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1.Highlights

• Yield Guild Games' treasury assets need to grow at least 1000% over 4 years to reach fully diluted token valuation. And only when it is illiquid will it take 1500% to reach a fully dilution valuation of $YGG.
• According to the current growth rate, the number of scholars is expected to exceed 200,000 by the end of 2026.
• YGG has a strong investment ability, generating $23M in revenue in half a year.

2.Overview

Web3 game guild was originally set up to solve the high entry threshold for games such as Axie Infinity. Most of the game guilds with the highest token market cap on the market, like YGG, merit circle, guildfi, blockchainspace, and pathdao are also established to rely on this model. That is, after purchasing NFT as treasury assets, the manager introduces scholars to earn. The general distribution profit is 10% for the guild, 20% for the manager, and 70% for the scholars.

3. $YGG INTRO

According to whitepaper:

$YGG = A+B+C+...+Z

“A” represents that the value of the index comes from the token revenue generated by using each Sub-DAO asset, in the following "YGG as Sub-DAO index".

A = % Axie Sub DAO (YGGAXS) + % Lok Sub DAO (YGGLOK) + ...+ % Zed Sub DAO (YGGZED).

“B” represents the value of all NFT assets and ROI.

“C” represents the multiplier from its growing user base.

The rest of the functions represent YGG’s activities, from NFT asset leasing, commodities, e-sports and NFT incubation activities.

Let’s analyze the asset value of YGG based on the above aspects in the following

4.Asset Analysis

4.1Treasury

According to the wallet address in the YGG Q2 report, the asset value disclosed by YGG can be obtained.

Most of the tokens held in the wallet are non-stable tokens and some LP pools. Stable tokens only account for 7%.

$YGG is the main non-stable token, accounting for about 80%. Considering the impact of transaction volume and token lock-up period, let’s take a 30% illiquidity discount for non-stable token assets.

NFTs are mainly the LAND of  The Sandbox  and Axie . Considering the impact of transaction volume, let’s take a 50% illiquidity discount for these NFTs.

According to the whitepaper, $YGG will be fully unlocked in December 2026, and the inflation rate will be about 8.5 times within 4 years. If the token is fully diluted,  the current asset value of the treasury needs to reach a 1000% rate of return within 4 years. Although it is optimistic about the long-term development of the GameFi industry, it will still be a challenge for YGG to achieve this.

4.2 Scholarships

According to the YGG Q2 Report, the number of scholars has grown steadily since 2022. Although the number of YGG Ontology users halved due to the market adjustment in May, the users of SubDAOs remained stable. Currently, YGG has SubDAOs in the following: YGG SEA (Southeast Asia), Indigg (India), olagg (Spain), BAYZ GG (Brazil)，YGGJapan.

Considering that there are currently 3 billion players in the world but less than 1 million on-chain users. If the market stabilizes, according to the current growth rate of 60% annual decline, the number of scholars is expected to reach 200K when $YGG is fully unlocked in December 2026.

It is hard to calculate the User valuation. But considering that these people are native Web3 gamers, based on the Internet user retention cost, let’s value each user at $8, and they will be worth $1.6M by then.

5.Investment Ability

The market has been bearish since the beginning of 2022, but the investment ability of Yield Guild Games should not be underestimated. In just half a year, the initial cost of $16M has been converted into an asset value of $39M.

Most of the assets are expected to increase their valuations after listing, but the overall market environment is poor which will not be given high valuations. From the overall consideration, no illiquidity discount will be made for the following assets.

6.Conclusion

From the perspective of the industry as a whole, Web3 Game users are still limited compared to the user numbers of traditional games. There will be more room for growth in the future.

Because game assets are all high-risk, the treasury assets of Yield Guild Games are greatly affected by this market adjustment, but their investment capabilities are still bright.

The increase in the number of scholars is a double edged sword. The advantage is that whether it is regarded as an asset or used for promotion, it will generate greater benefits. The disadvantage is that with the increase of the number of scholars, the management cost will skyrocket. And Yield Guild Games need to balance and make trade-offs.

*Note: The above content is just for reference only and does not constitute any investment advice.

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