Folius Ventures: After the launch of the blockchain game Gas Hero, there are several reasons to be bullish on GMT

The Web3 game Gas Hero launched by the Stepn development team seems to be a shot in the arm for the rise of GMT.

Written by MapleLeafCap, Founder of Folius Ventures

Compiled by: Felix, PANews

On January 3, the public beta version of the Web3 game Gas Hero produced by Stepn development team Find Satoshi Lab (referred to as FSL) was officially launched. The game uses Stepn’s GMT as its token and provides its own market and player voting opportunities for decentralized decision-making in the game. Since the game’s launch, the GMT token has been on a tear, reaching a maximum of approximately $0.444. MapleLeafCap, founder of Folius Ventures, published an article explaining how Gas Hero motivates the GMT token to continue to rise. The following is the full text of the content:

*Note: Folius Ventures owns a large number of GMT tokens, and the founder is an advisor to FSL. *

It has been 4-5 days since Gas Hero (GH) went live and I can now safely publish this article because the reality matches my model - GMT is reversing its historically poor launch status (100 daily selling pressure -1.5 million GMT), every additional 10,000 DAU (daily active users) of Gas Hero in the future = 1-1.5 million GMT locked at the current price every day. If Gas Hero can develop towards 100,000+ users and maintain the current Gas Hero asset price, then the FSL ecosystem may achieve 15 million GMT locked per day, recreating the craze from March to May 2022. With the market placing high hopes on this new game, I personally believe that the GMT token can return to the top 25-75 of the crypto market capitalization rankings within 2-3 months, with a short-term target of $1 (3x at this time).

Current GMT sell-off status

Before the advent of Gas Hero, we estimated that GMT issuance was about 115 million per month, which dropped to 109 million per month starting in December; 1/3 of which was allocated to investors and advisors, 1/3 to the team and Treasury, 1 /3 is allocated to M2E rewards. The team does not sell, the advisor’s issuance is small, and Treasury’s issuance is controllable. Therefore, the biggest selling pressure is mainly M2E (assumed to be sold at 80% of 1 million/day, but about half of it is burned internally in Stepn, so the actual net sales are about 300,000/day) and investor sales.

Before October 23, approximately 75% of GMT had been sold as private equity investors acquired it. If you include advisor selling, 1-1.1 million GMT is being sold almost every day.

Therefore, since March 2023, the daily selling pressure has been approximately 1.5-1.6 million, which is nearly $500,000. No wonder the GMT ratio in USD and BTC/ETH has declined.

But recent events have had a significant impact on the GMT/Beta ratio:

Since the start of the calf market in October, investors’ selling has slowed down, with the selling rate falling to about 40% from the previous 75%. As a result, daily sales dropped from 1.6 million to 1.1 million. As alternatives become more liquid, this has a direct positive impact on the ratio.

Additionally, around December 1st, 20 million GMT was transferred from FTX to Wintermute; all of this was completed before December 15th. This move added approximately 1 million/day of selling pressure. The ratio took a very significant hit during this time, and began to recover after FTX completed the transfer.

If we assume that only 40% of investor shares are sold off in the next few months, it is expected that about 1 million GMT will be sold off every day, but here, we assume 1 million-1.5 million GMT sold off every day.

That all changes when FSL launches the Gas Hero game on January 3, 2024.

How does Gas Hero work?

In short, players of this game need to purchase BCV Trucks + Heroes to start mining resources (the resources mined are NFTs rather than tokens). Heroes can carry weapons and pets (buff attributes), all of which need to be bound to the soul to enter the battle (cannot be resold after binding), and will die after 20-60 days of use (except for the creation hero, by the way, only 2084). All resources can be traded in the game market. The 3 ways to obtain resources are farming (in battle), bidding auction (actually buying from the system), and buying in the market (actually buying from other players P2P).

GMT as the base currency will be used for key functions (breeding, upgrades, etc.) and pricing transactions (market, auctions, prize pools). Importantly, 50% of the GMT used for functionality is burned (the remainder goes to FSL), 2% of the market royalties go to FSL, and 50% of the auction proceeds go half to FSL and half to FSL. This in-app tax, combined with the first cycle prize pool supply, should drive massive lock-up of GMT shortly after the game launches.

