YGG and Its Competitors: A Comparative Study of Eight Gold Farming Guilds and Their Investment Theories

Authors: Mcsauceth & 0xSong, Impossible Research

Compiler: Andy, IOSG Ventures

Analysis of the P2E Guild Landscape

The rise of Play-to-Earn (P2E) games in recent months can be attributed to various factors, among which P2E guilds often play the most crucial role, as they provide scholarships, social media marketing, or direct financial investment to P2E games, significantly increasing the daily active users of the games they collaborate with.

P2E guilds have achieved great success in helping the expansion of Axie Infinity and other P2E games, allowing them to accumulate token assets for reinvestment and growth. However, with success comes competition, as evidenced by the increasing number of new P2E guilds. In response, Impossible Finance aims to educate its community and provide the necessary knowledge about P2E guilds and their respective products. In this report, we analyze eight P2E guilds in detail, comparing their various aspects and investment theories.

TLDR Conclusion:

(Source: IOSG Ventures)

After a deep dive into eight different play-to-earn guilds, one of the main conclusions that can be drawn is the influence of guilds on the P2E space. Either through analysis platforms like Virtue Alliance to discover new metadata and strategies to improve efficiency in games, or by establishing a P2E esports scene, such as the Galaxie Cup launched by Hooga Gaming, or by employing a large number of scholars like YGG to increase daily active users. Additionally, as the AUM held across various games continues to rise, along with ongoing investments from guilds like Merit Circle, we can see that guilds are actively influencing the P2E ecosystem. By continuing to provide greater appeal to the entire ecosystem, combined with the ongoing investments we see in gaming, guilds have many promising aspects, as they remain one of the leaders in the P2E direction.

The current issue facing guilds is their over-reliance on Axie Infinity. This is primarily due to two main factors: Axie Infinity is currently the gold standard for attracting the most users in the play-to-earn gaming scene, and there is a current lack of P2E games, as many are still in development. This, in turn, has created a relatively one-dimensional ecosystem for guilds at present.

However, once more games begin to launch, guilds will have more opportunities to expand their strategies and operations. Whether it is recruiting more scholars to play games aimed at maximizing guild revenue or focusing on games that emphasize gameplay and fun. As the choices in games begin to diversify, we can pay attention to how each guild adapts to these changes to deploy resources, as these critical choices will determine the long-term success of these guilds.

Guild 1: Yield Guild Games

As one of the earlier guilds, YGG has successfully accumulated a large player base in their main game, Axie Infinity - with over 10,000 scholars from more than 10 countries. During this period, YGG has also successfully acquired 21 game partners, some of which are already being played within their community. Typically, for new games, YGG deploys subDAOs to focus on certain geographic areas or games. For example, the first YGG subDAO is YGGLOK (Kingdom Alliance), but there are now others, such as YGGSPL (Splinterlands), YGG Pilipinas, YGGSEA, and IndiGG.

As of September 30, 2021, the assets managed by YGG are currently valued at $845,916,893 (including their native token). The vast majority of their AUM comes from tokens, primarily from their native token, accounting for about 90% of the total AUM. Excluding their native token, this would represent a total managed amount of $64,576,735, which would be a more representative figure. This can be seen in the pie chart showing the breakdown between tokens (excluding YGG), NFTs, and early investments.

(Source: Impossible Research)

• Scholarship Situation: YGG scholars have successfully generated over $13.6 million in SLP, with 70% of the revenue returned to scholars (comparable to scholar income within Merit Circle), and the final 30% split 20% to community managers and 10% to YGG. Given the positive divergence between the DAO and its scholars, this may be one of the many reasons scholars continue to wish to collaborate with YGG, as it provides the necessary mechanisms for players to maintain incentives.
• Game Situation: YGG has invested in and operated 21 different P2E games, such as Axie Infinity, Thetan Arena, Illuvium, ZedRun, League of Kingdoms, SplinterLands, Guild of Guardians, Star Atlas, and Embersword.
• Guild Structure: Like many other guilds, YGG's structure primarily relies on subDAOs to host assets and activities for specific games. When creating a subDAO, a portion of the subDAO tokens will be provided to the community. Community subDAO token holders can send proposals and vote on specific game mechanics. The goal is to incentivize the community to place assets under treasury management. This will allow community subDAO token holders to enjoy the potential benefits of the assets and revenues generated from their productive gameplay. Additionally, subDAOs will allow guilds to operate more effectively by localizing their operations and streamlining processes that may vary due to games. By encouraging players of the same game to collaborate with each other, subDAOs also help create a more localized community awareness within the broader YGG community. Some of their current subDAOs include YGGLOK, YGGSPL, YGG Pilipinas, YGGSEA, and IndiGG, with further plans to continue expanding this part of the business.

