Shape the World You Want to Live In — TCG World Fundamental Analysis

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It’s the weekend!

After a long week of work, most of us gravitate toward spending time with friends and family. With such a short window of time until the next work week commences, we frantically squeeze in as many activities as possible.

Many may start their day off by heading to the beach to catch up with friends. Following a swim, you take a trip to the promenade or mall to browse some stores.

After visiting several stores, testing out some wares, and leaving with bags full of shopping, it may be time to take a lunch break.

Visiting the food court, we can see several fixed options from the standard fast-food giants to lesser mainstream offerings, but everyone agrees to enjoy a sushi platter together

Afterwards, we may need a bit of a ‘pick-me-up’ by finding a fun afternoon activity: bowling, playing golf, going for a fish, returning to the beach, or a bit of a walk through the bush.

There may be a gig playing to round off the evening that everyone collectively agrees they would be eager to see live.

While it may sound like I am describing a physical outing, I’m not. All of this is becoming possible online in the metaverse.

Once launched, TCG World will be the largest open-world metaverse on Binance Smart Chain that seeks to branch across multiple chains, playing into the metaverse trend.

If you are not across our fundamental analysis on Sandbox and Merit Circle, it is worth reading to catch up with the conceptual aspects of the metaverse we have previously explored that feed heavily into the current piece.

While doing an FA on a game in development for a relatively fresh investment opportunity, we will seek to have some fun with it. The following FA will be a shorter piece that touches on what TCG World is, what may be possible in the future, the significance of a community that backs the product, and discuss the implications of the technology and overall investment theses in the context of emerging competitor metaverses.

What in the virtual world is TCG?

TCG originates from the initial value proposition of a platform where professionals can authenticate collectible items and trade them.

Around the time Axie emerged as a trendsetter for metaverses, crypto projects and global brands began to recognize the potential.

TCG is no exception. The token contract migrated to a V2, and the team had pivoted branding toward metaverse as their flagship product, one of which is highly ambitious by some P2E deployments with unsustainable P2E mechanics.

Being on track to be the largest metaverse on BSC, players can purchase $TCG2 and virtual land plots for exposure to the metaverse.

P2E mechanics vary between four quadrants on their interactive land plot map, available on the TCG World website.

TCG World is a procedurally generated world. Generative aspects of the world may not be identical between two players — but remains consistent in the core dimensions and landmarks. Lobby Instancing groups players into dedicated servers to reduce the overall computational burden. This method of world creation is scalable, enabling TCG World to be the largest metaverse on the market.

Play-2-Earn mechanics of TCG World randomizes the availability of $TCG2 crystals throughout the game in the form of loot spawns (yes, opportunities to earn $TCG2 will randomly present). Finding creatures to capture and train unlocks P2E potential by increasing the player’s capacity to pursue more difficult activities with greater rewards. Further, $TCG2 can be harvested on player virtual farm plots, and the player’s actions in nurturing their $TCG2 crops will determine their ROI.

Similar to use cases discussed in previous FAs like Sandbox, landowners and players can choose their path, but unlike Sandbox, it is free-to-play. All in-game items in TCG World live on the blockchain as an NFT. There are particular use cases such as storefronts for business owners and personalizing privately owned land plots, such as players liquidity mining their $TCG2 tokens on virtual farms.

Creatures known as ‘Sprites’ populate the world, and players can choose to capture and train these monsters to be competitive against other players and the in-game mechanics of the world itself.

Suppose the strength of your Sprite determines the extent to which you can conquer TCG World. In that case, there is clear non-fungible value and secondary market potential for those who wish to enter with enhanced earning capabilities of a higher-level NFT instead of ‘grinding’ from scratch.

Like Sandbox, virtual land will invariably have non-fungible value based on common economic principles we weigh up in the real world when assigning value. A virtual land plot near Ja Rule’s virtual land will likely have more value than land on the outskirts of the map with limited access to resources and opportunities.

Players can build on their virtual plots and utilize in-game items to enhance the in-game experience, such as travel using cars, planes, dragons, etc. Trading is possible in-game, and $TCG2 is the primary in-game currency that will likely be spent on goods and services from businesses offering their services.

TCG 2.0 Tokenomics

TCG Coin had migrated from a V1 to a V2 contract. $TCG V1 token contract was designed for their trading card platform. However, the token contract and supply were not conducive to cross-chain activities or centralized exchange listings.

