What is AFKDAO (AFK) and How Does it Work? | KuCoin Crypto Gem Observer
The web3 ecosystem has been expanding rapidly, with the decentralized finance (DeFi) and non-fungible token (NFT) spaces unlocking significant milestones in the past year. The NFT sector quickly rose to prominence, becoming a multi-billion dollar industry. This growth fueled the growth of GameFi, especially games that leverage a play-to-earn (P2E) model.
At the beginning of the year, the GameFi industry had a market cap of $23.5 billion, while the total value locked in DeFi in Q4 2021 was $106 billion. However, the different operating mechanisms have prevented DeFi market participants from getting involved with the NFT space.
Additionally, the crypto industry does not fully address the needs of the P2E economy at the moment. As a result, the main stakeholders in the P2E ecosystem, guilds and project teams, face multiple challenges. This setup also poses difficulties for potential investors in the ecosystem because they lack a gateway to monetizing their NFTs without selling.
To address the shortcomings afflicting the P2E ecosystem, AFKDAO launched as a platform comprising four components. These include a Game Asset Launchpad, Game Aggregator, NFT Liquidity Protocol, and DAO governance.
Through these integral parts, the platform offers a smart gateway for anyone to participate in the P2E ecosystem. AFKDAO also helps P2E projects bootstrap their economies. On the other hand, the platform helps pro gamers profit. Check out what is AFKDAO (AFK) by watching the video: https://youtu.be/ZQ2VArMlfG0
How Does AFKDAO Work?
AFKDAO allows its members to mint badges to get early access to in-game NFTs through its Game Asset launchpad (IGO launchpad). The project also offers whitelisted guilds and pro gamers the ability to build their staking pools, where NFT holders can lease game assets and earn yields.
AFKDAO selects and vets all assets that go live through the IGO. To ensure only the best projects make it to the IGO, AFKDAO needs them to have growth potential, sustainable tokenomics, and the capability to keep operating even after facing security risks.
Members can purchase IGO items through a mystery box, an auction, and a flat-price sale. To participate, members need to own an AFK badge and stake $AFK, AFKDAO’s native token. AFK badges are NFTs that represent the identity of AFKDAO members.
There are five badge tiers and offer access to various services on the platform. Additionally, AFKDAO members get royalty points dubbed AFK Points. AFKDAO awards AFK Points based on badges and the amount of $AFK staked.
Purchasing IGO items comes at a fee. The project levies 10% of the IGO mystery box selling fee, 3% of the NFT trading fee, and 20% NFT auction fee as a service charge. AFKDAO then transfers 50% of the service charge to the treasury and burns the other 50%.
The game aggregator lets NFT holders put their in-game assets to work through an interface that almost resembles a DeFi yield aggregator with automated P2E strategies. Notably, AFKDAO features a delegator protocol, which allows anyone holding ERC-721 and ERC-1155 in-game assets to lease them seamlessly on-chain.
By loaning out their assets, lenders offer borrowers access to in-game NFTs for P2E purposes without risking their loss. The delegator protocol features low-collateral lending and borrowing pools, which helps unlock the liquidity value of gaming assets. This helps abstract away from the inefficiencies of NFT lending.
AFKDAO’s DAO governance allows members to vote on treasury policies. These include voting on various matters, including which games and NFTs to accept into the game aggregator and how to use or distribute funds in the treasury.
The treasury’s role involves monitoring the platform’s assets, rationalizing financial allocations, maximizing the efficiency of asset management, and bolstering the guild’s earning performance.
What Makes AFKDAO unique?
AFKDAO aims to set itself apart by offering a lending and borrowing protocol similar to Compound Finance for widely accepted in-game assets. In so doing, AFKDAO streamlines lending and borrowing by enabling both activities to take place at any given time.
NFT owners will be able to stake their assets at any given time and get a dynamic interest. Additionally, they will get access to an indefinite number of players that offer different interest rates for borrowing NFTs. The delegator would ensure lenders only provide access to their NFTs, not their ownership.
On the other hand, borrowers will have to deposit an optional amount of reward tokens depending on the pool as collateral. The collateral will go toward compensating lenders or any discrepancy between the total revenue generated within a billing cycle and the minimum return allowed.
In the future, AFKDAO also plans to introduce an Oracle for Game-Fi and non-collateral NFT lending.
Who Created AFKDAO?
The team behind AFKDAO comprises Ben Gothard, Nick Qi, and Colin Hebert. Gothard is a serial entrepreneur, author, influencer, and game enthusiast. On top of this, he is the founder of Crypto Gaming Institute.
Nick is a tech lead with vast experience in Blockchain, AI, Fintech expert, Python, R, Tensorflow, Spark, Nodejs, Web3, Solidity Development, and Cloud Service. He previously worked at Menulog, Cognizant, Deloitte, and Optus. On the other hand, Hebert is a tech founder, UX expert, and front-end developer.
By bridging the gap between DeFi and NFT sectors, AFKDAO positions itself to revolutionize the P2E ecosystem. This connection helps NFT holders put their assets into use by leasing them to pro gamers without risking their loss. On the other hand, pro gamers borrow in-game NFTs and make a profit, all while avoiding the expenses of purchasing the NFTs.
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