Animoca Brands: Digital Ownership with Blockchain Gaming and Education

Key Insights

• Often cited for its investments within the blockchain industry, Animoca Brands also derives significant income as a Web3 advisor, game developer, publisher, and operator.
• The company is known for its investments in gaming while also being an early champion of the concept of digital property rights.
• Animoca Brands’ portfolio is highlighted by investments in The Sandbox, OpenSea, CryptoKitties (and its creator Dapper Labs), and several Yuga Labs partnerships.
• Apart from the flagship brands, Gamee, REVV Motorsports, and Phantom Galaxies are three ecosystems that highlight Animoca Brands’ varied approach to blockchain gaming.
• Though the primary focus to-date has centered around gaming, Animoca Brands has recently ventured into the edtech and entertainment verticals.

In crypto investment, two successful strategies are early adoption and maintaining conviction. Animoca Brands has implemented both strategies effectively. Despite the challenges of the 2018 crypto winter and the lack of infrastructure for Web3 gaming at that time, Animoca Brands doubled down on its focus on digital property rights and the power of non-fungible tokens (NFTs). Since then, the company has prioritized the development of digital infrastructure to support the burgeoning and early stages of a fair and open metaverse.

Early Shift to Blockchain Gaming

Animoca Brands has a history that precedes the emergence of Web3, which was largely brought on by Ethereum. The company's origins trace back to the mobile app and smartphone boom. In January 2014, Yat Siu and David Kim founded Animoca Brands as a spin-out of the mobile gaming company Animoca, based in Hong Kong. The original idea was to establish the company's mobile game brands as a separate business entity. At its peak, the company's portfolio consisted of hundreds of games and became the first mobile gaming company to be listed on the Australian Stock Exchange.

While exploring new opportunities, the Animoca Brands team discovered CryptoKitties, which introduced Yat Siu to the blockchain gaming world. Unlike traditional art-focused NFTs, CryptoKitties offered a novel use case of NFTs. This exposure to the unique capabilities of NFTs led to a shift in the team's business strategy. Animoca Brands recognized that blockchains could support and enable digital property rights in the 21st century.

Business Model and Strategy

Whether it’s gaming, entertainment, education, or some other industry, Animoca Brands’ core goal is to rewrite digital property rights in favor of digital citizens. That sentiment is embedded into the company’s mission statement:

To deliver digital property rights to the world's gamers and Internet users, thereby creating a new asset class, play-to-earn economies, and a more equitable digital framework contributing to the building of the open metaverse.

In essence, an “open metaverse” would embody qualities of a more equitable internet including full ownership over one’s own data, fewer gatekeepers, and an environment that fosters permissionless innovation amongst its users. Animoca Brands aims to achieve this goal through a business model made up of three key pillars:

NFT Sales

The most basic of its income streams comes directly from the sale of NFTs representing digital assets within the ecosystems and IPs Animoca Brands have acquired and/or developed. The initial minting and primary sales of these assets generate an immediate source of income, while the company also garners recurring income in the form of royalties on secondary marketplace sales. Examples of NFTs launched by Animoca Brands and its subsidiaries include Mocaverse, The Sandbox “LAND” and Phantom Galaxies “Planets.”

Blockchain Services

Most of Animoca Brands’ granular contributions toward the evolving digital framework it set out to build fall under what the company describes as its “blockchain engine,” which includes a full suite of blockchain capabilities that empowers its operating subsidiaries, investees, and partners to build products and services in the open metaverse. Areas where the company can provide direct value to companies include:

• assisting with roadmap and tokenomic design
• listings of tokens on exchanges
• fundraising guidance
• providing market making services
• supplementing the core development team with community management, marketing, visual/arts, quality assurance, and smart contract engineering resources

For example, after the launch of ApeCoin, Animoca Brands announced it had partnered with Yuga Labs on a “secret project”— which ultimately turned out to be the highly anticipated Otherside metaverse. What is less understood publicly is that Animoca Brands also worked closely with Yuga Labs to launch APE, leading the overall tokenomics design, smart contract engineering, and token listing for the project.

Investments

Animoca Brands has made its name in the crypto community through its 380+ portfolio investments and 15+ subsidiaries. The company has made a number of bets within the relatively small but expanding industry. With a portfolio containing heavyweights such as Axie Infinity, OpenSea, Dapper Labs, Flow, Metaplex, and MetaMask, the company aims to cover the full gauntlet of industry verticals. Income under this business pillar is recognized on gains from the sale of portfolio assets and through recurring management fees / carried interest on funds raised with third-party capital.

