First-Class Cabin Research Report: Game Guild Yield Guild Games

Author: Yield Guild Games

Project Overview

YGG is positioned in the blockchain gaming guild sector.

With the rise of the Gamefi sector in 2021, the explosive popularity of Axie Infinity triggered a gold rush among blockchain players. However, for most gamers in low-income countries, the cost of entry—such as a $600 pet, often requiring three to start battling—was unaffordable for many. In this environment, the emergence of blockchain gaming guilds significantly lowered the barriers for players to enter P2E games, with Yield Guild Games pioneering the scholarship system that led to the rise of gaming guilds. The funding amounts in this sector saw substantial growth in both 2021 and 2022.

Yield Guild Games (YGG) is a decentralized gaming guild built on ETH and Polygon, which pioneered the scholarship model that spurred the rise of blockchain gaming guilds. However, due to the current stagnation in the blockchain gaming sector, the limitations of the scholarship model have gradually become apparent. YGG has begun to shift its development strategy towards investing in high-quality games rather than solely focusing on P2E game development.

As of the third quarter of 2022, YGG has collaborated with 55 Gamefi projects, with a broad and diverse investment ecosystem that positions it well for future growth when the Gamefi sector rebounds.

In addition to investing in gaming assets, YGG is committed to expanding its community scale by establishing SubDAOs to find suitable communication and marketing channels in each country, thereby increasing its influence and building exclusive communities in different nations. This strategic planning gives YGG a significant advantage in community size compared to other guilds in the same sector.

It is important to note that statistics show YGG's gaming assets experienced significant shrinkage throughout 2022, and its investment style has gradually shifted towards caution. With fewer gold mining-type games currently available in the blockchain gaming sector, investment income will be one of the important sources of treasury revenue. Future monitoring of treasury changes will be necessary to determine whether this project can survive the upcoming bear market phase. Additionally, if the blockchain gaming sector does not develop well in the future, it will greatly limit the project's growth potential.

1. Basic Overview

1.1 Project Introduction

Yield Guild Games (YGG) is a decentralized autonomous organization (DAO) that invests in assets or tokens based on virtual worlds and blockchain games, optimizing the value of assets owned by its community and maximizing utility.

1.2 Basic Information

2. Project Details

2.1 Team

The YGG team consists of 48 members, as disclosed in its official report. Most team members have backgrounds in blockchain and traditional gaming, with many being deep participants in the Axie Infinity ecosystem.

Gabby Dizon, CEO and one of the co-founders of YGG. He has been deeply involved in mobile gaming since 2004 and entered the blockchain industry in 2018. In 2014, Gabby founded a game studio called Altitude Games in Manila, which released the blockchain game Battle Racers in 2019. Gabby Dizon is an active member of the Axie Infinity and Yearn Finance communities and serves on the board of the Blockchain Game Alliance.

Beryl Li, CFO and one of the co-founders of YGG. Beryl graduated from Cambridge University and has been deeply involved in the blockchain industry since 2014. She served as the president of the Cambridge University Cryptocurrency Society in 2016, worked at BlackRock Asset Management, and is a co-founder of CapchainX (acquired by SMKG OTC US) and a licensed advisor for financial institutions.

Owl of Moistness, CTO and one of the co-founders of YGG. He entered the blockchain industry in 2018. Owl of Moistness developed breeding algorithms for Axie Infinity and many bots on its Discord, writing smart contracts to integrate Discord tipping systems, deflationary token wrapping contracts, and mining strategy contracts compliant with yVaults standards.

Alexei Udall aka Sarutobi, Head of Partnerships at YGG. He entered the blockchain industry in 2017 and has over five years of experience in SaaS sales and partnerships.

Nolan Manalo aka Nate, Head of Gaming Operations at YGG. He has been in the blockchain industry since 2016 and is an active member of the Axie Infinity community, as well as the head coach of YGG's esports teams across various platforms.

