Financial Rarity Games
Introduction
As part of my research into figuring out KFX (or) Kuxaku Fotet. I came across the idea of mixing Non-Fungible Tokens (NFTs) with Decentralized Finance (DeFi) for spacecraft identity. It’s a popular theme right now in crypto and Aavegotchi was one of the first to propose this combination. In my last post, I mentioned modeling mechanisms for air, water and fuel tokens and, why such a design could be disastrous considering these are critical resources when you’re in space and, price volatility could create disastrous issues and, that the only way might be some kind of algorithmically stable crypto asset. In the end, I mention how I came across the issue (the linchpin in crypto) — spacecraft identity — again like I did when researching crowded orbits. Solving this could be the key to the avalanche of implementations in cryptoeconomic space systems including solving the very first goal of crowded orbits and obviously KFX.
Put it simply — my thoughts revolved around creating spacecraft identity NFTs. These NFTs are fractionalized (currently infinitely in the hopes to provide infinite liquidity but needs to be thought out further). These fractions are fungible and are associated with a bonding curve for that NFT. This means actors on KFX trade fractionalized NFTs for spacecraft identity. But why? I think this would be a good topic to dive into in the next post.
But to get to that, we need to first investigate Aavegotchi because, I think there are clues in this project that could be useful to testing my hypothesis above.
The Aavegotchi Metaverse
This is a crypto collectible game that mixes NFTs with DeFi. It is developed by the Singapore-based Pixelcraft Studios that allows players in the game to stake their in-game avatars with an interest-generating aToken and at the same time interact with the Aavogotchi metaverse. The metaverse comprises of:
aTokens
aTokens are interest-generating tokens from Aave Protocol.
- They are pegged 1:1 to the value of the underlying asset that is deposited on the Aave Protocol.
- They are minted on the deposit of an asset and burned when that asset is redeemed.
- These aTokens can be freely traded elsewhere, stored, transferred, used for yield farming, etc. in the crypto verse.
From the perspective of a user in the Aavegotchi metaverse, the user:
- Gets a specific amount of aTokens
- Converts these aTokens to maTokens (this is the Layer 2 transfer step to the Matic Network — a long story and won’t be explained here but the Finematics Channel on YouTube is wonderful to understand the technicalities of crypto)
- Buy a portal
- Open that portal using your maTokens as collatoreal to summon an Aavegotchi (or) Ghost.
Aavegotchis
Aavegotchis are pixelated ghosts living on the blockchain — in this case the Ethereum blockchain. They have been designed on the ERC-721 standard — a common standard for NFTs. The value of an aavegotchi is determined by its rarity. This rarity level is determined by a variety of factors including each ghost’s traits, the amount of collateral staked (aTokens) and the type of wearables with which the ghosts are equipped.
The Rarity Attributes
Collateral Stake
Each Aavegotchi (referred to as ghost from now onwards) is an ERC-721 contract that holds an interest-generating token (aToken) in escrow. This aToken is constantly generating yield via the Aave Lending Protcol. Therefore, over time each user/gamer’s ghost has their staked collateral (aTokens) earning interest over time.
Side note: these interest rates are changing constantly and aren’t fixed or like a floating rate you’d get outside the crypto world — they constantly change every (smallest unit of time) second based on the usage of the Aave Protocol).
Traits
Ghosts acquire traits throughout their life from birth onwards. They come with specific traits when summoned from the nether realm and then those and other traits are obtained over time by participating in the metaverse games, building relationships and experience in the metaverse. The three main ways to level up are:
- Random Traits generated when first birthed from the nether realm;
- Developing Kinship with ones ghost through daily, weekly, etc. interactions and the length of period the owner has their ghost.
- And finally Experience by participating in the AavegotchiDAO and any mini-games within the metaverse.
More specifics about the traits can be found here.
Wearables
The ERC-721 contract that represents the ghost, not only holds an ERC-20 (aToken) contract in escrow but it also holds additional children NFTs (wearables/equipment for the ghosts) through the ERC-998 Composable standard. This standard gives an ERC-721 contract the ability to hold other ERC-721 and ERC-20 contracts. Not all wearables are compatible with all ghosts. Each ghost can be associated with a particular wearable based on factors such as the collateral staked, their inherent traits via different permutations and combinations.
The relationship between all these attributes can be seen in the diagram below
Ghosting Value
The real value of the ghost come from two channels: their intrinsic value and their rarity value.
Rarity Value
The rarity value for a ghost in this metaverse is determined by the combination of wearables and each ghost’s traits. This rarity value does not go up to the right over time in a fixed rate but rather fluctuates over time. This means a rare ghost at birth could become a more common ghost and vice versa. Rarity is totally dependent on the gamer’s commitment to their ghost and its involvement in the Aavegotchi metaverse. This is a very interesting concept and yet to see if it keeps users/gamers engaged within the community over the long-term. According to the creators, it also enables something called rarity farming. While I’ll discuss this in the next post about Aavegotchi, it seems to be a form of ‘permissioned’ yield farming and in this case, when I mean ‘permissioned’ I mean loyal gamers who’ve spent their time and energy to create a rare ghost.
Intrinsic Value
The intrinsic value of ghosts are solely determined by the ERC-20 aTokens. Depending on how much is staked. This amount, to be staked is dependent on how rare the gamer wants their ghost when first birthed/summoned from the portal. A Base Rarity Score (BSR) of greater than 582 implies a 1000 DAI collateral needs to be staked and at a minimum of 10 DAI, the gamer would get a ghost with a BSR below 450. Now, remember these rarity score can change over time depending on the gamer’s commitment to the ghost and its interactions within the metaverse and participation within the DAO.
Conclusion
To conclude this article, we discussed a brief outline of the Aavegotchi metaverse and its constituents; the aToken; the Rarity Attributes and finally what is the value and value types inside the metaverse. In the final (hopefully or second last) Aavegotchi article, I’ll explore its cryptoeconomics specifically the Tokenomics and Bonding Curve and also go into its Rarity Farming. Remember the point of exploring this is to help me define an initial strategy of identifying a spacecraft’s identity, how I could represent it as per my hypothesis at the start of this article in the form of an NFT, and how I could possibly create a sense of value to this identity so it can convince people to take it seriously or “seriously” enough to tackle larger issues like crowded orbits.