The token migration occurred end of August 2021, and existing holders received 1 $TCG2 token for every 10M $TCG1 tokens.

• Price: $0.24 (as of 26/05/22)
• Market cap: $67,689,788 (according to BSCScan Chart Tools)
• Total Supply: 280,000,000 (pre-mined)
• All-time high: $1.37
• $TCG2 Holders: 15,620
• Virtual landholders: 8,198
• Plots of land sold: 34,955 virtual land sale tokens minted (according to BSCScan Explorer)

*Tokenomics, specifically supply, is similar to $AXS — distributions are community-focused, relatively decentralized token distributions. Except that 22% of Axie token supply goes to funding future developments, compared to 2% to TCG developers, land sales and commercial land leases would likely be the primary funding source for TCG operations and developments.

TCG2.0 was first launched with a higher tax rate to prevent selling during migration. This measure is essential to ensure that liquidity locusts do not create complications in the migration. However, taxes are applied at the discretion of the team. There are taxes active to mitigate possible arbitrage with the release of $TCG2 on Ethereum Mainnet. Once bridging capabilities go live, taxes will be essential to alleviate opportunistic behaviour that harms the process.

The world is only as large as those that inhabit it — Discussion

As we have touched on in previous FAs, the most pertinent metrics for a project can be determined by where a project is in its lifecycle. At the beginning of a project, the team, ongoing fulfilment of roadmaps, and initial token holder distributions are generally the most telling aspects to assess when deciding whether to invest in a project while the flagship product is unavailable.

It takes time for the validity of such examination points to become self-evident. As time marches on (and unlocked wallets have not been dumped on the community), this earns trust and shifts our focus toward project milestones and how the team/community responds to planned and unexpected events.

The volume of content released is substantial, containing gameplay samples and partnerships united around shared interests in pursuing novel use cases in TCG World. AMA’s have run for 34 weeks uninterrupted. An undertaking such as a metaverse requires a high level of community engagement and new investors by demonstrating ongoing progress in development and team visibility.

Given metaverses with all in-game items living on the blockchain as NFTs, it is typically a ‘how long is a piece of string’ proposition when setting ETAs for full deployment.

Metaverse developments rarely meet their timelines, primarily because of the volume of unforeseen complications during development. Making a game and integrating it onto a blockchain is not easy, particularly in the use cases when altering P2E mechanics and making web 3 integrations.

A criticism of TCG World may be that the core team may not be entirely qualified to release a metaverse. Although the CEO’s experience using virtual environment tools to design real-world applications is notable, he does not appear to have prior experience in game development on paper. This raises two key questions: Does the project seek to fill in or outsource gaps in its capabilities? And do they have the resources to ensure continued development?

Let us make a series of balanced assumptions from the 34,955 plots of land, each sold for 1 $BNB. If we take the average moving price of $BNB over 300 days since the virtual land pre-sale went live, $BNB would be worth approximately $400USD. Then it is likely TCG have cashed out up to $14M USD of $BNB. Adequate to say that it is sufficient to ensure the ongoing development of the metaverse. In addition, there have been recent multi-million-dollar deals made by projects that wish to assert their presence in TCG World.

Further to whether the team is qualified, we should not be quick to dismiss a project on one resume if we understand what motivates them. Onboarding team members from the community is smart. Every product that seeks to make a disruptive impact on the world needs its champions. From an organizational and marketing standpoint, it is better to have 1000 ‘true believers’ than it is to have 100,000 flaky or non-committed investors.

To address the second point of contention, TCG World has effectively outsourced to a gaming studio with at least ten unity game developers and web 3 integration specialists dedicated to building. If the most considerable risk to this investment is ‘do they have the resources to pull it off?’, then the answer is ‘yes, but do not believe they are exempt from market forces.’

What will be essential to ensure the longevity of TCG World is completing the immediate milestones they have set out, as outlined throughout the whitepaper “the project is adapting with time, and there is no guarantee it will stay the same way forever”. With blockchain development taking place at lightning speed, it is crucial to be versatile to adapt to new and emerging market conditions. Locking in roadmaps too far in the future runs the risk of being redundant or front run from an innovation standpoint.

To keep it simple, TCG World is a community-centred project with a significant war chest.

