Vietnam-based gaming guild Ancient8 closed a $4 million seed round, the company said on Wednesday.
The seed round was led by Dragonfly Capital, Pantera Capital and Hashed.
Ancient8 says it will use the funds to form a decentralized autonomous organization (DAO) in order to further build the community around play-to-earn games.
Play-to-earn games like Axie Infinity require players to buy a character NFT from a marketplace to enter the game. As these NFTs can cost thousands of dollars each, gaming guilds purchase the NFTs and rent them to players (known colloquially as scholars) in exchange for a cut of the earnings. Community managers assist with the recruitment and training of players.
Effectively this is a labor arbitrage play, using low-cost labor in Southeast Asia to earn in-game tokens. A similar industry existed during the height of World of Warcraft’s popularity in the late 2000s, where laborers in China mined in the in-game currency by doing repetitive tasks.
The play-to-earn vertical has attracted significant interest from investors. In August, a16z lead a $4.6 million investment in gaming guild Yield Guild Games. GuildFi, another gaming guild, closed a $6 million round co-led by DeFinance Capital and Hashed in November.
“Games provide the perfect starting point for mainstream adoption of blockchain-based products, especially as people start transacting and earning income while playing,” Paul Veradittakit, partner at Pantera Capital, told CoinDesk in a statement. “Leading guilds like Ancient8 are the easiest gateway into blockchain gaming today, with the potential to become major financial services platforms and contributors to their local communities.”
Some analysts have pointed out that these gaming guilds as an investment proposition are wholly dependent on the yields generated by their assets – the gaming NFTs their own. Should the game fall out of favor with the market, or the vertical itself attract too much regulatory scrutiny, it would impact the ability of the gaming guild to earn yield.
Crypto gaming tokens have a total market cap of approximately $29 billion, according to CoinMarketCap. The largest is the MANA token, used in Decentraland, with a market cap of $5 billion.