other crypto-related endeavours!

I could also see some very good cross-strategies being developed here for some of the staking or loyalty rewards of those ecosystems that will certainly be given in NFTs beside the usual staking rewards.

Adding some of these rewards to a PieVault inside of this pie, or to our treasury could really have some crazy outcomes in the next couple of years.

Not that I could personally endorse that project (didn’t dive into it yet), but I could really see PieDAO owning and operating a GALA node for example, or get some additional rewards via Aavegotchi or Atari to secure into our own ecosystem, and perhaps make it rewarding in multiple ways to be part of our PieDAO.

Eventually, we could also look into owning larger parcels of land or estate via a PieVault that would give holders a part of the deed to ownership of virtual land in these systems, and could serve as a promotional piece for us as a whole in there, where we could show what we’re about, what our goals are, and how we’re part of this too, similar to what some other DAOs and companies did already in Decentraland for instance.

[nethan]

Hi there, @alexintosh,

I suggest we add $MUST by https://www.cometh.io/ (Space game x NFT x DeFI x L2) in this index.
One of the most promising game and token of the industry, with an OG team (Contributors from Consensys, Aave, Sandbox, Curve, Stake Capital &more…)
Lots of great partnerships coming, some already announced including $MEME

You’ll find below further information about the project:

General information:
Website: https://www.cometh.io/
Twitter: https://twitter.com/MUSTCometh
Discord: https://discord.com/channels/801398243354869790/802611110381092924
Telegram: https://t.me/cometh_io
Github: https://github.com/cometh-game
Coingecko: https://www.coingecko.com/en/coins/must
Blog (Medium): https://medium.com/cometh
Analytics: https://explore.duneanalytics.com/dashboard/cometh

Information about the project’s tokens:
-ERC721 contract: https://etherscan.io/token/0xbcd4F1EcFf4318e7A0c791C7728f3830Db506C71
-Cometh Opensea: https://opensea.io/assets/cometh-spaceships
-MUST token: https://etherscan.io/address/0x9C78EE466D6Cb57A4d01Fd887D2b5dFb2D46288f
-Pool Uniswap: https://info.uniswap.org/pair/0x15861b072abad08b24460add30b09e1481290f94
-Tube contract (MUST staking):https://etherscan.io/address/0x85BC2E8Aaad5dBc347db49Ea45D95486279eD918
-Staking rewards contract (MUST/ETH Univ2 LP token staking): https://etherscan.io/address/0x048Dda990f581e80EFfc72E4e1996AE548f8d64C

The game is set to launch on February 8th, expect lots of noise around it. The project is set to be positionned as a leader in the industry.

[rpdb-ops]

$ATRI already have a superior marketcap than $AXS for example, but with way less volume.

We should consider FunFair ($FUN) and maybe Wax ($WAXP).

If $MATIC is included, why not $LOOM ?

Not a big fan of $GAME and $RFOX for the moment.

[JulesV]

Enjin should have the biggest percentage allocation as the biggest and best gaming project.
Don’t understand why matic with massive 20% allocation is on list it’s not scaling solution index.
Enjin will soon solve scaling solution for Nfts anyway with Efinity.
I would rather see meme coin they start to drop gaming Nfts on their platform .

[Ben]

I’m all in for the $PLAY index.

Stupid question - Is there information on daily active users for each of the projects? If so, it would make sense to consider it at least like a sentiment score.

I’m not plugged into the gaming side of crypto.

[PizzaBagel]

I don’t know if any of these would be a great fit but wanted to at least bring them up:

$SOUL - Phantasma’s token, while they initially were linked with NIO they have an Ethereum bridge and their own tradable ERC-20 token. They also have a pretty cool NFT platform ghostmarket.io which has NTF’s available to purchase in SOUL, KCAL, and ETH.

$STAKE - Mostly for darkforest since it’s run on XDAI. Similar to how we have MATIC on the proposal.

$XED - Meh, mostly noting it because it’s a cool idea but I don’t know if the project will take off. It was a polkastarter project and while it is currently an ERC-20 token they will eventually migrate to DOT. The concept is a gaming platform where players can play each other in games (Counterstrike is the first one) and bet/win money and XED tokens. They have yet to release a beta of their platform but it is a new project started in Dec 2020.

[Shubiwubi]

After some more brain-dumping, I also remembered Polyient Games from last year, and I think it’s big enough to deserve to be looked at, especially since there is some extra mechanics involved, and some pretty big players invested in this.

They also partnered with pretty much everyone noteworthy from the current $PLAY allocation, so we would be silly not to include them too

[alexintosh]

Thanks you everyone for the inputs, planning on sharing an updated allocation based on the input received.

One note, I’m generally very much against adding tokens with less that 60days of trading. It’s the case for some of the projects mentioned in the thread, we should keep an eye for it once the minimum about of days passes and consider a rebalance to add them.