Cutting Edge of the Metaverse.
The blockchain gaming industry is flooded by buzzwords such as Metaverse, virtual reality (VR), and artificial intelligence (AI). However, as an investor, you need to look past the marketing gimmicks and understand the supply and demand dynamics to plan profitable exit strategies.
Today we will discuss some of the NFT projects with cutting-edge technologies that have successfully generated demand and how to spot similar opportunities.
Various blockchain teams are experimenting with cutting-edge tech. Projects like The Sandbox and Decentraland came into the spotlight this year with the explosion of the Metaverse narrative. These platforms provide the ability to host VR games. For instance, Atari has a virtual casino on Decentraland.
However, there’s one significant caveat to this exotic technology. Despite being around for dozens of years, they are still not ready for mass adoption.
Despite the advancements in VR and AR, we aren’t likely to live our lives in virtual reality anytime soon. Hence, while you can make short-term bets on the advanced tech in blockchain gaming, they may be a lot riskier in the longer term.
On the positive side, there’s a lot of excitement around these technologies, enabling projects to generate substantial demand, which is exit liquidity for early investors. So, how to spot a good hyped technological pick?
First, to create demand, a project has to have reputable backers. Recognizable Twitter accounts or support from venture capitalists helps to raise awareness. The bigger the brand, the more people join their Twitter and Discord communities looking to ape in their assets.
Next is throwing decentralized finance (DeFi) and play-earn-tokens (p2e) concepts on top of the NFTs to create utility for them. Genopets on Solana is a perfect example.
Virtual Reality and Augmented Reality
Genopets is a VR/AR powered project that would enable play-to-earn based on real world movements of players. The team calls it “move-to-earn.”
On Oct. 18, Genopets announced that it raised $3.8 million from notable VCs like Pantera Capital, Alameda Research, and Mechanism Capital, along with angel investors like Twitch co-founder Kevin Lin.
Then, the project generated additional demand by airdropping 1,000 egg NFTs to early supporters, which ended up selling for 22 SOL (~$4,400 at that time) each.
The next batch of 2,333 Genopet NFTs saw active demand with over 50,000 entries in a raffle-type auction. This batch of NFTs was sold for 5 SOL each. Currently, these NFTs sell at more than double their initial value at 11.6 SOL.
Token airdrops are powerful tools to drive the price of NFTs and retain ownership. There are many games that are airdropping tokens to NFT holders, or giving them out as rewards for staking NFTs.
Moreover, Genopets introduced GENE and KI tokens to add utility to their product and NFTs. While these tokens will likely fade into oblivion over the next few years, they helped the project with marketing.
To make a profit, it’s imperative to identify projects with strong backing, enter during the drop, and exit when the staking hype accelerates.
One of the notable recent AI-focused projects is Alethia AI. Disclaimer: It’s a classic Ponzi scheme, in my opinion.
The NFT offers an advanced AI model which users can train over time to emulate human-like traits such as speech, intelligence, and emotions. Users can train them to have specific personality traits as they’d like.
The AI model learns from the real-world data fed to it and evolves to perform specific actions more efficiently.
Released in August, the project was showcased at Sotheby’s and raised $14 million from prominent investors. Hence, the team created the demand for the NFT early on.
The NFTs were first dropped, starting from 0.07 ETH. Currently, they are selling on OpenSea for 0.289 ETH, or 4X their mint value.
To avoid a quick sell-off and retain users, the team devised an NFT staking model—Intelligence Training—to earn in-game ALI tokens.
The Alethia bot staking model will run until Dec. 28, and the tokens will be distributed at the end of the staking period. To avoid the sell-off of these tokens, the team devised a token lockup mechanism. When you lock your tokens, your NFTs become more “intelligent,” thus earning more ALI tokens.
The Ponzinomics are now complete. Stake NFT to earn tokens, lock tokens to improve earning capabilities.
Despite the team’s effort to keep people holding, a profitable exit from Alethia could be selling NFTs at a profit right after the staking ends and using the proceeds to buy ALI tokens on the open market after the launch to potentially profit even more with no lockups.
The next example is Altered State Machine (ASM), which requires GPUs to enhance AI capabilities.
In ASM, the intelligence training happens in a “Gym,” a machine-learning (ML) model trainer. The ML model is based on neural networks and requires GPUs for training. Each brain learns how to perform certain tasks.
The team kickstarted marketing with an online soccer game called Artificial Intelligence Football Association (AIFA), where the NFT could learn how to play better than other players. However, as exciting as it may sound, it’s still an experimental endeavor.
Nevertheless, there will be staking and a native token, ASTO, with p2e utility.
The team sold 10,000 “brain” NFTs that could be trained to perform certain tasks in the future. The floor price of ASM brains on OpenSea is 1.36 ETH (~$5,440.) The original minting price of the NFT was 0.09 ETH + gas fees (~$500).
Along with the brain NFTs, the drop also included four AIFA player NFTs that can be used to play the online soccer game.
Genesis brain holders will be the first to get in the whitelist or possible airdrop of the ASTO tokens. In the future, ASTO tokens will enable governance and act as a currency for buying and upgrading the brains.
They also plan to launch breeding and cloning of brains, which will provide additional benefits for brain owners. The price of the brains will likely surge after the launch of tokens or breeding features. That should be a cue to exit.
To conclude, when it comes to cutting-edge technology in the Metaverse, I believe there’s a rather small chance that these projects will gain mainstream popularity. However, there’s merit in investing in them during the early stages and flipping them for a quick profit at the right time.