Will DeFi Kingdoms be the mega blockchain game in the long term?
Initially launched in Aug 2021 on Harmony, DeFi Kingdoms is now a cross-chain MMORPG game, DEX (Uniswap V2), liquidity pool provider and a NFT marketplace. Even with more GameFi combatants mounting their charges since DFK’s debut, the game is still a rare gem in the rare, nostalgic form of pixelart.
DFK is well positioned to be at the forefront of the megatrend of Metaverse, with quite a few necessary elements intertwined in the system: multiple tokens including 2 power tokens (JEWEL and CRYSTAL), NFTs such as characters (heros, pets), land, buildings, equipments and battle systems (the latter 3 are under development) along with all other in-game activities.
DeFi Kingdoms’ native token JEWEL provides utilities across DeFi and gameplay. It’s trading at $0.48 at the time of writing, almost a free fall from its January ATH of $22. While some believe JEWEL is already a shitcoin at this price level, other hardcore players think it’s the best time to buy the dip and the token value will appreciate as the game develops in the next couple years. I personally tend to agree with the latter opinion as I delve more into the game more deeply (Not a financial advise at all).
Before we go into game details and its tokenomics, positive signs remain as DFK’s 7-day incoming volume of $48mn is still way above all other blockchain games and even twice that of Axie Infinity which is the runner-up on the list. In terms of balance (i.e. total value locked), the game is ranked the 4th among all blockchain games, recording a TVL of $149mn.
For easy reading, I’ve split the following contents into a few sections:
I. Game design: Gaming elements + DeFi elements
II. Future Roadmap
III. Tokenomics
IV. Risks
V. Closing thoughts
I. DeFi Kingdoms’ Game design (Gaming + DeFi)
Gaming Elements: Major NFTs
DFK is a multi-token game that incorporates utility NFTs which users can purchase, sell, hire, rent out, level up and use for specific tasks (‘Quests’ as used in the game) by interacting with different facilities and NPCs. The game is free to play but almost every in-game activity will cause an amount of gas fee which is just a fraction of cents given Harmony One’s current price. There’re many cool in-game NFTs and this article will focus on the existing ones as the rest are yet to be fully launched.
(1) Hero: DFK’s major in-game collectible NFT with P2E functionality and summoning opportunity (i.e. breeding). Hero NFTs fall into a set of categories by Rarity (4 colors), Class (15 Primary & 15 Sub), Element (8), Generation(from Gen-0 to all the way up), Level, Stats (8), Professions (4) and etc, as shown on the Hero card below. Here’s an excellent deep dive on breaking down Hero cards.
Having a unique set of above features combined, a given hero is best suited for going on certain quests and has odds of summoning (i.e. breeding) a specific type of next generation hero. With a good understanding and strategy in place, players can arrange their heros to work on specific quests in order to generate optimized rewards in the form of JEWEL tokens.
Some of the task rewards are simply computed using a random number generator (RNG), such as Foraging and Fishing Quests. Another interesting sweet spot lies in the rewards that are tied to DeFi. For example, gardening-profession heros can boost the yields of liquidity mining via Gardening Quests whereas mining-profession heros offer players earlier access to the locked portion of JEWEL tokens via Mining Quests. This makes DFK stand out in the space given the ‘utility’ of its in-game NFT is for real.
The barrier to entry could also be either high or low and you just need to adjust your strategy accordingly. For instance, a strategy of having many heros help boost liquidity mining yields is more meaningful for those deep-pocketed players given the larger amounts deposited in the LPs. While smaller players may rely more on heros going on other quests to earn JEWEL tokens as it’s more efficient.
Eggs & Pets: When heros go on quests, they get to collect additional tokens or certain in-game resources such as eggs. What’s following eggs you may ask? Exactly. DFK’s Pets hatchery just went live this Wednesday. Pets will accompany heros on their adventures in the future. Currently, these pets can already grant heros stat bonus, passive ability bonuses and more. Similar to heros, pets NFTs are also embedded with a series of traits including Rarity, Element, Season, Bonuses, Bonus Rarity. Here’s an official high-level guide that covers egg hatchery, trading and sending Pets.
Kingdoms/Lands: Virtual lands is a big utility of NFTs and it’s always exciting as it enriches the in-game activities and creates extra revenue streams for land-owning players. Some players who met the criteria of holding 1000 or 5000 xJEWEL tokens in the past were granted airdrops of some Land plots. Land plots will be available for acquisition in the future. But other than knowing it will be related to the power of heros, there’s little information on the acquisition mechanics as of now.