(Source: Impossible Research)

• Value Proposition: YGG is one of the earliest guilds to gain attention and the first to implement the franchise and subDAO model, providing them with an extremely strong position due to their first-mover advantage. Being able to leverage this, due to their household name, they can recruit at a faster pace and with better quality. This, in turn, will continue to allow YGG to expand into other games at a better speed when considering investment opportunities, leading to greater capacity to expand their subDAOs and maintain their core goal of generating revenue through operations and renting NFTs and investing in NFTs that yield the best returns in the Metaverse. Gaining greater deal flow will further permeate their scholar community, and it allows scholars access to games that smaller guilds may not be able to provide. However, their goal of investing in assets that yield the best returns can further extend to blue-chip assets and stablecoins within their treasury balance. With a significant amount of stablecoins and ETH in YGG's treasury, their stable and blue-chip assets are severely underutilized to generate returns. YGG holds stablecoins and ETH valued at approximately $18 million, capable of generating substantial returns through low-risk mining annually, thereby reducing their exposure to more volatile assets, which would typically be the case for them to continue investing in new games. By having stable liquidity mining generating some form of income, it can allow them to have a higher utilization rate in terms of income-generating assets, thus improving overall efficiency.

Guild 2: Ancient 8

Ancient8 is the largest blockchain gaming guild in Vietnam, co-incubated by Coin98 Labs, Kyros Ventures, Coin68 Media, and 3twelve Capital. Ancient8 aims to develop a platform that allows their community to earn monetary rewards while having the opportunity to play and build in the metaverse. Ancient8 develops its community through investments, scholarships, and education, and has currently grown into one of the most successful gaming guilds.

• Scholarship Situation: Ancient8's Axie Infinity scholarship program currently has over 1,000 scholars (scholarship recipients) and aims to increase its scholarship pool in other games like Thetan Arena and Cyball. Ancient8 plans to add another 1,000 scholars after the official launch of its Cyball scholarship program. The revenue-sharing ratio for Ancient8's scholarships is not disclosed and may vary by scholar.
• Game Situation: Ancient8's investments and participation in P2E games mainly revolve around Axie Infinity, Thetan Arena, and Cyball, but their investment in the P2E scene has allowed them to further expand into Sipher, Summoners Arena, and Elpis Battle.
• Guild Structure: Ancient8 is currently moving towards a DAO structure, as its goal is to become more decentralized. Currently, Ancient8's guild structure is relatively simple and flexible, with a single entity owning all assets and investments. As Ancient8 continues to grow, it will be interesting to see whether it chooses to implement a subDAO structure to execute specialized tasks and operations or opts to maintain its flexible and simple single structure.
• Value Proposition: Compared to other gaming guilds, Ancient8's main advantage lies in its unique ability to build a strong community and dominate the Vietnamese regional ecosystem. Targeting smaller markets like Vietnam is particularly beneficial due to macro reasons. According to ChainAnalysis, Vietnam ranks first in the world for cryptocurrency ownership and usage, which has been proven and supported by the rapid rise of Vietnamese crypto companies, projects, and protocols. Ancient8 has an impressive community of 73,000 members from just Twitter and Discord, which serves as strong evidence of its competitiveness.

Guild 3: Good Games Guild

Good Games Guild aims to help create and nurture the largest virtual economy by optimizing the use of their own P2E assets as well as borrowed P2E assets to ensure maximum returns and rewards.

