LD Capital: GameFi + SocialFi star xPET, is it worth participating?

I. Fundamental Analysis

1. Basic information

xPET is a pet raising game based on the extension program embedded in Twitter, pets can carry out Twitter companionship, Farm, adventure, PVE and other activities to eventually generate Token income, through Token consumption to upgrade pets can expand related income.

Source: xPET official website

The xPET game adopts a dual Token model, XPET and BPET, and the two Tokens have risen by more than 30 times and 10 times respectively in a month since adding liquidity, taking over the last hype enthusiasm in 23 years.

Source: Dexscreener-XPET

2. Core mechanic - Farm

Once you have your own pet, the core mechanic of the project is to farm with pets. All level 7 pets will automatically participate in the farm to farm produce berries (the higher the level of the pet, the faster the berry will be generated), when the pet reaches level 10, the factory can open the factory, and the factory will convert berry into BPET (the higher the factory level, the faster the conversion speed of berry-BPET), and the BPET in the farm can be claimed in the Wallet every 10 minutes. After receiving it, if all the BPET previously invested is withdrawn and the pet is at a new level, the cycle ends.

If you continue to use the newly claimed BPET to further upgrade the pet, a new cycle will be initiated, and the aforementioned repeating cycle of the farm will work like a flywheel.

Source: xPET Official

Since the level of the pet is positively correlated with the output of the berry, and the level of the factory is positively related to the efficiency of the berry-BPET, users will upgrade the pet and the factory in order to obtain higher farm income.

3. New gameplay online - PVE

Pets can participate in the Adventure when they reach level 10 and above, and the Adventure is divided into three levels

Adventure Level 1: Levels 10 – 29 pets are eligible

Adventure Level 2: Pets above level 30 are eligible

Adventure Level 3: Only available during special events. (May be open to everyone, or may be limited to those who meet specific criteria, depending on each activity)

The reward for the adventure is BPET, food and probability dropped xEGG shards (shards can be combined to create 1 – 5 star Non-fungible Tokens). BPET’s reward amount comes from 10% of the total revenue generated from in-game store purchases, pet upgrades, and factory upgrades the previous day. This 10% of BPET is divided equally among the adventure tiers based on the proportion of players in each tier.

Since the higher the level of the pet, the more BPET rewards will be obtained in the adventure, which will also encourage the player to upgrade the pet to obtain additional rewards in addition to the farm.

Source: xPET

4. Other mechanisms

There are some other components around the main line mechanism to enrich the gameplay of the game, the acquisition and consumption of Tokens, such as food can be obtained through Twitter comments “xpet” to maintain pet health value; through the invitation code recommendation mechanism can get more berry, the market can directly buy pets of higher levels and different images, etc.

II. Token economics

The game adopts a dual Token mechanism, at the beginning of the game’s release, the two Tokens can be consumed together for in-game upgrades, and the current in-game upgrades can only use BPET, and the specific purpose of XPET is not yet clear. The design of the entire Token Economics is still in its early stages, and version 2.0 is being updated, and there will be changes and adjustments in the future (including in-game output parameters and other settings may also change).

1, BPET - Game Token

According to the observation, BPET should be infinitely issued according to the output data of in-game users, and the consumption of BPET will be divided into four parts, 10% will be given to the adventure reward, 1% will be given to the project team, 5% will be rewarded with XPET staking, and 84% will be burned. Depending on the user’s daily output and consumption, BPET will dynamically move towards inflation or deflation.

BPET Token can be purchased on the DEX or wait for the in-game Farm to be generated.

2, XPET-Utility Token

The total supply of XPET is 300 million, which is vested in 40% ecological funds, 15% marketing, 30% community, 5% liquidity, 5% team, and 5% reserved. The future is positioned for social use, and there is a lack of detailed use case disclosure.

Source: xPET Official

XPET Token can be purchased on DEX, BPET converted, or staked ETH to obtain 90% of the corresponding value of XPET (according to the market price). Note that the way to obtain XPET by staking may face liquidation as the price of XPET rises (which may also constitute an incentive for the project party to pull the market)

After the XPET Token is consumed, 5% is allocated to the project party, 50% is used for marketing, and 45% is used to redeem the conversion of BPET-XPET.

3. Suppress Token selling

There are some hidden lines in the game design of xPET, and many mechanisms to control the Token Selling are added to help the project Stable Coin price, leaving time for updating the design, such as:

(1) BPET — XPET conversion requires a waiting period: each user can only execute an exchange order of 100 BPET at a time. You need to wait for the previous withdrawal order to be completed before opening the next conversion order. Each user who places a conversion order is considered to be in the queue. The larger the queue, the longer it will take to receive BPET Tokens.

(2) BPET can continue to be obtained by Farm, but the amount consumed relative to output upgrades and other behaviors is very high, if you rely solely on output to upgrade pets, you need to wait for a long time, and it is difficult to sell excess Tokens after upgrading.

(3) Level 7 pets can contribute blueberries, and level 10 factories can convert BPET, new players must invest first, and then accumulate the cost in a waiting period.

(4) The introduction of the PVE mechanism has increased the way to obtain BPET, but receiving BPET will drop 3 levels of pets, which will make the income of PVE drop in the future, and will also inhibit everyone from selling coins quickly.

