🧘‍♂️Big Crypto Trend

Market Meditations | June 9, 2022

Dear Meditators

There’s no denying the popularity of video games. People love them. They’re responsible for hours of entertainment, spontaneous friendships and even the occasional breakup.

In today’s brave new world, however, the implications of the gaming industry cannot be understated.

Today’s Meditations: 

  • AAA Games: What, Who, and How
  • New York Takes Charge Of Regulation 
  • Ethereum’s Test Run

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⏰ Top Headlines


?️ Bringing The AAA Game

Play For Fun

According to the data below, gamers are still a growing audience. Accelerated engagement, partially due to the pandemic, enabled video gaming to surpass the revenue of the movie and music industries combined during 2020.

USAToday: 13/07/2021: Two-thirds of Americans, 227 million, play video games.

With such unbridled growth, will this industry give on-chain games the time of day?

Looking into Google search trends below, we can see a steady decline in Axie Infinity’s popularity over the past year.

Play To Earn

Google Trends: 08/06/2022: Axie Infinity

But why would this be the case when gaming is such a burgeoning industry?

  1. Most players engage Axie Infinity for earning potential, not entertainment. Economically disadvantaged areas of the world are responsible for the highest P2E gaming populations.
  2. Axie’s gameplay is comparatively shallow against AAA titles. Games like Fortnite and Apex Legends regularly release new content that introduces new mechanics.
  3. Production quality, like graphics, is well below the industry standard when compared to traditional games.

When the economic incentive to play began to wane due to flawed tokenomics, there wasn’t enough intrinsic entertainment value to retain such a large player base.

!TIP: ‘AAA’ refers to highly developed gaming projects led by large studios with massive budgets aimed at producing top-notch video gaming experiences.

Play For… Both?

The success of blockchain games like Axie coupled with the NFT boom we saw last year grabbed the attention of more than a few big names in the gaming industry.

  • Square Enix (Final Fantasy, Dragon Quest) told investors it’s still pouring money into NFTs earlier this year.
  • Activision Blizzard (World of Warcraft, Overwatch) sent out a survey asking players for feedback about cryptocurrency and NFTs last month to gauge sentiment and interest.
  • Two-time Streamer of the Year, Dr Disrespect’s AAA game studio, Midnight Society, has already published a number of NFTs on Polygon ahead of its inaugural game release with plans to feature more.
  • Illuvium’s recent NFT land sale concluded Sunday and raised over $72 million well before the game’s release date.

Remember, we’re in a bear market, yet studios are still consistently building toward digital economies.

With success comes opportunity, and unfortunately so does risk. So before clicking “Start” on a blockchain gaming investment, remember – you have to do your homework before playing video games.

  1. What is the quality of the game? Cash grabs are everywhere, gems are hard to find. A key factor in the likelihood of a game’s success lies in the graphics, story, mechanics, and overall playability of a title, not in its tokenomics.
  2. Who is behind the game? Experienced teams, big budgets, and brand recognition are indicators of success in this industry.
  3. How does it compare? This is a big one. If assessing a blockchain game, compare it to big titles like Fortnite, Warzone, World of Warcraft, or Pokemon. If the only reason to play a P2E game is the “2E”, its successful days may be limited.

Growing pains have become apparent in this industry as we move toward an on-chain online space.

Getting started:

Twitter and YouTube account like @YieldGuild@BGameAllianceand On Chain Gaming offer great alpha for emerging blockchain gaming projects, while conventional media outlets like PCGamer and Gamespot keep a finger on the pulse of titans in the industry.


? New York Takes Charge Of Regulation 

Strict regulation and government-backed stablecoins have been a common theme over the last 12 months. The collapse of Terra’s LUNA and UST has seemingly accelerated the road to regulation, particularly in the United States. The New York Department of Financial Services (DFS) has become the first financial regulator to issue guidance outlining compliance requirements for dollar-backed stablecoins in the US. The document labeled Virtual Currency Guidance builds on informal policies used by the DFS since 2018 and has three main components:

  1. Backing and redeemability: any stablecoin issued must be fully backed by a reserve of assets. The market value of the reserve must always be equal to the nominal value of all outstanding units of the stablecoin at the end of each business day.
  2. Reserve: the assets in reserve must be separate from the proprietary assets of the issuing entity and must be held in specific asset categories.
  3. Attestation: the reserve will be examined by an independent Certified Public Accountant (CPA) monthly and yearly.

The document also states that the above requirements are not the only requirements DFS places on issuing stablecoins. The DFS will consider a range of potential risks before they authorize the issuance of a new stablecoin.


?Ethereum’s Test Run

Ethereum was supposed to switch from a proof-of-work network to a proof-of-stake network. This was for a variety of reasons – one of them being to make it slightly more eco-friendly. The upgrade has continued to be pushed back, but on Wednesday Ethereum developers completed a merge of Ropsten’s proof-of-work chain with its proof-of-stake beacon chain. Let’s take a closer look at the test merger.

  • The merge took place on Wednesday after it was announced on June 3.
  • The merge was between the proof-of-work chain and the proof-of-stake chain.
  • The goal of doing this was to run a test in preparation for Ethereum’s mainnet merge set to take place later this year.
  • The merge in essence combined their separate codes into one. It also performed without any glitches.
  • Vitalik acknowledged that this small-scale test is not proof that everything will be fine, saying, “The merge working well for 6 hours isn’t evidence of complete success.” That celebration will come later this year when the full merger will have taken place.
  • Vitalik is not celebrating the immediate success of the merger since he is aware of things that could go wrong days or weeks after the mainnet merger.

This merger has been long anticipated and many are starting to get impatient with it constantly getting pushed back. Despite the delay, it is good to see these small-scale tests to ensure, to the best of their ability, that the merger will proceed successfully.

Twitter

  • Bear markets are the best time to experiment. If it goes well – you’re a genius. If it fails – no one cared anyway – Coopahtroopa
  • The national average for gasoline in America hit an all-time high today. We are 3 cents away from $5.00 a gallon across the country – Pomp.
  • 1/ While most of our efforts had been spent on Terra 2.0 and making sure ecosystem developers can find a home after the depeg incident, we will soon be more proactive in communicating with the press & getting the right information out there (Thread) – Do Kwon

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??‍♂️✍️ Stories in this newsletter were written by Misael Calleja, Kai.A, Nick T., Max P., Kimia K., Ellen B. and Koroush AK. Graphics were produced by Ellen B.


Not financial or tax advice. The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision. See our important security disclaimers here.

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