• Scholarship Situation: Good Games Guild provides an average distribution rate of 65/35 between scholars and the guild. Currently, GGG has 500 active scholars earning daily income in Axie Infinity using guild assets, with each scholar averaging about 130 SLP per day. (As of January 12, 2022)
• Game Situation: Good Games Guild is currently involved in over 20 games, as their goal is to diversify and continuously utilize productive assets to generate multiple income sources from game operations. GGG is currently involved in Axie Infinity, Elumia, Era7, Elfin, MetaStrike, Wasted Lands, RaceFi, Hero Arena, Age of Tanks, Duelist King, Decitated, and Universe Island.
• Guild Structure: GGG's structure is similar to that of Hooga Gaming, with different vaults having their own dedicated purposes, but GGG's structure is distinguished by using specialized income sources rather than operations. Currently, GGG's vaults are primarily divided into three aspects: Axie breeding income, game scholarship income, and NFT market income. The income from these vaults will then be distributed to $GGG holders based on their percentage of total income compared to other vaults.
• Value Proposition: GGG has been able to introduce Good Games Labs, an incubator for startup projects that have successfully passed through a series of selections to help nurture and develop these projects into high-quality products that can compete with top-tier P2E games like Axie Infinity. Additionally, the introduction of GGG's NFT market will allow users to buy and sell GameFi-related NFTs on their market, enabling them to engage more with game creators, players, and artists, allowing GGG to profit from various activities within the ecosystem. Lastly, one thing GGG needs to consider is that the average SLP earned by scholars is relatively low compared to other guilds, with each scholar averaging 130 SLP per day. This may be interpreted by GGG's scholars as a lack of quality, or that GGG's Axie Infinity NFT assets lack quality, preventing GGG's scholars from keeping up with the ever-changing meta and strategies of Axie Infinity.

Guild 4: GuildFi

GuildFi is a Web3 infrastructure that connects games, NFTs, guilds, and communities, creating an interconnected system where players' time and energy can interoperate across games and the metaverse. By providing a foundation for players, GuildFi aims to address the accessibility issues that players typically face in GameFi. More importantly, GuildFi will give players the opportunity to participate in various games, reducing the isolation that typically occurs due to high startup costs and the added complexity of cryptocurrencies, thereby bringing long-term benefits to players.

• Scholarship Situation: Axie remains where the majority of GuildFi's scholars are, with over 1,500 scholars, making it the primary game in P2E. Next, the game with the most scholars is Cyball (1000+), followed by Thetan Arena (500+), and finally Pegaxy (100+): totaling over 3,000 scholars. However, as more games begin to launch, it is expected that more scholars will join GuildFi, especially as their scholarship waiting list has already exceeded 20,000, indicating significant market interest. Additionally, GuildFi has over 30 coaches to assist players with onboarding and guidance for specific games.
• Game Situation: GuildFi has invested in many different games, highlighting their increasing need for more investment opportunities and diversity in game design as the play-to-earn space continues to evolve. This can be seen from their early investments in games like Pegaxy, Sipher, Elpis Battle, Gunstar, Zodium, Nitro League, CyBall, Syn City, Elumia, and Mavia.
• Guild Structure: GuildFi's DAO structure is essentially divided into two main parts: the gaming center and zones - consisting of tools, guilds, NFTs, and vaults: The Gaming Center is the core mechanism for introducing users, while the zones are dedicated engines driving commercial activities, adding value to GuildFi's entire ecosystem: including Guild Zone, NFT Zone, and Tools Zone. The zones can be seen as dedicated engines for adding value to the entire GuildFi ecosystem.
• Value Proposition: GuildFi's long-term plans enable them to attract not only players looking to make quick money but also players who genuinely enjoy gaming. This allows them to accommodate a whole portfolio of games that can meet different needs, thereby creating a more comprehensive guild. It reduces the over-reliance on recruiting players to join the guild as a form of expansion, as there are immediately a large number of other guilds within the GuildFi network that can leverage their services to continuously grow their base. Additionally, it provides players with the flexibility to move between different guilds in the ecosystem based on their gaming preferences, essentially creating an echo chamber, as other guilds within the ecosystem have already provided diversity, thereby retaining players.

Guild 5: Hooga Gaming

Hooga Gaming is a DAO aimed at developing the Web3 GameFi ecosystem by establishing an equitable community and a strong esports scene for each game involved in the DAO. Hooga Gaming aims to achieve this through three different aspects: community, tools, and competitive gaming.

