This article was written by Andrew Wagner, the founder of www.blockchaingaming.com
It’s been some hard times for blockchain gaming investors. Even after the DeFi bubble popped, bull runs in Bitcoin and also Ethereum brought a storm of inactivity to the market. But we weathered it by satiating ourselves on arbitrage of Xaya‘s CHI token, and now our investments are blossoming like flowers after a desert rain.
We used much of our arbitrage profits from trading CHI to buy GALA tokens. GALA is the token driving the Gala Games network, which is the brainchild of one of the founders of Farmville. That gives them a lot of technical experience and financial backing, but some of their network marketing tactics (abundant referral spam) proved unpopular with the blockchain gaming community. They have since hired a new Chief Marketing Officer known as BitBender, and the results speak for themselves.
The cleverest and most aggressive traders managed to buy as low as .2 cents and sell as high as 2 cents, making possible gains of around 900% (X10 your money). Obviously this is great news. We are cautious and didn’t do as well as that, but we still managed to sell some GALA at much higher than the current price. We used much of our profit to buy the GALA back, and now we have more than we did, before. We also now have more data… it was hard to see where the resistance lines were, before.
That means GALA is now the highest fraction of our portfolio. This may begin to undermine our diversification strategy, but GALA is still on a hot streak, having recently broken the record for most valuable NFT sale and gathered ample excitement for the related RPG under development. We also have a clear exit strategy: with volume so high despite reliance on Uniswap (which has high fees due to Ethereum gas costs), they are eventually going to get listed on a major centralized exchange. The historical pattern for altcoins suggests a huge spike in price before or after that. We will know we’re getting close when GALA reaches a market cap more comparable to competitors, whom are all in the 9-figure range.
We did take some of our GALA profit to Decentraland, though, anticipating a MANA price breakout. This happened much sooner than expected, partially due to the Bitcoin and Ethereum bull runs. Our analyses of historical price movements showed us several horizontal resistance lines, including the highlighted ones recently breached. We sold some MANA on the way up at 12 cents and 14 cents, buying it all back at 10 cents.
The reason MANA is still the second largest fraction of our portfolio is that we believe the market has not yet priced in events I am anticipating to occur. Decentraland remains the most popular blockchain-based virtual world, and development has continued to progress on its stability and features, and I don’t think the value of this status has been realized. We have also been helping to prove the value of having a virtual world be decentralized by building something that will annoy the Chinese government.
Matic & Enjin
These coins we weren’t expecting to go up so much so soon, so we didn’t have as many of them. They did, though, so it’s nice that we had some.
The Matic Network‘s success can be partially explained by rising Ethereum transaction fees. They are literally choking the life out of blockchain gaming and DeFi projects, taking cuts as high as $50 or even $100 from single NFT sales or decentralized exchange trades. Matic’s Plasma-based sidechains offer to reduce these fees to zero, which has caused more games to switch to their platform. The most recent is Aavegotchi, and the list will probably keep growing. We managed to sell some MATIC tokens around 2.8 and 3.3 cents and buy back around 2.6, a decent profit for a low-risk strategy.
Enjin‘s price spike doesn’t seem to correspond to any current events. Generally speaking, though, their ERC-1155 token standard has been growing in use across NFT platforms; they also still have games destined to reach mainstream consoles. We drew our resistance lines partially from historical data not visible in the above chart, but still managed to sell around 24 cents and buy back at around 20.
We told four different stories about trading blockchain gaming tokens, and each one ended the same way: with a larger balance of them in our portfolio. We now possess more GALA, ENJ, MANA, and MATIC tokens. Even if the blockchain gaming markets were down, we now own a higher percentage of the industry. That primes us for success when it eventually goes mainstream.