PieDAO’s $PLAY product is tailored for those who are looking for diversified exposure to the blue-chips of metaverse and gaming
This article appeared in The McNeill Report and has been published here with permission.
PieDAO is an asset-allocation DAO that builds and maintains financial products so that anyone can obtain exposure to the sector of their choice in a diversified manner. Since inception, they have consistently built and maintained products that remove a lot of the headaches from speculating on investments in the cryptocurrency arena. The community has experienced great success in this endeavour thus far, leveraging the inherent flexibility of DAOs to make a variety of different product offerings and find innovative ways to generate more yield for holders of PieDAO products, as well as pioneering industry-leading infrastructure for combatting voter apathy and ensuring that holders of PieDAO’s governance token are adequately remunerated for their contributions (with a specific focus on output rather than input).
Different DAOs across the DeFi space are currently experimenting with ways in which revenue can be distributed amongst governance holders. As Ethereum and DAOs dematerialise traditional work environments (particularly those that don’t require physically-taxing manual labour), it has become clear that this is not an easy issue to contend with, and many projects have had a varied focus on the best way to fairly and efficiently reward their communities for their contributions.
I have not found a more compelling example of how DeFi governance can be properly incentivised than PieDAO’s example. The structure currently in place means that governance token holders can share in DAO revenues if they pledge their allegiance to the DAO for a certain period of time by staking for ve-tokens, and vote on governance proposals.
The theory behind these innovations, which were implemented in October 2021, was that this would mitigate the risk of mercenary capital and ensure that PieDAO could depend upon a community with incentives sustained over the long term. In practice, what this meant was that PieDAO dramatically exceeded expectations and became one of the most active DAOs (if not the most active DAO) in the crypto space.
To understand the significance of this pragmatically, it is only useful to compare PieDAO with other DAOs to a certain extent. Since most of the world’s capital currently resides outside cryptocurrencies, it is more useful to compare these statistics with those in traditional finance. As a capital allocation DAO, the main roles of the PieDAO’s veDOUGH holders are to ensure that the DAOs products are well-managed. This process includes rebalancing, which assets to include in indexes (PIP-59), establishing remuneration for governance (PIP-64), and protecting investors from security concerns (PIP-66), etc. Since October, when the current structure for remunerating governance token holders was implemented, the number of voting wallets has risen to 392 (as of the time of writing). There are currently five indexes (or “pies”) that are actively managed by the DAO: PLAY, DeFi+S, DeFi+L, DeFi++ and BCP. When one considers that BCP is simply an amalgamation of WBTC, ETH, and DeFi++, and that DeFi+S and DeFi+L are to be deprecated into DeFi++ as part of the DAO’s product refinement initiative, it becomes apparent that there are 392 wallets that are focused on ensuring that the PLAY and DeFi++ pies are managed as efficiently as possible.
To put this into context, there is no fund manager in the world that has this many people overseeing this many funds, and certainly not with the combined wisdom that comes with a DAO’s hive mind. No matter how adept an individual may be at their craft, they will struggle to compete against hundreds of other people who are attempting to achieve the same.
Compared to many other funds, especially those in DeFi (which often have a higher barrier to entry, particularly for institutions), the fees on PieDAO’s indexes are also comparatively low: fees range from 0.7%-1% depending on whether or not further strategies are being employed to generate yield and to which extent. For example, some pies will generate yield on the assets within the indexes by lending them out automatically and in a gas-efficient manner (pooling assets with several others into a pie is a hugely efficient method of achieving this). This strategy is particularly noticeable in DeFi+L, and will be rolled out to $PLAY as soon as it is deemed feasible.
So what is $PLAY ?
$PLAY is PieDAO’s product offering that allows people to automatically and seamlessly invest into the largest projects in metaverse and gaming. Currently, the index consists of MANA, SAND, AXS, ILV, ENJ, GALA, AUDIO and YGG.
MANA
One of the longest-running metaverses, and certainly one of the largest, is Decentraland. MANA operates as the in-game currency for this metaverse (wearables and virtual real estate is priced in MANA), as well as the governance token for the Decentraland DAO, which oversees the governance of the ecosystem. For this reason, amongst others, Decentraland is often touted as the most decentralised metaverse that exists — for this reason it has already gained large-scale institutional support such as those who are invested in MANA through the Grayscale fund. In terms of metaverses (and it is quite possible in the future that there will be thousands), Decentraland is by far the most revered amongst OGs and has the most proven track record over time.
As well as the in-game currency, MANA token holders will have the ability to vote on the ways in which LAND (the NFTs that constitute the Decentraland metaverse) and estates can be upgraded, the ways in which LAND can be auctioned in the future, marketplace fees (always denominated in MANA — some of which gets burned), allocation of MANA for grants and development efforts, voting to replace and manage the security council, etc.
SAND
SAND has exploded into prominence recently due to the high-quality graphics of their metaverse and the extra utility that is afforded to holders. The Sandbox, so named due to the lack of constraints that exist within virtual worlds, has been pioneering in many ways that their competitors have not, such as focusing on the integration of NFTs which are external to the platform as avatars.
