Place/Date: - January 21st, 2022 at 3:35 pm UTC · 5 min read
The already booming market for gaming tokens and NFTs has exploded as more games are created for the virtual reality (VR) space known as the metaverse. Gamers are enthralled by this more immersive gaming experience tailormade for a more interactive Web 3.0. Fortunately, investors have many opportunities to invest in the token public offerings of these exciting gaming projects on the blockchain.
One of the great advantages of blockchain technology is it makes it easy for anyone to access financial services, including conducting and investing in a public offering event. Public offerings have traditionally been premium investment banking services. Gone are the days when Wall Street bankers would take a big cut of an initial public offering in exchange for giving projects access to investors.
The challenge is, the competition is stiff for a place in the alternative whitelisting process. A spot on the public offering whitelist is open to any investor who meets simple qualification requirements. Unfortunately, competing for the whitelist spot is like an epic battle in an RPG game against the Horrible Horde.
The race to get a place in a public offering turns into a stampede because most whitelisting processes are conducted on a First Come First Serve (FCFS) basis. The investors who can pay the highest gas fees get whitelisted first. Big whales typically front run small investors by setting Gwei very high to get to the front of the queue faster. In this unfavorable environment, the smaller investor loses twice because not only do they not receive an allocation but they still get stuck paying the gas fees.
For many reasons, this competitive whitelisting approach subjects all investors to higher risks of investing in weak projects.
Reminiscent of the dot-com days, investors are less apt to conduct thorough due diligence. Startups, in turn, are under less pressure to disclose detailed information about their projects.
Meanwhile, autobots filling the whitelist spots accelerate the price rise. Automation improves the efficiency and facility of investing in tokens, but it can also run up prices very quickly, a further motivation for investors to blindly jump in at the earliest opportunity to a token pool.
Another approach to allocating whitelist spots is to virtually throw the dice. Random number generators are used in a growing number of blockchain applications, from betting to governance voting. Because the results are transparent, recorded and distributed on the blockchain, participants are ensured a fair outcome.
Though the process is indisputably egalitarian, it makes it impossible for an investor to get a place on the list based on merit. On the other hand, more smaller investors without white shoe Wall Street connections have the opportunity to participate in public offerings. Beware, though, whitelist managers with centralized control could still stack the selection list with their friends before throwing the dice.
But consider the case of a private investor who has loyally mentored the startup company and wants to increase his allocation to be adequately rewarded for his investment of time in the company, but alas, this investor is not randomly chosen to participate in the public offering. The history of free markets has shown time and again that when people are not adequately rewarded for their efforts, they are less motivated to invest their time and money in a project.
Flipping the traditional allocation process upside down, the wealthiest or most loyal investors may not even get a spot on the whitelist.
On the opposite end of the incentive spectrum, the investor’s token allocation depends on the amount they have staked in the token pool. A growing trend is to allocate tokens based on the staked equity proportional to the percentage it represents of the total pool. This is similar to the mining rewards model. The wealthiest investors get the highest token allocation, so we are back to square one — the traditional investment banking model.
An attractive feature of blockchain token allocations is that they typically offer three tiers of investment, allowing small and large investors to be rewarded with additional incentives based on the amount they invest. Reserving token allocations for the wealthiest investors, however, pushes out smaller investors while increasing investment risks. With the token distribution concentrated in fewer hands, the risks of market manipulation, and volatility and steep token price declines during the token unlocking period are much higher.
What if instead of battling the horrible horde, investors could gain access to gaming projects based on the wisdom of the crowd? In this meritocracy, investors are given whitelist spots based on their ability to predict the future success of gaming tokens and NFTs.
According to behavioural scientists, the best decisions in life are made from a combination of intuition and knowledge. Spark has been created to help you make better investment decisions in gaming projects from those sparks of intuition.
Spark has gamified the prediction process. By making the token investment process fairer, Spark is driving engagement and community in high quality gaming token projects across interoperable gaming metaverses.
Investors vote on the best gaming projects based on weekly and monthly prediction tournaments. Gaming guilds can be formed to back gaming projects based on various parameters, such as favorite gaming project sectors like NFTs or play-to-earn, or the prediction performance of investors.
Our Fair Prediction Launch (FPL) distributes tokens in the fairest and most equitable manner while directly engaging potential investors in gaming projects. Your allocation depends on several factors all influenced by your prediction on the future success of a project:
Our egalitarian token investing process brings investors and creators together through fair and interactive prediction events. Supported by the meritocratic process of prediction-based token allocations, Spark is where you can gain access to high quality and transparent public offerings based on your skills in the prediction markets.
All great things start with a Spark!