Advisory Team:

Anil Lulla, Co-founder and COO of Delphi. Anil has a strong reputation in cryptocurrency research and technical consulting. Delphi oversees YGG's token design, and Anil will provide guidance and effective fund management until full decentralization is achieved.

Eric Arsenault, Partner at Metacartel Ventures. Since 2018, Eric has been a leader in the DAO space. He is a partner and investor at Metacartel Ventures and leads the Rarible DAO ecosystem. Previously, he worked at DAOstack, providing consulting for many leading DAO projects in the industry. Eric will advise YGG on DAO structure and the transition to decentralization.

2.2 Funding

YGG has completed four rounds of funding to date, totaling $22.425M, as detailed below:

Table 2-1 YGG Funding Situation

From the statistics of YGG's on-chain treasury asset address, the treasury funding situation is as follows. Given YGG's current team size, its overall funds are expected to support the DAO through this bear market.

Table 2-2 YGG Treasury Assets

2.3 Code

YGG's codebase is not open source.

2.4 Product

Yield Guild Games (YGG) is a decentralized gaming guild built on ETH and Polygon, which pioneered the scholarship model that spurred the rise of blockchain gaming guilds. However, due to the current stagnation in the blockchain gaming sector, the limitations of the scholarship model have gradually become apparent. YGG has begun to shift its development strategy towards investing in high-quality games rather than solely focusing on P2E game development. Additionally, YGG is enhancing its community influence through various strategies to expand its community scale. Therefore, we will primarily introduce the project from YGG's investment landscape and community structure.

2.4.1 YGG Scholarship Model

As shown in the diagram below, the scholarship system created by YGG operates through three parties:
For players lacking the necessary NFT assets to enter the game, they can apply to the guild for work, borrow NFT assets, and spend time earning in-game token rewards. For the guild, they need to purchase a certain number of NFT assets to lend to the players who apply. For community managers, this role involves recruiting, screening, and training qualified gold mining players. The tokens earned by players need to be shared with the guild and community managers. Currently, YGG's profit-sharing ratio is 7:2:1, meaning players can earn 70% of the tokens, community managers can earn 20%, and the guild can earn 10%.

Figure 2-1 Scholarship System Business Process

The scholarship mechanism essentially helps Gamefi attract more gold mining-oriented players. This group can help games gain popularity and expand their communities in the early stages. However, once entering the mid to late stages, the generally immature token models in the current blockchain gaming sector, coupled with the prevalence of death spiral dilemmas, can severely damage the game itself, accelerating the collapse of the Gamefi economic model.

This means that the operation of the scholarship system is difficult to sustain within a single Gamefi. Guilds need to continuously seek profitable Gamefi to generate profits, and during bear markets, the number of profitable Gamefi is very limited, which may lead to guilds experiencing prolonged periods without income.

2.4.2 YGG DAO's Operational Mechanism

The treasury assets of YGG DAO (tokens, NFTs, virtual land) are managed by the YGG treasury department, currently overseen by three co-founders of Yield Guild. These assets can only be accessed when two of the three co-founders sign off on a transaction or when a proposal to handle the assets is initiated by the DAO community.

Another major mechanism of YGG is the establishment of different SubDAOs based on different regions and games. SubDAOs are secondary guilds focused on specific games or regions, each with its own governance rules. SubDAOs will allow the guild to operate locally. When a SubDAO is created, such as a game-focused SubDAO, YGG will first conduct research on that game, then purchase NFT assets within that game to place in its treasury wallet, and finally appoint management personnel for the SubDAO, transferring NFT assets into a smart contract wallet controlled by the SubDAO.

At the same time, YGG will issue tokens for SubDAOs. For example, the SubDAO created for League of Kingdoms is named YGGLOK. After the issuance of the SubDAO tokens, YGG will retain a portion of the SubDAO tokens for future governance participation. SubDAO token holders can vote on governance issues specific to that SubDAO, giving them a voice in its operations.

