Fund Development, Servers, Software, and Prizes

Background

Since we began building Decentral Games in 2019, the Web4 Ltd. development company has funded product development and other expenses using USDC seeded from capital raises in exchange for vested DG tokens. The development company has no other sources of capital, and 100% of all revenue generated since launch including NFT mint proceeds, secondary sale royalties, Polygon validator Node rewards, etc., have accrued to the Decentral Games DAO Treasury. Additionally, the DG Team individually and Web4 Ltd. donated the Polygon Node ($2M USD) and 403 parcels of LAND to the Treasury in 2021.

Despite interest from VCs to purchase vested DG tokens, we’ve opted to not sell additional DG tokens at the current levels. We haven’t raised in approximately one year because we strongly believe that DG is undervalued given our suite of live products with thousands of daily active players, the value of our diversified Treasury, our highly engaged community, and our proven track record of relentlessly shipping valuable updates regardless of market conditions.

By reducing headcount and salaries over the last year, we’ve reduced our monthly stablecoin burn from a ~$400k peak during the midst of the bull market (early 2022), down to ~$230k today. Of that ~$230k per month, ~$210k pays the salaries of 48 people, and ~$20k pays for tools like Cloudflare, Segment, MongoDB, Azure, servers, and other miscellaneous services (e.g. Slack, Discord, Gmail, Github, etc).

2023 Focus and Roadmap

As we dive into Q2 2023, our three main pillars of focus driving our product decisions and resource allocation are:

1. Deliver a sticky gameplay experience (around progression and socialization) to retain new players. KPIs to measure our success in this objective include:
   • Current users retention rate (CURR): The chance a user comes back this week if they came to the product each of the past two weeks
   • New users retention rate (NURR): The chance a user comes back this week if they were new to the product last week
   • Reactivated user retention rates (RURR): The chance a user comes back this week if they reactivated last week
   • WoW retention rate: The percentage of players that come back each week from the prior week’s WAU
2. Effectively convert free play players to paid players. KPIs to measure our success in this objective include:
   • Conversion percentage to paid: What percentage of our free play players are we converting to paid players
   • SNG/Free Play Daily Active Users Ratio (SNG/Free Play DAU Ratio): How many players are playing SNGs versus Free Play each day
3. Entice ongoing player spending to achieve protocol profitability. KPIs to measure our success in this objective include:
   • Player Lifetime Value (LTV): How much does the average player spend in our ecosystem

In Q1 2023 alone, we were able to deliver the following:

• Player Hub on ICE Poker Arcade
• Onboarding funnel optimizations to support social login/wallet creation
• Multiple game modes with differing Shine entry on ICE Poker Arcade
• Player Leveling on Both ICE Poker Arcade and ICE Poker Metaverse
• Metaverse SNG
• Prize Marketplace revamp featuring custom prizes, NFTs, tokens, raffles, etc
• Assigned Seating V3 with extra fraud prevention

As we move into Q2 2023 and beyond, our highest priority roadmap items are:

• Free Play Mode on ICE Poker Arcade
• Chests (randomized loot box-esque rewards) unlocked by progressing in Player Level
• Banked ICE wagers for Metaverse Blackjack and Roulette
• New Raffle section on the ICE Poker Arcade Prize marketplace
• Emotes utility in game as custom avatar win animation
• Native wallet features on ICE Poker Arcade
• Tiered shopping experience unlocked by Player Level
• New in-game Emojis unlocked by Player Level
• Private tables/lounges with custom URLs to share with friends
• Spin-n-Go tournaments on ICE Poker Arcade
• League Mode on ICE Poker Arcade
• Shine NFTs purchasable with Fiat (credit card)

Proposal

Upon passage of this proposal and then bi-monthly going forward (end of month & mid-month):

• Allocate $105k to continue the design, development, operations and marketing of Decentral Games and ICE Poker products.
• Allocate $10k to cover costs for DG servers, software, hosting, and live Nodes (Decentraland, Polygon, Ethereum).
• Allocate $10k to spend on ICE Poker Arcade prizes. This would include allocation to DAI bags and physical prizes but not LAND.

All future capital raises for vested DG tokens would go directly to the DG DAO Treasury to bolster our stable coin position. While we frequently receive offers to do so, we would target at least a $0.12 or greater DG price to consider this.

Rationale

Over the past 4 years of development, Decentral Games has matured into an ecosystem with several live products and robust economic levers at the DAO’s disposal. Now it’s time for the project to entirely operate out of a single treasury.

Given a $250k monthly burn rate and the substantial stablecoin position we hold, we’re able to keep shipping at our current pace for the next ~1.5 years, before allocating any other non-stablecoin assets in the Treasury ($17M in total assets). This also assumes the absolute worst case scenario — zero revenue and zero additional capital raises over this time period. While we should plan for the worst to ensure our survival, we believe we can substantially grow revenue by the end of 2023 and conduct additional capital raises in 2024 (as the crypto market recovers) to further extend our runway.

The DG Team has continuously proven that we are able to deliver high quality work and will continue to do so regardless of market conditions. This allocation of resources continues our path of delivering timely development updates to all our products and allows the DG team to focus on replenishing these resources with revenue in the near future.

Additionally, we recently launched the revamped ICE Poker Arcade Prize Marketplace, which has provided players with much more enticing prizes including IRL DG merch, popular tech products, tokens, and raffles. This, in turn, welcomes increased ICE demand, Shine purchasing, and daily active use of ICE Poker SNG. The initial allotment of real world prizes were funded by the DG Team to prove the model would be valuable for the ecosystem, but now we would need to fund from the Treasury in order to continue with this initiative.