The diverse portfolio gives Animoca Brands insights into where different subsectors are moving and helps keep the company competitive. For example, last year, Animoca Brands announced the acquisition of TinyTap and Pixelynx, two growing NFT projects outside the scope of gaming – education and entertainment.

The acquisition of TinyTap, announced on June 16, highlights how NFTs can be utilized as forms of supplemental education. The acquisition aims to leverage NFTs to enhance the acquired company’s Coursera-like learning platform. The main difference between the two massive open online course (MOOC) platforms — Coursera versus TinyTap — will be content ownership. Unlike traditional MOOCs that own and host all content on their platform, TinyTap lets creators tokenize their lessons, paving the way for real ownership of each educator’s work. The platform will also tokenize student achievement milestones, creating a type of lifetime credential for finishing a class or course. Open Campus and TinyTap recently announced a partnership to achieve these ends.

Project Deep Dives

A deeper exploration into some of Animoca Brands’ subsidiaries fosters a clearer understanding of the future of gaming it is trying to build.

Mocaverse

Mocaverse is a collection of 8,888 profile picture NFTs on Ethereum that act as the owner’s proof of membership into Animoca Brands’ Web3 ecosystem.

The entire collection was minted during the MocaMint event on March 6, 2023. Access to the NFT mint was only available to Animoca Brands’ investors, employees, and partners, as well as the teams of projects that Animoca Brands has invested in and members of the Mocalist. Inclusion on the Mocalist was granted to community members that were airdropped Realm Ticket NFTs for holding tokens and NFTs associated with Animoca Brands’ ecosystem. The collection sold out within two days and raised a total of 3,552 ETH, valued at ~$5.5 million at the time of the mint.

Animoca Brands created a backstory for the NFTs, or Mocas, in which the relentless expansion of space within their home world, the Mocaverse, separates the population of Mocas. As the Mocas continued to develop their technologies, the distance between them grew and led to the formation of five tribes. All the NFTs are categorized as part of the Dreamers, Builders, Angels, Connectors, or Neo-Capitalists, each representing a different Web3 persona.

The membership granted to Moca NFT owners will enable them to access four Realms, none of which are currently live. The Realms are named Learn, Build, Play, and Do Good, each of which will offer different utilities to members. Realm Learn will provide access to classes and interviews with industry leaders as well as educational research, Realm Build will grant members access to resources and tools for Web3 developers, Realm Play will offer exclusive game passes, airdrops, and unique in-game items, and Realm Do Good will give members opportunities to participate in social causes. Animoca Brands intends to allow the community to help define and create the utility of the Realms.

The Mocana opened on March 17, 2023, which allows Moca NFT owners to accrue Moca XP in a non-transferable, credit-based rewards system. Accumulating Moca XP gives the NFT owner a chance to win rewards boxes that contain tokens and NFTs from Animoca Brand’s partners and portfolio projects, as well as benefits such as whitelist draws. Each member’s chance of receiving boxes and benefits increases as the member gains higher amounts of Moca XP.

Moca XP can be earned by staking the NFTs, participating in experiences offered by partners of Mocaverse, and interacting with the community. Each NFT is counted as staked as if it has not been listed, sold, or transferred during the staking period. Each staking period lasts seven days, beginning at 1:00 pm UTC every Friday and ending at 12:59 pm UTC the following Friday. A maximum of 8 Moca XP can be earned each staking period. Various partners of Mocaverse will create unspecified experiences for Moca NFT owners, and Moca XP can be earned through participation in such events. Members that rank high on the leaderboard for each experience will earn extra Moca XP. The third way to earn Moca XP is by adding value to the community by being active and helpful in community spaces like Discord and Twitter.

All of the accrued Moca XP is bound to the NFT used to accrue it, and if that NFT is sold, the purchaser also owns the total amount of Moca XP along with the NFT and receives the associated benefits. The amount of Moca XP bound to each individual Moca NFT can be viewed on the Moca XP Leaderboard.

Moca NFTs can be purchased on OpenSea, Blur, LooksRare, and several other NFT trading platforms.

GAMEE (Arc8)

GAMEE is a blockchain-based, play-to-own gaming platform that was acquired by Animoca Brands in July 2020.

The platform’s core offering is ARC8, an entertainment product that operates as both a virtual arcade for players and a promotion platform to assist partnering businesses in gaining exposure to Web3 audiences. GAMEE’s other products include an upgradeable, breedable NFT collection of characters named G-Bots and items that can be used within the G-Bots Metaverse, as well as over 80 free-to-play Web2 mobile game applications on both iOS and Android, and Telegram. The entire GAMEE ecosystem uses the GMEE token, an ERC-20 token with a fixed total token supply of 3.18 billion tokens.

