Passive Income in the Metaverse: Gameswap DEX
Herres070 here! This is my first post on medium and I will be writing a future revenue scenario for two of the coins I am holding. My idea of this post is to make it a casual post that is easy to read with traits of how I would talk or comment in real life. I am not aiming for this to be a thesis, since I am doing this for fun!
Before you read further, make sure to read https://r3volt.medium.com/niftyx-protocol-update-november-2021-shroom-gswap-the-biggest-metaverse-opportunities-of-782287ba9049. Revolt is, just like me, a long time community-member who has done extensive research and due dilligence on NiftyX and Gameswap. In the medium post he explains, very thoroughly, why both $SHROOM and $GSWAP are good opportunities. This will also greatly increase your understanding of this article. I would like to highlight that NiftyX and the Gameswap DEX is set to migrate to AVAX in the near future.
When performing Fundamental Analysis (FA) or research in general, I always think how future scenarios could plan out. Real thinking though, not fantasizing about how if it could moon 100x, I could do X or Y. The fun of it is looking and searching for the right puzzle pieces. And I hear you thinking: ‘’But Herres070, how can you know the future?’’. The answer is simple, I don’t. No one knows, but it is really fun to guess with the goal of doing the guessing as accurate as possible. Also, let us try to be gods.
‘’tell us what the future holds, so we may know that you are gods.’’ (Isaiah 41:23)
The question I want to answer is the following:
How much revenue could be generated by holding X amount of $SHROOM and X amount of $GSWAP from its respective platform?
The puzzle pieces
To estimate this revenue we have to find the ‘’puzzle pieces’’ I am talking about! A big piece of the puzzle is hidden in the tokenomics of $SHROOM and $GSWAP. Simply put, $SHROOM holders will get 30% of the total net fees generated from all her own integrated verticals. About verticals, think Gameswap, with potential to future other …swap projects. Here NiftyX($SHROOM) is the backbone of all the verticals. In addition, $GSWAP holders will receive 60% of the total net fees on the Gameswap DEX. You could see the Gameswap DEX as a decentralized Opensea, focussed on gaming and will be the first integrated vertical that is releasing on NiftyX ($Shroom).
The next big puzzle piece that we need to find is the total amount of fees that will be generated, that in turn will be distributed to $SHROOM and $GSWAP holders. When we have these two puzzle pieces we can make a formula that can calculate the total amount of revenue you can generate by holding $SHROOM and or $GSWAP, by taking into account what ratio of the total supply you have.
The two scenarios
To estimate the total amount of fees, I constructed two scenarios:
Scenario 1 and Scenario 2. In scenario 1 we take the Gameswap DEX and project the growth of Opensea on the tokenomics of the whole NiftyX ecosystem. In scenario 2 we will do the same for Axie Infinity. I chose these two platforms/projects for the scenarios since in my own opinion they represent the possiblities of what could happen the best. Later in this Medium I will explain my further thoughts on the framework I chose and what I think of what could be possible.
Opensea is a centralized marketplace for NFT’s. On Opensea NFT’s (ERC-721 & ERC-1155) can be traded through the Ethereum network.
Axie Infinity is a play-to-earn game and has an ecosystem developed around it. Participants can buy, breed and pit their Axies against eachother for rewards.
NiftyX aims to be the infrastructure of these two examples where the exchanges of NFT’s and rewards take place in its own ecosystem.
Note: for the two scenario’s the generated revenue from fees were calculated with the following amount of holdings:
$SHROOM: 10,000.00 ($7500 worth, at time of writing)
$GSWAP: 1,000.00 ($5200 worth, at time of writing)
If you would like to calculate what you would earn with your holdings, don’t worry! I will post the Excel-sheet at the end, which you can download.
