Blockchain Gaming Investment Fund: Week 1
This article was written by Andrew Wagner, the founder of www.blockchaingaming.com
Background
The team behind blockchaingaming.com have started a Blockchain Gaming Investment Fund. In the featured graphic, you can see how you would have done if you invested $450 a week ago upon its creation (which is what my wife and I did).
Our goal is to provide investors in the fund a means of capturing growth in the blockchain gaming industry. We do not match the industry average, like the S&P 500 does the American stock market; rather, we target the winners.
We do, however, focus on diversification. New investments are acquired either when market conditions provide the opportunity (such as a huge spike in an existing investment) or when new investor money enters the fund.
We do not engage in day trading. Typically, we invest for at least a month. Sometimes longer for bets we think will take off but can’t know when; sometimes shorter for coins that hit the moon way sooner than we expected.
Decentraland
My first pick was MANA, the native token of Decentraland. It is needed to acquire LAND, and its use is encouraged within their virtual world. This is similar to their competitors.
What sets Decentraland apart, however are two things:
- It had a huge head start
- It is very focused on decentralization and the community
This is leading to them becoming a sort of virtual capital city of the crypto world; many different companies and organizations are establishing embassies, headquarters, and virtual offices, bringing players and events with them. Essentially, it functions as the most neutral ground available for decentralized intermingling, capable of partnership with almost any other blockchain project.
The quarantines occurring worldwide due to COVID19 have only accelerated this phenomenon. One good example is GameCredits, an old blockchain gaming token that has somewhat recently changed leadership. Some even bigger names are OpenSea, the biggest blockchain gaming marketplace, and Binance, the number one cryptocurrency exchange. Others like Kraken, Coinbase and BitPay have mock offices.
One point of criticism is that its market cap is already high, over $100 million. However, it is still much less than many other tokens on the market, some of which do basically nothing. Further, the net worth of Second Life — a virtual world that lacks the neutrality offered by Decentraland — is several times higher.
MATIC Network
MATIC came to my attention when I was reading about Ethernal, which uses the blockchain to crowdsource the development of dungeons (as opposed to random generators). It lacked a fungible token to invest in, so I looked into the protocol it was using.
Then I noticed Decentraland also uses MATIC. So many other games, as well, that it’s easier to point you to this list than to name them. The main cause of this demand appears to be scalability: in a time when Ethereum is clogging up with transactions, MATIC offers a secure way to process NFTs off-chain. This is attractive because Ethereum remains the dominant chain for smart contracts.
What really interested me, however, was MATIC’s cross-chain interoperability. Even if you ditch Ethereum, you won’t have to leave the MATIC Network. More importantly, you won’t lose the ability to play with your friends still on Ethereum, unlike the situation between Xbox and PlayStation until recently.
XAYA
CHI is definitely the least-known token on our list, with the smallest market cap. CoinMarketCap refused to even list it for a while, despite an extremely reputable dev team with a great idea. I attribute this to a couple things.
One is ignorance. XAYA is hard to understand, as can be the need for it until explained. A lot of people initially assume the concept is impossible, and think me silly for suggesting it.
A more annoying reason is greed. XAYA intends to fully decentralize online, but that is much harder to do than simply putting NFTs on the blockchain, which are easy to sell. It also gives less control to the developers.
Traditional game developers have reacted predictably, and as a result, the XAYA team finds it more difficult to network with institutional players in the blockchain space. However, I consider the situation unsustainable — competitors’ market caps are two orders of magnitude larger — and recommend reading my overview of their platform.
Initial Results
It took a couple days to turn our cash into Bitcoin and invest that into blockchain gaming tokens. I set aside 25% for MATIC, 50% for MANA, and 25% for CHI. CHI has low liquidity due to poor exchange access, so I was able to enter the market strategically such that we saw immediate gains.
Following that, money began leaving most of the blockchain gaming market. My theory is that investors are moving funds back into BTC in anticipation of a bull run, due political and economic chaos worldwide.
Fortunately, our bet on XAYA took off! It increased a whopping 139.5%, causing our Blockchain Gaming Investment Fund to increase around 33% in only about a week. CHI’s market cap is still an order of magnitude less than competitors’, and it has not yet listed on a mainstream exchange, so we are still hodling.
In hindsight, I wish I’d bet on them more heavily, but we know that hindsight is always 2020. It was impossible to predict when investors would start to notice it, and we cannot risk missing out on growth elsewhere in the blockchain gaming industry. We will continue with our strategy of diversification.
