In-depth analysis report of Nine Chronicles Gold
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With Axie Infinity’s recent success, now the spotlight and expectation towards the blockchain gaming is growing more than ever. However we are still in the early days of the decades old industry’s most aggressive innovation. Following the current trend in GameFi, we have conducted research on how Play2Earn concept will fit well with Nine Chronicles before bridge to Ethereum is launched.
Gaming has been such an old industry that has been in place for a long time, but what about earning with the game? Axie Infinity has opened a whole new door for this Play2Earn trend that is ongoing with extremely high interest in South East Asia. Nine Chronicles, one of our early investments that is innovating the blockchain gaming industry has now attracted more than 20,000 active users since its early access in Oct 2020.
At Nine Chronicles, things work a little bit different from Axie Infinity, or other NFT games such as Sandbox, where you will buy an in-game asset in a form of NFT, such as a piece of land or character, with which you can then increase value within the game and eventually sell to other users for a higher price. Well, on Nine Chronicles, you can also do this, but there is more about this game. The game comes with staking feature as well.
By holding and staking Nine Chronicles Gold, which is basically an in-game currency which you can buy in the Nine Chronicles game, you can acquire items called “Potion” and “Hourglass”. These items are unique, as they can only be created by staking the NCG in-game.
* AP Potion: This can be used to restore the player’s AP even before the Goddess’s protection is full.
* Hourglass: This can be used to speed up the crafting of items.
You can use these items for playing, accelerating growth & more importantly, earn. AP Potions and Hourglasses can be monetized into crypto. You can exchange Potions and Items into NCGs at a marketplace, which can be later turned into WNCG, now a publicly traded token on SushiSwap, OKex and gate.io. It’s like the gaming world is now connected to the real world. So every hour NCG is staked in the game — it creates the same value with you working in the real world.
This is like staking and gaming services combined into one. You can play the game, but you can also stake the game money within the game, which can earn incentives that yield weekly interest. It works just like any other staking services available in the market, except that they don’t take any fees, since the game is fully decentralized and tokens get staked on its own mainnet.
So, how much can you actually earn? Unlike the innocent look of the game, it rewards users more generously than most other standard staking services. However, since Nine Chronicles usually provides items corresponding to the game’s paid goods as staking rewards, it is difficult to intuitively know the rate of return. Therefore, through on-chain data analysis, we identified the recent market prices of AP Potion and Hourglass, and based on these prices, we estimated the annual rate of return.
Currently, on-chain analysis must be performed through tools such as Lib9c.Tools, but we expect that various tools will emerge in the future so that anyone can easily perform on-chain analysis of the Nine Chronicles mainnet.
1. Currently, staking 813,500 NCG gives you 360 AP potions and 120,965 Hourglasses weekly,
2. AP potion is traded for 8.5 NCG on the market by the players
2. Hourglass is traded for 0.07 NCG on the market by the players
3. This means you can expect a profit of 73.69% per year, which could grow further as the gamer community grows in the future.
4. Depending on staking level, your earning rates can go even higher.
Considering ETH staking rates are around 5% on exchanges and a maximum of 17% variant on network rates, this can be considered one of the highest staking yields in the industry.
Of course, this is the result of calculation based on NCG, and there is a risk of NCG’s value as it may fluctuate depending on supply and demand.
One thing which could be concerning is that the supply of NCGs gradually increases through mining rewards, but on the contrary, the supply decreases as you play the game. NCG typically locks up the market fee (8% of the transaction amount) and equipment production and enhancement (100–300 NCG) without transferring this fee to the development team. Importantly, NCG which is locked up will be processed following the community’s opinion, which can be burnt or distributed to rewards for arena competition.
Based on this, it is interesting that the market fee (2,306,907 NCG) and production cost (116,350 NCG) were higher than the newly issued block reward (2,240,000 NCG) between blocks 2200816 to 1976816 (approximately August 2021 period), which became the reference point of the analysis. This is a deflation phenomenon that occurred on the scale of DAU 2000, and this gap is expected to grow as the number of users increases in the future.
We have actively been investing in blockchain games since 2018 and Play2Earn is now getting seriously considered in the traditional gaming industry too. We are seeing the people buying houses in the Philippines with their earnings from blockchain games. With the current bullish trend in the NFT space, we are monitoring new phenomena and creative destruction in blockchain gaming industry. As the industry advances, the Play2Earn, decentralized gaming trend’s expected to grow.
* For AP Potion and Hourglass price information, the average and median values were calculated by extracting the results of successful `Buy` actions in the market for a block period between 2200000~1940000.
** NCG supply and demand analysis was conducted around blocks 2200816–1976816 between the end of July and the end of August 2021. On-chain data was extracted and analyzed using Nine Chronicles GraphQL API, Libplanet block explorer, and Lib9c.Tools.
