👀 VCs' #1 bet right now

GM everyone. This is 2036, the crypto newsletter that pays you.

Here’s what we’re serving up today 🍲: that’s it - the numbers are in. One sector has dominated VC funding in the crypto space this year. Is it time for us to invest?

Let’s dig in.

🥔 Today’s meat and potatoes

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You’d be forgiven for thinking the world’s most valuable Intellectual Property (IP) were movies or books.

But that award goes to games.

As of this year, Pokemon is the most valuable IP in the world:

The gaming industry is already bigger than the entire music and film industry combined.

Take the most successful Harry Potter movie. It made ∼$300 million in its first two weeks.

But the latest Harry Potter game made $850 million in the same time period.

Harry pulled a Wingardium Leviosa on those sales.

A lot of investors dismiss games. After all - ‘they’re for kids.’

Much better to invest in the serious stuff of grown-ups, right?

Venture capitalists aren’t entirely convinced.

In Q3 of 2023, a whopping 63% of all funding in the crypto space went into crypto games.

These are games that incorporate blockchain technology in one form or another.

Typically, this means:

1/ Players can own their in-game items, assets, and characters and freely transfer or sell them to others.

Today, if you start playing World of Warcraft and get locked out of your account - tough luck. There’s nothing you can do about it.

That’s exactly what happened to Vitalik Buterin. He cried for days. Then, he realized the value of decentralization. Then, he co-founded the Bitcoin Magazine.

And then he created Ethereum. Bad mofo.

2/ Games can reward their most die-hard fans with special in-game rewards for accomplishing certain milestones.

Games have experimented with paying everyone to play (play-to-earn).

But that didn’t work.

Now, some of them will reward only their best players to create extra player incentives.

3/ Investors can own the IP around which games will be built.

Yuga Labs - founders of the Bored Ape Yacht Club - and Veefriends (by Gary Vaynerchuk) are both trying to do this.

They’re building IP in the form of NFTs intended to be used inside different ecosystems, including games.

Imagine buying an original Pikachu NFT in 1996 that could be used in every Pokemon game and licensed to every Pokemon film in perpetuity. Not a bad deal.

Games are also a foundation for a possible new Metaverse, so everyone from Zuckerberg to… Zuckerberg is paying attention.

You get it - gaming is big business. A16z - the world's most prestigious VC firm - raised a $600 million fund just to find the next viral game.

But how do we - mere mortals - get on in the action?

Here are different ways you can approach it…

a/ Invest in the games directly.

This means buying NFTs or tokens of existing games like Axie Infinity, Illuvium, Otherside, MixMob, Sipher, Parallel, etc.

This is high risk, as any game can go to zero. But the upside is immense if the game takes off.

When Axie Infinity - the most popular play-to-earn game - took off, its token $AXS increased ∼360X.

It is down -97% since then.

b/ Invest in platforms that power other games.

GALA, Decentraland, Magic, The Sandbox, etc., are platforms that allow creators to build other games on top of them.

They all have tokens and allow you to spread your bets more widely across ecosystems.

c/ Invest in the blockchains that power crypto games.

Some blockchains - like Bitcoin and Ethereum - were not designed to process millions of transactions per minute.

But others are.

Blockchains like Solana, Avalanche, and ImmutableX are making specialized forays into gaming.

As games built on their blockchains take off, they’ll capture part of the upside.

Now - we’ll be real with you.

Crypto games are down -95%+ from their all-time highs in 2021.

But after 2-3 years in development, some incredible games are about to come out.

We’ll keep you updated on the ones worth paying attention to.

🍨 Dessert

Stories to read if you have FOMO

1/Billionaire Paul Tudor Jones backs bitcoin and gold as geopolitical risks rise

2/ Amazon and Immutable want to make it easier to launch crypto games

🖼️ Crypto meme of the day

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