A Figurative Painting on Game Guilds: Varieties of ecosystem behind similar projects

Author: AIKO

Compiler: Kxp, Rhythm BlockBeats

Recently, a large number of so-called "game guilds" have emerged like mushrooms after rain, and they are considered comparable to YGG. However, despite all being called guilds, their management and operational models differ significantly.

This article will provide a detailed analysis of YGG's internal operational model, outline the differences between various guilds, and predict the future market positioning of guilds, hoping to bring some insights to Web 3 developers and investors.

1. YGG's Internal Organizational Structure

(YGG Treasury + YGG SubDAO)

1.1 Community Management

YGG DAO consists of guild apprentices, ambassadors, and community operation members.

Guild apprentices are generally made up of ordinary members from the community, but as guild activities and competitive gaming evolve, some advanced players will form dedicated esports teams (specific details will be introduced later), while ordinary players will learn game operations and liquidity mining under the guidance of coaches. Ambassadors are primarily responsible for recruiting and training players in various regions, while community managers are mainly responsible for managing the community according to regulations and organizing community activities and voting.

Unlike centralized management systems, DAOs require their members to make active contributions. Therefore, DAOs typically have clear incentive systems, known as the "upgrade system" in YGG, where members can earn rewards by participating in four roles: class leader, guild activities, tournaments, and voting. Guild activities include regular competitions held in games and daily community activities, while tournaments refer to non-traditional large-scale competitions, with rewards for esports players, event organizers, hosts, etc.

DAO members holding YGG Tokens not only enjoy governance rights but also receive benefits from commercial activities such as game asset staking and leasing. If members also join a SubDAO, they are required to participate in the construction of the DAO and can enjoy privileges in obtaining SubDAO Tokens.

1.2 SubDAO

While Crypto has increased global user accessibility, language barriers still hinder guild management from fully crossing multiple regions, leading to the emergence of the SubDAO organizational form.

SubDAOs are branches of YGG DAO in certain regions or large game projects. For instance, YGGSEA is a SubDAO focused on the P2E gaming community in Southeast Asia. In addition to organizing community activities like the main DAO, SEA also focuses on localizing guild construction, overcoming regional and language barriers to create value for the main DAO.

Each SubDAO is responsible for recruiting and training players on the ground, localizing games, and bringing talent into the DAO organization. Their work includes:

• Organizing activities in specific regions
• Operating and managing small teams
• Adapting management methods to different regions and adjusting strategies in a timely manner
• Recruiting and retaining local talent (mainly "ambitious and energetic young people")
• Managing according to regulations
• Maintaining stable member income
• Encouraging members for "ownership"
• Contributing to the issuance of SubDAO Tokens for specific regions

By binding with players and paying attention to their needs, habits, and income, localization can not only maximize investment returns but also transcend geographical and cultural limitations.

To ensure players' gaming experience and collect constructive user feedback, each SubDAO will also carry out the following tasks:

A.) Exchange popular game resources and information from different regions

B.) Rapidly collect player information and feedback to build a bridge between players and developers

C.) Allow players to earn extra income through local esports competitions, providing insurance or loans

1.3 YGG Treasury

The asset management department within YGG DAO is the YGG Treasury, responsible for purchasing game assets, arranging asset allocation, and publishing asset usage information. The assets of YGG DAO include not only the initial fundraising but also the appreciation gains from game asset staking, leasing, and other interactive activities.

They will not only participate in researching each game and teaching ordinary players about liquidity mining but will also evaluate the value of game projects in the early stages of seed investment.

1.4 YGG Token

YGG Token is an index of all SubDAO Tokens, summarizing the asset usage of each SubDAO, the value and returns of all NFT assets, and the growing number of users. As the NFT gaming economy develops, NFT assets are increasingly used for leasing, sales, and obtaining other forms of income (such as incubation or acquisition airdrops) and esports revenue, which will create a multiplier effect on YGG's value.

