Crypto portfolio update

Invested in: Jewel (JEWEL), Harmony (ONE)

Net return: 671.2%

Comments: Much has happened over the past 2 weeks. First, the price of JEWEL dropped almost 20% from $15 to $12. Then, it shot up 85% from $12 to $22... and since then, the price has fallen more than 20% from $22 to $18. Such is the volatility of an altcoin!

But while JEWEL has made significant gains since my last newsletter, the dollar value of my portfolio has not kept pace, due to the plummeting JEWEL price of heroes.

The price of Gen0 heroes has now effectively halved, with a floor Gen0 going for under 3,000 JEWEL. Some full-summon Gen1's are even being sold for less than summoning cost!

To reflect this current reality, I've re-priced the hero component of my portfolio:

So it's clear that players today are dumping heroes in favour of JEWEL, most likely in response to the latest incentive announcement, and in preparation for the upcoming Crystalvale launch.

Lead developer Frisky Fox previously mentioned in various AMAs that the team is looking to add value to Gen0 holders, but this latest incentive announcement has conspicuously left out that exact group of players. 

In my view, Gen0 holders are the biggest believers in DFK because Gen0's are the most illiquid asset in the game; A player holding $1 million worth of JEWEL/LP tokens can sell his holdings and exit the ecosystem in minutes with minimal slippage; Another player holding $1 million worth of Gen0's cannot do the same. The latter type of player is the most heavily "locked" into the game, which to me signals the strongest commitment of all.

It is thus understandable that many Gen0 holders - after having taken on the heaviest risk and commitment - are feeling left out in the cold. It is now apparent to most players that holding JEWEL is far more rewarding than holding Gen0 heroes. A result of this dynamic is the plummeting Gen0 price that is fast approaching the original JEWEL mint price.

This is hopefully just a temporary phenomenon because if the strongest supporters of the game aren't aptly rewarded for the risk they're taking, the incentive structure shifts to encouraging more short-term, mercenary thinking.

From a social point of view, Gen0 holders are like the mini-celebrities of the DFK community; Non-Gen0 holders aspire to be part of that exclusive group... and if they see Gen0 holders running for the exits, it won't be long before the less committed (i.e. all other) players follow suit.

I believe Frisky Fox has been notified of this growing issue (thanks to SuperiorForm), so the ball is now in the devs' court. 

More than just a "money making" issue, this is a social contract issue that has significant implications to how players view their investments in the game (both monetary and otherwise). After all, why bother playing the game if I'm better rewarded by keeping JEWEL in the bank, or  by providing liquidity?

I have to say though, the DFK developers have always adequately addressed player concerns, and I believe they will continue to do so.

This is, however, a major issue that I hope will be quickly addressed, because the crypto markets are highly sentiment-driven. For most people, crypto is essentially a drawn-out game of musical chairs, and if DFK is to survive over the long term it needs to demonstrate that it is capable of keeping the music going by maintaining balanced incentives.

Personally, this is a make-or-break issue for me. If the devs are unable (or unwilling) to provide a decent solution, my inclination is to divest a portion of my DFK holdings because I'd then envision an exodus away from heroes, which would be an existential threat to the game.

I think very highly of the DFK devs, and it should be noted that none of this is their doing; The rapid rise of JEWEL surprised everyone (I believe, even the devs themselves). This is why I'm happy to continue supporting their grand vision with my actions and my capital.

But, that vision can only be attained if player incentives are well aligned... and right now, they aren't.

Bottom line: This is the first big test of the developers' ability to manage the delicate issue of player incentives, which will hint to their game-balancing capabilities of the more advanced game dynamics down the line (eg. 16 hero classes won't be easy to balance, especially for PvP).

I've played many games in the past that were ruined because of subtle character/economic imbalances, so how the devs deal with this issue today will be a telling signal of the future potential of DFK.

DeFi Kingdoms stats

Users (30 days): 272.3k
Transaction volume (30 days): $1.4b
Number of xJewel wallets: 23,963
Discord members: 63.1k

 Admin update

• Recently published videos:
  • Are Gen0 heroes worth investing in?
  • Are Gen0 heroes worth investing in? Part 2
  • DeFi Kingdoms AMA
• If you missed the previous newsletter, you can read it here.

 Orangutan drives a golf car

Tell me you're not impressed after watching this.

Thanks for reading, and have a great weekend.

Cheers,
Slowmad

P.S. If you have any questions or feedback, let me know at: chris[at]digitalslowmad[dot]com

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