The Good, The Bad, & The Ugly: Examining Recent Esports & Gaming ICO’s
Earlier TNL re-published my post from a few months back on Ethereum. Manny prodded me to share my thoughts on a few recent Initial Coin Offerings in this update. It’s important to view ICO’s as investments with various grades of risk. As with any investment it’s important to research potential market size, functionality, aspirations, & team behind the product before spending money on the coins. I am not a financial analyst. If you choose to act based on the below information, please know that you are doing so at your own risk.
Two of the main tools I use to examine coins are White Papers & CoinMarketCap.com.
White Papers are technical papers provided by the team who is selling the coins. These papers aren’t audited by any government entity so their accuracy should be taken with a grain of salt. They’re not ideal but it’s usually better to have some insight as opposed to none, so I enjoy looking them up when I’m investigating a new coin.
CoinMarketCap hooks into the API’s of various cryptocurrency exchanges and calculates a volume weighted average for different coins. Again, unregulated but having some info is better than none.
SkinCoin
What they hope to achieve:
“Our main product under this ICO is creating an exchange service with a convenient API for connecting to the third party websites, so that they can accept payments in SKINCOIN without having to open and maintain their own stores.”
White Paper:
https://skincoin.org/whitepaper.pdf
CoinMarketCap:
https://coinmarketcap.com/assets/skincoin/#charts
The Good:
Gambling is a lucrative space within esports. Skin Betting is estimated to be a $5B market within the space. Digging through the paper I discovered the developers also operate several skin related websites that they hope to plug SkinCoin into. (Steamtrade.net, Skinwin.com, Case.club and Dotashop.net). Outside of ethics or legality, it seems that the team knows the market they are planning to operate in.
The Bad:
It remains to be seen whether SkinCoin will offer enough functionality to be adopted by sites other than the ones owned by its operators. At the conclusion of the ICO, the market cap spiked and then promptly plummeted to $3.4M. By my napkin math the creators control somewhere in the neighborhood of 82% of the the tokens.
The Ugly:
Valve (and various government entities) have previously attempted to shut down skin trading websites. While these sites are not doubt profitable, SkinCoin is choosing to operate in legally very grey area. Horror stories abound of minors circumventing age gates, getting addicted to gambling, and racking up thousands of dollars of debt on their parent’s credit cards before they are even of a legal age to wager.
Firstblood.io
What they hope to achieve:
“FirstBlood will be the first decentralized app, built on top of Ethereum, that allows eSports enthusiasts to compete in their favorite games through a decentralized, automated platform.”
White Paper (Aug 2016 — Historical Archive):
https://coss.io/documents/white-papers/first-blood.pdf
CoinMarketCap:
https://coinmarketcap.com/assets/firstblood/
The Good:
FirstBlood completed it’s ICO in October of 2016 when Ether was trading at ~$10 USD, raising $5M USD. In Spring of 2017 Ether spiked to a peak of $391 USD and has recently been hovering around $300. If they kept their funding round in Ether to this point — Firstblood would sitting on a $150M warchest.
Since their raise FirstBlood has built a team, launched a platform, and seen the value of their token spike to $2.05 and then settle at $0.66. The platform currently supports only DoTA 2 but they are teasing the addition of other games in the near future. Nothing I’ve seen yet is revolutionary, but the potential size of their warchest will allow them to experiment and pivot the product if need be. They’re also riding the momentum of the Ethereum developer community which could provide breakthroughs FirstBlood could capitalize on.
The Bad:
FirstBlood is following in the footsteps of ESEA, Gamebattles and a slew of other competition platforms, in attempting to package a competitive skill based system. Before assessing the benefits of using a crypto currency for this service, it’s important to understand the intrinsic difficulties that come with operating such a service.
1 — Publishers & Developers have greatly improved their in-game matchmaking & competition features. GB & ESEA built their momentum when in-game ladders, tournaments, & matchmaking were much less sophisticated. Since then many other tournament platforms have been launched and shuttered. (see Virgin Gaming, XFire, Avyd, etc). From a user perspective the value provided by these services is not worth the difficulty of using an outside service. Yes you can get introduced to other serious competitors, but managing accounts, reporting matches, & managing disputes is tedious. In large part this has prevented services like these from scaling.
2 — Skill based platforms tend have sharks who prey on newer entrants. A few of the top players will take money from newbies, drive away the newbies, and ultimately stifle growth.
The Ugly:
When I reached to reference the accuracy of the archived FirstBlood White Paper linked above a representative for the company said that there is no current White Paper for First Blood. This leads me to think that the product has pivoted beyond the vision that was shared prior to the ICO.
Neverdie
Whitepaper: https://neverdie.com/wp/NDC-TPT-ICO-Whitepaper-v-1-eng.pdf
CoinMarketCap: https://coinmarketcap.com/assets/neverdie/
What they hope to achieve:
“The purpose of the NEVERDIE Coin and Teleport Token is to turn the mechanics of buying a new life in a game or traveling within a game or between games into a utility that requires universal tokens. With a limit to the number of tokens in circulation, these utility tokens gain an intrinsic value as the demand to utilize them grows.“
The Good:
MMORPG’s have millions of people playing them. The digital goods found in these games often have real life dollars attached to them. NEVERDIE hopes to become the currency that is used to trade these goods. They have two products on the market — the NEVERDIE Coin & the Teleport Token.
The market cap for virtual goods is increasing, so this is a good place to be. To aid with strategy Neverdie has secured the services of Richard Garriot — a pioneer in MMORPG development.
The Bad:
What value these two tokens can provide remains to be seen. Exchanges for MMORPG digital goods exist, however publishers are incredibly wary of secondary markets and Neverdie is going to need their support to improve their product.
The Ugly:
Neverdie has the lofty goal of creating 1 billion jobs in virtual reality worlds. In practice, the wages for these type of jobs are incredibly low and in the past has resulted in unscrupulous digital slave shops to be built.
Hungry Panda
Whitepaper: https://www.hpgesports.com/whitepaper/
CoinMarketCap: ICO has yet to occur.
What they hope to achieve:
“The HPGC token can be used to pay for premium in-game content, compete in eSports competitions, share in yearly game revenue payouts, or sell on an open exchange.”
The Good:
HPG hopes to finance their video game studio and projects via Ethereum and the blockchain. Looking back to 2009, Riot benefitted greatly by being a first mover in the freemium space. If the Ethereum model succeeds, HPG could find themselves owning a financing pipeline that could grant them a lot of freedom to experiment and innovate.
Profits from the studio will be split among token holders and a percentage of studio revenues will be used to buy tokens back. This “stock buyback” program may serve to drive token prices up, which is lucrative for token holders. Finally the studio says it will focus on traditional forms of distribution as well, so risk will be diversified by also incorporating traditional monetary systems.
The Bad:
Hungry Panda’s website states that they have a 15 member team that has worked for various studios. This credential would be more compelling if their website offered more information.
The Ugly:
Team identity hasn’t really been revealed, the website is amateur looking, and everything I’ve found online is from the boiler plate press release. For all their AAA experience it’s surprising the limited amount of credibility HPG has managed to establish.
Conclusion: The ICO space is incredibly active. There will be a few huge winners and many losers. Unikrn with Mark Cuban and Na’Vi’s past owner are also offering ICO’s in the esports space. There will be more after them. Cryptocurrencies have spiked, it remains to be seen to what degree this will be a sustainable market.
