In briefYield Guild Games, which makes money from yield farming with video game NFTs, has raised $4 million in Series A funding. Notable video game and esports VC fund BITKRAFT Ventures led the round.
Yield Guild Games, a group of investors and players who generate revenue in games designed around NFTs, announced today that it has raised $4 million in Series A funding to accelerate the trend of “play-to-earn” gaming.
The decentralized guild invests in NFTs from blockchain-based games and then loans them out to members, who use them and generate revenue as they play. Crypto game NFTs take a lot of forms, from breedable, fighting monsters in Axie Infinity to customizable, income-generating plots of land in The Sandbox. Yield Guild Games takes a fee from the revenue generated by players who borrow their NFT assets for such yield farming efforts.
According to Gabby Dizon, co-founder of Yield Guild Games, the $4 million investment round will be used to purchase additional NFTs and support further games. The guild has already invested in assets for Axie Infinity and The Sandbox, both of which are built on Ethereum, as well as F1 Delta Time, Guild of Guardians, Illuvium, and League of Kingdoms.
“When making investment decisions, YGG considers the play-to-earn tokenomics of the game and its plans for guild-based gameplay. For YGG, the most critical component is the monetization design in the way that players can earn money from the game,” Dizon told Decrypt. “Provided this aspect of the game is made clear, and is potentially lucrative for players, YGG is comfortable investing in the game at a very early stage of development—perhaps even before it is launched.”
BITKRAFT Ventures, a venture capital fund focused on the gaming and esports industries, led the Series A investment round. New investors A.Capital Ventures, IDEO CoLab, Mechanism Capital, and ParaFi Capital also participated, alongside existing investors such as Animoca Brands, Ascensive Assets, and SevenX Ventures. Yield Guild Games’ angel investors include G2 Esports founder and CEO Carlos Rodriguez, as well as Axie Infinity developer Sky Mavis’ CEO Trung Nguyen and founder Jiho Zirlin.
“There remain a number of questions around what play-to-earn game economies will look like as they mature, but Yield Guild gives us the best chance at building long-term sustainability into this ecosystem by providing structured engagement opportunities for its participants,” BITKRAFT Senior Associate Piers Kicks told Decrypt. “It is difficult to see any other group of founders possessing the combination of boots on the ground and deep industry experience required to execute on a vision as grand as this.”
Infinity and beyond
Axie Infinity has emerged as one of the leading NFT-driven games so far in 2021, with high-dollar Axie monster and land sales amidst the spring’s wider NFT industry boom and continued growth even as other NFT demand has seemingly cooled of late. DappRadar shows some $44 million in trading volume for Axie Infinity over the last 30 days, and more than 34,000 users during that span.
Yield Guild Games is heavily invested in Axie Infinity, and has launched a unique scholarship program for players of the game. In the scholarship model, an owner of Axie monster NFTs loans them out to players who do not own any of the required NFTs for the creature-battling game, and then the revenue they generate is split between the player, NFT owner, and a community manager who recruits, trains, and mentors the players.
According to Dizon, the program now has 1,900 participants, with the first 1,000 of those coming over the span of seven months. The rest have been onboarded since just last month, with demand accelerating in part due to the release of a “Play-to-Earn” documentary short that showcased the potential of the scheme. Dizon said that the program has already generated more than 14 million in Axie’s Smooth Love Potion (SLP) currency, or nearly $2 million worth at the current price.
“It’s important to note that these are not your average startup growth metrics,” Dizon explained. “These numbers represent 1,900 people whose lives have significantly improved because of YGG’s efforts in countries like the Philippines, Indonesia, India, Venezuela, and Brazil. Play-to-earn games have found a powerful product-market fit in emerging markets where they can legitimately provide a pathway for people to lift themselves out of poverty. Now, YGG wants to accelerate that impact and reach more countries across the world.”
Part of the Series A funding will be used for that Axie scholarship program, covering the breeding fees to generate even more lendable Axies and onboard more players. Yield Guild Games is also looking to develop an esports team, with Dizon citing Axie Infinity’s competitive circuit as a sign of esports potential in the NFT play-to-earn space.
“This will be an opportunity for high-caliber talent that come in through YGG’s scholarship program, to rise up into esports where players compete in tournaments around the world for larger prize monies as compared to everyday farming of in-game tokens,” he said.
BITKRAFT is a major VC player in the gaming and esports space, with investments in more than 50 companies to date including Fortnite creator Epic Games, gaming television network VENN, and clothing brand H4X. BITKRAFT has more than $500 million in assets under management across five funds raised to date. Beyond its funds and esports expertise, Yield Guild Games aims to also leverage BITKRAFT’s connections as it works to expand its unique business model around NFT-driven, play-to-earn gaming.
“Having a best-in-class fund such as BITKRAFT invest in the future of YGG is a signal that play-to-earn is to be taken seriously. Within the next decade, YGG is predicting that any game with an economy inside it will adopt some form of play-to-earn,” said Dizon. “As such, working with such a respected fund in the game industry opens the door for YGG to engage with other major publishers and game studios on how they can create an NFT game of their own.”