As NFTs are increasingly used in the DeFI environment, Aavegotchi has managed to create their own Universe with a strong community since the start. What exactly does this all-pixel ghost bring to the world of NFTs and more generally, Cryptocurrencies?
One of the concepts emerging in the world of NFTs is “DeFi Gamification”. These terms refer to the art of making the sometimes complex mechanisms of Liquidity Mining and Yield Farming playful, an exercise that many projects have been attempting since 2020.
In October 2020, we spoke in an article about this alliance being formed between these two universes but at that time the bond still seemed very new. Among the projects that have succeeded in building a community around the potential of NFT x DeFi applications is Aavegotchi.
With the project’s launch in its final stages, it’s the right time to examine the goals Aavegotchi is working to achieve and take a closer look at some of their most innovative features.
Aavegotchi was announced in July 2020 with a simple concept: players can use NFTs and mine various cryptos from Aave Technology. In fact, Aave enables you to have your own tokens whose price is indexed to the original token. For example, a $aDAI has the same characteristics as the $DAI but grows in quantity inside a hodler’s wallet. This is extremely intuitive and only possible because of the yield generated by depositing $DAI on the Aave platform. The Aavegotchi team recognized the potential of staking Aave’s “aTokens” into collectible NFTs and began to build out what has become the incredibly well-layered Aavegotchi experience.
Pixelcraft Studios was formed to build out the central features of Aavegotchi. Their core members include:
This group, mixing both NFT and DeFI skills, quickly put their ambitions into action, starting with the grassroots: The Community.
The reward for having completed all of Aavegotchi’s promotional quests were NFTs for customizing your Aavegotchi and the game quickly became known to collectors and the crypto curious alike!
Each of their Discord’s quests linked to steps for the participant to follow which helped them understand the project in its entirety, some of them required writing a blog post and others ranged from getting your first $GHST to spawning portals on the projects testnet.
Newcomers to the project just have to reread the missions to be as well informed as early adopters and if there are any issues, there is always someone to answer questions on their Discord.
Before being able to obtain an Aavegotchi, several steps are necessary for the economic equilibrium of the project to be achieved. The first of these is to get $GHST which is the only way to buy a portal. GHST is also the AavegotchiDAO’s governance token and can even be staked to obtain NFTs which will be used to personalize your Aavogotchi.
$GHST are the utility tokens of the project. You can get $GHST through Uniswap or directly from the site after performing KYC, the price and supply is fixed on a Bonding Curve, providing the basis of their DAICO (DAO+ICO) token distribution model.
Their primary role is purchase portals allowing you to obtain Aavegotchi, but they also have another use: they can be staked to generate $FRENS, the tokens which enable wearables for your Aavegotchi.
To obtain wearables and personalize your Aavegotchi, it will be necessary to stack $GHST to obtain $FRENS. There are two methods to achieve this:
Method 1: By storing $GHST directly from the site, the reward is at the ratio of 1 $GHST = 1 $FRENS / per day.
Method 2: From Uniswap or Quickswap on MATIC, the reward is 14 $FRENS / per day but the method is a little more complicated than simply staking your $GHST.
You will be asked to participate in a liquidity pool that requires staking an equal value in $GHST and $ETH (or $QUICK) to obtain a new ‘LP’ token, meaning Liquidity Provider. Depending on the percentage of what your investment in the pool represents, this will define the number of LP tokens obtained. The reward of 14 $FRENS / per day is set on a basis of 1 LP GHST-ETH or GHST-QUICK, the reward will be allocated depending on the number of LPs you hold.
The name of this method is ‘Yield Farming’: by participating in the liquidity of a project you receive rewards associated with the LP token.
$FRENS cannot be bought or traded, the only way to get it is by one of the methods listed above.
They have only one purpose, buying tickets which offers the possibility of obtaining wearables of different rarities. To ensure greater fairness, the quantity of tickets purchased will give the best chance of getting the price you want, but does not necessarily mean getting something!