• Scholarship Situation: Hooga Gaming also offers a highly competitive revenue-sharing ratio between the guild and its scholars, with an average distribution rate of 70/30 between scholars and Hooga Gaming. Currently, Hooga Gaming has 350 scholars, with each scholar averaging 160 SLP per day.
• Game Situation: Hooga Gaming has been seeking new opportunities in the P2E ecosystem and space, as evidenced by their investments in Axie Infinity, Sipher, Nyan Heroes, and Cyball, as their goal is to generate revenue through P2E games. This can also be seen from their investments in Web3 game launchpads.
• Guild Structure: Hooga Gaming consists of a main guild with four additional sub-guilds (DCG sub-guild, Cruxia sub-guild, AOC sub-guild, Putra sub-guild). The main guild accounts for about 70% of the total scholarships, while the remaining four sub-guilds account for the remaining 30% of the total scholarships. Hooga Gaming can provide top-tier scholarships for sub-guilds, as each sub-guild serves specific and specialized purposes for Hooga scholarships. DCG is fully responsible for breeding top Axies for scholars, Cruxia handles event streaming and casting, AOC is responsible for community management, and the Putra sub-guild is responsible for content creation.
• Value Proposition: Hooga Gaming's main advantage compared to other gaming guilds lies in their ability to cultivate and retain high-quality scholars, ensuring that Hooga Gaming's scholars effectively utilize guild assets. This can be seen from Hooga Gaming's scholars averaging 160 SLP per day, while scholars from guilds like Good Games Guild average 130 SLP per day. Hooga Gaming has demonstrated the ability to cultivate higher potential for their scholars through the number of services they provide, such as offering higher incentives for scholars when meeting quantitative and qualitative KPIs (e.g., MMR, activity, content creation, ideas), introducing a winning mindset through mandatory rookie training camps, and implementing educational content to help scholars understand top gaming meta and strategies. This has already been evidenced by Hooga Gaming and its partners being able to organize a leading tournament in the Axie Infinity esports space during the launch of the FTX Galaxie Cup, showcasing Hooga Gaming's development, ambition, and goals.

Guild 6: Merit Circle

Merit Circle was first established in August 2021, aiming to create a decentralized autonomous organization that develops and provides opportunities through P2E. Merit Circle aims to create an environment that effectively connects capital, expertise, and participants. This can already be seen in Merit Circle's operations in Axie Infinity, providing competitive in-game assets, in-game tactics and strategy education, and offering competitive revenue-sharing for potential players.

• Scholarship Situation: Merit Circle offers a highly competitive revenue-sharing ratio between the DAO and its scholars, with an average ratio of 70/30 between scholars and the DAO. Currently, Merit Circle has 2,750 scholars using DAO assets to play Axie Infinity to earn SLP.
• Game Situation: Merit Circle has invested in and operated over 20 games, such as Axie Infinity, Vulcan Forged, Cyball, Fancy Birds, Big Time, Genopets, Hash Rush, Illuvium, Nyan Heroes, Heroes of Mavia, Summoners Arena, Mixmob, Rainmaker, Sipher, and UFO Gaming. As the P2E ecosystem continues to evolve, Merit Circle believes that the future of free-to-play games will become a target for more traditional gamers, and that the player-shared economy can enhance their own gaming experiences.
• Guild Structure: Merit Circle's DAO consists of three important components: MainDAO or EcosystemDAO, which is a great tool that can play a role in all of Merit Circle's operations; SubDAOs, which are DAOs designated for each P2E game; and Vaults, which represent the strategies deployed by Merit Circle to generate income and ensure profits flow back into the ecosystem. The specific interaction can be seen in the diagram below:

(Source: Impossible Research)

(Source: Impossible Research)

• Value Proposition: Merit Circle's main competitive advantage compared to other P2E guilds is its use of their DAO structure to ensure that Merit Circle continuously adapts to the play-to-earn environment. Utilizing their subDAOs ensures that Merit Circle's treasury and AUM consist of a variety of assets, diversified across multiple games, placing Merit Circle at the forefront of any significant changes in gaming. Another competitive advantage is that Merit Circle is a gaming DAO rather than a traditional scholarship guild, as Merit Circle's activities extend far beyond just providing scholarships to its community members. Instead, Merit Circle prides itself on having the capability to build its products, as evidenced by the introduction of Edenhorde, which is Merit Circle's first incubated product designed by experts and Emmy Award-winning designers.

Guild 7: UniX Guild

UniX Gaming Guild focuses on creating an engaged community through giveaways, competitions, participation in esports tournaments, education, and training community members. UniX Gaming Guild began its Axie Infinity operations in September 2021 and has since developed a community of over 130,000 members. UniX Gaming Guild aims to provide more earning opportunities for its community -- by allowing scholars to participate in other P2E games, as well as operating a P2E game launchpad and NFT market in the future.

