Guilds are an integral part of any online game. They are self-governing organizations that enable players to enjoy a game’s content together, which can be for the social aspect or to help each other improve their finances within the game.

With the advent of blockchain gaming we are seeing a resurgence in the idea of gaming guilds, but this time with a heavier focus on economic coordination. The stakes are higher now as blockchain games allow players to make real money. That means real world income, but also real world liabilities including tax.

When there is real income involved for a collection of people, we generally don’t recommend being an unincorporated partnership, as it would carry unlimited liabilities for all members. Fortunately, we have a solution: we can help gaming guilds to incorporate as smart companies.

We have already deployed this solution for one client who set up a Smart company in Singapore for his Play-2-Earn guild. The client’s guild started with Axie Infinity but has now branched out to several other games. Let’s start by taking a quick look at what Axie Infinity is to illustrate why this idea is exciting.

 

What is Axie Infinity?

Axie Infinity is a Pokémon-inspired online game where anyone can earn tokens through skilled gameplay and contributions to the ecosystem. Players can battle, collect, raise, and build a land-based kingdom for their pets.

Currently, it is the leading game within this new genre of blockchain gaming. Their tokens have the highest market cap of any such project. We cannot recommend buying or selling their tokens as we are not financial advisors, so please do not try to take this as investment advice.

The biggest difference with traditional online games is that Axie Infinity has its own cryptocurrency and all the characters are non-fungible tokens (NFTs). Surely you heard about the NFT craze that really took off this past year? It has been one of the biggest drivers of mainstream adoption for blockchain technology.

So how does the most popular blockchain game fit into what we do at Korporatio? Let’s find out!

 

Client Story

We are delighted to share a client story with you. This is something rare for the Korporatio blog! One client that created a Smart Company to manage their activities within various Play-To-Earn games, not just Axie Infinity but several games, has agreed to share a few details of their business.

What are these business activities? Glad you asked! Play-To-Earn (P2E) is all about earning money while playing a game. Multiple people are contracted within this business to play a selection of P2E games where the yields are particularly good.

A Smart Company can own crypto assets in multiple games and can contract, or employ, people in basically any country. Of course it is also possible to have multiple owners too. This is exactly like a normal company. You can basically turn your gaming guild into a Smart Company where the company assets are owned and managed by the shareholders.

The secret sauce is that the governance of the company happens almost entirely digitally. As mentioned in multiple previous articles, Smart Companies are represented by smart contracts on the blockchain. Our companies are crypto native companies.

This is why we see Smart Companies as the perfect match for handling crypto assets. Smart Companies created by Korporatio can own and manage tokenized assets on Axie Infinity. It is always important to remember that a Smart Company is a real, legally incorporated entity and therefore the tokens are securities.

Anyone employed by the company can be paid in crypto or eventually, even in fiat, but that is probably more challenging when the Guild has a lot of members.

 

In Practice

Let’s take an example of what can be done in practice.

You and some friends have decided to create a P2E guild. You go to Korporatio, place an order and create your company. At this point you deposit funds into the company. It can be crypto or even NFTs directly. Depending on the options, you eventually end up with the in-game-assets required to run the business. Next, you will need players. In the case of Axie, you will need to find those on your own. Many use Discord to coordinate with their community, but any platform could be good.

You then lend the assets to the players and they start playing and earning tokens. At the end of the month, you can use an automatic tool to run the payouts. The player gets his/her share and the guild wallet receives its part. The company owns the guild wallet thanks to a board resolution. Once a month, our accountant will run a check on the Ronin wallet and register all operations into your company’s books. 

For guilds of a specific size, managers are normally involved as well. In this case, a board resolution can record the percentage to send to the managers. The rest of the process is exactly the same. 

The blockchain is public, this means it is easier also to record non-traditional operations. For example, you might want to sell some assets, because their ROI isn’t very good, or you decide to differentiate the guild activities and start breeding. That is all good and easy to record as well, so nothing to worry. You and your friends are free to run things as you prefer. Even if you have a silent shareholder, both of you are fully protected, because your guild is a fully registered entity.

 

Enhanced offering: Panama Foundations

There is an extra piece of the governance puzzle that we need to tell you about. P2E guilds are normally presented as DAOs, which in reality are unincorporated partnerships, which means that it’s possible that every member of such a partnership carries unlimited liabilities. Normally, guilds tend to ‘avoid’ this issue because everybody is anonymous, and therefore it is difficult to understand who is really behind something, however, it doesn’t remove the actual liability from the individual. 

To mitigate those risks, and actually build a model that is basically a good gaming guild, where the members are in full control, a person could think of creating a model with a Foundation plus a Smart Company. 

The foundation is a legal persona in itself. No shares, no shareholders and no business activities. Just pure management of the assets. A guild can incorporate a foundation and deposit all their NFTs in it. From there, the foundation could issue an NFT as a sort of ‘founder token’ and anybody with that token would be considered a beneficiary of the foundation. 

The NFT holders will be able to vote on how to use the assets or maybe in which new game they wish to deploy capital into. Once the decisions are made, the foundation will instruct the company to execute the decided business activity. This is possible because the foundation fully owned the Smart Company.

 

What about other P2E games?

Above we have mentioned Axie, however, the model will work with any P2E game. You can even combine multiple assets all together into a single entity. Splinterlands, Revv Racing, Fancy Birds, etc. and have the beneficiaries managing them all together. 

In some cases, such as Aavegotchi or Pegaxy the renting system is built into the product. This means, you can skip the step of looking for players. However, if you want to build a community, you might still look for some. 

Assuming you manage multiple games, you can pay the players with only one token instead of many. Let’s say a member is playing Splinterland and Axie, instead of paying both DEC and SLP, you could just combine the SLP all together. 

Should the guild grow to a proper size, you could spin-off sub-foundations that are specific only to 1-2 games. This can be good for keeping management smooth but also for asset protection.

Another example is to give the option to the members of the foundation to suggest, vote, and decide on different structures and models. For example, beneficiaries (of the foundation) can decide upon less traditional scholarship models.. Instead of the classic model where the guild rents the asset to the player and the player earns an income from it; the members of the foundation could, for example, decide to stake some NFTs and split the revenue with the players that meet a certain criteria of activity within the guild. This could be something like the top 10 most active members, or the person that submitted the best gift, but also the top 5 players of a specific season. The good thing of such a model is that each individual can contribute to the success of the community while everybody, as well as the assets, remains protected.

 

Does this sound cool? Want to do it yourself? Come say hello!

Reach out to us if this is something you are interested in! The best way of reaching out to us is via email (future@korporatio.com) or on Discord: Link.

 

Disclaimer

One or more team members of Korporatio hold AXS, the token of Axie Infinity as well as tokens in the other mentioned games. This is not a recommendation to buy or sell any cryptocurrency.

Smart Companies