Functionally, YGG, as the main DAO, will tend to collaborate more with various game developers, invest, and manage its treasury assets. Most of the work related to incubating and attracting specific games will be delegated to SubDAOs. Additionally, for regional SubDAOs, such as YGGJapan and YGGSEA, investments and community building will focus on games in Japan and Southeast Asia, respectively. SubDAOs will recruit local talent for management, organize local events regularly, and strive to develop localization for the guild, expanding YGG's influence in various regions.

Figure 2-2 SubDAO Establishment Process

Currently, there are 12 SubDAOs under YGG, as shown below:

Table 2-3 SubDAOs under YGG

From the table above, it can be seen that the total number of members across all YGG SubDAOs has exceeded 350,000. Below are the main SubDAOs:

YGG SEA: YGG SEA is the first regional SubDAO of YGG, aimed at providing community services for Southeast Asian countries outside the Philippines. By the end of 2021, YGG SEA had raised $15M and has organized over 1,000 online events and participated in more than 500 speaking engagements (including AMAs, interviews, podcasts, etc.) since its establishment in November 2021. It has held four large-scale live events in Indonesia, Vietnam, Thailand, and Malaysia, and conducted over 20 roadshows in Indonesia and Singapore.

YGG Japan: YGG Japan is the SubDAO focused on the Japanese region. This DAO raised $2.8M led by Animoca Brands in July 2022 and is currently focused on providing development and marketing support for IP-driven blockchain games in Japan.

BAYZ: BAYZ is the SubDAO focused on Brazil. This DAO was led by YGG DAO in a $4M investment in July 2022. It has launched a dedicated cryptocurrency education and content platform, creating and disseminating P2E concepts through channels like Twitch and TikTok. Currently, there are over 40 content creators in this DAO, with over 70% of the viewing time share on Twitch for Web3 games in Brazil.

IndiGG: IndiGG is the SubDAO focused on India. This DAO builds its community using offline and online nodes, described as micro-influencers or sub-communities within their guild. Offline nodes include various colleges and university campuses within the IndiGG network, while online nodes consist of mini-communities of 5,000 to 15,000 Discord users.

OlaGG: OlaGG is the SubDAO focused on Spanish-speaking countries such as Mexico, Colombia, and Argentina. The founder of this SubDAO is a partner at a family office managing over $20 billion in assets. This DAO raised $8M in June 2022.

AMG DAO: AMG DAO is the SubDAO focused on Central and Eastern Europe. Currently, its members are distributed across 11 countries in Europe, making it the largest gaming guild in Central Europe. Additionally, Troy and SKYGG are SubDAOs focused on Turkey and South Korea, respectively.

Figure 2-4 YGG's SubDAO Landscape

2.4.3 YGG's Investment Landscape

As of the third quarter of 2022, according to YGG's Q3 community report, YGG has collaborated with 55 Gamefi projects. Below is a list of its major investment projects:

Table 2-4 List of YGG Collaborative Projects

2.4.4 YGG Community Operations

YGG has launched the GAP program (Guild Advancement Program) to expand its community and enhance community cohesion, promoting collaboration between community members and partner games. Participants need to complete achievement tasks officially released by YGG, such as participating in cooperative games for a certain duration, recruiting a specified number of players to join YGG, and hosting high-quality streaming content to earn YGG token rewards and corresponding NFTs. This program is one of YGG's key development directions.

GAP Program Season 1: Most achievement tasks in the first season were created by game operation managers and community marketing managers within YGG DAO. There were a total of 45 achievement tasks, with over 500 participants, distributing 102,160 YGG tokens and 1,030 corresponding achievement proof NFTs. The program ran from April 2022 to July 2022 for three months.

GAP Program Season 2: In addition to the game operation managers and community marketing managers creating most achievement tasks, YGG's partner ambassadors also participated in creating achievement tasks for their respective games. There were a total of 116 achievement tasks in the second season, involving 13 cooperative games. The scope of achievement tasks in the second season was broader, including not only tasks related to game cooperation but also skills-based tasks such as content creation, community tool building, and recording tutorial videos. The number of participating wallets in the second season was 603, distributing 225,226 YGG tokens and 2,063 corresponding achievement proof NFTs. The second season of the GAP program ran from September 2022 to December 2022 for three months.