There’re a couple more NFTs coming online in the future and we will cover them in the Future Roadmap below.
Gaming Elements: Facilities & Activities
(All the facilities/sites can be found on the map of DeFi Kingdoms. The facilities below only refer to the realm of Serendale built on Harmony. The game has expanded to DFK’s own chain combined with Avalanche subnet infrastructure via the realm of Crsytalvale so everything from Serendale is also mirrored there.)
(1) Tavern: This would mostly likely be your first stop if you’re coming to experience the game itself (instead of just visiting DeFi). You need to start the game by at least owning one hero and you can buy/sell/list heros for hire via Argent or send heros to friends/view the details of heros via Barkeeper.
(2) Portal: This is where you can summon (i.e. breed) a new hero which requires 2 parent heros and paying a summoning cost. To summon a hero, you need to own at least one hero and you can rent another one on the market.
(3) Alchemist: A less focused facility as of now where you can craft potions that can be be used for things like boosting the Stamina for your heros, or increasing its Health point (which may be valuable for battles in the future). In exchange of specific potions, you need to send heros to go on quests to collect in-game assets such as Gaia’s Tears and Gold.
(4) Professions: There’re 4 types of Professions Quests where you can send your heros to generate rewards. We will explain more about it later.
(5) Meditation Circle: You come here to level up you your heros once they have reached the full XP level.
(6) Docks: It kind of serves as a bridge to DFK chain, Avalanche and other chains. You can travel between Serendale (built on Harmony) and Crystalvale, bridge tokens and NFTs over to other chains or buy Harmony One tokens with fiat currency here. In the future, you can also send heros on a quest in Crystalvale via Perilous Journey which is likely a high-risk high-reward activity for heros.
(7) Marketplace — East Marketplace: Here you can incubate the eggs that heros collected on quests, trade/send your Pets, trade Potions if you’ve crafted some from Alchemists above. And if you ever want to change your profile picture you can also come here to find the Stylist. Yes, you can’t change it by clicking into your current profile. Just come to the East Marketplace to find your Stylist.
(8) Castle: There’s some ongoing development about Land auction. We will cover that in the Roadmap below.
(9) Wishing Well (unnamed): Within the Castle. You can send your heros to earn XP (experience points) and Gaia’s Tears. But I personally don’t think it’s a valuable activity any more as there’s no rewards for heros’ Stats, unlike other Quests. Actually the game seems to has already taken it down or hidden it somewhere.
*Quests: As mentioned above, heros are best suited for different Professions Quests based on their Profession gene, Stat and Class. Other than the 4 types of Profession Quests, there’re also 8 Training Quests currently. Here’s a summary of what and where these Quests are.
DeFi Elements: Facilities & Activities
Finally we enter the less complex part of the GameFi project. Each of the 3 facilities/sites covers one DeFi function: DEX, Staking and Liquidity Mining.
(1) Marketplace — Central Marketplace: This is the DEX that uses the tried-and-true Uniswap V2 protocol. You can trade in-game tokens like JEWEL with Harmony One via Trader based on the current exchange rates. If you want to try liquidity mining, you also need to come here first to find Druid to create new seeds (i.e. token pairs). You can also manage your currently deposited Liquidity Pool here. Another minor thing is the game has put its own development board here via Crier.
(2) Gardens: After you’ve created seeds at Druid’s from the Marketplace, you can come to Seed Box at Gardens to deposit your token pairs in Liquidity Pools. At Harvest, you can claim rewards from the LP in the form of JEWEL (or CRYSTAL if it’s on Crystalvale). Note that there’s no deposit fees but withdrawl fees will be generated.
To balance the emissions rates and to provide price stability, DFK’s tokenomics includes a locking model on Gardens rewards. A portion of the token rewards is unlocked but the rest is locked and cannot be used in any way until they become unlocked later. More details are here.
Once again mentioned, gardening-profession heros can help boost the yields and mining-profession heros can help unlock tokens earlier. It just feels rare and yet right to see an organic and seamless interaction like this bewteen ‘Game’ and ‘Fi’ in a crypto gaming project.
(3) Jeweler: You can come here to stake JEWEL tokens and receive xJEWEL which can be used as governance votes. You can deposit and withdraw any amounts of power tokens (i.e. JEWEL on Serendale, CRYSTAL on Crystalvale) at any time without withdrawl fees. As for your staking rewards, the Jeweler allocates1/3 of Marketplace transaction fees and 10% of in-game transactions to each player based on their respective share of the staking pool. The JEWEL: xJREWEL ratio will only grow over time as your staking reward accumulates.