Personalizing your Aavegotchi is not just for fashion, wearables also have other uses.
One of the great strengths of Aavegotchis is the balance sought by the team between farming and gaming. To achieve this the community’s opinion is regularly asked for but it’s also important to see how the team has thought out and considered what constitutes the value of an Aavegotchi.
Each Aavegotchi is an NFT which has its own characteristics. These different character traits also determine a rarity score.
Six in number, the characteristics are as follows:
Apart from the color and shape of the eyes, it will be possible to modify the characteristics of the Aavegotchi thanks to experience acquired when playing the mini-games, using consumables or to make them wear certain wearables.
These characteristics will be taken into account in particular during the Aavegotchi mini-games offered in the Realm. For Instance more BRN will be better in a meditation game while an important characteristic in NRG makes it more suitable for a running game.
In addition to these different traits, another characteristic should be taken into account: belonging to Aavegotchi has its own collateral and as we mentioned above they are also used to mine, but in what way?
After opening the portal, the little ghost will randomly take on the colors of $DAI, $LINK, $USDC, $USDT or other Cryptos. But for it to be truly yours, it will be necessary to hold the Aave collateral associated with the Crypto to finalize the invocation.
For example, after opening a portal, an Aavegotchi in the colors of the $DAI appears. Depending on its scarcity level, a greater or lesser amount of $aDAI will be required for it to start being used…and in the process generate interest in $aDAI!
This method of using a token (fungible or not) to earn interest on it is Liquidity Mining. Regarding Aavegotchi, the collateral contained in these NFTs are transferable to a new owner in the event of sale!
Another important element is the continuation of the tamagotchi concept which consists of having to take care of your Aavegotchi regularly. Infact, each has a Kinship level that represents their loyalty to you.
This Kinship level will determine boost levels and can be maintained by different methods:
There is currently no penalty for neglect, but the more you take care of your Aavegotchi the better it will adore you..
There is another benefit in taking care of your Aavegotchi, that of increasing its rarity! Your choice of Aavegotchi when summoning, quests, or suitable wearables, will have a direct impact on the rarity of your little ghost. This level of rarity is called the Base Rarity score.
But there is a second scarcity score, which is much more dynamic than the first. Called the Final Rarity score, this is calculated based on the number of Aavegotchi in the ecosystem with the same specializations as yours.
If all players focus on meditative ghosts and improve the Brain Size characteristic, it will actually become less rare and lower the final rarity score of Aavegotchi with that same specialization.
There is therefore an entire strategic stake in having a well trained Aavegotchi but also keeping an eye on the others to be sure that yours remains very unique!
Usually, projects that combine DeFi and NFTs are more focused on the financial aspect, providing little value to the overall ecosystem. Although more and more projects are emphasizing the playful side of ‘DeFi Gamification’ for the sole purpose of generating liquidity, Aavegotchi is creating a much more complete Universe.
Indeed, the emphasis here is not on the DeFi aspect which is made accessible to anyone but rather on the importance of the Aavegotchi traits. This brings a strategic dimension to adopt before buying wearables or blindly investing in all of Aave’s collateral.
These initiatives which tend to provide a real use case for NFTs x DeFi could be reused subsequently, for example in metaverses to bring the concept of ‘Play to Earn’ on to another level!
This requires an excellent knowledge of the economic balance between the available liquidity and rewards for the players, but it seems that Aavegotchi has understood this well and has proposed a project with a long-term vision rather than quick and risky profits.
The launch date for the first generation of Aavegotchis is expected to be announced any day now. It will be very interesting to follow and see how the 100% on-chain Aavegotchis continue to evolve!
Disclaimer: This is a sponsored article. No content or article should be considered as financial advice. We strongly recommend you to conduct due diligence and always do your own research before investing in a project.
Analysis · · 6 min
Many artists and creators are worried about NFT marketplaces' decisions regarding royalties. Let's take a look at the data...
Written by besancia · 09/14/23