Speaking on my personal experiences with cofounding and operating Peak Finance, the project’s success is not in a specific Dapp or function but in the community that backs it. TCG World does indeed have a highly enthusiastic and engaged community. For those considering TCG World as an investment, keep in mind that while no project is ever immune from broader market forces or whale activities, ‘True believers’ effectively perpetuate a reliable mid to long term price floor. This observation is grounded by price performance since launch. During the last 200 days of bearish market conditions, the price has not dropped below the initial listing price. The projects with the most robust communities appear to have held up best as the market has shed blood.

Altering the physics of virtual environments changes how value gets attributed in these economies, we have recently explored this in-depth with Sandbox, and these considerations also play a role in evaluating the broad P2E potential of TCG.

There is indeed another component of metaverses that is less broadly understood, and that is e-commerce in the metaverse. For a brief period, I worked closely with Red Fox Labs and wrote an opinion piece on e-commerce in the metaverse. This brings us full circle to the analogy used at the beginning of this piece.

Catching up with friends in the metaverse for lunch and enjoying an actual meal together is entirely plausible online. Provided that the logistics for food delivery are available, it is quite possible to purchase a meal in the metaverse that arrives at your house by delivery in real life. Similarly, you can enter a virtual storefront to see an NFT of a T-shirt you like, and you can request a live product demonstration when you approach the customer service avatar.

From a humanities viewpoint, should we be concerned that virtual environments disrupt real-world engagement?

Absolutely. We should all treasure the meaningful relationships we have fostered in our lives. Still, with events outside of our locus of control, such as lockdowns becoming enforceable public health policy globally, metaverses are a solution to the isolation of lockdowns. Metaverses are a solution that should be engaged in moderation for our well-being. As many gamers will tell you — time flies when you’re having fun.

Technology is agnostic, and it is the behaviour of those utilizing the technology that determines whether there are positive social outcomes. Metaverses should supplement our day-to-day lives, not replace it.

There are plenty of opportunities inside a metaverse to gain meaningful employment and conduct a business constrained only by the logistics of delivering real-world products to players.

Having worked with RedFox Labs and recognizing the passion of their moderators, encountering TCG, and running a project with irreplaceable community members, it is clear that TCG has a strong community, and many followers are dedicated. In terms of investment risks, this is a noteworthy mitigator. However, these observations should be taken with a grain of salt. We have seen many projects with dedicated communities get squashed by whales.

Does it guarantee $AXS-like returns in the short term?

No. We can observe that when it comes to emerging trends, first movers typically capture the most gains, albeit speculative. However, as P2E mechanics kick in and revenue streams enter a metaverse, this can significantly change our investment theses.

Guilds are highly inclusive and offer an opportunity for people who love playing games to operate on behalf of those making investments into the metaverse but unable to find the time to pursue profitable opportunities on their own steam. It may be worth revisiting our FA on Merit Circle for more information on guilds.

Which segues us nicely into how TCG take it to the next level?

DAOs are here to stay. The Merit Circle FA shared above illustrates the revenue-generating potential of having DAOs pursue a shared goal in the real world and the virtual world. We should assume that DAOs and metaverses will become increasingly intertwined as time progresses.

While the updates and volume of content have been well above average, there are still many applications and use cases for TCG World to explore. After the public launch of the TCG World game platform, it will be necessary for a new roadmap or at least a direction provided to investors that dictates the direction of ongoing developments. Currently, It is not pressing to commit until the virtual foundations are in place for future developments.

But, to put the potential applications of the metaverse into context: RedFox Labs have spent the last two years developing an in-game streaming app for live product demonstrations, % cashback in $RFOX with purchases, embedded overlays for video displays (enabling customers to perform transactions without being redirected from the server), mini-games, logistics for delivering food and items ordered in the metaverse, employ commercial plot managers, VR headset compatibility, and more.

To be fair to TCG World, they have been in development for less than half the time RedFox Labs have been working on their e-commerce metaverse. P2E mechanics have received a great deal of attention during development. Arguably, this is a more sensible approach to take. Players come for the P2E gains and compound to pursue future opportunities as they become available.

Once the public launch is complete and the user experience is optimized, the next step would be to optimize for business integration. Conversations are increasingly taking place around how businesses of all sizes can integrate into the metaverse to pursue novel opportunities.

