ICO Review: Bit.Game (BGX)

Screen Shot 2018-05-30 at 4.35.53 PM.png

Gaming is a twelve figure industry. From console based to mobile games, players are increasing their average spend on digital in-game items. When I worked for Google I recall the impressive revenues to the Google Play P&L due to game hungry countries such as Korea and Japan. Blockchain is a great technology to enable gaming asset ownership. If there are two things that blockchain does very well it is: 1) data ownership and 2) cross network payments. Bit.game aims to do more than just track asset ownership and transfers.

There are other established gaming projects such as Enjin and up-and-coming projects such as Rupie.io. What stands out to me about Bit.game is depth of the team and the well rounded group of advisors from prominent projects such as Elastos and Matrix AI. Aside from the team, the use case of data ownership and ability to move beyond restricted gardens is not just an attractive investment thesis, but also an incredible utility vehicle for gamers. Let’s say you play World of Warcraft (WoW) for several years and your characters have built up substantial in-game wealth. Switching away from WoW would mean having to leave your accumulated assets on that game. With blockchain exchanges, digital assets can be flipped for other gaming assets or other digital assets altogether.



Team and Advisors

Team

Screen Shot 2018-05-30 at 3.28.25 PM.png

Advisors

Screen Shot 2018-05-30 at 3.26.53 PM.png



Token Metrics

  • Token Symbol: BGX
  • Token Standard: ERC20
  • Hard Cap: 30,000 ETH (at time of writing, estimated $600 / ETH or $18M USD)
  • Total Supply: 10,000,000,000 BGX, eventually reduced to 5,000,000,000 BGX through buyback and burns (see below for detail)
  • Sales Stages:
    • Private Sale (10%): 1,000,000,000 BGX
    • Pre Sale (5%): 500,000,000 BGX
    • Main Sale
      • Stage 1: May 8th – May 18th, 10% bonus
      • Stage 2: May 18th – May 25th, 5% bonus
      • Stage 3: May 25th – June 8th, 0% bonus
  • Lockup for team
    • Lockup period of 1/2 year: 10% of total team tokens (150M BGX)
    • Lockup period of 1 year: 15% of team tokens (225M of BGX)
    • Lockup period of 2 years: 20% of team tokens (300M of BGX)
    • Lockup period of 3 years: 25% of team tokens (375M of BGX)
    • Lockup period of 4 years: 30% of team tokens (450M of BGX)

 

Screen Shot 2018-05-30 at 3.45.49 PM.png

 



Existing gaming business models

Pay-to-play

Console and PC games charge upfront for their games. Walk into a store, pick up the game you want, purchase it, go home, and start playing. Prior to internet connected games, the pay-to-play model lacked the ability to update games based on newer technologies. Since then, games are saved locally to consoles and patched over the internet to include new bonus levels and items.

Free-to-play

Mobile games in particular are free to download. These publishers generate their revenues either through displayed ads (much to the annoyance of their players) or charge for in-game items that help boost your chances to defeat the game. This model allows players willing to spend money to level faster through the game. It also allows spendthrift players to move their way through the game in a slower fashion.

Blockchain games

A new form of gaming is starting to arrive on the scene. Pay-to-earn has players experiencing the game and earning tokens for particular sets of activities. These tokens are offered as an incentive rewards and can be sold on the open market or to purchase in-game items. Potentially, investors may be interested in the tokens themselves as they offer the potential for financial returns. Gamers earn the tokens to use for their games or to make a tidy profit.

 



Evolution of gaming on the blockchain

Phase 1: Mostly centralized

Gaming on a blockchain at this stage is still very centralized. In fact, the operating system, the game’s software, the computing/rendering, and the assets still sit somewhere on a centralized technology stack. Tokens on a blockchain at this point are mirrored by the centralized ledger.

Phase 2: Data is decentralized

Data ownership shifts from offchain to onchain where users completely own assets. The game itself however from a runtime perspective still sits very much off-chain. Think of the Crypto Kitties example where the game itself is very unimpressive in terms of features, aesthetic, and game play. Adding all the bells and whistles of games of today would bring the game’s base protocol layer to a grinding halt.

Phase 3: Everything is decentralized

If and/or when the blockchain tradeoffs between scalability, decentralization, and consistency are solved, gaming can bring low latency, high resolution gaming on-chain complete with decentralized asset ownership. At this stage, independent game developers could thrive up from under the thumb of the larger gaming studios. Gamers and developers would potentially have a much more tightly aligned set of priorities due to the mutually beneficial relationship in making the games and its platforms successful.

 



Technology

AIDEX – Artificial Intelligence Decentralized Exchange

Bit.Game will build out a DEX in partnership with Matrix AI. Having its own DEX will help games on the Bit Game platform avoid low liquidity traps on other exchanges and to avoid difficult and expensive listing processes.

Proof-of-Contribution

The consensus mechanism of Bit.Game. Community members who own BGX will have the ability to adjust the incentives for other community member’s contributions. What is considered a contribution is not well covered in the whitepaper, perhaps to be decided by the community. Incentives to paid out to contributors will come from Bit.Game’s reward pool.

Mining SDK (Software Development Kit)

The SDK Bit.Game will offer will enable game developers to enable players to mine BGX tokens by playing and trading on their games.