Typical low-end players play the game to gain ROI (i.e., recycle heroes and put resources into the market), while big players mainly play to compete for the prize pool-the prize money will be distributed to the PVP winner or regional officials. To win in PVP battles, players need to spend a lot of money to equip a hero lineup. To become an official, they need to use a similar hero lineup in smaller areas, but in larger areas, they need more and more donations/ Vote for election. Prize pool = the tax base of the Gas Hero ecosystem (i.e. taxes on the market and auction house) - importantly, there is no additional GMT inflation in Gas Hero, the game only does net burns.

Economic design ingenuity should be immediately apparent. In the short term, the entry of new users + the reinvestment of existing users ensures the return on investment; but as time goes by, the expenditure of big players to win the prize pool = the need to purchase resources = the return on investment of small players. In the prize pool competition, the effective sunk cost of many players who lose frequently becomes the “consumption” to pay everyone’s ROI. The key to Gas Hero’s success is:

(a) Accumulate a sizable prize pool, potentially reaching millions of dollars

(b) Continue to attract (new) whale players who are constantly consuming and competing

In a way, Gas Hero does become a 100,000–1 million DAU game (all players share the same global status + Gas Hero’s innate sociality), global recognition (fame), control over one’s faction (power ) and a sizable monetary reward (wealth) should deliver a massive dopamine hit greater than any SLG game seen to date.

The forward flywheel looks like this: Initial fomo (current stage) -> more new users and reinvestment -> more transactions and taxes -> bigger prize pools -> more PvP and donation investment competition + more Follow the game -> more new users and reinvest (and the cycle repeats).

In addition, the existence of asset life + the choice of old players to restart the economic cycle will continue to destroy excess production capacity. Assuming that user attention and wallet share are relatively stable, then oversupply + declining ROI can be resolved over time (oversupply -> ROI and price decline -> let heroes die -> NFT production decreases -> if demand remains the same , prices will rise). A new season means adjustments to the rules, which brings new hope and incentives for players to reinvest.

With Gas Hero quickly reaching 10,000 users (currently 65,000) + internal test data + current price (all of which can be observed on Mooar), I believe the reward for becoming a global champion can easily reach 200,000-400,000 US dollars, That is, 500,000 GMT can be destroyed every day + 1 million GMT can be locked by FSL every day. This equates to approximately 1.5 million GMT not entering circulation every day. Current Dune data analysis supports our estimates. The first supply via the prize pool won’t hit the market for at least 14 days, and after that the metagame (PVP + normal heroes die on day 20) should add more destruction.

Future Forecast

Therefore, GMT’s supply and demand situation will change from selling pressure of 1 million to 1.5 million per day to net “deflation.” This apparent shift will only accelerate as Gas Hero accumulates more and more users. If there is a craze like Stepn’s from March to early May 2022, it is expected that GMT will be destroyed even more quickly. More users in Gas Hero = more burned = GMT rising = more attention = more users in Gas Hero. An added benefit is that even Stepn+Mooar may accumulate more DAU in the process and increase GMT burns.

I think Western crypto funds are severely under-allocated to GMT. There is no mention of GMT in any of the so-called “game beta” posts I’ve read on CT. From talking to most of Stepn’s private equity investors, none of them take the time to pay attention to GMT anymore, and some don’t even know what Gas Hero is. This kind of project that is not understood by Western players, is driven by DPI, and is in “auto sell” mode is already rare. Once Gas Hero gains the attention of Western players, expect the flywheel to spin even faster.

When Gas Hero reaches 50,000 DAU+GMT and the price is high enough, the maximum prize pool will reach millions of dollars, and the story starts to get interesting. No SLG game in the Web2 world encounters this situation (no one really makes money from SLG games except game companies). If the FSL team markets well in this regard, it is expected that this game will gain huge traction from the traditional Web2 SLG community and become the first popular Web3 game in 2024.

The current price of GMT is US$0.35, and the circulating volume is about 1.6 billion, but the market value of GMT is actually 1/6 of IMX, less than 1/2 of AXS/SAND/MANA/BEAM. GMT didn’t get much attention from the open beta, but will catch up in the future (in my opinion, this is the best game open beta in Asia today, and we work closely with FSL on multiple other game/app investments in the region) . The launch of Gas Hero provided the narrative and fundamentals for this catch-up (perhaps a little quickly) - and Westerners recognized the story (just like the Chinese loved SOL, or the West loved Ordinals).