• Scholarship Situation: From November 2021 to January 31, 2022, UniX Gaming Guild's Axie Infinity scholar pool increased from 1,008 to 4,600, and has begun to expand its scholarship business into other games, with an additional 50 scholars focusing on Rising Sun, 100 scholars playing Starsharks, 100 scholars playing Pegaxy, 40 scholars playing Block Ape Scissors, 50 scholars playing Idle Mystic, and another 100 scholars playing Placewar. UniX Gaming has 5,040 scholars participating in its play-to-earn business. UniX is also focused on increasing the number of professional leaders within its guild, currently having a team consisting of 62 team leaders, 13 recruiters, 40 trainers, and 54 professional leaders responsible for overseeing various departments within UniX Gaming Guild. UniX Gaming Guild offers a 50/50 revenue-sharing ratio between scholars and the guild.
• Game Situation: UniX Gaming Guild is committed to continuously contributing to the P2E space, as evidenced by their investments and contributions to P2E games. UniX Gaming Guild is currently involved in Axie Infinity, Big Time, Adanimal, Monkeyleague, Sidus, Sipher, Starsharks, and Syn City.
• Guild Structure: UniX Gaming Guild's DAO structure is relatively fluid, with revenue-generating activities forming the core of the DAO and allowing the profits and revenues from these activities to flow into other areas. Revenue-generating activities, such as game operations/scholarships, NFT leasing, NFT market income, UniX's launchpad, and Land NFTs provide profits for UniX, which can be used for activities such as investing in new projects and scholars to return to their investors, treasury, and advisors, or reinvesting in revenue-generating activities to further expand.
• Value Proposition: Compared to other gaming guilds, UniX Gaming Guild's main competitive advantage in the P2E space lies in their commitment to improving the infrastructure within the P2E ecosystem. UniX Gaming Guild is currently implementing its own NFT market called Pegify to make it easier for community members and external users to trade P2E assets, providing a platform where UniX Gaming Guild can sell their own developed NFTs; UniX will also provide a game launchpad that allows community members to participate in initial game products and assist new P2E games through marketing support on social media platforms like YouTube and Twitch. UniX Gaming Guild is also committed to developing its own game called Unity. The goal of Unity is to create a metaverse-centered experience, allowing players to compete in PvE and PvP modes with varying levels of difficulty, including battles with character and weapon NFTs. One thing to consider is that UniX Gaming Guild and Good Games Guild have a similar and strong focus on their NFT markets and respective launchpads. It is likely that UniX Gaming Guild and GGG will directly compete in the future, as their roadmaps and future plans are relatively similar, and NFT markets and launchpads are typically products with strong consumer loyalty, as these products are often based on their native tokens.

Guild 8: Virtue Alliance DAO

Virtue Alliance is a DAO focused on gamers, aiming to help gamers maximize their performance and earnings through a combination of expertise, operations, and analytics. Virtue Alliance aims to provide more services to its guild members by establishing a multi-functional platform with advanced analytical capabilities, helping managers and players improve their productivity and address their weaknesses through systematic education and training to maximize profits and enable scholars to become top performers in their respective games.

• Scholarship Situation: Virtue Alliance currently has 1,040 scholars in its gaming operations, with the player base growing at an approximate rate of 8% per week, offering scholars a 50/50 revenue-sharing ratio during the trial period, which then shifts to a 60/40 ratio between scholars and the DAO after the trial period ends. Virtue Alliance's scholars currently average about 145 SLP per day. 10% of the revenue is allocated for operations, player managers, and community leaders, while 30% goes to Virtue Alliance's main treasury.
• Game Situation: Although Virtue Alliance's current focus is on Axie Infinity, Sandbox, Illuvium, and Guild of Guardians, Virtue Alliance has been seeking to continue growing within the P2E space and is currently negotiating with Nyan Heroes, Nifty Islands, Treeverse, and Defi Kingdoms.
• Guild Structure: Virtue Alliance's DAO structure is similar to that of Merit Circle, utilizing subDAOs under the MainDAO. Virtue Alliance's MainDAO will always hold a certain percentage of VA-subDAOs to ensure that subDAOs can be bound to the MainDAO and further expand the treasury.
• Value Proposition: Compared to other gaming guilds, Virtue Alliance's main competitive advantage lies in its use of analytical insights and algorithmic guild management systems. This visual system allows guild members to establish their guilds within the platform itself, enabling them to view available P2E assets (e.g., Axies), their historical returns, the calculated APY of NFT assets, and even refine down to the granularity of daily systems. It can also be used for easy onboarding of new scholars and managers. Introducing algorithmic recommendations into the onboarding process can help scholars and managers lower the entry barrier and allow them to start earning for the DAO immediately upon joining. One area where Virtue Alliance may face competition from other guilds is the rise of third-party analytical platforms for P2E guilds, as well as the increase of analytical platforms built by the guilds themselves. However, Virtue Alliance's analytical insights and algorithmic management system go further, as the introduction of the algorithmic management system helps eliminate significant pain points in guild operations and their scholars.