Aavegotchis are digital pet ghosts on the Polygon Network. Bridging the gap between NFTs and DeFi, they will happily help you collect income based on their rarity and other factors, but expect you to take good care of them in return. The GHST token drives the in-game economy and governance.

The launch of the "Gotchiverse" is tentatively planned for January 2022. It will provide a digital home, playground and battlefield for the gotchis and their owners,with novel game mechanics and revenue sources. So what could be a better time to take a closer look at the ecosystem? Let’s roll!

Who are the builders & what is their track record?

Aavegotchi was launched by Singapore-based Pixelcraft Studios in mid-2020, the brainchild of project leads coderdan and gldnxross. As an Aave grant recipient project, it was on the radar of early investors and had a successful private sale shortly after the official white paper was released in August 2020. With community building fully underway, the GHST token launch followed in September.

Things went ahead smoothly, with development on testnet progressing, the Aavegotchi DAO holding its inaugural vote in October and the first wearable raffles celebrating partnerships with big brands like Chainlink, OKEx and, of course, Aave. It was not until late 2020 that the project faced its first crisis – the planned Ethereum mainnet launch was cancelled due to high gas fees. It became obvious that the cost for regular gameplay use cases would not be sustainable on mainnet and the team moved to evaluate alternatives.

After some deliberation, the project pivoted to the Polygon sidechain and finally went live with a first sale of portals (needed to summon an Aavegotchi) in early March 2021. 10k portals sold out in less than a minute and the first gotchis soon entered the blockchain. For trading them, as well as portals and wearables, the in-game bazaar was rolled out. Productive partnerships with Polygon ecosystem players like QuickSwap were announced and the project made steady progress throughout 2021. With the launch of the Gotchiverse on the horizon, a second batch of 15k portals were sold in August and the first two land sales followed in November and December 2021.

Besides the 13-strong Pixelcraft team of core contributors, a key factor in the milestones reached so far has been the growing Aavegotchi community. With a strong discord as its home base, the community has expanded by forming guilds, minigame builder teams and supporting sites focused on the ecosystem.

With the AavegotchiDAO, the project has embarked on an iterative path towards decentralized governance. As part of the current “cocoon stage”, community members can make governance proposals and vote on them.

How to get in on Aavegotchi & how to earn?

There are three investable areas in the Aavegotchi space. Let’s go through them step by step.

Aavegotchis, Portals & Wearables

Every new Aavegotchi is summoned through a portal. When opening a portal, 10 random gotchis are made available for you to select a favorite. You will typically choose the gotchi with the highest base rarity score, while the other 9 disappear forever. To summon the selected gotchi, you need to equip it with a spirit force collateral of Aave tokens that will allow your new friend to accrue interest over its lifespan. The higher the base rarity score, the higher the spirit force required for summoning the gotchi.

So, how do you get your hands on a gotchi in the first place? With a floor price of around 500 GHST, the pixelated spirits have become quite pricey.

Aavegotchis on sale in the bazaar

Before apeing in, consider your options:

• Buy a gotchi on the bazaar. Advantages are that you can freely choose and that any kinship, xp & spirit force acquired by previous owners will carry over. Also, any wearables attached to the gotchi at the time of sale will be transferred with it.

• Buy a closed portal. This is the risky route, as closed portals are expensive and you may end up with a sub-par set of gotchis to choose from. The upside is, of course, that you may pull a gotchi with a high rarity score, 10xing your invest right away. But do not count on that.

• Buy an open portal. These come cheaper than closed ones, as the current owner has already had a look at the 10 gotchis inside and chose not to summon any of them. You can skip through them and see if any gotchi appeals to you. You will need to set up the spirit force when summoning, costing roughly $10-100, depending on gotchi rarity.

• Wait for the next portal auction. No date announced yet, this would be a long-term play.

Once you have acquired a gotchi, take action:

• Pet your gotchi every 12 hours. Each petting, done by a simple polygon transaction, will raise the kinship score indicating its attachment to you. While a high kinship score provides little immediate benefit, it will be helpful for farming the Gotchiverse once it is live. It is also plain embarrassing to own a neglected, unhappy gotchi.

• Dress your gotchi up– wearables look cool and help raise the rarity score of your gotchi. They can be bought on the bazaar, purchased in auctions or won in raffles. For the most rare “godlike” items, six-figure sums are being paid on secondary.

• Take part in mini games, discord events & governance to acquire xp for your gotchi. For each xp level a gotchi reaches, you will be able to slightly tweak its rarity traits.

• Collect passive income – your gotchi will automatically take part in the regular rarity farming seasons. The higher its rarity score, the more GHST it will collect for you.

The GHST Token

We have mentioned the GHST ecosystem and governance token repeatedly. Buying it is a simple way to get Aavegotchi exposure. Issued via a bonding curve, GHST has seen lower volatility than comparable metaverse tokens, both on the up and downswings. The best way to buy GHST is directly on Polygon, via QuickSwap or an aggregator like Slingshot.

Here is an overview of token utility:

• GHST is currently needed for all in-game interactions like trading gotchis, wearables or REALM parcels on the bazaar.

• GHST can be staked - stakers maintain full exposure to price appreciation while accruing “frens” points that can be exchanged for raffle tickets. Tickets can either be entered into raffles to win items or sold on the bazaar for more GHST.

• GHST is needed to take part in bid-to earn auctions. All auctions in the Aavegotchi space are conducted via the highly innovative GBM model, in which bidders are rewarded for being outbid. E.g. if you place an initial bid of 100 GHST on a wearable and get outbid, you will end up with 110 GHST to deploy for your next bid. Pro tip: Be early and don’t be shy with matic gas fees - placing the opening bids on valuable items may set you up for significant gains.

