Mechanism Capital / Mechanism Play – Fund - Contributions

Hello to the Merit Circle Community!

This is Marc Weinstein writing. I am Partner and Head of Platform at Mechanism Capital. I spend A LOT of my time supporting the founders of our portfolio companies, especially in the crypto gaming space.

If you’re not familiar with Mechanism, we’re one of the leading early-stage funds in the crypto industry – we’ve made investments into 25+ protocols in the blockchain gaming space (our sample portfolio) since our inception including Yield Guild Games, SnackClub, Star Atlas, and Ember Sword. We’re crypto-natives as many of us have been in crypto since 2016-17. We also trade spot and derivatives in public markets, participate in DeFi, and contribute ideas to the crypto ecosystem.

We support the industry through dedicated research that we post on our website and our Twitter. This research includes high level writing on mega trends like p2e gaming, or more nuanced work on the appropriate token liquidity incentives for protocols. For our portfolio companies we help source and structure partnerships, design liquidity mining programs, and shape marketing strategies (among other work which you’ll see below).

We try to maintain a disciplined, data-driven approach to crypto markets while backing the most passionate, hard-working, talented, and sometimes crazy founders.

As crypto natives, we’re excited by and encourage experiments in DAO governance, and when we have novel ideas and capacity, we do our best to contribute to public governance forums – as we recently did with this Frax Finance proposal.

We’re a small team of 7 investment professionals and do our best to use the resources we have available to perform high impact, high leverage tasks for our founders behind the scenes.

We were one of the early investors in the guild and crypto gaming vertical and recently launched a dedicated gaming arm called Mechanism Play. For this fund, we brought on a new partner, Steve Cho, from his senior role at Apple where he worked on the app store focused entirely on gaming.

Our $MC receiving address is: 0x323D95D3c6D199AD9d035e122115F5a5b58F5F83 and we intend to stake the $MC that will begin to unlock on May 5, 2022

- Value-added to the Merit Circle DAO so far:

While we haven’t been extremely active in the public governance forum, behind the scenes we have been working hard for the Merit Circle community.

TLDR on specific deliverables:

  • Introduction to over 1 dozen investment opportunities leading to MC’s investment in Avalon (an incredible team building a new metaverse that we believe will lead to substantial gains for the MC DAO)

  • If we have any say in the cap table for a hot deal that Merit Circle is interested in, we fight for them. So far this has happened two times.

o First, we facilitated the investment in another guild whose round was 5x oversubscribed. MC received $250k allocation in the round, while many others were cut out

o Most recently, MC indicated interest to invest $750k into the oversubscribed round of a hot game studio. The founders planned to squeeze Merit Circle from their $750k investment request proposal to $50k, but we helped them secure a $350k investment. I cannot share the company info because the deals are non-public, but the Merit Circle team can verify

  • Introductions to partners like Avalanche which is rapidly scaling its gaming ecosystem and BlockchainSpace, an early DAO and p2e gaming analytics protocol

  • Introduction to a leading US exchange that ultimately led to an $MC listing

  • Access to two Mechanism Capital founders channels on telegram that provides direct connectivity and idea-sharing to over 150+ of the top builders in the industry. –

o Through these channels we help facilitate dialogue, partnerships, and sometimes investments between our portfolio

o We also use this channel to share potential candidates (one of the most frequent asks from founders is around sourcing quality talent). We source these through our network and those of partners like Proof of Talent, 10x Recruiting, and SuperMomos

Merit Circle is one of the earliest/most successful blockchain gaming organizations, so the information flow is a two-way street. We learn a lot from them and hope they feel the same. When you have an exceptional team like theirs, one of the most valuable things a VC can do is to get out of the way, but continue to give “air support” on an as-requested basis.

We see A LOT of deals in the market and keep track of the overall evolution of the space whether it be new token models, DAO tooling, or the ideal listing & liquidity strategy. When founders are heads-down building, they often (necessarily) have tunnel vision, so we provide them with insights they may not otherwise see.