A benchmark to determine future growth potential for TCG World could be to compare current holders across mainstream projects: 15,620 $TCG2 holders, 51,433 $AXS holders, and 139,917 $SAND holders. TCG World has clear benchmarks to reach to emulate the levels of success experienced by $AXS and $SAND. Axie implemented a highly accessible P2E model, and Sandbox is still in development but available to make in-game items and play in Beta. TCG World does not yet have a publicly accessible product.

What is commonly noted in P2E is the meteoric rise of $AXS. $TCG2 are pre-mined and have similar tokenomics and supply to $AXS. With future centralized exchange listings to gain exposure, low-cost barriers to entry (compared to Axie and Sandbox), and soon becoming the largest metaverse on the blockchain, there is a fair probability that $TCG2 could take off.

Given that the macro still presents a great deal of uncertainty, as it divides crypto investors on the short-term trajectory of the market, $TCG2 is a medium to high-risk investment, with virtual land at the higher end of the scale.

Why?

Several reasons. Metaverses took off, in large part due to Zuckerberg rebranding Facebook to Meta. Of course, without a catalyst, the P2E metaverse trend may take a back seat to other crypto categories such as Layer-2s, DAOs, SocialFi, etc.

The P2E and Metaverse space has become insanely competitive. The Other Side metaverse by Yuga Labs sent Ethereum mainnet gwei through the roof (albeit it did not help to have poor gas optimization on minting contracts). Illuvium is an upcoming metaverse with significant hype and following, with land sales just around the corner. If we were to assign the most notable competition for TCG World, gaming studios such as Gala Games have amassed considerable anticipation for upcoming releases, such as Mirandus, that will give TCG a run for its money.

Furthermore, the metaverse trend is reminiscent of aspects of the 17/18 ICO bubble. At the time, the market was operating on pure speculation, and there was no utility other than value transfer. It took time for DApps and emerging blockchains to fully deliver on their promises. The critical difference is that we have P2Es available to play like Axie, but the full scale of innovation for P2E applications has yet to be seen.

An attractive feature of TCG World’s metaverse is they are not boxed in or confined by a particularly over-powering gaming genre. While there is a lot to be excited about with the release of Mirandus by Gala Games, it is a fantasy MMORPG, not an overly familiar place for businesses offering actual products and services to set up shop. Mirandus may have the edge over TCG World for in-game P2E mechanics, which will undoubtedly be a sight-to-see upon full release.

Still, it is not unfair to assert that it is unlikely businesses or brands will seek to maintain a presence in a fantasy metaverse. TCG World having more familiar themes, excluding some optional fantasy elements such as flying dragons, does make it a more attractive metaverse for e-commerce. The broader and more relatable the genre, the more likely businesses will find alignment with a particular metaverse, which may be why Decentraland is popular for companies such as Samsung to set up shop. Decentraland is about as generic as it gets and is entirely contingent on how landowners choose to customize their virtual land.

Regardless, if you have yet to participate in virtual land acquisition, TCG World is an opportunity that has relatively low-cost entry barriers. Soon, investments into TCG World won’t necessarily require you to part with your capital if you are willing to spend your time in-game to grind toward obtaining TCG World NFTs and $TCG2 tokens.

References

Medium, ‘Meet The Team Behind TCGCoin 2.0’, October 5th 2021, https://medium.com/@TCG_World/meet-the-team-behind-tcgcoin-2-0-50a69aad5992

Medium, ‘TCG World April Monthly Roundup’, May 4th, https://medium.com/@TCG_World/tcg-world-april-monthly-roundup-da432d27c0ad

TCG Developer house #1, https://blockczech.io/

TCG Developer house #2, https://www.matrix-creators.com/

TCG Daily updates, https://www.TheSpriteReport.com

TCGWorld (Trading card platform), https://www.tcgworld.com.au/

TCGWorld Whitepaper, https://tcg.world/whitepaper

Youtube, CryptoStache, ‘Cross Chain NFT Metaverse To Play & Earn On Binance Smart Chain’, 25th November 2021, https://www.youtube.com/watch?v=Nq311rG304I

Youtube, ‘TCG World In-Game Builder Trailer — Create Your Dream Home In The Metaverse’, 23rd January 2022, https://www.youtube.com/watch?v=gxcnwivEcOc

Youtube, TCGWorld, ‘AMA#34 — TCG World Metaverse Company News & Updates’, 23rd April 2022, https://www.youtube.com/watch?v=u7YuVrnMCZo

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