Our Road to Revenue
In this post, we summarize our vision for the future of Web3 gaming, our conviction in how Parallel will lead the charge, and our advantageous positioning to thrive.
This is an excerpt from our latest Semi-Annual DAO Report — you can read the whole thing here.
Web3 gaming is due for another bull run
After a long bear market with a slow recovery, crypto markets are firmly back on the rise, punctuated by the recent US Security and Exchange Commission’s authorization of the Bitcoin ETF — a significant milestone in the perceived legitimacy and future of crypto.
It’s our firm conviction that web3 gaming will play a top role in crypto’s continued adoption and day-to-day usage by average users, whether a user even realizes they’re using it.
Some industry leaders predict over 100 million new web3 gamers in the coming years . Others suggest that most games will incorporate web3 technologies before long:
“$135 billion was spent in 2022 on virtual gaming items — none of which are owned or tradeable by gamers…it’s inevitable that (younger) gamers will eventually demand ownership of virtual gaming items, and Web3 enables just that…
…Over the next 10 years, most games will incorporate Web3 technologies and that monetization enabled by Web3 will become a dominant business model in gaming.”
- Colleen Sullivan, Co-Head of Venture at Brevan Howard Digital
Parallel will lead the charge
All it will take to bring web3 gaming to the mainstream is one game with mainstream appeal that shows the true value of digital asset ownership…we believe that game is Parallel.
Parallel has extremely compelling IP, worldbuilding and lore, top-tier art direction, and unique application on the popular sci-fi genre. Using this baseline, they’re set to launch both the trading card game (Parallel TCG) and their unique AI game (Parallel Colony) this year, tapping into i) proven large markets with no compelling sci-fi IP, and ii) creating an entirely new AI gaming niche with each of the respective games.
Parallel has thoughtfully designed the TCG to provide a path in which users need no interaction with the blockchain, while providing compelling incentives and simplifying the journey to convert to web3.
As a first-of-its-kind AAA sci-fi TCG, Parallel has a unique opportunity to reach significant heights when it scales. One only needs to look at the annual opportunity size of the existing IPs in the niche to understand the possibilities at scale for the TCG alone.
And through Colony, they’ll create new markets and audiences altogether. Colony presents a paradigm-shifting opportunity in semi-passive gaming, creating never-before-explored relationships between players and their AI Avatars (who have a mind of their own, and can transact in crypto and digital collectibles on a player’s behalf).
Parallel has already been successful in onboarding and converting several top players and influencers from other leading TCG games — a clear nod of approval that the game has what it takes to compete with the current industry leaders.
We’re positioned to thrive with Parallel’s success.
At Paragons, it’s our goal to level up players and guilds within the Parallel ecosystem to become more competitive and increase their rewards, and the DAO will be one of the greatest benefactors to the success of Parallel. We’re setting ourselves up to be a “no brainer” for players to join our community and take advantage of everything we have to offer.
We’re already one of the top holders of $PRIME (Parallel’s game token, managed by the Echelon Foundation), and we’ll continue to passively earn PRIME in the following ways:
Caching
Through caching our collection of Prime Drives and Prime Sets, we’re currently earning 1.2% of the Prime Sink schedule — and though a portion of that will taper down over time, we expect the pool of rewards to significantly increase with player volume. In the last period, we collected c.$800k in caching rewards.
If 10% of PRIME were sunk annually, at just $8.50/PRIME, this would produce c.$1.1m annual revenues for ParagonsDAO.
Some bulls predict over 50% of PRIME could eventually be sunk each year (which would likely have a sizable impact on its price, too).
By caching our Masterpieces, we also receive 1% royalties on secondary market sales and replication sinks for the related cards. With increased trading and replication volume, this could provide attractive supplemental revenues.
Colony
We own 1.5% of the Parallel Avatar supply. We’re still uncertain as to how they will continue to yield for ParagonsDAO, but we know they’re core to Colony, and we’re excited to learn more as Colony news unfolds.
