MIP-18 Investment in Project Firebrand & Roadslide

Authors

  • DAO Investment Committee

Summary

The DAO Investment Committee proposes to make a $3M investment in “Project Firebrand” at a pre-money valuation of $80M with a 1.25% advisory token allocation and a $5M investment in “Project Roadslide” at a pre-money valuation of $40M with up to 2% advisory allocation (based on performance).

Project Firebrand: codename used to maintain confidentiality during fundraising - team is fully doxxed, a veteran 100+ person studio building a AAA Web3 shooter for PC and consoles. They have a successful track record in the PC/Console space, and their past games have generated tens of millions of dollars in revenue.

Project Roadslide: codename used to maintain confidentiality during closing of the fundraising - team is also fully doxxed and have a significant track record in their respective area. They had successful and profitable games for years and will bring fun, engaging sport mobile games to the web3 space.

Abstract

Without diving into the specifics of the games themselves, we would like to share a couple of thoughts on our current investment thesis and our view on the current industry.

The market is evolving, and so is our investment approach
The “first wave” of blockchain gaming was dominated by crypto-native teams that sometimes lacked meaningful game development experience. Initially, they are focused on the technology aspect on the blockchain side, plus its in-game economy and secondary the game development itself. The game-development experience is often acquired through individual hires.

While we believe that the best of these teams will ship projects that are successful, it became evident that we are now at the start of the “second wave”, marked by the arrival of veteran teams with a long track record in the games industry who are moving into web3 for the first time.

The Merit Circle DAO’s expertise complements the skills of these veteran gaming teams extremely well. Considering the Merit Circle DAO is a web3 native organization, we are in the perfect position to complement teams first introduced to these novel technologies. We are working hand in hand with these veterans as they work through key elements such as economy design, blockchain selection and go to market strategy.

Fewer, more concentrated bets
In order to give our founders the attention and support they deserve, focus is key - this means making fewer, but bigger, bets. Trading greater diversification for higher concentration may sound risky, but we believe the opposite is true. By reserving larger amounts of both our money and our time for our highest conviction opportunities, we both maximize our exposure to the upside and our ability to contribute to the likelihood of the best outcomes.

On that note, we are extremely excited to share more information about ‘Project Fireblock’ and ‘Project Roadslide’ (codename used to maintain confidentiality during fundraising) and why we are convinced about these investments.

Motivation

We would like to break down the motivation to dive into these specific games in various topics.

1 - Team, team, team
Project “Firebrand”: The founders and senior team members have held lead roles on some of the biggest and most successful games in the industry, including Diablo III, Valorant, League of Legends, Overwatch, Division 2 and Horizon Zero Dawn. Much of the team has worked together for more than a decade. Why does this matter? Simply put, individual talent is valuable but not enough - game development is a complex and deeply collaborative process with many interdependencies and it takes time for teams to gel. There are no shortcuts to building a team like this. Even more exciting is that this team is already at scale - with more than 100 developers already working on the game, they are well positioned to deliver a AAA-quality shooter that competes with the best of the genre.

Project “Roadslide”: The team has been together for several years - where they shipped several comparable seasons which still has above a million monthly active users. Featured and chosen by both Apple and Google editorial teams dozens of times, showcased by Facebook, Samsung, Huawei and others as a top leading premium game and reaching top charts in 87 countries

2 - Self-sustaining games that last forever
Project “Firebrand”: Unlike the “first wave” of blockchain gaming, this team’s first principles are starkly different. First, the team is establishing in-game meta-systems that naturally evolve and spark innovation over time through the positive-sum decisions of players in the game, thus sustaining the game’s growth without much direct developer intervention. Second, the team is building game economies that are durable over time, forever ensuring price stability for common goods and low floors to entry so the game remains accessible with no upper bound for the number of players.

Project “Roadslide”: The main difference between seasoned crypto natives dabbling in game development and Roadslide, an experienced gaming team is mainly data. Over the years of building games, the team learned so many interesting facts about the tendencies of players in the game. What makes players play, come back and what drives their decision making. They have seen it all, and can perfectly use these lessons to create a sustainable and engaging game economy.

3 - Play-to-Contribute
Project “Firebrand”: This team is building a AAA shooter title with a meta-design that has been proven to be timeless yet still novel in standout features – a game that players play for the sake of playing, not out of obligation nor pure financial incentives. Ultimately, this team understands the necessity for the game to satisfy core human needs such as a sense of deep emotional investment – human connection, sense of belonging, and self-actualization.

