In-depth Study of Aavegotchi: The Pioneer of DeFi Gamification
Source: CYC Labs
3 Value Support Factors
Before discussing the innovation of the project, let's briefly talk about what kind of game it is.
The value of Aavegotchi is determined by its rarity, with the main influencing factors being these 3 value supports:
SpiritForce (Defi aToken staking)
Random Attributes (innate attribute values, intimacy, experience)
Wearable Equipment (game items)
Image source: Aavegotchi official website
All value factors are related in an onion ring manner. aToken staking, various attributes, and wearable devices are layered together to form Aavegotchi. The value of each Aavegotchi consists of intrinsic value and rarity value. Intrinsic value: the staking value of the aToken of Aavegotchi. Rarity value: determined by the rarity of attribute values and wearable devices.
SpiritForce
SpiritForce depends on the intrinsic value of Aavegotchi. This value is measured by the value of aTokens (aLINK, aUSDC, aDAI, aUNI, etc.) staked on Aave: The staked aTokens will be placed in Aave's lendingPool and will generate returns, thereby increasing the token holdings of aTokens.
Attribute Values
Innate Attribute Values: Each Aavegotchi is born with randomly generated attributes, which are randomly produced by the ChainLink VRF random number generator.
Intimacy: Intimacy starts with a fixed value at birth, players can increase or decrease intimacy through on-chain interactions (limited to 2 times a day, 1 point each time), and neglecting for 24 hours will decrease it by 1 point. It is worth mentioning that the project has currently migrated from Ethereum to Layer 2 Polygon, significantly reducing gas fees.
Experience: Experience points can be increased by being active in the community; voting in the DAO, volunteering in Discord, and participating in games can all increase experience and level up.
Wearable Equipment
This can be understood as game items that can enhance various attributes. In addition to managing aToken custody, Aavegotchis also expanded the ERC998 token combination standard, which allows for the combined management of sub-NFTs, namely the wearable devices in the Aavegotchi ecosystem.
After roughly discussing the value composition of Aavegotchi, let's take a look at what innovations it has brought to the blockchain gaming field:
Dynamic Rarity Mining, User Self-Competition
Unlike other NFT games, rarity in Aavegotchi is not a fixed value. It can change with the leveling up of Aavegotchis and the different wearable devices equipped. Therefore, a rare Aavegotchi may become less rare in a short period, depending on the overall distribution of characteristics and wearable devices in the Aavegotchi universe. This realizes a new concept called "rarity mining." Simply put, the more money users spend on Aave, the more rewards the project will give you. For example, if your Aavegotchi has a characteristic that only 5% of the network possesses, you will receive an additional 95 points.
Maximizing Aave's Native Users, Improving Capital Utilization
Users deposit Defi tokens into the Aave Lending Pool, exchange them for aTokens, and place them in the Lending Pool to earn interest, thereby improving capital utilization. Of course, if you are not a Defi veteran, you can also purchase GHST through Bonding Curve and then buy Portals to open Aavegotchi. Moreover, a lending feature has been opened at this stage, which will be discussed later.
Fast Development Speed, 40% Token Rewards for Main Developers
The team reserves 40% of the tokens for Aavegotchi project developers, with rapid code updates on GitHub and timely market responses.
Introducing Profitable Metaverse Land with Social Attributes
Aavegotchi Gotchiverse is the official "metaverse land" of Aavegotchi. It has not been released yet. It offers various ways to earn income, whether you are a novice with limited funds, a seasoned gamer, or even a big spender, you can find corresponding ways to earn in the game. Additionally, this land also possesses social attributes similar to sand, mana, and cv.
In Gotchiverse, the main P2E mechanism involves farming 4 new ERC20 tokens (including FUD, FOMO, ALPHA, and KEK), collectively referred to as Gotchus Alchemica. These resources can be combined to create powerful devices or simply sold on the market for other cryptocurrency assets. Different ways to earn Alchemica (gold refining) include:
Gold Refining Channel: Aavegotchis can directly channel their energy to REALM land, exchanging their intimacy points for gold refining.
Public Channel Transmission: Aavegotchis can also build Gotchi Lodge devices on REALM land to collectively channel gold refining. To participate in the collective guidance, Aavegotchi must wear the relevant guild badge and appear in the ceremony on REALM land. The more additional Aavegotchis participate in the public channel ceremony, the faster gold refining will be cultivated. (This is an interesting mechanism for guilds like YGG.)
Farming: Once the harvester is built, gold refining begins to accumulate passively, with X amount entering the Reservoir, Y amount overflowing to nearby maps, and Z amount entering the monolith gate.
