For a brief moment in 2021, it seemed like cryptocurrency had finally found its killer use: video games. Play to earn game Axi Infinity attracted millions of users, and platforms like Sandbox raised venture capital funding. Perhaps most promising of all was a highly publicized metaverse project from Argentina called Decentraland, whose token, known as Mana, exploded by a whopping 6,000%.
As the hype around crypto games grows, one of the founders of Decentraland, Ari Meilich, decided to launch his own game, an NFT-based multiplayer role-playing game called Long time. The project has raised $10.3 million from well-known crypto investors, had a successful test run, and has reportedly generated millions of dollars in profits. Meilich then decided to invest in the crypto markets.
As the documents of the bankrupt Genesis company show, Long time invested most of his capital not in growth, but in a high-risk crypto lender in the hope of earning more than 5%. His $20 million bid is now frozen, making him one of Genesis’ top creditors. Experts say Long time’This bet was not only a highly unusual move for a game still in its early stages of development, but also a reckless gamble that could jeopardize the future of the company.
The rise of cryptocurrency gaming
Ari Meilich began development of Decentraland with Esteban Ordano in 2015 as part of a crypto-centric hacker house in Buenos Aires called Voltaire House, envisioning the metaverse platform as a kind of utopian alternative to the real economy.
In the following years, games became a potential channel for cryptocurrency to enter the mainstream – players could participate in role-playing games or first-person shooters and be rewarded in the form of tokens and NFTs, which the developers said would give gamers more control and autonomy. .
Decentraland bills itself as a cryptographic version of Second Life’s groundbreaking virtual world, allowing players to purchase virtual land and other items using the Mana metaverse token. Despite attracting only a relatively small number of players, Decentraland became the first metaverse project to use blockchain technology, which quickly made it a darling in the crypto industry. During 2021 and early 2022, Mana Decentraland’s tokens surged, while major brands such as Dolce & Gabbana and JP Morgan opened a virtual lounge on the platform in February 2022.
Due to Decentraland’s reputation, Meilich’s next project…Long time— came with a flood of hype at a time when crypto investors were salivating at the prospect of the Web3 game becoming mainstream. While Axi Infinity recruited an impressive number of players, the vast majority of whom came in hopes of making money – primarily young workers in the Philippines and Vietnam who treated token farming like a full-time job. Long time, however, it promised to be an NFT-based game that would connect with real players.
Luck got a pitch deck that Long time distributed in December 2021 ahead of the planned Series B funding round. Long time was in the early alpha phase of development and the game was available to players bought NFT-passes. As the overall NFT market grows, Long time boasted impressive stats for a game still closed to the public, including $38.5 million in NFT primary sales and over 89,000 users.
The deck shows that Long time raised a $10 million Series A round of funding in March 2021 with investors including Sam Bankman-Fried’s Alameda Research and Digital Currency Group, the parent company of Genesis. In the deck Long time also revealed that it raised $110 million in Series B in January 2022.
This round of funding never came to fruition. Long time’growth continues.
According to Crunchbase, Long time did not raise additional funding after the $10.3 million Series A. And today, the game is still in closed alpha, available only to players with NFT passes.
Ari Meilich did not respond to multiple requests for comment from Luck.
Luck also addressed several Long timeinvestors, including Ashton Kutcher’s Sound Ventures, North Island Ventures and FBG Capital, but received no response.
“Very strange and very doubtful‘
With the onset of the “crypto winter” in 2022, the NFT market evaporated and total trading volumes fell by 97%.
As Long time is still in closed alpha, analytics platforms such as DappRadar are not yet tracking the activity of many of the NFTs traded through Long timeprivate market. Pedro Herrera, head of research at DappRadar, said that once the game goes live, players will start earning rewards on the network through NFTs or tokens that the platforms can track. Currently the only way to track Long time’popularity thanks to public marketplaces such as OpenSea and Binance, where Long time sells NFT passes that provide early access.
The total cost of two Long time collections for sale on OpenSea is 2,000 ETH, or about $3 million at today’s prices, but trading volume has been sluggish over the last 90 days. One collection sold only 64 times for about $5,000, while sales of the other were even more sluggish. Together, the two collections have fewer than 2,000 owners.
With a clear drop in income, Long time probably still had a significant runway thanks to profits made during the crypto boom cycle and the company’s Series A funding round. However, Genesis documents show that Big Time has placed $20 million of its treasury on a now bankrupt lending platform, an investment that is currently on hold.
Leading crypto gaming venture capitalist who spoke with Luck described the move on condition of anonymity as “very strange and very dubious”.
Before the collapse of the TerraUSD and Three Arrows Capital fraudulent crypto projects in May last year, venture capitalists who had not invested in Long time or Decentraland said it was popular for companies to invest some of their funds in Genesis because the platform offered returns above 5%.
Long time was probably holding a high percentage of his treasury on Genesis when he stopped withdrawing funds, which gaming VC said would be a bad decision for any company. Long time, however, he was still creating a game not yet open to the public, making the move even more risky. The venture capitalist said the money should have gone to hiring and other development instead. While negotiations between Genesis and lenders could release the frozen funds in the coming weeks, they are currently not available to investors.
Meilich, Long time’s, was not the only one among his colleagues from Decentraland who trusted Genesis with his money. According to bankruptcy filings, his co-founder Esteban Ordano had over $25 million in Genesis through Panamanian-based Winah Securities. Decentraland’s current CFO Santiago Esponda had over $55 million on Genesis through another company called Heliva International Corp. headquartered in the same building as Winah in Panama City.
The Decentraland Foundation, a non-profit organization that oversees the Metaverse Platform, disclosed He also had a nearly $8 million loan against Genesis last week. Like Long time, Genesis’ parent company, Digital Currency Group, also happened to be an investor and one of the largest owners of virtual land.
With a circular flow of funding, the choice of name for Decentraland’s central plaza should come as no surprise: Genesis Plaza.