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    GenZ VC Shares Little-Known Play-to-Earn Game, Protocols

    • Piers Kicks got his first bitcoin at 13 years old while playing online fantasy game Runescape.
    • Almost a decade later, he’s a leading a VC in the crypto gaming space.
    • He shares his outlook for play-to-earn gaming and the battle between layer one blockchains.

    At 13 years old, Piers Kicks got his first bitcoin when it was trading at around $8.

    It wasn’t a savvy investment decision at the time, it was simply a way for him to secure virtual currency in the online fantasy game Runescape.

    But it’s decision that set him up for a career in investing, as he’s now one of the leading crypto gaming venture capitalists almost a decade later.

    Kicks, after a stint of competitive gaming on Rainbow Six Siege and starting his own venture fund, co-founded the venture arm of the crypto research house Delphi Digital in 2019. 

    Two years later, Kicks also took on the position as crypto lead at Bitkraft, a gaming venture fund with over $540 million assets under management that was founded by Jens Hilgers, a legend in the gaming world  known for helping esports go mainstream.

    The two companies just launched an exclusive partnership on a $75 million token fund, where they will look at token-based investments together, led by Kicks. 

    “Basically that allows us to combine this deep token engineering experience of  Delphi, which is activist in our investing approach, [to] often come in at these early stages and actually help build out these token models and stress-test them,” Kicks said. “Combine that aspect with the deep games network and game design expertise of Bitkraft and we think it’s pretty compelling.”

    The investing styles of the two teams differ. At Bitkraft, the team looks at crypto investment in three buckets – crypto games and experiences; tools and infrastructure and then marketplaces and platforms.

    Delphi, meanwhile, has a proprietary fund, so there’s more flexibility in the type of investments they can explore. One of Delphi’s first big bets was Axie Infinity, the play-to-earn game.

    Play-to-earn gaming

    Axie Infinity started to gain attention in recent months as players in the Philippines started to make more money from the game than some traditional jobs. The Smooth Love Potion (SLP) token used in the game surged 159% within the last year whilst the AXS governance token which Delphi built is up over 1000x since its initial public listing late last year.

    This is an investment that Hilgers of Bitkraft famously missed.

    It’s not surprising that many venture capitalists, including experts in the gaming space, missed the Axie investment because it requires some rewiring in terms of evaluating the level of fun in the game, Kicks said.

    “Because this is an economy that people are earning money from, your benchmark for fun isn’t other games on the market, it’s [instead] like driving a taxi or working some manual labour job,” Kicks said. “It needs to be more fun than that.”

    Yield Guild Games, another of Kicks investments, has experienced a significant amount of success from Axie’s rise. To play the game, individuals must buy three Axies upfront. To provide more individuals with access, Yield Guild Games lends Axies out and then takes a cut of the players in-game revenue. 

    Yield Guild’s recent token sale sold out in 30 seconds and the token price has surged 375% since July 28.

    Many other games are now trying to design strong play-to-earn loops after seeing the success of Axie, Kicks said. But  he adds that it’s difficult to do and it’s going to take time to get these economies off the ground.

    “We’ll definitely see a lot of it, I think the concept of shared economics in gaming is 100% not going away,” Kicks said. “…  The difference between a traditional publisher who has a 100% take rate on everything versus these new crypto native Web 3.0  games that have like a full 4% to 6% take rate on their marketplace fee and the rest is somehow distributed amongst the game’s participants, that’s 100% here to stay.”

    However most implementations are not meaningful yet, Kicks said.

    “This is largely because the actual play-to-earn loops, and these other economies, haven’t come online yet,” Kicks said. “If you look at other play-to-earn guilds like BlackPool, they only derive 30% of revenue from Axie and the remaining 70% from Sorare strategies.

    “Sorare is not explicitly a strong play-to-earn loop, but it’s basically a soccer manager game and in doing that well you can earn pretty substantial money, so we’re starting to see it.”

    Sorare is a fantasy soccer game that runs on the ethereum blockchain, where players manage a virtual team.

    Layer two protocols

    A significant number of crypto gaming projects run on ethereum, a blockchain that currently faces scalability issues due to high gas fees and slow transaction times. 

    The aim is to resolve these issues with an upgrade toward ethereum 2.0 and layer two protocols. But rival layer one blockchains, such as solana, claim to also offer more scalable and faster solutions compared to ethereum. Solana is already making serious headway in the gaming space.

    “We are actively looking at a couple of projects on solana,” Kicks said. “That said, I am very bullish on the layer two ecosystem on ethereum. Some of the activity we are seeing right now with Starkware technology stack that ImmutableX runs on does have greater end-game scalability than solana itself … much more decentralized, much more robust underlying consensus mechanism from the ethereum network.”

    Kicks, who is personally invested in ethereum, describes its network effects as formidable and believes the window of opportunity for alternate layer ones to entrench themselves is closing thanks to the rise of the layer two ecosystem.

    “Starknet has a whole new programming model with Cairo, but I’m very confident in what I’m seeing there,” Kicks said. “Solana is probably the only one beyond ethereum that we are actively seriously looking at at this point. Most of the others are just decentralized in name and not in practice.”

    Despite certain preferences, Kicks adopts a chain-agnostic investing approach with a focus on great founders and projects.

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