Crypto gaming guilds have taken off in the past six months, with organisations like Yield Guild Games, Crypto Gaming Guild, Perion DAO and Avocado Guild launching to take advantage of the opportunities in the play-to-earn gaming space.

Crypto games such as Axie Infinity have made it possible for players to actually earn more than the minimum wage of many developing countries through a few hours of gaming.

But playing requires NFTs — in-game items such as battle pets and equipment — which are prohibitively expensive for those on the poorer end of the socioeconomic spectrum. So Yield Guild Games and its rivals have amassed  vast war chests of NFTs they loan to “scholars”, often in the Philippines, in exchange for a cut of their loot.

Now a new entrant is entering the crypto gaming space, this time with the same sort of capital-light approach that many modern TradFi companies favour.

Rather than simply owning NFT gaming assets outright, Balthazar is also loaning items from other players to lease to its base of 1,100 scholars. (There’s another 30,000 on its waiting list, and 70,000 in its Discord chat channel).

“So the goal around Balthazar, think of it like Airbnb or Uber, where people plug into us,” chief executive John Stefanidis told Stockhead recently during a lunchtime interview.

“We want to stay as asset-light as possible,” in part because Balthazar doesn’t think it can predict which play-to-earn games will endure.

“We’re agnostic on the games, but we’re long on the actual industry …

“Essentially, we take existing assets from people in different games, and they lend us the assets so we don’t have to buy them ourselves, and then we pass them on to our scholars.”

Earning yield on NFTs

It’s a way for NFT owners to earn a yield on their assets without bothering the play their games or having to manage “scholars”.

For example, one of Balthazar’s advisors has some $6 million in NFT assets for a play-to-earn card game called Splinterlands, and the DAO is looking to borrow those items.

“So we’re essentially mobilising assets for them, sharing the revenue, and it’s a really scalable way for us to move into different games,” Stefanidis said.

Balthazar has other business models, he added, such as Balthazar Buy, an upcoming marketplace aimed at investors who want exposure to gaming assets. Customers will be able to buy Balthazar-recommended NFTs and then lend them to the organisation, which then deploys them to its scholars.

“We’re giving them tips on NFTs that they can buy that are actually going to earn high yield for them,”  Stefanidis explained.

“So they could buy, say, 10 grand of NFTs, and then have 10 or 20 scholars working through the guild earning them money. And they can track their earnings through the dashboard.”

Balthazar is focused right now on the play-to-earn games Axie Infinity, Splinterlands, mobile online battle arena (MOBA) game Thetan Arena and mech-horse racing game Pegaxy.

It is also working on a gaming launchpad, “so people can activate their games quite aggressively through our platform” and take advantage of its large audience, Stefanidis said.

“Come to us, you’re going have immediate users, immediate people that want to buy your assets, because you’ve hooked them up through our platform to media marketing and digital platforms,” he said.

Smooth Love Potion crash

Even before this weekend’s crypto-crash, there were some cracks in the play-to-earn space emerging. The price of Smooth Love Potion, the in-game currency that Axie Infinity players earn by battling Axie creatures, had crashed from a July 2021 high of nearly US40c to under US2c.

On Wednesday, SLP was changing hands for just than 1.1c – a 97 per cent drop.

But Stefanidis said that the price of Axie creatures had dropped proportionately alongside the price of SLP, so that wasn’t a major issue for the guild.

“We just needed to play more scholars, more games, to make the same kind of money – which we’re OK with because we’ve got a 35,000 scholars in the backlog, and that increases weekly.”

Play to earn games in general need to fix their inflationary models, Stefanidis said.

In Axie Infinity, for example, AXS tokens can be spent to breed new Axie creatures. In Thetan Arena, heroes can be battled for 200 games, and then have to be combined with another hero.

“Tokens are burnt to try and manage the economy, but nobody’s got it right just yet,” Stefanidis said.

“So we’re watching very closely to see which games gonna get it right.”

That’s one reason why Balthazar isn’t trying to pick winners and losers in the play to earn space, he said.

Future of play to earn

Eventually, Stefanidis said, there’ll be tier-one games with play-to-earn components — games that are really fun to play, on the level of League of Legends, Dota or Counterstrike.

The gaming industry, he notes, is huge – bigger than the TV, music and movie industries combined. (Accenture values it at US$300 billion).

“Gaming is massive. When people start to move into games, that are simply amazing games but with a play-to-earn economy attached to it, you’re going to see money stay in the game,” says Stefanidis, noting he paid money on FIFA Points to upgrade his players during the pandemic.

“I just wanted to get my Ronaldo player – I didn’t expect anything out of it. I just wanted to be able to play the game better and beat my friends… and that’s very, very common behaviour.”

So once first-world gamers start pumping money into tier one games with play-to-earn components, that’ll sustain a “bottom layer” of people in less developed economies playing the games to earn money, Stefanidis argues.

“And that’s where you see that distribution of wealth happening.”

Play-to-earn may also evolve into a system where the stellar gamers earn a lot, while players who are just average aren’t getting much or anything.

Animoca Brands leads $3m capital raising

Balthazar announced on January 14 it had raised US$3 million in a token sale led by leading metaverse company Animoca Brands, which has invested in over 150 different NFT-related companies and decentralised projects.

Others investing in the round included Finder Group (through Hive Empire Capital, which is led by Fred Schebesta); ZipPay co-founder Larry Diamond; Digital Asset Capital Management (DACM); Fantom; ZED Run; Darling Ventures; Pluto Digital; San Francisco-based VC Side Door Ventures; Algorand; and Three Arrows Capital’s TPS Capital.

The capital raising valued the DAO at US$30 million.

Balthazar has opened a private token sale round, with plans to sell US$8 million of tokens at a valuation of US$150 million by February.

Stefanidis says the project may use a Balancer reverse auction pool for its initial token launch.