In-Game Wallet

Rather than managing severall wallets, Bit.Game plans to feature a lite wallet within games to more easily manage diversified game assets. Bit.Game and Bit.Game Development Lab (discussed below) will work together to integrate wallet capabilities within games.

 



Bit.Game utility and price drivers

Reward Pool

Similar to Steem, Bit.Game will feature a reward pool for contribution payouts. Bit.Game will collect 30% of the mining pool to fund the reward pool.

Producing Token Scarcity

In two phases, Bit.Game will stabilize its total token supply. In the first phase, Bit.Game will use 50% of its net commission fees to purchase BGX tokens. Bit.Game will burn these tokens and continue doing so until the total supply is 5 billion tokens.  In phase two, Bit.Game will use 30% of its net commission fees to buy back BGX tokens. Instead of burning these tokens these will be poured into the mining pool.

Decentralized ICOs on Bit.Game

The Decentralized Anonymous ICO will be a feature of the Bit.Game platform. Rather than going through the elongated process of launching an ICO (see here for costs to start an ICO), game developers can raise capital for their games with Bit.Game’s DAICO mechanisms. Developers can raise funds for each discrete stage of its development cycle by setting soft caps. For example:

  • R&D phase: soft cap of $500K
  • Publishing phase: soft cap of $1M
  • Follow-on periods: soft cap of $500K

 



 

Product Roadmap

Below is a very detailed roadmap. There’s not a lot of code in the GitHub repo so either this ICO is fundraising before significant product is built or the code is sitting behind closed doors. Based on the way the whitepaper is written by bet is on the former.

 

 



Supporting Organizations

  • Bit.Game Foundation: similar to Neo Global Council or Ethereum Foundation, Bit.Game Foundation will be a Singaporean non-profit with the designated task of the development and research of the BGX digital currency and platform technology.
  • Blockchain Game Deveopment Lab (BDGL): a consortium of partners including Achain ($ACT), Matrix AI Network ($MAN), TrustNote, and GCS to build a new public chain together to foster blockchain games.
  • BGX Investment Fund: Similar to Neo’s Global Fund, the BGX Investment Fund will be focused on investing in promising games considering incorporating the Bit.Game Mining SDK and listing on the AIDEX.

 



 

Verdict

Bit.Game is an ambitious project aimed at the singular purpose of evolving gaming from a centralized model to a fully decentralized model. To do that, it envisions developing an entire ecosystem complete with a mining SDK so developers can turn their games into BGX mining operations, an AI driven decentralized exchange (AIDEX) to facilitate trading, and an ecosystem of buybacks and organizations to support the success of the BGX token. Overall, the idea fits one of the clearest use cases of blockchain. However, there are several red flags to consider when investing in Bit.Game. The first is the lack of transparency around where the project is in terms of its development. Digging through the GitHub repo and inferring into the state intentions of the whitepaper, it seems funding is first priority over product development. Secondly, the whitepaper is far less technical than its peers. Its written very much for the non-technical person.

The lack of technical clarity also leaves open several outstanding questions such as:

  1. What is considered a contribution for the Proof-of-Contribution consensus mechanism?
  2. How will governance participation take place? Is one BGX token one vote? Or is one account one vote? Are we looking at developing a series of delegates to vote for?
  3. While setting up a multiple public chain solution to work with Neo, Ethereum, Qtum, etc. does this leave open the potential for high latency or network disruption based on the underlying protocols?
  4. Are there unforeseen incentive designs that could be gamed within the Bit.Game SDK. For example, what if a game created its own token that was very easy to mine while another game was much harder to gain (such as a fighting game where you earn tokens by winning fights). Would each game have its own native currency that can be traded on the AIDEX with BGX as a trading pair? Would market pricing really keep up with any game that displays a hidden inflation problem?

Conversely, there are many factors to like about this project as well. The team and advisors have already launched successful token projects. One could argue this history of launching Elastos and Matrix AI are positive signs for the price of the token. Secondly, the team lockup is set up in a way that more tokens are released over a longer period of time. This reverse vesting schedule indicates the team is serious about building for the long term. Successful cryptocurrency projects such as Neo, Qtum, and Ethereum all feature non-profit foundations to watch over the growth of the network and to recruit new projects to work in and around the protocol. Bit.Game is setting its supporting organizations in the similar fashion to Neo with not only a foundation, but also a development arm (BGDL, compared to City of Zion) and a funding organization (BGX Investment Fund vs Neo Global Fund).

Overall, I have a positive outlook for the project but that’s primarily based on how well thought out the structure of the ecosystem is, the relatively “small” hard cap of $18M (remember… this is similar to a Series C venture capital round for a company with real products, years of operation, and paying customers), the advisors behind the team, and how well aligned blockchain is with the idea. Holding me back from giving it a stellar outlook is the lack of technical detail in their whitepaper, code for audit in their public repository, and a working product to show. As always, not financial advice and do your own research.

Thanks for reading.



Sources:

  1. Bit.Game website
  2. Bit.Game whitepaper


 

Quantalysus publishes blockchain research and analysis for the crypto community. Please follow on TwitterSteem (please follow and upvote if you can – thanks!)Telegram channel (New!), and Medium to stay up to date.

My ICO rankings (anything above a 60 by the way I would seriously considering investing in… call me a harsh grader)

If you learned something:

Other posts:

3 thoughts on “ICO Review: Bit.Game (BGX)”

Leave a Reply