Third, the revenue model

Game Mining Earnings vs. Token Speculation Earnings

The main income method in the game is currently obtained by Farm, but because the price of the game Token BPET is Fluctuation, if you buy BPET to upgrade pets and factories when the price is high, and the price of subsequent BPET is lower, the payback cycle will be extended when converted to the U-standard. Conversely, upgrading at a relatively low price, accumulating output to selling when the Token price is high will shorten the payback period or amplify profits.

The important thing for Token speculation is to buy low and sell high, and refer to excellent Farmer to grasp the opportunity of short-term undervaluation and overvaluation of the price to obtain profits. Due to the limited supply and the impact of the Token Swap Conversion Period, the price of inflationary XPET is much higher than BPET.

Since it takes a lot of BPET to upgrade pets at the current currency price, it is best to seize the opportunity to earn income through mining, and attach a table of upgrade consumption and berry output:

Source: Getting Started with xPET Pet Journey Tutorial

Fourth, potential risks

1. Economic model risk

The increase in the price of the currency will increase the popularity of the project and the income of early participants, but it will also raise the threshold for late entrants, when the price of BPET is $1, it costs $285 worth of BPET to buy BPET to upgrade to level 7. Owning a level 10 pet and a level 5 factory will cost $685 in BPET, which is not a very low price for most retail investors.

How to strike a balance between the rise in Token prices to build growth expectations and continue to break the circle to acquire new users so that the economic model does not collapse is the most test of the wisdom of the project side, and there is no good solution launched at present. However, a healthy model should be for the project party to maintain a currency price that gradually fluctuates upward, so that new users have the expectation of growth and wealth creation effect, and are willing to consume when entering to look forward to future gains.

I temporarily believe that the model of Token Returns in the adventures planned by the project team is also applicable to the overall Token Economics.

Source: xPET Official

2. Centralization risk

According to a December audit by Beosin, a third-party Blockchain security agency, the xPET project is centralized and potentially risky. For example, the main contract of xPET is an ERC 1967 upgradeable contract, and the main contract is responsible for handling the lending logic of ETH and xPET. However, because the main contract is an upgradeable contract, and the project does not expose the logic contract in this upgradeable contract, it cannot detect potential logic errors or risks in the logic contract; the xPET Token contract inherits the ERC 20 and AccessControl contracts, which designate the deployer as an administrator, forming a centralized point of control. Attacking the deployer’s account poses a significant risk, and in terms of Token accessibility, the contract centralizes the flow of Tokens because all Tokens are minted to the contract itself. This design makes Token flow centralized.

However, centralization is also a common problem in many Blockchain projects, and whether there is a problem in the end lies in the technical strength and pattern of the project party. Dear users DYOR.

3. Competitive risk

After the popularity of xPET, many imitation disks have appeared in recent days, such as XSaiyan, Bitpet, zPET, xKingdom, etc., among which xSAIYAN is relatively hot, and its background is based on the world view of Dragon Ball Z, and the Token is deployed as BRC 20 and ERC 20 at the same time.

5. Data and roadmap

1. Current data performance

The current game has only been running for 1 month, and the total number of users is only 1.5 w, compared to its X platform based on hundreds of millions of users and simple gameplay, it is not difficult to capture X users through continuous marketing. The overall trading volume trend, ETH value changes and other data are not in a stable growth stage, but follow the price increase There is a significant influx. In terms of actual functions and operational data, it is still in an early stage, but the overall situation of the project is good and the potential increase in the market is huge, and it is believed that there is a lot of room for imagination in the future development.

Source: Dune

2. Roadmap planning

xPet has unveiled a 3-month roadmap, which can be divided into three main parts:

(1) PVE (online)

Adventure (PvE) - Week 1 (December 21 - December 28, 2023):

Launch the Adventure (Player & Environment feature.

Allows users to engage their pets in exciting adventures

(2) PvP (in development)

PvP Beta (Private) - Weeks 2 – 3 (December 29, 2023 - January 11, 2024):

Develop and release beta versions of player-on-player (PvP) features, with internal teams having limited access to private testing to identify and resolve potential issues

PvP Ver 1 (Public) - Week 4 (January 12-January 18, 2024):

Publish the first public version of PvP features; allow users to participate in PvP battles with enhanced features.

PvP Ver 2 (Complete) - Weeks 5 – 6 (January 19 - February 1, 2024)

PvP features are finalized and finalized based on user feedback and testing, and additional elements and improvements are introduced to enhance the PvP experience.

(3) Multi-chain and socialFi

Multi-chain - Weeks 7 – 9 Weeks 7 – 9 (February 2 - February 22, 2024):

Start implementing multi-chain support; explore and integrate compatibility with multiple Blockchain networks for greater flexibility.

More Social Fi Features - Weeks 10 to 12 (February 23 to March 14, 2024):

Introduce additional Social Fi features; enhance the social and interactive aspects of liquidation to provide a more engaging experience

VI. Conclusion

1. Rational participation xPET needs to grasp the rhythm of TokenFluctuation participation, invest at a low level, sell at a high level, and stabilize income.

2. How xPET solves the economic model problem to make its Token rise without crashing is still the biggest challenge, and the imitation disk will follow the price if it is not able to solve the problem.

3. Projects such as xPET are in the early stages, but the market confirms that the track has great potential and is worth paying attention to.