• GHST drives governance - voting rights in the Aavegotchi DAO are proportional to the GHST value of tokens and assets owned by a wallet.

Location, Location, Location: Realm Parcels

The Gotchiverse is not live yet, but sales of “REALM” ERC721 NFTs representing individual land plots have already started. Getting some prime real estate early might be a smart way to get exposure to the ecosystem.

Gotchi Map

Here are some key facts you need to know:

• The Gotchiverse will consist of three main areas , with a maximum of 420,069 REALM parcels. 155,069 of these will be made available in the first two years.

• Parcels auctioned and raffled off before the launch are located in the most desirable area, the well-protected “Citaadel”, which in itself is split into 49 districts. Browse it here.

• Parcels sold on the open market come in three sizes, from large to small: Humble, Reasonable & Spacious. There are also huge Paartner parcels reserved for collaborating projects and guilds.

• Parcels will contain four types of Gotchus Alchemica, farmable ERC-20 tokens needed for various in-game purposes and tradeable for GHST. Which amounts of valuable Alchemica are located at a specific site will be calculated by a randomized Chainlink VRF call upon Gotchiverse launch. Parcels adjacent to the Alchemica sources shown on the map will receive “boosters”, increasing their harvestable supply.

• Once the Gotchiverse is live, your gotchis will be able to farm Alchemica and thereby generate income for you. You can also use your parcels to build various installations and even make Dapps accessible through them.

So, how to get your hands on REALM plots and what to take into account?

• The simple way is to buy parcels on the secondary bazaar market. Filtering by size and sorting by price will give you a good idea of current floor prices.

• Larger parcel types present a better deal with a view to expected Alchemica allocation:

Average alchemica supply per parcel type

• Parcels with Alchemica boosters appear overpriced on secondary, as the boosters will probably not have a supply impact significant enough to justify the current price discrepancy to regular land plots.

• Prices also vary significantly per district. The more central, the more expensive, with district 1 currently being the priciest.

• Proximity to landmarks and Paartner parcels is another factor driving higher valuations. Roads and rivers may also play a key role in the future, as owners will want to optimize their location for foot traffic exposure and transportation.

• Note that much of this is speculation, until the actual Gotchiverse experience is available!

• If the bazaar is not your thing, you may also wait for the final REALM auction & raffle before launch, expected for mid-January 2022. The second land auction was just conducted from December 2-5, with 26,000 Citaadel parcels distributed in total in 2021 (including 20% via raffles). Further rounds will happen after the launch.

• REALM auctions follow the aforementioned bid-to-earn model and can thus be worth taking part in even if you do not plan to buy land.

What is next for Aavegotchi?

The biggest project milestone yet will be the release of the Gotchiverse, planned for January 2022. This is what the team has been working towards from the very beginning and expectations are high. According to the Gotchiverse litepaper, it will provide an “open-ended social space where players can engage in myriad activities, such as farming, crafting, trading, and combat.”

We can expect a limited alpha version upon initial launch, focusing on enabling the core gameplay for the Citaadel area, in particular farming and trading Alchemica. Functionality will then be added iteratively and the map will be expanded beyond the Citaadel, to the “Grid” area where REALM prices will probably be lower and everyday life for your gotchis slightly tougher.

Scaling the player base beyond the owners of expensive NFTs is a key challenge for all blockchain games. The Aavegotchi roadmap contains two innovative approaches to tackle this:

• Users who do not own a gotchi will be able to roam the Gotchiverse as “Liquidators”, aiming to collect or steal Alchemica and generally harassing the hard-working gotchis. They will also play a key role in the overall narrative, where big battles are foretold and Citaadels will be stormed, only to rise again.

• Another key feature to be rolled out in December 2021 is Gotchi Lending. It will enable trustless lending of Aavegotchis from one party to another, with pre-aligned durations and profit-split agreements. This potentially presents a major improvement over scholarship agreements in other games, where trustlessness is missing.

Overall Assesment

Strengths

• Experienced, tight-knit team with non-anon leads and a strong delivery track record, constantly pushing innovation.
• Sustainable path towards decentralization: The iterative DAO rollout provides a great balance between gradual community enablement and efficient core team guidance. Community engagement is among the highest in the space.
• Organic community growth: The team has done a great job in building and engaging a strong community.
• A strong network of partners and backers, including a growing number of gaming guilds acquiring gotchis and REALM parcels.

Weaknesses

• Dependency on enabling technologies: In particular, subgraph issues have plagued the project since inception, causing sporadic downtimes and performance issues.
• The “Spirit Force” of each gotchi, supposed to introduce new users to the blessings of DeFi, currently has no real use case in the game. This is supposed to change with the Gotchiverse launch, but so far it presents more of a barrier to entry than added value.

Opportunities

• Significant upside if the Gotchiverse launch is a success and the team manages to establish a sustainable in-game economy. Token and asset prices have appreciated recently, but not to the extent of other metaverse plays like Sandbox.
• Building on its in-game utility and DAI-backed bonding curve, GHST may be the perfect collateral for DeFi. A listing on Aave, heavily pushed for by the team, seems to be on the horizon.

Threats

• Execution risk: If the Gotchiverse launch is delayed or fails to deliver on expectations, valuations of in-game assets and GHST may deflate significantly.
• Metaverse froth: Metaverse tokens have seen significant price appreciation recently and may be due for a backlash. Irrespective of its own merits, Aavegotchi may tumble as part of a larger market move.

If you made it to the end of this post, you will probably share our view that Aavegotchi is a highly promising ecosystem. At the interface of NFT, DeFi and Metaverse plays, it checks all recent hype boxes and has at least a partially working product, which may turn into a full-blown metaverse in 2022. Exciting times to come!

September 2020

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