Harvesting: Aavegotchis and Liquidators can wander the map to collect scattered gold refining that overflows during the mining process.
Eliminating Third-Party Dependence with On-Chain Lending
A newly introduced feature is Gotchi Lending. Unlike the past perception of lending NFTs, Aavegotchi places lending on-chain, conducting transactions and processing entirely on-chain, eliminating third-party dependence and enabling trustless lending of Aavegotchis from one party to another.
Gotchi owners pre-adjust the term and profit-sharing agreement, which specifies the percentage of income sharing, the lending term, and prepayment fees. Borrowers can accept this list, thereby transferring the Aavegotchi on-chain to the borrower. However, during the lending period, the Gotchi is effectively locked. It cannot be transferred or sold. Once the lending period ends, the original owner can reclaim the Aavegotchi and split the ERC20 tokens accumulated during the lending period according to the percentage listed in the agreement.
Image source: YGG, Gotchi lending flowchart
Reserve Ratio Set at 33% to Prevent Malicious Whale Price Manipulation
In the Aavegotchi world, $GHST is generated or destroyed on demand. The certificates obtained from depositing assets in AAVE can be used to obtain GHST in Aavegotchi, and when redeeming the certificate, GHST will be destroyed. The same applies to purchasing from the liquidity pool; buying will yield GHST, while selling will destroy it.
Image source: Aavegotchi official website
Governance at the Forefront, DAO Updates Keeping Pace with the Times
Image source: Official website, DAO V1, V2, V3 versions
At the end of August this year, Aavegotchi provided GHST token compensation for those who did not win the Haunt 2 NFT auction (Portal auction); those who did not win could not only reclaim the GHST tokens used for bidding but also receive an additional 10% of the bidding amount, funded by higher bids.
Advanced Technical Architecture, Open and Free Team
Aavegotchi smart contracts are written in Solidity and utilize the Diamond standard for easy upgrades.
Aavegotchi smart contracts follow the ERC998 standard, which allows for the combined management of sub-NFTs, namely the wearable devices in the Aavegotchi ecosystem.
The project has now integrated with Polygon, reducing gas fee payments on-chain. Functions like daily check-ins are placed off-chain (e.g., on Google Cloud or AWS; or on sidechains) to ensure normal operational speed.
Aavegotchi smart contracts also have a locking system to prevent front-running in NFT markets like OpenSea; Aavegotchi owners can list their Aavegotchis at a price and remove collateral/wearable devices before sale.
How Can a Newcomer Achieve P2E?
Step 1: Purchase GHST through the token bonding curve, which requires KYC beforehand. If unable to purchase, you can buy through an exchange. However, Gotchi rentals have now opened, similar to Axies.
Step 2: Use GHST to buy a Portal on the market or directly purchase an Aavegotchi.
Step 3: Buy wearable devices and consumables for your Aavegotchi from the market.
Step 4: Interact with your Gotchi every 12 hours to increase intimacy.
Step 5: Participate in rarity mining or engage in Aavegotchi DAO governance to increase experience points.
Step 6: Play mini-games to enhance experience points.
Step 7: Earn money through various modes in Gotchiverse land.
Summary
Aavegotchi has achieved many innovations and added various gameplay elements, undoubtedly making it a pioneer project combining Gamefi and Defi, playing an indispensable role in the recent rise of Gamefi:
- Although currently built on Aave, the project may expand to other chains in the future to integrate more capital flows, achieving technological composability.
- The project places all assets on the native chain, including on-chain trading interactions, etc.
- It transforms the buying and selling market into a rental market, effectively utilizing aTokens to improve the utilization of idle funds.
- The token economic model is advanced, with the team allocating 40% of tokens to developers, resulting in fast development speed.
- The team uses Bonding Curve for the first DAICO (DAO + ICO), allowing more participants to engage in token financing. The reserve ratio is set at 33%, fully utilizing mathematical currency to support the entire token rather than human control.
- The project achieves a win-win situation for multiple parties, allowing any role to find its position and realize profit.
- Two participation methods (fully utilizing Aave's native users): directly through the Aave lending pool or directly purchasing any Portal for a random Aavegotchi.
- The team continuously innovates internally with the updates of the Gamefi market, responding to the market in a timely manner.
- High participation in DAO governance.
- The project is one of the early adopters of Layer 2, reducing gas fees.
- However, the current development of the project relies on the growth of the Aave platform, and various aTokens deposited in the Aave ecosystem will be locked into Aavegotchi. Fortunately, Aave remains a leader in Defi, and the project may also connect to other platforms in the future.