The Arc8 Arcade currently features 14 skill-based games, such as Karate Kido 2, Pirate Solitare, Man City Striker, Cool Cats Combinations, and Qube 2048. Each player is individually ranked by their performance in the games and will win prizes accordingly at the end of a Season, each of which lasts approximately two months. New content and features of the platform are added at the start of each season. During each season, players can compete in either 1-on-1 games against other players or in various styles of tournaments. Both players in a 1-on-1 game pay an entrance fee denominated in GMEE tokens to compete, and the winner receives the loser’s entrance fee. In Rapid Tournaments, the prize pool also consists of the GMEE entrance fees from the participants; however, Sponsored Tournaments are also held in which top-performing players can win GMEE tokens or NFTs and other cryptocurrencies offered by the sponsor.

Sponsored Tournaments are a part of events named Token Takeovers and are hosted by partners of GAMEE to create additional exposure for those projects. The host’s chosen token is used as part of the prize pool for the tournament, and the host may also decide to award project-specific NFTs to the winners. Past Token Takeovers have distributed TOWER, QUICK, REVV, SAND, SPORT, MATIC, QUIDD, TCP, MSU, ICE, and IXT tokens. Token Takeovers may also include NFT events or third-party games being offered on ARC8. Access to special events or games is only offered to players that already own or choose to obtain a certain NFT. Each Token Takeover is announced as part of the Season’s notifications and on the GAMEE Medium page.

Dark Lords and Energy Wars are ARC8 arcade games within the G-Bot Metaverse and only accessible to owners of G-Bot NFTs, which are ERC-721 tokens on Polygon’s Proof-of-Stake (PoS) Chain. G-Bots carry statistics that affect the player’s performance during gameplay. The statistics can be upgraded to a maximum of 99 using GMEE and OMP, the ERC-20 token used specifically within the G-Bots Metaverse. G-Bots can also be bred with up to four other G-Bot NFTs to create Baby Bot NFTs that have a chance of possessing a higher rarity than the parent NFTs. Baby Bots can then be evolved into a new G-Bot NFT to give the player a more valuable asset. OMP tokens are also used in the breeding and evolving processes, and every token used for these functions, as well as the upgrading of statistics, is burned.

More forward-looking, Arc8 will serve as a platform for both partners and communities. Partners can leverage the platform as a means of user acquisition, and existing communities can use it to further engage with their audience and run their own version of Arc8.

GMEE Token

The GMEE token was first launched on Ethereum through Uniswap on April 8, 2021, and has since been bridged from Ethereum to Polygon’s PoS chain and BNB Smart Chain. Outside of its uses as the entrance fee and reward for tournaments, GMEE is also used to directly purchase new G-Bot NFTs in special sales events and is intended to be used as a governance token in the future. Additionally, projects can use GMEE to run their own versions of Arc8.

The entire token supply was allocated to nine different groups at launch. This distribution includes one allocation specifically for the project team and its advisors (20% of the total token supply or 636 million GMEE), three allocations for token sales (~8.87% of the total token supply or ~279.2 million GMEE tokens), two allocations for third parties (~12.73% of the total token supply or ~404.8 million GMEE tokens), and three allocations that were initially controlled by the project team (~58.4% of the total token supply or ~1.86 billion GMEE tokens).

Arc8 User Activity

Gamer activity on GAMEE peaked on October 2, 2021, when 265,844 players participated. The activity occurred only several weeks after the app’s launch, signaling immediate interest from widespread curiosity about the new platform.

As of this writing, ARC8 has approximately 10,000 daily Unique Active Wallets (UAW) interacting with the platform’s smart contracts. In total, GAMEE cites that over 2.5 million wallets have been created for the game, and is one of the top five games on Polygon.

REVV Motorsport

REVV Motorsports is an ecosystem of play-and-earn racing simulation games built around NFT collections by Animoca Brands.

The ecosystem consists of four games, and the team will continue adding games as the ecosystem is developed. Animoca Brands recently acquired accomplished racing studios Grease Monkey Games, Eden Games, and WePlay Games to create a pipeline of racing titles.