Project “Roadslide”: Taking into account the years of game development, and the experience of building a game with over 250 million downloads, it’s safe to say that this team knows what it takes to build a fun game. Similar to Firebrand, the goal here is to create a really fun game that people will want to play for the sake of the game, not the financial incentives that come along with it.

Budget

The total budget is $8M in USDC divided in $3M to Project Firebrand, and $5M to Project Roadslide.

Rationale

Beneath, we have compiled a list of questions that might be asked after going through the proposal above.

Isn’t it smart to keep a large USD position in these uncertain market conditions?
Currently, we already possess a USD position of more than $60M when including all staked positions. The acceptance of this proposal would bring our USD position to roughly 50M+, which we consider to be enough to continue with the following activities for the foreseeable future;

  • Continuous investments in seed rounds
  • Continue development of in-house products
  • Continuous stimulation and development of new products
  • Maintain current and future contributors that contribute to the DAO

Considering we already have an advisory stake, why don’t we lower our investment size?
The height of the advisory stake is obviously correlated with the investment size. Therefore lowering that amount would also lower the advisory stake. Both ticket sizes are to equal the largest investor in the round which gives us certain weight into discussions.

Are we somehow managing the risk we are taking?
The team is working with both parties to bring them to Sphere (and probably even a native marketplace integration) to have royalties to the DAO without touching the investment base itself for the foreseeable future. Moreover, we deem both projects to have a much smaller risk of failure than the average investment. Both because of the teams working on it and the category they are servicing. This is why we are comfortable doubling down on both projects. It also means we will be even more hands-on than we already are with other projects, to make sure the projects will reach their potential.

Copyright and related rights waived via Creative Commons CCO

10 Likes

Henlo,

A very big YES to both!!! Finally the potential for strong teams and AAA games to give a nice shine to Web2/Web3. Exciting

honey-with-wooden-barrel-vectors

Honey Barrel
Vanquisher of non-Frens
The Freefolk Fellowship

6 Likes

Hard yes for both of these!! The team and plans behind these projects sound as cool as their codenames.

3 Likes

I believe this is precisely the sort of investment Merit Circle should be deploying funds to, I’m excited to see some true AAA games that integrate Web3 at their core and not just an afterthought to cater to the Web3 crowd

3 Likes

A big yes to both! This is brilliant progress for the DAO and bigger investments with a higher level of conviction is certainly pleasing.

One question: What is the reason for the $3million to $5million split and not $4million into each project?

3 Likes

Recently I’ve had a look at past investments made by the MC DAO. Seeing this proposal, I thought it might be interesting for more people to have a look at the numbers.

All data was taken from treasury.meritcircle.io, this just include the “Token” data. If the “purchase value” increased to the previous month, I suspected a new investment was made.

Total Investment Amount: $22,597,061
Total Investment Count: 69
avg Investment Amount: $327,493

avg Investments per month: 7.7
avg Investment Amount per month: $2,510,785

3 Likes

Greetings,

This is Admiral Erik von Pumpson of the MC Enterprise.

Immensely excited about these stronger conviction bets. Yes, it’s a lot of money, but then again, good games are costly to make. Curious to finding out more details, but I’m sure that will come in the future.

It’s been about time we are getting a stronger ‘Web2’ presence in the ‘Web3’ world. Experienced teams who already have a great track record will start a new phase in gaming that will change. With both Merit Circle and the game teams working together, I think we’ll be able to have a great set of titles that will please many gamers but also current (and future) developers alike.

Many gamers are still disappointed in the purely Web3 games out there and want to see stronger games come to fruition, and on the other side, developers are waiting on trendsetting game studios to carve their way into the space.

This is definitely one of the larger investments Merit Circle is doing, so I’m wondering what entailed their final decision. It must be two very promising titles to warrant this size. Can’t wait!

Signed,

Erik von Pumpson
Admiral of the MC Enterprise
Ascending Galactic Federation

4 Likes

Sounds very interesting. What are the forecasted delivery dates for both projects? And what are our conditions (cliff, vesting, any important constraints).
Thanks!

Thanks for bringing this to teh community. Am a bit pressed for time but fully agree with other positive comments here and will vote YES!

Very nice work and a big fan of moving towards bigger bets with a lot of conviction and involvement

2 Likes

Meow,

Thank you to the @DAOCoreContributors for another exciting proposal!

At Sad Cat Capital, we are firm believers in focused, high conviction investments, which center around strong fundamentals, as well as highly promising teams who align with our core principles. When the Merit Circle DAO is offered the chance to make such investments, we believe it should be seized with both paws! Not only will this offer the DAO the greatest financial benefit, but it will allow Merit Circle to give each partnered project the dedicated support, advice and backing they deserve. We know for a fact that Merit Circle is one of the strongest allies to have in GameFi, and the DAO’s partnered projects know this as well.