II. Future Roadmap
From a more macro perspective, players are all looking forward to seeing Buildings, Equipment and Battle Systems (PvE, PvP) going live. These in-game activities and NFTs will have more interactions with the existing resources, creating more excitement and potentially better rewards for players.
(1) Buildings — Players can create buildings within the land plots and buildings offer various types of values such as crafting rare equipments for heros, providing passive bonuses to heros, improving their quest efficiency and stats, gaining higher multipliers on staking rewards.
(2) Equipment — Another in-game NFT that will have different traits and will equip heros and grant them passive and active abilities as well as increase their stats.
(3) Battle Systems — “heroes will be able to form parties of 3 and compete in regular PVP tournaments, which will award JEWEL prizes.” Some of the currently irrelevant information, such as hero’s Heath Point (HP), will likely play a key role here.
III. Tokenomics
The biggest issue for a P2E game is the token inflation caused by generous rewards to players and yet a lack of sustaining user growth.
With end-April’s exploit when players can mine the locked JEWEL more than they should, the price of JEWEL was hit hard but in fact the exploit itself didn’t result in a meaningful influx of JEWEL entering the market. While JEWEL’s price is currently trending below $1 or even <50 cents, many players are still active and looking forward to the future development. The game design is still a rare find in the market, but let’s switch gears and dive into its tokenomics now.
The native token JEWEL has a hard cap of 500,000,000 (although this could be voted to change on a DPoS consensus mechanism). 10,000,000 JEWEL tokens were pre-minted where 50% was distributed to Game Development, 20% to Marketing, 20% to Original Liquidity Pool and 10% to Founders.
Currently, 56% of JEWEL tokens are still being locked and 25% is left unallocated. The following is the overall token distribution:
There is limited information available about the overall unlocking schedule how tokens will be distributed after they are all issued and unlocked, which we expect will occur sometime in 2025 (after Epoch 51).
However, It’s surprising to see such a thin portion of the current unlocked tokens is distributed to Dev Team, which seems like a positive signal for the team’s long-term determinism. Additionally, no VC money is taken, undoubtedly another impressive point for a top game.
There’re a series of scenarios built in to both burn (demand) and reward (supply) JEWEL. To recap from a DeFi perspective, JEWEL can be used for swapping for in-game currency or items, staking via Jeweler to earn 1/3 of the trading fees and depositing in a liquidity pool to generate yields. Each JEWEL token can also be exchanged for governance tokens when such votes are called.
From a gaming perspective, JEWEL can be used to purchase hero NFTs which can themselves be used to earn JEWEL and other rewards. JEWEL can also be combined with existing heros for minting new heros. On Crystalvale, there’s one more burning scenario for JEWEL: gas fees are collected in the form of JEWELs where 50% is burned.
What’s more delicately designed is that 1% of the JEWEL/CRYSTAL tokens collected from every in-game transaction is burned, and the rest are simply allocated back to other in-game rewards as follows, creating a domestic loop for the currency to self-sustain its economics.
IV. Risks
Team: The team has been transparent online, leaving their wallet addresses and social media handles public. But they are staying ANONYMOUS at the moment. They do host weekly AMAs, which gives players more confidence about the team’s execution and long-term mindset. Nonetheless, we can’t rule out a rug-pull possibility theoretically.
Execution risk on striking a balance between gameplay and tokenomics: The gameplay is still under development and will only get more and more complex when new NFTs and in-game resources go on live. The goal of increasing user engagements, bringing extrinsic values into the game and striking a balance of its tokenomics will be a challenging play.
On the bright side, DFK was audited by Solidty Finance, the well-reputed smart contract auditing company, in Sep 2021. This minimizes the chances of having security issues from outside attackers.
V. Closing Thoughts
This game is not a StepN type of game in the sense that it may be lack of mass adoption at this point. IMO it’s a game for real-life gamers who appreciate the beauty of its arts, care about owning in-game assets of intrinsic values as well as embracing the opportunity of earning token rewards by plotting the right strategies. Unlike the commonly seen single- or dual-token scheme adopted by other GameFi projects, DeFi Kingdoms is ambitious enough to integrate multiple tokens and NFTs on a metaverse-like world map, where players interact with characters/facilities/lands and make transactions or travel cross-chain to create meaningful gameplay and DeFi rewards.
Despite the risks aforementioned, this could be one of the few games that transforms the current GameFi experience for many.
Nothing in this article is intended to be financial advice and is strictly for informational purposes. The thoughts expressed herein are my own and not indicative of the views and opinions of the official DeFi Kingdoms team.
___________