The value of YGG Token comes from its ownership returns of all SubDAOs, and the treasury contains a portion of the assets (NFTs and Tokens) from each game within the SubDAOs, while the rest is earned by community members and invested back into the games. The ownership ratio reflected by YGG Token for each tokenized SubDAO is:

A = % Axie SubDAO (YGGAXS) + % Lok SubDAO (YGGLOK) + ……+ % Zed SubDAO (YGGZED)

2. Traditional Guilds vs Crypto Guilds

2.1 The Relationship Between Players, Guilds, and Developers

In traditional games, players want to farm gold, but this behavior has been criticized by legal professionals, game developers, and players alike.

Legally, the regulation of virtual assets still needs to be strengthened. Gold farmers engage in large-scale transactions without being subject to tax constraints. Automated bots produce excessive game assets, which not only disrupt the game economy but also infringe on the interests and intellectual property of game developers.

For game developers, while some mobile game companies may collaborate with guilds to promote projects and increase active user numbers, it is more common for development teams to ban accounts of users employing cheats and gold farmers, as their actions severely affect the overall balance of gameplay and may even damage the game ecosystem.

In "Diablo 3," gold farmers monopolized all in-game gold, causing severe devaluation, making it impossible for ordinary players to acquire game assets. As a result, developers and manufacturers can only choose to ban their accounts and restrict online gold farming advertisements to reduce the exposure of this underground market.

From the perspective of ordinary players, gold farmers undermine the fairness of competition and experience in games, leading them to unite the entire community in a "cyber war" against gold farmers, such as interfering with or banning accounts suspected of gold farming.

2.2 Rewards for Guild Players

Traditional game guilds are often referred to as "sweatshops" because there is a long profit chain from gold farmers to factory owners, from factory owners to intermediaries, from intermediaries to cheat creators, and finally to game managers, where the interests of gold farmers are most easily exploited. In the early stages of this black industry chain, some gold farmers tasted the benefits of free games, as long as the factory provided food and accommodation, they could work without any salary.

However, the working environment at that time was quite harsh. Around the year 2000, small gold farming factories in China had only about 3-10 machines, so gold farmers had to take shifts day and night. Before the advent of cheats, the number of gold farmers was greater than the number of computers, and they had to play games continuously for 24 hours to farm gold. Their dormitories were small and messy, with 8 to 10 people squeezed together, and there was no furniture other than computers.

They had to stare at electronic screens for up to 12 hours a day in smoke-filled rooms, doing extremely boring repetitive work, but their monthly base salary was only a meager 800 RMB.

However, the emergence of YGG will change this situation. Guild members possess governance Tokens that can be used for voting, suggestions, and participation in DAO activities. In addition to gamers, guild members can also play other roles in the community, such as community administrators, trainers, and volunteers. Among community members are both professional gamers and new players who come in through bounties, and everyone can gain something here.

2.3 An Active Secondary Market

Crypto-related guilds, players, and developers have a close cooperative relationship. On one hand, guilds invest in the primary market to help projects progress, thereby increasing their own traffic; on the other hand, guilds also recruit and train players, host competitions, and promote games, organically combining player communities with game projects.

The close integration of the three parties' interests relies on an active secondary market for trading. In traditional games, the pricing and control are in the hands of the official, and players as consumers cannot own assets within the game. However, when games combine with NFTs and Crypto, everything changes. At this point, anyone can be a buyer or seller and manage their assets in the secondary market.

Many user-generated content tools in games encourage people to use their imagination to create innovative content beyond the official game content. In the secondary market, players can independently and freely evaluate NFTs and provide liquidity.

Early game players will become core participants and thus earn game rewards, becoming long-term users of the project, while new players can participate in the game by purchasing avatars or items.

3. Market Positioning of Guilds

In the ecosystem, three elements have a direct relationship with YGG: seed investment, secondary market (purchasing game NFT assets), and bounty programs (training players and managing player communities). Rather than viewing YGG as a game guild, it is more accurate to see it as an investment institution focused on Crypto and NFT games. YGG has a very close relationship with both players and developers, providing not only financial support for projects but also assistance in project guidance and community contributions.

So, what will future guilds look like?

The evaluation criteria for guilds have shifted from the accumulation of individual income to the financial performance of the company's balance sheet.

3.1 Distribution Channels

While web3 allows everyone to publish their own projects, it also requires endorsements to make these projects known, and guilds are definitely one of the means.