Figure 2-5 YGG Achievement Task Program Interface

In addition to earning YGG token rewards through the GAP program, YGG has also launched Reward Vaults in collaboration with games to incentivize players holding guild badges to stake $YGG for rewards related to cooperative games. The second phase of the Reward Vault is currently open.

Phase 1 Reward Vault: Lasted for 90 days, opened for staking on July 28, 2022, with rewards starting to be released on August 1. This Reward Vault included two projects, Aavegotchi and Crypto Unicorns, where stakers could earn rewards in the respective tokens ($GHST and $RBW). A total of over 3.5 million YGG tokens were staked by the end of the event.

Phase 2 Reward Vault: Lasted for 90 days, opened for staking on November 13, 2022, with rewards distributed until February 12, 2023. Users holding YGG guild badges could stake YGG tokens on the Polygon Reward Vaults to earn rewards in League of Kingdoms and Thetan Arena tokens ($THG and $LOKA).

Summary:

As the pioneer of blockchain gaming guilds, YGG's main focus in 2021 was promoting Axie Infinity and its scholarship system. However, with the downturn in the blockchain gaming sector in 2022, YGG has gradually shifted towards investing in high-quality games, moving towards a fund model while also focusing on incubating games and expanding its community scale to prepare for future traffic generation for its cooperative games.

It can be seen that by establishing SubDAOs and finding suitable communication and marketing channels in each country, YGG aims to enhance the visibility and influence of both itself and blockchain games, thereby building exclusive communities in different countries. This strategic planning is beneficial for YGG to rapidly expand its community size when the Gamefi sector explodes in the future.

3. Development

3.1 History

Table 3-1 Major Events of YGG

3.2 Current Status

3.2.1 Operational Data

From the table above, it can be seen that the number of YGG badge holders is showing a slow upward trend, indicating that the community size is also gradually increasing. However, the number of scholarship participants has experienced a decline over two quarters, primarily due to the lack of breakout games in the P2E model in the second half of 2022, resulting in no rewards to attract new players to join the scholarship model. From YGG's investment situation, the total value of its investment assets has decreased from over $100 million in Q4 2021 to $30 million in Q3 2022, a decline of 66.3%. This indicates that the bear market has caused significant retracement in its overall assets, but from its yield perspective, the decline is mainly due to profit retracement, and its investment portfolio remains in a positive profit state.

Figure 3-1 Number of Scholars in YGG Scholarship Program

Figure 3-2 YGG Investment Situation

From the images above, it can be seen that the number of scholars in YGG has decreased since 2022. However, due to the expansion of SubDAOs, the overall number of scholarship scholars has maintained a certain stability in the following months, although it has also shown a downward trend since mid-2022. From YGG's investment frequency and amount, it is evident that throughout 2022, the number and amount of games YGG invested in have shown a downward trend, indicating that YGG has gradually shifted towards a cautious investment style during the bear market.

3.2.2 Social Media Scale

Table 3-3 YGG Social Media Data

3.3 Future

Currently, YGG has not disclosed its roadmap.

Summary:

YGG's community size has been slowly increasing during the bear market, but its investment assets have significantly shrunk throughout 2022. Its investment style has gradually turned cautious, and with fewer gold mining-type games currently available in the blockchain gaming sector, investment income will be an important source of treasury revenue. Continuous monitoring of treasury changes will be necessary to determine whether this project can survive the upcoming bear market phase.

4. Economic Model

The native token of Yield Guild Games is YGG, with a total supply of 1,000,000,000 tokens.

