Pantera Capital Partner: Why We Invested in Perion?

Author: Paul Veradittakit, Partner at Pantera Capital

Original Title: "Gameplay Alpha"

Compiled by: Tanker, Deep Chain Finance

Earlier this month, top gaming guild Perion announced the completion of an $8.6 million Series A funding round, and Pantera Capital is honored to be a part of it. The round was co-led by Alameda and Framework, with participation from several strategic partners, including Jump Crypto and The Spartan Group.

Pantera Capital chose to partner with Perion because of its optimism about the blockchain gaming industry, and more specifically, its strong belief in the potential of gaming guilds. While many articles have detailed the concept of "play-to-earn" (P2E), we will briefly explain what a "gaming guild" is:

To maximize performance and earnings in many "play-to-earn" games, players sometimes need to make an initial investment in assets to continue playing. For example, in the Axie Infinity model, users must have a team of three "Axies" to start battling, which may require users to spend hundreds of dollars.

With this issue arising, gaming guilds came into existence. Guilds lend in-game assets (such as Axies) to their "scholars," allowing them to qualify to play and earn a certain percentage of the rewards. Many large guilds, such as Yield Guild Games or Merit Circle, have thousands of scholars and are valued at billions of dollars.

In the past six months, many similar guilds have emerged, each adjusting the original model. However, we believe that only those sustainable and platform guilds that have grown to valuations in the billions can break the traditional understanding of "guilds" and provide their scholars and users with a unique experience.

Pantera Capital believes that Perion, with the aforementioned qualities, has great potential to become a once-in-a-century gaming brand.

What Makes Perion Stand Out?

In fact, Perion's revenue model is similar to other well-known gaming guilds. It is well-known that guilds exchange a certain percentage of rewards by lending NFT assets to players, and this scholarship model is the core revenue source for guilds. Moreover, Perion shares similarities with other companies in that it also has a venture capital department that makes early investments in many blockchain games. For example, they have invested in MetalCore, Syn City, Sipher, Ember Sword, and ZED Run.

What truly sets Perion apart is the type of players in their guild: these players constitute the upper echelon of the play-to-earn ecosystem. Since Perion primarily focuses on Axie Infinity, many of its players frequently occupy the top ranks of the game's leaderboard. The "player advantage" allows Perion to achieve higher returns from its assets, obtain high-quality data for generating new strategies, and establish the brand as one of the most authoritative gaming groups in the crypto space.

Image source: Perion

To fully leverage the strong "player advantage" for further development, Perion has also made significant investments in other resources to create better conditions for their scholars. In their words, "By utilizing the team advantages of these players in meta-game analysis and resource allocation, Perion will be able to achieve extraordinary returns and create ideal scenarios for our large professional team to better engage in the play-to-earn ecosystem." For new scholars joining Perion, they can perform better in the game by learning from other top players in the guild, gaining team experience, and obtaining customized gaming tools.

It is worth mentioning that this guild concept actually originates from Perion team members. One of the core team members, Amos Whitewolf, aspired to become a world-class player while playing Axie Infinity and had a strong idea about the game's mechanics, which was to establish a high-performance guild. Meanwhile, another core member, Mitch Penman-Allen, previously founded a high-frequency trading company that employed complex quantitative trading strategies. It can be said that Perion inherently possesses these two advantages—proficient gameplay and a high-level financial background.

The Perion Model Proves Successful

So far, this high-performance, high-yield strategy has brought substantial returns to Perion. Here are some statistics:

· 51% of Perion scholars rank in the top 2.5% globally in Axie Infinity;

· Average daily earnings of 288 SLP (the native token of Axie Infinity), over 380% higher than the industry standard;

· 25% of Perion scholars achieved a maximum earning of 21 SLP after a single victory;

Image source: CMCC Global

In terms of revenue, Perion shares profits equally with their scholars, a ratio that exceeds that of most competitors by four times. Their ability to secure such a large share of the profits is attributed to their possession of rare top-tier assets and the "best gameplay" provided to scholars. Other guilds are quite dissatisfied with Perion's approach, arguing that the price competition among a small number of players will ultimately lead to "malicious competition," harming everyone's interests. However, this competition only exists among top players, so this criticism is somewhat misplaced for Perion.

As attention gradually shifts from Axie Infinity to new play-to-earn economies, the question remains—can Perion continue to provide their scholars with high-quality assets, revenue-generating tools, and other valuable benefits?

PERC—Perion's Native Token

Image source: Perion

Next, Perion's major move is to launch its own token, Perion Credits ($PERC).

Perion's IDO event started on January 21 and lasted for 7 days to ensure that all participants could purchase at the same price, and early contributors could gain high returns through $PERC. For more details on the token issuance, please read this article.

Image source: Perion

On the other hand, like many other guilds, Perion is gradually moving towards decentralization, establishing their own CoreDAO and GameDAO. Ultimately, how funds are allocated and the future development of the guild will be decided by $PERC token holders. In addition to the governance capabilities of the token, the team is also considering granting token holders other value-added mechanisms and economic incentives.

Outlook for the Future

Perion has ambitious plans for 2022 and beyond, including: expanding the scholarship program, maximizing the global influence of the Perion brand, and investing in more early-stage blockchain games.

However, Pantera Capital believes that one of the most interesting aspects of Perion is the software they are developing.

In recent months, Perion has created many proprietary tools to manage the guild and enhance player levels. They "developed smart contracts for scholar rewards, integrated performance tracking software, created the first MOBA credential verification system, and established automated systems for Axies' genetic matching, pricing, and breeding."

If they continue down the path of software development, Perion should be able to create tools that maximize income for future play-to-earn players and tools for guilds to streamline their operations. As play-to-earn games become increasingly complex, Perion could even build financial products within these vibrant game economies, becoming a leader at the forefront of GameFi.

Today, "play-to-earn" games are thriving, and Perion has found its place in this vast industry, making it an exciting moment for Pantera Capital to collaborate with Perion.