YGG follows three criteria when selecting games: there are NFT assets on the game land, Tokens are issued in the game, and there are PVP and Token staking reward mechanisms, among other P2E mechanisms. In other words, the games YGG invests in have ecosystem designs suitable for P2E models and can compete with core gameplay. It is foreseeable that when guilds reliably assess the investment value and playability of the games they promote and publicize them on social platforms, they will become a type of distribution channel.

3.2 Esports Tournament Organizers

Guilds will play the role of sponsors in global esports competitions, responsible for planning, organizing, disseminating, and establishing connections between social platforms, players, and arenas. The competition of Crypto game projects is still at the conventional stage, and the commercial value of esports games has not yet been fully realized, as there are currently no strong competitors in Crypto games. Once FPS and MOBA develop, and SubDAOs become popular worldwide, guilds will then become the best organization for esports teams and initiate global esports tournaments.

3.3 Dispute Mediators

In the process of game operation, modifications to state points or mechanisms often bring different experiences to players. Since specific SubDAOs within guilds can establish formal communication with developers, the situation where players in traditional games can only vent their dissatisfaction through official surveys and social media will soon improve.

Some restrictions set by officials to protect the balance of the in-game ecosystem also affect many innocent players, so guilds can organize votes and negotiate with game offices to resolve conflicts. Guilds can also appropriately restrict certain gaming behaviors of players, and players must adhere to certain rules when using guild assets to play games, so they will not be banned for excessive gold production and account abuse.

3.4 Professional Gaming Families

As game project types continue to diversify, players can form different families based on their gaming preferences and skills, or they can form different SubDAOs within the guild. For example, YGG is a comprehensive venture capital institution for multi-type game investments, while Guild B focuses on professional video games, and Guild C is dedicated to providing guidance for traditional players transitioning.

4. Other Crypto Game Guilds

Most Crypto game guilds provide players with game guidance and bounty services, with some guilds existing in the form of DAOs or issuance platforms. However, very few guilds can fully replicate YGG's internal operational model, so due to their short development time and insufficient resources, most guilds will only specialize in one direction.

4.1 Mature Guilds with Established Organizational Structures: Merit Circle

Merit Circle's internal structure is basically consistent with YGG, divided into main DAO and SubDAOs, with two mature game SubDAOs, Axie and Vulcan Forged, whose asset ownership and revenue distribution details are even more detailed than those published by YGG.

Referring to the bounty distribution method of the SubDAO treasury, Merit Circle has customized different funds for different game mechanisms and provided the already mature Axie Infinity as an example. In addition, Merit Circle has participated in various game projects, acquiring land in Big Time (future operational plans have not been disclosed) and investing in Cyball in its early stages, forming a strategic partnership.

Merit Circle gitbook

4.2 Incubator: GuildFi

GuildFi has a treasury and DAO governance internal organizational structure similar to YGG. They invested in some games in the early stages, transforming themselves into a game incubator and game startup.

More notably, they intend to establish closer connections between players and games by recruiting sub-guilds and introducing game proof mechanisms.

Rather than monitoring players, they choose to incorporate informal local guilds by providing membership and organized support, effectively expanding their influence and the backup power of the player community. Additionally, the game proof reward system has also incentivized some individual players or asset owners who may have previously been too busy to participate in DAO activities or volunteer work, only occasionally playing games to collect some game items. However, with this reward system, the game will grant them more rights and experience points, allowing even individual players without any bounty plans to earn extra rewards by leveling up.

Even for those players who do not need to earn money through games, the sense of achievement brought by this lifelong player certification can motivate them to continue playing.

GuildFi White Paper

4.3 Lending Protocol: Metagame Guild

In the white paper, the description of MGG Token usage is very limited, as too much space is devoted to introducing Axie Infinity and YGG. While it is strange to promote oneself using other successful projects, the lending protocol of Metagame Guild indeed leaves a deep impression.

In addition to purchasing a large number of NFT game assets across various projects, MGG DAO encourages contributors to lend their idle assets to the treasury to ensure the sustainability and stable growth of the treasury, while contributors or lenders will receive corresponding deposit income. With this lending protocol, MGG resembles a lending platform, targeting users who own game assets but are too busy or unable to maximize their NFT earnings.