4.1 Token Distribution

The distribution of YGG tokens is shown in the table below:

Table 4-1 YGG Distribution Situation

Figure 4-1 YGG Token Distribution Details

Figure 4-2 YGG Token Unlocking Schedule

4.2 Token Holder Address Analysis

According to data from the Ethereum blockchain explorer, as of January 16, 2022, there were 18,726 YGG token holder addresses on Ethereum. The top 10 addresses account for 91.86% of YGG, while the top 100 addresses account for 98.59%. Most of the top 10 addresses are contracts and exchange addresses. If we exclude the tokens held in contract and exchange addresses, the top 10 on-chain addresses hold approximately 4.52% of the tokens, indicating a relatively low concentration of holdings.

Figure 4-3 YGG Token Holder Address Distribution

Figure 4-4 YGG Token Holder Address Changes

From the Nasan token address data, it can be seen that the number of YGG token holder addresses grew rapidly before 2022, maintaining a slow growth trend after the second half of 2022.

4.3 Token Use Cases

Currently, the main functions of YGG tokens include:

1. Staking tokens can earn rewards in related SubDAO tokens or tokens from cooperative game projects;

2. DAO members holding YGG tokens can initiate proposal votes on its website, including but not limited to the following topics: 1) Technology; 2) Products and Projects; 3) Token Distribution; 4) Governance Structure.

5. Competition

5.1 Industry Analysis

YGG operates in the blockchain gaming guild sector.

5.1.1 Industry Overview

In the traditional gaming field, the formation of gaming guilds allows players to gather and cooperate to conquer dungeons or collectively defeat bosses. For example, in World of Warcraft, top guilds often compete for first clears of dungeons or first kills of monsters. In addition to these highly cooperative guilds, traditional gaming guilds also focus on social interactions among players or sharing game content, becoming community hubs.

In Web3, the rise of the Gamefi sector in 2021, driven by the explosive popularity of Axie Infinity, triggered a gold rush among blockchain players. However, for most gamers in low-income countries, the cost of entry—such as a $600 pet, often requiring three to start battling—was unaffordable for many. In this environment, the emergence of blockchain gaming guilds significantly lowered the barriers for players to enter P2E games, with Yield Guild Games pioneering the scholarship system that led to the rise of gaming guilds.

The scholarship system is currently one of the key mechanisms in blockchain gaming guilds. As shown in the diagram below, the scholarship system operates through three parties:

For players lacking the necessary NFT assets to enter the game, they can apply to the guild for work, borrow NFT assets, and spend time earning in-game token rewards. For the guild, they need to purchase a certain number of NFT assets to lend to the players who apply. For community managers, this role involves recruiting, screening, and training qualified gold mining players. The tokens earned by players need to be shared with the guild and community managers. Currently, YGG's profit-sharing ratio is 7:2:1, meaning players can earn 70% of the tokens, community managers can earn 20%, and the guild can earn 10%.

Figure 5-1 Scholarship System Business Process

Due to Axie Infinity generating significant profits for gold mining players in the first half of 2021, the profit model of gaming guilds under this system has been validated as feasible. As YGG's community has grown, more guilds have begun to emerge in this sector to tap into the potential of blockchain gamers. As shown in the diagram below, the financing amount for blockchain gaming guilds saw a significant upward trend in 2021, with over $40M raised in December 2021 alone, showing exponential growth. However, in 2022, the financing situation for blockchain gaming guilds was relatively average.

Figure 5-2 Financing Situation of Blockchain Gaming Guilds in 2021-2022

5.1.2 Characteristics of Blockchain Gaming Guilds

In addition to lowering the barriers for players to enter games, gaming guilds also play an important role in guiding games to acquire new users. For example, in the scholarship system, community managers train players on how to create wallets, how to use wallets, and how to trade on DEXs, imparting basic cryptocurrency knowledge. This approach allows traditional gamers to quickly get started and expands the user base for blockchain games.

With nearly a year of development in blockchain gaming guilds, the following characteristics have begun to emerge:

1. Limitations of the Scholarship Mechanism: The scholarship mechanism essentially helps Gamefi attract more gold mining-oriented players. This group can help games gain popularity and expand their communities in the early stages. However, once entering the mid to late stages, the generally immature token models in the current blockchain gaming sector, coupled with the prevalence of death spiral dilemmas, can severely damage the game itself, accelerating the collapse of the Gamefi economic model.