In scenario 1 we will use on-chain data to find monthly volume of Opensea in USD since the summer of 2018 till present. The data used for these volumes are taken from Dune. Note that these values are on the ethereum network only. Opensea is also transacting on the Polygon network since July, so total numbers are higher than this. We then apply their own fee of 2.5% (on each transaction) on these total monthly volumes in USD. This will give us the amount of revenue generated from their 2.5% base fee for Opensea. The reason I do it this way and do not take total revenue from a site such as Tokenterminal, is that they include royalties, which for this comparison I do not want to include.
The graph above was put into Excel according to the following table below, where cells are filled up till 01–12–2021, values of monthly volumes were put in manually and are within <1$ value of actual numbers:
As can be seen from the first graph, the real sheckels for opensea started coming in at the start of 2021. Due to this, I put into perspective how much cumulative profit you would have made by projecting the growth from Opensea since inception, and since 2021. These can be seen below:
99,9% of all profit was generated since 2021. When NFT’s went mainstream. We can see the same thing in scenario 2.
For scenario 2 we need to find data of the fees generated by axies infinity so we can calculate our rewards from holding $GSWAP according to those generated monthly fees. Below a graph from Tokenterminal is taken.
Since Tokenterminal shows protocol revenue, there is no need to calculate generated fees from the monthly volume and the fee AXS marketplace take. Therefore, the cells in Excel look like the table below:
The following is stated in their whitepaper regarding future revenue streams.
A 4.25% marketplace fee is set, which is relatively high. This could skew the comparison for $GSWAP holder fee profit a bit to the high-end. However, later in this medium I will discuss the assumption of taking such high fees into account and other things that need justification, rather than lose assumptions.
What fees can be generated by holding $GSWAP through the Gameswap DEX when looking at the fees generated by Axie Infinity? Just like scenario 1 I will show the cumulative fee profits from inception and from the start of 2021. Just like Opensea, 99,9% of fee revenue are made in 2021.
Scaling down fee % and generated fees
These values are in my opinion inflated when comparing them to Gameswap, since Opensea and Axie Infinity are two projects that withstood the test of time and have shown their use case. I don’t want this to be a moonboy projection that with a couple thousand $ investment you could earn 10’s of thousands $ in a couple months. I want this projection to be somewhat plausible. In the end you can adjust the fees and ratio of fee revenue generated per scenario in the sheet yourself (for all the moonboys). For now I set the following 2 parameters on the fees generated above:
Projected fee Gameswap: 1%
Generated fee in relation to Opensea and AXS: 10%
To justifiy the 1% fee taken by Gameswap, 2.5% fee on Opensea is largely complained about, it feels a bit too much to instantly lose when just exchanging these assets. 0.5-1% might be a bit of a lowballing number, but that is totally fine. I’d rather know what I can profit with lowballing numbers for future scenario projections.
As per the generated fee in relation to Opensea and AXS, this is the part where I am struggling most with. Opensea and AXS both are important projects for the NFT ecosystem and it is hard to find an approach that can predict future market demand for gameswap that are justified with data. This is why I arbitrarely set it to 10% of the total fees that were generated by Opensea and AXS. If you have any ideas for a good approach, let me know!
By even reducing the generated fees by 10 times aswell as lowballing the taker fee of the platform to 1% you would have earned a total of $3.180,60 worth so far when following both scenarios. This is accomplished by holding a total of 10,000.00 $SHROOM and 1,000.00 $GSWAP. Ofcourse, this is dependent on token prices and their respective USD value over time, aswell as the scenario. But this gives a good insight in value that can be distributed by the tokenomics of $SHROOM and $GSWAP at a potential relative early stage.
The sheet currently looks like this :
Regarding further positive developments. It can be seen from the cumulative fees, 99,9% of the revenue from fees of both platforms were generated in 2021. Opensea, Decentraland, Sandbox and Axie Infinity maybe launched 2 years too early (or just in time since they could develop). I laughed hard when this tweet showed up lately:
It shows that no one (or atleast not a lot of people) knows when narratives come into play and how hard. For the unkowing, Decentraland is now sitting at approx. 6B market cap. At the time of the tweet (08 August, 2018) it was sitting at approx. 125M mcap. Classic Barry does it again.