The games that are currently featured include REVV Racing, MotoGP Ignition, Formula E: High Voltage, and Torque Drift 2. The ecosystem uses the primary token REVV and the secondary token SHRD as in-game currencies, the assets serve other purposes specific to each individual game. REVV is an ERC-20 token available on Ethereum, and has been bridged to Polygon and Flow, with a total token supply of 3 billion tokens. Each game also offers NFTs that allow players to have real digital vehicle ownership.

REVV Racing was the original title in the REVV Motorsports ecosystem. Players of the game must own cars from the REVV Racing NFT Collection, which are used to race solo along the various tracks, and complete a KYC process in order to engage with the game. The most common type of race is a “Car Specific Race” where access is limited to players that own an NFT that belongs to one of the multiple specified car types. A player can attempt the race as many times as they desire to get the best time. Car Specific Races require an entrance fee of one REVV token per attempt while other races are styled as tournaments, and players with any type of Car NFT can participate without paying an entrance fee. In both types of races, the top 100 players ranked according to the shortest amount of time it took to complete the race win REVV tokens. All players receive a different type of token, SHRD, for every mile they drive while racing. SHRD tokens can be burned 5,000 at a time to earn CATA, an ERC-20 token that is spent along with REVV tokens to upgrade the NFT’s abilities. Abilities affect racing performance and include Acceleration, Top Speed, Handling, and Weight.

MotoGP Ignition was created in partnership with Dorna Sports S.L. and features motorcycle NFTs called “Hot Shots,” and Rider NFTs. The gameplay proceeds with the players serving as the manager of a racing team, and the NFTs serve as collectibles for the player to create the best combination of rider, support team, and technology. In Management Mode, players use the assembled assets to compete in head-to-head dynamic management races with other players. Two other game modes are available, with Time Trial Mode offering quick playing sessions and leaderboards to earn REVV and SHRD rewards, and Events and Tournaments enable players to compete for additional game-specific NFTs and REVV tokens.

Formula E: High Voltage is still in development as of May 2023. When the game launches, it will allow the user to play as a Team Principal and develop their own Formula E racing team. Players will race through cities and circuits to earn REVV and SHRD tokens, which are used to upgrade the game-specific Car NFTs to improve their performance and increase their value. The game will also feature a second style of play titled “Attack Mode” in which each track offers its own unique challenges. The first sale of the NFTs for Formula E began on August 6, 2021, and raised 292.05 BNB through Binance’s NFT Marketplace. Each NFT is assigned a rarity level, and rarer assets will possess a skill that will have an impact on the gameplay and the player’s strategy.

Torque Drift 2 is an upcoming motorsport game by Grease Monkey Games, known for its previous game releases Torque Burnout and Torque Drift. The game offers customization options, digital collectibles, diverse environments, player custom creation tools, and both single and multiplayer modes. Interactive experiences, like a tuning garage, will be released in Q3 2023, with the full game release in 2024. Multiple deals with parts manufacturers have been announced. Player feedback is being actively sought through Discord and social media during the development process.

REVV Token

The REVV token was first launched on Ethereum on September 1, 2020, and has since been bridged from Ethereum to Polygon’s PoS Chain and BNB Smart Chain. Outside of its uses as the entrance fee and reward for races and tournaments in each of the ecosystem’s games, REVV is also used to purchase new NFTs in the REVV Motorsport ecosystem as well as spent in combination with either SHRD tokens or CATA tokens to upgrade owned NFTs. The token supply was allocated to seven different groups at launch:

• MotoGP Ignition: 13% of the total token supply or 400 million REVV
• Formula E: High Voltage: 11.67% of the total token supply or 350 million REVV
• Reserve: 48.33% of the total token supply or 1.45 billion REVV
• Team and Advisors: 10% of the total token supply or 300 million REVV
• Initial DEX Offering: 8.33% of the total token supply or 250 million REVV
• Player Reward Reserve: 8.33% of the total token supply or 250 million REVV

As of May 19, 2023, according to DappRadar, REVV Racing has approximately 100 daily Unique Active Wallets (UAW) interacting with the platform’s smart contracts. As Formula E is still in development, there are no relevant metrics regarding interactions with the game.

Phantom Galaxies

Phantom Galaxies is an open-world space simulation game that also incorporates third-person shooter mechanics.

The game is being developed by Blowfish Studios, an award-winning indie game developer that was acquired by Animoca Brands in July 2021. Both fungible tokens and NFTs are utilized in the game environment in the form of ASTRAFER tokens, an MRC-20 token on Polygon’s PoS Chain, and in-game assets, respectively.