AXS
Axie Infinity was one of the best-performing assets in the metaverse and gaming space in 2021, largely credited with bringing play-to-earn mechanics to the fore. The ramifications for such game mechanics have been enormous and are being replicated all over the industry. Currently, Axie boasts 2.8 million active players and $3.6 billion traded on their in-house marketplace.
ILV
Iluvium is another project that has risen to prominence through exploring the play-to-earn mechanics. Although far smaller than Axie Infinity, it is certainly not a negligible force: since launch in 2021 ILV rose from just a few million dollars in market cap to a high of well over $1 billion.
ENJ
Enjin, along Decentraland, is a project that has been focused on gaming and the metaverse for a while now (aeons in terms of some of the rest of the projects listed in $PLAY). As such, they have developed their product offerings and diversified the organisation. Nowadays, Enjin provides end-to-end solutions for launching and managing NFTs across a variety of spheres including art, music, sport, gaming, collectibles, etc. They are particularly focused on the ways in which companies can be helped to implement and integrate NFTs into their platforms in order to better interact with their customers and clients.
GALA
Gala Games is a company that is focused on building games that have blockchains implemented into them, and are focused on doing so in such a way that the blockchains are effectively invisible to the end user. This thesis of putting the UX first guides their operations: they want to use the benefits of blockchain (most notably verifiable ownership of assets within games) to enhance the gameplay experience. Thus far, they have built a wide variety of games that span various formats. In a further effort to decentralise the Gala ecosystem, participants are able to run their own nodes (there are currently over 16,000) for more benefits in terms of accrual of $GALA as well as exclusive NFTs.
AUDIO
Audius is a project focused on democratising the music industry through NFTs. Their business thesis is that the current state of artists producing music is too elitist and that the barriers are too high: signing with record labels isn’t an easy thing to do, and without it many musicians find themselves unable to gain the traction that they seek. For this reason, Audius has built a platform that allows artists to grow their communities and publish their music for free with no limitations or restrictions. They boast that they have the highest quality audio of any free streaming service. Their native token $AUDIO is used to govern the platform, reward the most popular artists, and to provide artists the ability to gate their music for exclusivity purposes.
YGG
Yield Guild Games is a community of gamers that collaborate together in play-to-earn games so that they are more profitable. As well as this, YGG invests in NFTs (particularly in-game assets such as virtual land) and makes them available for their members to borrow so that they can be used in-game. This thesis has made the P2E arena more efficient and made the industry far more profitable for many gamers.
The future of experience
The above projects represent a shift from the current state of gaming, in which those who play are consumers alone, to a more egalitarian form of gaming in which ecosystems are built that have the potential to become fully autonomous. This process is not confined to gaming alone, but metaverses also represent a future in which the physical world becomes less meaningful and the digital world more so. Lockdowns showed the world the importance of the digital world, the limitations of the physical one, and the importance of innovating to ensure that this digital world is as beneficial as it can be. Metaverses are not just restricted to games: as bandwidth constraints improve and become less burdensome, and as more people come to populate these worlds, enhanced user interfaces will dictate that the user experience is also improved. The possibilities for moving the human experience into a digital space are profound and nearly limitless: education, socialisation, gaming, work… most human experiences can be transposed into such a world, and the benefits of decentralised blockchains mean that users can retain digital sovereignty and not fall prey to a surveillance dystopia, since personal data can be retained.
The trends are clear: the space has exploded over the past couple of years. When it comes to finding the best way to invest in these projects, it is clear that diversification and risk management are responsible strategies, and the ability for PieDAO to automate and oversee the management of the $PLAY index means that potential investors and speculators are provided with all the tools they need to make passive investments. The unique structure of PieDAO means that there are also potential opportunities for meta-governance in the future across the future, and that either $DOUGH or $PLAY could be used to participate in a variety of different ecosystems simultaneously and seamlessly.
Since inception, $PLAY has performed extraordinarily, and has generated phenomenal returns for holders. All of PieDAO’s pies start at a value of $1, and at the time of writing $PLAY stands at $2.40. Indeed, from the lows of June to heights of November, $PLAY rose from approximately $0.50 to $7, a 14x return. The markets may be volatile, and indeed there have been huge swings in the price, but for long-term investors such volatility is par for the course. Those who have provided liquidity for $PLAY have also been extremely profitable: the launch of PieDAO’s DOUGHpamine programme to incentivise liquidity provision initially gave the SushiSwap PLAY/DOUGH LP an APR of 1500%, and even though more capital has headed in this direction, the yields still stand well above 100% .
With ETH Amsterdam on the horizon, there is no doubt that VC-fuelled chicanery, speculation, and investment will continue well into 2022. For those who have the knack to recognise the degen play du jour, there are plenty of profits to be made.
However, for those who are more interested in consolidating and building a long term, responsible portfolio, but who are also confident that the dematerialisation of the physical world is not only a burgeoning trend but a continuing one, $PLAY is a brilliant tool — particularly for those who subscribe to the maxim that “diversification is the only free lunch in investing”.
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