Inside an ‘NFT factory’ that’s shaking up GameFi

Players looking to get into crypto gaming are facing a major hurdle: The cost of joining is almost criminal, sometimes as much as 25x more expensive than a PC game.

But a company that launched in the Philippines just three months ago is already changing that. BreederDAO has developed a way to mass produce high-quality non-fungible tokens that can be sold to gaming guilds, which can then rent out the digital assets for a portion of the player’s earnings (if any), CEO Renz Chong told Tech in Asia. This NFT factory could help drive down the entry costs for crypto games and remove an industry-wide bottleneck that has slowed growth.

If this all sounds confusing, Chong admits that it’s difficult to explain what his company does, even to his friends and family. But that hasn’t stopped BreederDAO from raising over US$10 million in venture capital and turning US$2 million in profits in just three months. Its series A funding, which was done via a token sale, was co-led by Silicon Valley-based Andreessen Horowitz (a16z) and crypto research firm Delphi Digital.

But to really understand what BreederDAO does requires some knowledge of crypto games, part of a quickly growing segment called GameFi or play-to-earn games.

To even play Axie Infinity, a popular crypto game that sees as many as 1 million active users each day, players must first purchase three axies – NFTs of cute monsters that will act as their character or game piece.

See also: Explaining Axie Infinity and its mercurial rise

Axies can only be purchased on the game’s marketplace, where listed prices start at around US$50. A creature that can actually win games will cost more. The price of NFTs are even higher on newer games, such as Crabada, where a digital hermit crab – also called a crabada – can easily cost over US$1,000.

Enter the guilds

Because of the high entry prices, new players often rent NFTs from gaming guilds such as Yield Guild Games, Merit Circle, and others.

These users are known as scholarships, and they give a portion of any money they earn from playing back to the guild and its members. But guilds say demand for new characters, especially top-quality NFTs that increase the likelihood of players making money, is so high they can’t meet it.

“The single biggest pain point for guilds these days is a lack of quality supply in the marketplace,” Chong says. “Yes, there are over 600,000 axies in the marketplace. But of those 600,000, how many are actually usable?”

This is where BreederDAO comes in. It has created software that mass produces or “farms” NFTs by using Axie Infinity’s “breeding” mechanics. Just like on a real farm, breeding is selective and aims to produce good offspring.

“It’s not blindly breeding or just randomly combining these axies,” Chong points out. “We analyze quality ones and what allows a specific axie to dominate a specific match. Then we produce those traits at scale.”

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