Phantom Galaxies will be set in an interstellar expanse 50 years after the end of a great war between two entities, the Union and the Commonwealth of Neoterra. These powers find themselves in a tentative alliance against groups of space pirates and an external foe named the Sha’Kari. The Sha’Kari have a technological advantage over the human alliance, which has inspired the creation of the playable Mechanized Starfighters NFTs. Players can purchase these NFTs from four different categories, which serve as the mech’s class throughout the game. The class of mech affects the gameplay as each class will have different specializations and combat styles. Players will be able to use the mechs to explore the galaxy to be assigned missions and discover new locations.

Missions are sequential story content that provides context to the gameplay. Accomplishing these feats will reward the player with ASTRAFER tokens, which can then be spent to purchase additional NFTs in the form of items and property, as well as use the tokens to buy new mechs or upgrade existing mechs to increase the NFT’s in-game performance and real-world value. Additional mechs will also be obtained through the manufacturing process by combining a Base Frame NFT with several other component NFTs and spending ASTRAFER tokens in a Fusion Facility.

Owning numerous mech NFTs can benefit the player if they make use of the mercenary system. Players without mechs, or without a desired quality of mech, will be able to rent the assets from other players through the Phantom Galaxies marketplace. The rented mech’s owner receives either a fee or a share of the rewards the renter earns while playing with the loaned NFT.

A player’s Avatar is also an NFT, and it portrays the visual appearance of the in-game character. Avatar NFTs begin with a set of attributes that increase as the player progresses through the game and increases their level. This in turn increases the combat effectiveness of the Avatar in both Player-vs-Environment (PvE) and Player-vs-Player (PvP) battles. The hardest of both types of battles take place in “Frontier Space,” the most distant part of the in-game universe. Unlike players that choose to stay in the center of the galaxy, who are in a “Safe Zone,” players can be attacked by other players at any time in the Frontier Space. PvP battles will primarily be conducted in the arena where fighters can earn rewards but suffer no permanent damage for losing. When a battle is lost in the Frontier Space, the mech NFT’s durability decreases, and the NFT will be locked in a cool-down period. If the player continues to lose battles and the durability decreases below 0, the real-world NFT asset will be destroyed.

Planets and Asteroids scattered throughout the galaxy are combined into one category as Planet NFTs that players can buy, own, and trade. Each individual planet NFT is allocated a set amount of ASTRAFER tokens. The rate at which the owner receives the ASTRAFER tokens depends on the number of other players that visit the planet, the buildings added to the planet, and the number of missions the player has completed. Planet owners will also be able to govern their planet using ASTRAFER tokens as they see fit.

ASTRAFER Token

The ASTRAFER token was first launched on Polygon on July 12, 2022, and has since been bridged to Ethereum. ASTRAFER is used as the in-game currency of the Phantom Galaxies universe, as well as rewards for completing missions and payment of trading item NFTs. The asset will also be used for the governance of the in-game land found in Planet and Asteroid NFTs. The entire token supply was allocated to nine different groups at launch, as seen above. This distribution includes one allocation specifically for the project team (10% of the total token supply or ~88.8 million ASTRAFER), one allocation for public distribution of the asset through listings and liquidity pools  (~10% of the total token supply or ~88.8 million ASTRAFER tokens), three allocations for in-game distributions (~45% of the total token supply or ~400 million ASTRAFER tokens), and four allocations that were initially controlled by the project team (~35% of the total token supply or ~310.8 million ASTRAFER tokens).

The Phantom Galaxies team announced on May 17 that the Phantom Galaxies Beta version has been released, and the holders of “Zorran’s Favour” NFTs will be the first cohort of players.

Closing Summary

Animoca Brands has made a name for itself by taking risks and remaining steadfast in its convictions. These attributes are what drive a winning strategy within the crypto industry. Not only has Animoca Brands transformed its business model from game developer to investor and operator, but it’s also done so while keeping true to its core mission for the industry: furthering the proliferation of digital property rights to its players and participants.

Animoca Brands may have started with the gaming industry, but its most recent steps into education and entertainment make it known that there are much bigger plans in store. Even in the current bear market, the company is positioned to take advantage of the deflated valuations by doubling down on its bets. In addition, given the $359 million raised in January 2022, the $75 million follow-on tranche infused in July 2022, as well as the $110 million strategic funding round in September 2022, Animoca Brands is well positioned to continue its strategic investments.

The success thus far has highlighted a maxim that can be said about the crypto space as a whole — the highs outweigh the lows. Although gutsy calls inevitably lead to some losses, Animoca Brands’ strategy of long-term commitment will likely pay off with the rising tide of innovations brought on by crypto and Web3.

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