This means that the operation of the scholarship system is difficult to sustain within a single Gamefi. Guilds need to continuously seek profitable Gamefi to generate profits, and during bear markets, the number of profitable Gamefi is very limited, which may lead to guilds experiencing prolonged periods without income.

Moreover, the current scholarship mechanisms of gaming guilds typically only apply to P2E model games, and all P2E model games are currently in a downturn phase. It is uncertain whether P2E model blockchain games will continue to exist or fade away in the long term.

As the Gamefi sector matures, more and more Gamefi projects are beginning to establish their own rental systems, such as Starshark and Pegaxy. The emergence of rental systems may also squeeze the audience of scholarship systems. If more players choose to use rental systems instead of profit-sharing scholarship systems like YGG, the income of such guilds will significantly decline.

2. Severe Regional Nature of Guilds: Currently, mainstream guilds are primarily distributed in Southeast Asia. For example, YGG, the largest guild in this sector, has its main community players in the Philippines, while GuildFi, which focuses on developing Gaas (Guild-As-a-Service), has its main community in Thailand. The largest blockchain gaming guild in Vietnam is Ancient8.

3. Future Development Trends Towards Fundization and Functionalization: After the success of the scholarship model, guilds began searching for the next "Axie Infinity." As a result, current guilds generally participate in early NFT presales of blockchain game projects, aiming to acquire a certain number of NFTs early on to prepare for the game's launch.

In addition to NFTs, guilds may also act as early investors in many blockchain game projects, transforming their roles from NFT rental intermediaries and player communities into investment funds in the blockchain gaming sector.

Beyond the direction of fundization, some guilds are also exploring other development directions, such as providing data services, community services, traffic generation services for cooperative projects, and systematic management services for the guild's scholarship and income systems, thus moving towards functional development.

4. High Dependence on the Development of the Blockchain Gaming Sector: The income of blockchain gaming guilds, whether through profit-sharing from scholarship mechanisms or returns from investing in Gamefi, is built on the development of the blockchain gaming sector. As the blockchain gaming sector is still in its early stages, there is significant growth potential. For gaming guilds, whether they can grow alongside this sector and ensure the sustained profitability of their investment portfolios is crucial.

5.2 Sector Projects

As shown in the diagram below, the top 1000 projects in the blockchain gaming guild sector by market capitalization include Merit Circle, Yield Guild Games, and GuildFi. Since Merit Circle's mechanism is somewhat similar to YGG but not as refined, the following comparison will primarily focus on Yield Guild Games and GuildFi.

Figure 5-3 Market Capitalization Ranking of Blockchain Gaming Guilds

5.3 Competitive Element Comparison

5.3.1 Competitive Project Mechanisms

Yield Guild Games: YGG was founded by three founders deeply involved in the mobile gaming and blockchain gaming industries and is currently the largest blockchain gaming guild in the crypto space. YGG has a complete scholarship system and SubDAO system. To join YGG, players must first mint the YGG Guild Badge on its official website, which serves as a tool for players to access the YGG website portal. Players must possess this badge to register for scholarships, view achievements, and participate in SubDAO token sales.

Figure 5-4 YGG Official Website Page

In addition to the scholarship system described in section 5.1.1, another major mechanism of YGG is the establishment of different SubDAOs based on different regions and games. When a SubDAO is created, such as a game-focused SubDAO, YGG will first conduct research on that game, then purchase NFT assets within that game to place in its treasury wallet, and finally appoint management personnel for the SubDAO, transferring NFT assets into a smart contract wallet controlled by the SubDAO.

At the same time, YGG will issue tokens for SubDAOs. For example, the SubDAO created for League of Kingdoms is named YGGLOK. After the issuance of the SubDAO tokens, YGG will retain a portion of the SubDAO tokens for future governance participation.