GameFi, and cryptocurrency as a whole, is an industry in which most projects will ultimately fail in time, and this is the main risk presented when involved in early-stage investing. Handpicking only the most promising, key titles not only minimizes investment risk, but also provides the DAO with accomplishments its members can take pride in. We want the DAO, and its members, to be proud of the games and teams it invests in. This is a chance to help build the future of Gaming, and we will brand our mark upon GameFi by ensuring teams, such as the ones behind “Firebrand” and “Roadslide”, receive the support they need to build cutting-edge games we can enjoy for years to come.

Building this future is not an easy task. We know that we live in a rapidly evolving and experimental world. Like any introduction of new technology, there is already resistance from the “status-quo” who are skeptical of change. As mentioned in the proposal, this resistance has primarily been in response to the “first wave” of Web3 games, which focused too much on the technology side, and not enough on the fun gaming side - something which left some gamers disappointed. If we can show the world that it is possible to have successful games that are not only enjoyable, but also take advantage of the latest technology, the space will undoubtedly rapidly grow with gamers that are ready to experience this innovation first hand.

Teams such as the one building “Firebrand” which have a repertoire of games such as Diablo III, Valorant, League of Legends, Overwatch, Division 2 and Horizon Zero Dawn, have an astounding track record of delivering highly enjoyable and fun games, and with a team of over 100 developers already working, we believe “Firebrand” to be an significantly strong investment for the DAO to make.

Likewise, the team behind “Roadslide”, which has delivered ongoing games with millions of users, as well as a game with 250m+ downloads, is a team which knows how to acquire users, and most importantly, keep gamers interested and playing the game - something which most “first wave” Web3 games failed to do. We strongly support investing in the “Firebrand” and “Roadslide” projects, and are excited to partner with both of these teams.

We will be voting a firm YES to this proposal, and are delighted to see the Merit Circle DAO progress with high-conviction, high-potential investments.

Signed with right paw,

Purrseidon

1 Like

Also big Yes from my side. The projects presented seem very promising. Thanks to @DAOCoreContributors for making this possible.

1 Like

Agree with most what was said above. It’s great to be able to invest in experienced teams for once. So a big YES

1 Like

It’s a yes from me. Ultimately the success of the game matters more than the technology aspect.

High conviction bets in established teams appeals a lot more to me than lots of smaller games that seem indie with less shelf life.

We should be investing with significance in the next COD or WOW - not the next Snake.

I believe the MC community will better be able to get behind and support a smaller number of higher profile games too.

Great work team, I’m bullish as always and thank you for your hard work.

2 Likes

Hello,

This sounds like an exciting opportunity. Could we please have a better sense of why the substantial pre-money valuations? Does it mean the games are pretty far along their development process? Or are they just beginning their development and we are just paying for the team expertise/prestige?

Best

2 Likes

I am wondering about this as well! Would appreciate a response.

Regardless of what the answer is, I am excited for the proposal.

1 Like

Super excited with this new investment strategy.

Making Concentrated high conviction bets is a great way to maximise returns.

Would love a bit more details on how far along the game dev both the teams are .

Regardless will be voting yes for this proposal.

1 Like

Thanks everyone for the positive responses. To answer some of the outstanding questions;

@JGdog23 One question: What is the reason for the $3million to $5million split and not $4million into each project?

The round composition did not justify an equal split based on the total amount raised and the valuation. However, in both rounds we are equalling the largest investor .

@timour Sounds very interesting. What are the forecasted delivery dates for both projects? And what are our conditions (cliff, vesting, any important constraints).

In both cases we are talking about a mixture of both equity and token warrant. This means that vesting terms are to be decided. However, we have a strong voice in designing them in collaboration with both teams.

@BVM101 This sounds like an exciting opportunity. Could we please have a better sense of why the substantial pre-money valuations? Does it mean the games are pretty far along their development process? Or are they just beginning their development and we are just paying for the team expertise/prestige?

When talking about the development of both games, we can’t share too much. However, the valuation of both projects is justified by the stage they are in. We’re not talking about teams with empty promises, but teams who can actually deliver, and already have something to show for before revealing anything to the public.

Considering the overall positive response to this proposal and the passing of the 48 hour discussion period, we will proceed to voting.

2 Likes

The vote is now live: Snapshot

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@DAOCoreContributors thank you so much for your responses, In the end a vote here is truly simply a vote on your judgement and competence…as we truly are privy to know way too little about the possible deal to make an informed decision on valuation, potential, etc! But I trust MC core team judgement, so I will voting to support your decision.

Best

1 Like