But let’s get back to the positive future narratives that are happening. Facebook rebranding to META, NIKE filing for patents for the metaverse, gaming companies pivoting to the metaverse (EA), all metaverse. I always tell my friends that NFT’s and especially gaming NFT’s are what DeFi was in summer of 2020. We went from 2B Total Value Locked (TVL) to, what is it? 200B+ TVL divided over hundreds of protocols. With the DeFi category being worth 160B+ market cap. Gaming and metaverse category on coingecko is currently sitting at approx. 36B Mcap. NFT category is sitting at 67B total market cap.
There is however one thing that is super different compared to DeFi, which is the whole crux of this all. Try getting a normie friend into DeFi. Providing Liquidity (LP), transacting on different chains, bridging to the different chains, overcollaterarized loans or finding out how to pay the lowest amount of fee in the whole structure. Below is an example of a relative ‘’intermediate’’ defi strategy:
You understand the point now.
How easy is it to onboard gamers for a game? where you own your stuff, and can easily transact your valued assets for other assets you prefer. In the end the gamer just wants to game. This is also one of the most important values that NiftyX and Gameswap try to percolate. They try to form the ecosystem from the bottom to the top, instead of the top-down method.
It’s safe to say NFT’s and its technology are here to stay. Another analogy I tell my friends is that to not miss the overall trend, you do not want to bet on a dAPP to be succesful (i.e. 1 certain game or project within an ecosystem), but rather be invested in infrastructure that make the ecosystem possible. When Ethereum came out, a lot of people bet on different dAPPs, while in the end the safest, and in most cases, also most rewarding hold would have been Ethereum all along. The same is the case, in my opinion, with NiftyX and Gameswap. They are the backbone and infrastructure that will make the whole metaverse connected that will be build on these platforms. In addition they have their eyes on not only these two markets. A DEX for music and fashion is also in the making. Imagine those $SHROOM fees when everything is connected and setup. Imagine not Axie Infinity fees, but imagine 10 different AXS and 100 different smaller gaming projects connected on the gameswap DEX. An investment of 10k$ worth, could be worth a monthly revenued fee of a couple 1k$ maybe even couple 10$k worth in a few years time if the metaverse narrative plays out. Also, imagine at what market cap. NiftyX and Gameswap will be sitting when they generate that amount of fees.
A lot of people also sleep on the fact that NiftyX and Gameswap value decentralization as a core principal. As of late, there is some twitter interaction regarding a centralized metaverse. Emin also is very big brain.
I want to highlight that the launch of $SHROOM and $GSWAP was done fair. Not having leeching VC’s with DAO voting power, or having to be between one of their schemes, means that it’s a huge positive asymmetric risk.
Also take note that these scenario projections were done with the max supply taken into account of both $SHROOM and $GSWAP. Alot of important details regarding tokenomics will be announced down the road, this could further improve the projections made here. This fee projection was done, only with the information of the basic tokenomics.
To end my first medium I would say: Do not try to bash/be toxic towards other projects. A lot of people are just grinding. The best and most succesful projects have been projects and communities that were humble and include others by responding with love and enthousiasm. Some people are born salty, be the better person.
Here is the link to the google drive Excel spreadsheet so you can download and play with it yourself! You only have to change cells that are highlighted YELLOW: https://docs.google.com/spreadsheets/d/1yJP12uaGC8CAT5BuV-v8cU_DjruPXZOYnEGqLWFCyMk/edit?usp=sharing
DISCLAIMER: I am a community-member of NiftyX ($SHROOM) and Gameswap ($GSWAP). Everything I write here is my own opinion and not financial advice. I am holding $SHROOM and $GSWAP for almost a year and have been scaling into them heavily over the past summer.