4.4 Family: CGU

Some guilds are unwilling to develop influence in the gaming industry or collaborate with game projects; they only want to hire players globally. They do not set standards for selecting games, focusing solely on developing their own community and concentrating on Axie Infinity without acquiring other game assets. Crypto Gaming United (CGU) is one such example.

Although the number of sub-communities distributed across different countries has exceeded 20, and the number of Discord users has reached 90,000, only 5,000 of them can earn income through CGU's bounty.

They also have a structure design of main DAO and SubDAO in their white paper, but there are currently no signals indicating that they operate other game incubators or engage in asset collection beyond Axie Infinity, so the DAO organizational form will not impact the treasury of SubDAOs.

CGU Website

4.5 Platform: GameFi

In my view, GameFi is a platform rather than a player organization. It is a guild version of Steam, emphasizing collaboration and public display among game projects without deliberately dividing players into different families.

GameFi is a comprehensive GameFi center that provides services for game studios, gamers, projects, and investors, targeting games on the BSC and Polygon networks. It is also the first market that allows in-game items and NFTs to be traded across games. The GameFi ecosystem consists of the Golden Alliance, game issuance (IGO), game aggregators (showcase and demonstration portals), asset trading, and incubators.

GameFi Website

5. How Should Investors Differentiate Between Different Guilds?

5.1 Understanding of Games

At this moment, some guilds are working hard to expand their partnership networks, but a close observation of these projects reveals that many games have vastly different gameplay. From a gameplay perspective, some of these games lack competitiveness and playability, essentially amounting to digital gambling. While these projects are very common in GameFi, after several collapses, some players have realized that if a game does not have core gameplay to retain core players and attract reinvestment, the liquidity of that game's Token will eventually dry up.

Taking Splinterlands as an example, its daily user activity is far higher than that of Axie Infinity, but in the past month, its NFT trading volume was less than 1/100 of that of Axie Infinity. If there are restricted transactions and numerous wallet login addresses in the game, how can we ensure that the players in the game are real people and not bots?

Despite the doubts surrounding this user data, some guilds are still promoting the game Splinterlands.

Daily active user count of games on Dappradar over the past 30 days

NFT trading data in Axie Infinity on Dappradar over the past 30 days

NFT trading data in Axie Infinity on Dappradar over the past 30 days

5.2 Comparative Advantages in User Base

Guild participants exhibit a clear regional clustering effect. For instance, YGG SEA captured the Southeast Asian market during the pandemic, as people lost their jobs and had more free time to learn how to make a living through gaming. The Southeast Asian market has a large population base, low average wages, widespread mobile device usage, and high user acceptance, all of which contributed to YGG's success. If there are adaptable game resources and a user base, similar situations can also occur in parts of South America, Africa, and East Asia.

Due to cultural and language barriers, local game users mostly play games recommended by local gaming KOLs or friends, so for guilds, capturing the user market will soon be on the agenda.

On this basis, most of YGG's users are concentrated in Southeast Asia (mainly in the Philippines), while GuildFi's users are primarily distributed in Thailand, each having its own geographical advantages and independent user markets.

Merit Circle may not have access to users like local guilds in developing countries, but it still has a first-mover advantage and rich experience in SubDAO operations. The founder of CGU is from Australia, but its users are distributed worldwide, which significantly reduces its localization efficiency and requires substantial assistance from localization teams. However, platforms like GameFi are likely to break through geographical and cultural barriers, further expanding their online communities.

Moreover, guilds should continuously enrich their game resources, as having only one game would greatly limit the diversified development of the player ecosystem. Therefore, it is unreasonable for guilds to have most of their members, or even all players, playing Axie Infinity.

6. Conclusion

The birth of YGG is not accidental; its co-founder Gabby is a game developer who founded his mobile game company, Altitude Games, in 2014 and began researching how to avoid the negative impacts of smart contracts and Crypto on the gaming industry. Founders with such deep insights into the gaming industry and Crypto market have become scarce resources among many emerging guilds today.

Crypto-related game projects have attracted a lot of attention, but whether in game development or community management, both require a deep understanding of the industry to succeed. Game guilds have ample opportunities to hire players and accompany emerging games as they develop, but what they truly need is foresight and insight to elevate the blockchain gaming industry to new heights.

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