Card sharing
We own over 47k Parallel cards (and counting). Through Echelon’s Bonds, we’ll be able to share these cards with our Bond members (at no cost to the player), while collecting a rake on their PRIME earnings. We’ll optimize how we share our cards through our Player Management System…
Our tools will amplify our revenues
We’re creating the cornerstone tooling of the Parallel community — and we believe that investing in building now will be an unmatched benefit to our community when Parallel begins to scale. By offering the top community tools and building our reputation as the top Parallel community, we’ll attract more people to play with our Bond and use our other services. Here are the key tools we’re building that we expect to amplify our revenues:
Our Player Management System will optimize card sharing
Our vast collection of Parallel cards can already equip at least 1k concurrent players with full, competitive decks, and we’re not finished collecting. But how can a group of our scale ensure that the cards are going to the right hands and used efficiently without significant manual administration and ongoing overhead?
Our player management system will be built on top of Echelon’s Bonds to optimize and automate card sharing at scale — helping us efficiently support hundreds (eventually thousands) of players.
Early modelling suggests that our Bond (when optimized by our player management system) could earn an average of c.$3-$7 per player per day.
(Using a full DAO deck at full emissions, excluding keys).
Those who show they can produce will have better access to the in-demand cards that allow them to maximize their rewards, while producing greater revenues for the DAO. We plan to make our tool available to other large bonds (capturing further revenue), followed by other games via “Guildr” (for even greater scale).
To maximize our lending efficiency and quickly scale rake, we also plan to supply playable assets to other bonds. We already have several potential partnerships lined up for communities with significant size.
Priming will be an essential tool for all Parallel players and collectors
Priming.xyz is our asset management tool built for web3 gamers to optimize their win rate and yield. Through a unique combination of personalized financial and gameplay analytics, it’ll become an indispensable tool for players and collectors who want to maximize their outcomes.
Over the past months, we’ve been primarily focused on delivering the core infrastructure to position it for scale and flexibility. As we deliver the final milestones of our Echelon Foundation grant, we’ll formalize our payment and revenue model (including premium features with a Prime Sink).
Priming will also be a funnel to other revenue-generating services we offer, e.g. card-sharing and “Vaults” — the first of which will be “Sleeves”.
Sleeves is our forthcoming “community caching” offering that enables users to earn Echelon Caching yield on their individual Parallel cards. Through Sleeves, our treasury will collect the PRIME earnings, rewarding users in the equivalent PDT (withholding a small service fee).
As we continue to build our reputation and prove our value proposition, we’ll incorporate more premier game titles, creating additional partnership, promotional, and/or revenue opportunities.
We also have other paths to revenue
Liquidity provider (LP) fees
We currently supply and actively manage over $2.9m in liquidity (between PDT/ETH and PRIME/ETH), and we’ve been collecting significant LP fees. Last year, we earned c.$0.4m in fees alone. If market activity continues or increases with the player base, we’d expect the LP fees we earn to increase accordingly.
Other ecosystems
As we prove our model and reputation, we’ll be able to port it to other premier web3 game titles in a similar way, creating opportunities for cross-pollination of users across game titles, and building our reputation across a greater surface area.
As of now, we have a collection of assets for ARBO and The Watch, two more exciting web3 games set to launch this year. We’re also exploring partnerships and mutually beneficial arrangements with other games and ecosystems, while recognizing that our primary focus should remain on Parallel for now.
Further explorations
We continue to explore other potential revenue streams that complement the value we provide, with several ideas set to take shape in the coming months. For example:
Competitions and tournaments
We’ve already gained a foothold as the top Parallel competition organizer. Both Parallel and Echelon are developing solutions for competitions — we’ll use these solutions (where possible) to support our events, and fill strategic niches that will supplement our revenues (e.g., subscription-exclusive access to guaranteed minimum prize pool tournaments).
Content
We’re proud to employ Quinto, Parallel’s top streamer of 2023 (recently awarded this honor in the Prime.Wiki awards), and will continue our effort to produce top-tier Parallel content. As the game scales, we’ll expand the reach of our regular streams and educational content — depending on this reach, we may be able to monetize our content channels, while providing a funnel to our other revenue-generating services.
Expanding through support and advisory
Though we’re still in the process of proving our model, we’ve captured the attention of other groups interested in following a similar approach to ingesting game assets, launching a DAO with a governance token, imitating our governance model, using a similar legal framework, or using a player management solution.
In exchange for our advisory, tools, and future developments to apply our frameworks/solutions to these groups, we’d collect a percentage of their tokens to expand the game economies we’re involved in.
Our opportunities are vast, and with several clear paths to revenue, we have no doubt that ParagonsDAO is poised for an incredible 2024 and beyond!