Hopefully, this helps clarify that when Mechanism Capital is announced as an investor, we provide more than just our $ and pretty logo to the ad mat

- Currently working on for the Merit Circle DAO / - Plans to work on individually for the Merit Circle DAO in future:

  • Continue to share data, research, talent, partnership, and investment opportunities with the team

  • Continue to act as multisig signor

  • Remain available to support the team on any direct requests around capital raising, token listing, marketing, or strategic development

  • Advise on best practices for mobile strategy / getting approved for Apple’s appstore for Merit Circle’s exchange

  • Introduction to BreederDAO for development of burn/mint mechanics for in-game assets + direct supply channel to other guilds who ultimately will participate in new Merit Circle games

- What ideas do you have for the Merit Circle DAO:

  • Double down on Africa. When we invested in Merit Circle, the access to the rapidly growing, mobile-first, technology users in Africa was a meaningful part of the thesis (especially because we believe the guild ecosystem will evolve vertically across geographies and horizontally across games)

We can help facilitate a partnership with Mechanism Capital portfolio company, CoinMara, who are building one of the leading exchanges in markets that overlap closely with Merit Circle’s original scholars. This could lead to a massive influx of potential players for games published by Merit Circle from countries like Nigeria, Kenya, and South Africa; that would be synergistic to both CoinMara (providing players) and Merit Circle (providing content)

  • Continue to scale the publishing vertical. Given MC’s massive treasury + marketing reach and reputable position in crypto gaming, we are well-positioned to publish new titles (especially in specific regions like Africa)

  • More guild partnerships to strengthen geographic alliances (SnackClub in Brazil, Ancient8 in Vietnam)

  • Non-dilutive grants to artists and other content creators who will contribute to the future development of MC games

  • Launch a research arm that shares reports on the gaming ecosystem. Merit Circle sees so many early games and is a pioneer in the Web3 gaming space, we believe our insights would be valuable to the overall gaming community. Mechanism team would love to collaborate on this research, guest post, and promote on our social channels

  • Close collaboration with Twitch, YouTube, and other streamers, and/or building out Merit Circle’s own team of streamers. This will widen the marketing reach and help extend/onboard nonnative audiences to Merit Circle titles

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Thanks for taking the time and being the first to do so.
Excited to have you and your team along for the ride.

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Thanks for your extensive post and your support. Looks like you have added a lot of value already and looking forward to what you will do going forward!

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It is very nice to read that Mechanism capital is very supportive in MC and have long term conviction. This is a fruitfull parnership, thanks for the honesty and opennes.

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Thanks Marc @MechCap

Congrats on being the first!! I think possibly even the first ever in web3 to produce such a thread since this is the first DAO initiative of its kind. I think the DAO community will greatly appreciate your engagement, transparency and support.

As a member of the Merit ltd team, I can attest to everything said by Marc in the main post. Mechanism has been a valuable and consistent partner to Merit ltd and the team. Translating into valuable opportunities for the DAO.

We look forward to many more years of close cooperation in our shared mission to grow the Merit Circle DAO, the web3 and the GameFi space.

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Hi Marc / @MechCap,

I appreciate the great post and the value you have added in the background. I never really knew much about Mechanism until now. I am sure much of this work goes unnoticed in the public eye and gets taken for granted, so it’s great to share with the community. I think transparency like this shows the strength of our strong VCs and willingness to try something different.

You have hopefully started the ball rolling on transparency from seed in this space. Arguably one of the first incidents in general, I would say. Thanks for being first and willing to put your stamp on the governance forum.

Best regards,
AS

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Thanks Marc @MechCap, and congratulations on being the first with such an open and transparent post.

We’re proud to have you in our ranks, and look forward to making the Merit Circle DAO and its ecosystem the best it can be.

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Henlo @MechCap and welcome to our DAO forum.

Thanks for taking your time to write such an incredibly detailed post about your engagement and contribution to Merit Circle DAO.

Appreciate the transparency and continous value production for our community.

This is incredibly based to say the least, hopefully you set the level of transparency here that web3 community has never seen before. Such initiative brings a lot of education to the retail participants and educate them on operations of early funding contributors and VCs.

Regards

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Hey Marc,

Thanks for starting up the first thread within the Accountability sub-forum. Good to see your openness, transparency and value-add. :+1: