Aavegotchi: What Are The potentials For This DeFi Cryptocurrency?
While the Blockchain’s capacity to host videogames and collectibles is often touted, it is rarely ever brought to fruition in any way resembling huge success. While there’s yet to be a killer app in the gaming area for blockchain, a couple collectible apps have made their mark in the blockchain world, particularly cryptokitties back in 2017.
The logic behind Aavegotchi is, basically the same behind cryptokitties: Aavegotchies are Ethereum-based Non-Fungible-Tokens that work both as collectibles and units of value. Their creation, as happened with cryptokitties, is random – making all creatures unique, but certain ones decidedly rarer than the others.
Wait, I don’t get it. What IS this?
It’s hard to get the logic behind Aavegotchi (and cryptokitties) at first, yes.
These types of NFTs come from humanity’s tendency towards collecting, and our desire to own shiny things (see: Gold for most of mankind’s history, or diamonds during the last century.) These types of NFTs are usually pure luxury items, their value more than anything speculative than reality-based: A rare cryptokitty is worth a lot not because it has intrinsic value, but because some people out there will pay lots of money for it.
The very same logic can be applied to Aavegotchi: These cute little spirits that we summon from portals are worth something because people out there will pay something for them… well, for the most part.
A mostly, but non entirely, speculative value
This “for the most part” when speaking about Aavegotchi’s inherent value is a part of what makes it stand out. Aavegotchies, as it happens, don’t just come out of nowhere. There are two things that need to happen in order for a user to create a new Aavegotchi spirit-thingy.
First, the user must obtain a portal from where they can summon demons from the nether realm, or whatever it is Aavegotchies are. These portals, as you probably expected, cost crypto, specifically in the form of a GHST token. This alone already gives every Aavegotchi out there an intrinsic value, although said value isn’t guaranteed to be as high as the GHST token you paid for it, in the same way the baseball cards you get from a pack aren’t guaranteed to be worth the cost of the pack itself.
Then, once you get your portal and open it, you get a choice of ten different, randomly-generated creatures, each with its own looks, abilities, and properties. Each creature costs a different amount of crypto to summon and, you guessed it, the rarer your creature’s traits happen to be, the more crypto you’ll need to stake as collateral to summon.
This gives Aavegotchies a second degree of value: On top of the cost of the portal, there’s also the amount of money staked to summon the creature and keep it summoned.
Wait, staked? Or paid? Which one is it?
While it can feel like a payment, the crypto you stake to summon a creature is just that, staked. You can actually retrieve it at any time, either partially or totally.
However, if you retrieve 100% of a creature’s staked crypto, the portal it came from will close and the little demon will vanish into the ether.
Alright then. Why do we have to stake crypto for this?
Because that’s what Aavegotchi is really about: Getting people to stake their tokens, in the same way they could stake them in other blockchains, but making it fun and collectible.
But why would I want this? Why would anyone pay more for an aavegotchi than it originally cost?
Because humans like to collect shiny things, as seen with every single collectible market. Rare baseball cards are worth way more than the materials they’re made of. Coin collectors can pay thousands of dollars for coins whose face value is less than a single dollar.
Humans are weird like that. We like having rare things, so we pay for them more than they’re worth.
Oh, also, there’s the whole traits thing. That’s where a good chunk of the speculative value comes from.
Why do traits matter?
You remember how the crypto you use to summon an aavegotchi is staked? Well, there’s this thing about staking cryptocurrencies: It’s supposed to give people back earnings as collateral. It’s the whole reason why people stake to begin with.
Rarer aavegotchies will have higher amounts of crypto staked – and, the way staking works, the more you have staked the more crypto you’ll receive. This means that rarer aavegotchies, and aavegotchies with more staked crypto, will return higher yields than lower-tier ones.
And then, for the last value-affecting part, is the game portion of it.
You can also play with them?
Yes, there are mini-games you can play with your aavegotchies. And the better traits and equipment they have, the better they’ll perform. Different traits and equipment will be better suited for specific types of games, so if you want to do well in them all you’ll need a whole team of them.
Fine, that sounds fun. But will this work?
It might, or it might not. The interesting part here is how much it could boost gaming in the blockchain if it works.
There are plenty of videogames that form competitive communities. These communities are dedicated, and often they host events with actual cash prizes. If one of the games you can use your aavegotchi in were to become big, and generate an e-sports communities around it, the aavegotchi that are good at that game would inherently receive a huge value boost.
Then, there’s the way these cute little NFTs entice people to stake, rather than hold, their crypto. Having many people staking is good, because it gives the blockchain more processing power to power its inner transaction. In other words, more people staking means the blockchain becomes more scalable, and thus faster.
It’s yet to be seen whether Aavegotchi will become a thing, but there’s already a decent amount of hype around it. While it might be wise to buy into it, this is definitely a project to keep an eye on.