Functionally, YGG, as the main DAO, will tend to collaborate more with various game developers, invest, and manage its treasury assets. Most of the work related to incubating and attracting specific games will be delegated to SubDAOs. Additionally, for regional SubDAOs, such as YGGJapan and YGGSEA, investments and community building will focus on games in Japan and Southeast Asia, respectively. SubDAOs will recruit local talent for management, organize local events regularly, and strive to develop localization for the guild, expanding YGG's influence in various regions.

Figure 5-5 SubDAO Establishment Process

In addition, SubDAOs will have autonomous asset management rights and scholarship profit-sharing mechanisms, allowing them to set their own profit-sharing ratios for the games they manage. The tokens of SubDAOs essentially represent the foundational value of their treasury assets. If the games managed by SubDAOs generate substantial income, YGG, as the main DAO holding the SubDAO tokens, will also benefit, meaning that the value generated within SubDAOs will ultimately accumulate to YGG's governance tokens.

Currently, YGG has a total of 11 SubDAOs, as shown in the table below:

Table 5-1 SubDAOs under YGG

5.3.2 Business Data Comparison

Table 5-2 Number of Cooperative Game Projects

Table 5-3 Community Data

From the tables above, it can be seen that YGG's cooperative projects outperform GuildFi in both quantity and quality. On one hand, this is because YGG's development direction leans more towards investment and community aspects, while GuildFi leans more towards functional aspects. From the perspective of community data and scale, YGG's number of scholars far exceeds that of GuildFi. In terms of community scale, YGG has a significant advantage due to the successful development of its regional SubDAOs, resulting in a much larger overall community size compared to GuildFi. Both communities exhibit high levels of activity.

Table 5-4 Comparison of Treasury Assets

From the table above, it can be seen that the vast majority of YGG's treasury assets are non-stablecoin assets, primarily consisting of YGG tokens, which account for over 80% of non-stablecoin assets. Therefore, the overall value of its treasury assets is significantly influenced by the price of YGG tokens. In contrast, nearly half of GuildFi's assets are stablecoin assets. In this asset allocation scenario, YGG's treasury asset value may face significant depreciation compared to GuildFi during a bear market in the crypto market.

Summary:

The blockchain gaming guild sector is still relatively small, with community sizes not even matching those of popular blockchain games. The entire sector has significant growth potential. After nearly a year of development, blockchain gaming guilds are beginning to show trends towards fundization, functionalization, and localization.

Among them, the leading project in this sector, YGG, is committed to investing in and collaborating with early-stage quality blockchain games, creating different SubDAO organizations based on different regions and game projects to expand its ecological landscape. In contrast, GuildFi, in addition to its basic direction of collaborating with blockchain projects to build communities for traffic generation, is also focused on functional development, aiming to become a guild service platform through the development of scholarship management systems, cooperative game data panels, guild discovery tools, etc., forming two distinct development paths compared to YGG.

From the business data perspective, YGG currently surpasses GuildFi in both community scale and the quality and quantity of cooperative games. YGG's larger community scale and the potential benefits from its investment in quality blockchain games may further enhance its development in the future. However, from a financial perspective, GuildFi's treasury situation appears to be better than YGG's. Currently, the competitive landscape in this sector is not intense, and there is a possibility that multiple guilds may share market share through different advantages in the future.

6. Risks

1) Sector Risk: This sector is highly dependent on the development of the blockchain gaming sector. The income of blockchain gaming guilds, whether through profit-sharing from scholarship mechanisms or returns from investing in Gamefi, is built on the development of the blockchain gaming sector. If the blockchain gaming sector does not develop well, it will greatly limit the upper potential of this sector.

2) Financial Risk: YGG's treasury assets experienced significant shrinkage in the second quarter. With fewer gold mining-type games currently available in the blockchain gaming sector, investment income will be an important source of treasury revenue. Continuous monitoring of treasury changes will be necessary to determine whether this project can survive the upcoming bear market phase.