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ICO analysis of Fracture Labs’ DECIMATED.
Reviewed by an investment fund analyst who wishes to remain anonymous.
Decimated® is an online survival game for the PC where players can play with their friends and earn cryptocurrency while playing. There exists mainly two types of players: human survivors and cyborg cops. Human survivors in the game need to survive in the world within the game either by competing or cooperating with other players, and after playing for a certain amount of time, they can progress to be a cop. This is usually achieved through fair play by players whereby they do not kill other players for no reason. Playing at cop level involves policing the entire area and other cops as well.
There would be two types of players: those that play by the rules and those that don’t. There is a lot to do in the game to prevent the average user to get bored. Activities could include building bases with friends, repairing things, fortifying bases in case of opponent attacks. Initially, there will be some pre-determined number of cyborg cops played by other gamers trying to police the entire area and making sure everything is done in the right way i.e. other players are playing by the rules. The game is set to involve science fiction environments in a futuristic Earth (imagine a world 200 years from now with climate change has disrupted or “decimated” the entire planet. Conditions could include scientific experiments having gone wrong that are roaming the environment, scientific robots, missions to do including shipping cargo, money shipments, convoys, etc through competing and/or co-operating with other players.
The team has thought through the gaming experience very deeply with cool graphics and design and a lot of activities to ensure high gamer satisfaction and user experience.
Blockchain helps in the management in the flow of digital tokens and ownership of virtual items in the game. It will allow digital scarcity to items that exist in the game world. Hacking can be mitigated and players rewarding themselves extra tokens can be eliminated. Blockchain in the gaming industry will prevent duplication ongoing right now. Items in the game will eventually have a value that other players would want to purchase them. The ICO will include auctions for virtual items so players could own certain vehicles in the game straightaway. Auctions will run for a certain period of time, say a few weeks with the highest bidder(s) winning the item(s), which they can use in the game when it is officially launched. Items could include weapons, characters, collectibles and many more interesting things. The utility of tokens lies in purchase and sale of items in the game and also extends to do other micro-tasks (repairing damaged vehicles, and weapons). The survival instinct makes it compulsory for gamers to use the tokens throughout since if they fail to perform these types of micro-tasks , these digital items will cease to exist on the blockchain.
Similar to CryptoKitties, the DECIMATED ICO will be based on the Ethereum blockchain (ERC-20) and issue non-fungible virtual items on the Ethereum blockchain first and tokens will be usable on the Halo Platform blockchain in the future, which will be an industry-standard blockchain for the gaming industry. The project is using ex-lead developers from Skycoin and the lead developers of the Halo Platform. Use case for blockchain is evidently present since the team will build the game around the blockchain and use Unreal 4 engine to create a synchronized infrastructure.
The CEO has experience with Decentraland and helped with art and animation for projects like CryptoKitties and also Etheremon. Decentraland is a virtual world where players can own virtual land and the founder is helping create assets for people to put that on to the gaming world. The CEO has over 10 years in the games industry. Past projects include The Division (over 4m sold units), God of War (one of the highest selling action-adventure games), Injustice 2 (highest grossing console game in second quarter of 2017 according to Warner Bros), and Evolve. Throughout these years, he has established strong networks in the games industry.
Team size is reasonably moderate consisting of 17 team members with 12 core team members and over 100 years of combined experience spanning across games, development, creation and design. Advisory team comprises 8 team members experienced in the blockchain and cryptocurrency space. All team members have a good LinkedIn presence with strong leadership skills and good track record. It must be noted that there are two key advantages of the founders: their creativity, which will play a positive long-term role in the development of the game and allow meticulous improvements in design interface enabling a high level of overall gamer’s experience
DECIMATED envisions a world where players will constantly use skills, create and trade resources with each other to survive in a hostile apocalyptic environment. Players will be incentivized for exploring this “environment” by completing missions, scavenging and looting in the game as good or rogue citizens. All the resources present will normally have a value which the players will keep establishing as they use them throughout the game. We can imagine a new civilization with its own rules, laws and structures which the inhabitants will adopt to in the gaming industry and this civilization is meant to run on the main currency called the DIO. This digital token will act as the main transfer of value for all items (virtual) such as clothing, weapons, construction equipment and other resources. Once the game is purchased, players will start with the DIO tokens which they can use to but their first vehicle, weapon or license and will have to find paid work-in-progress. One can see the game spans a 200 km square world map including cities, deserts, wastelands, caves and safe zones fortified by cyborg cops so there is plenty of room for many more developers and players to work on and keep growing the game ecosystem. The team will use Unreal Engine 4 using the most up-to-date physically based rendering with assets from Quixel Megascans. A world-class toolset and accessible workflows empower developers to quickly iterate on ideas and see immediate results without touching a line of code, while full source code access gives everyone in the Unreal Engine 4 community the freedom to modify and extend engine features. By utilizing the Blockchain, Decimated allows to tokenised this game allowing players to spend the time playing towards an end-goal. It makes the experience all the more worthwhile..
The blockchain and gaming industries have always had a large demographic overlap.
Gamers are accustomed to digital economies and are quick to adapt to new technology.
Although no direct competitors exist, there has been exploration of virtual assets in the gaming world. Virtual items such as tools, weapons, costumes and accessories will hold increased value as blockchain facilitates their purchase, sharing, gifting, and trade. Platforms are being set up to allow users to sell in-game items, thereby giving the items actual economic value.
A notable example is Gods Unchained, the world’s first blockchain-based eSport created by Fuel Games. It leverages the technology to allow players trust-free ownership of the items they purchase or earn in games. This newfound ownership adds a completely new dimension to gaming, and makes it easy to understand how the decentralization of in-game economies is relevant.
The creation of digital assets with real value, combined with the public blockchain ledger allows developers to create limited edition rare virtual assets. As the items get unleashed periodically, the scarcity will keep users interested, loyal, and ready to pounce at any chance to be one of the few that have the item.
The success of such campaigns has been proven by CryptoKitties. Limited supply led to intense demand, to the point that the volume of transactions overloaded the Ethereum network.
Many video games in the current market would serve as potential competitors for DECIMATED, such as Playerunknown’s Battlegrounds, DayZ, SCUM, Miscreated and Arma 3, though many fans of the genre play multiple online survival games, so there is a huge market share. The main advantage it has over it’s competitors is the use of blockchain technology, players being able to earn while playing and the in-app purchases through the DIO tokens.
Overall, market environment is healthy for expansion with over 10% average expected annual growth in the global video games industry for the next 5 years.
Community Size (last count in October 2018)
- Facebook = 1537 followers
- LinkedIn = 113 followers
- Twitter = 6120 followers
- Telegram = 435 members
- YouTube = 28 subscribers
- Instagram = 441 followers; 96 posts
- Reddit = 32 subscribers
- Discord = 353 members
Although the project has low traction in the mainstream communities, they have a growing presence on the Discord Channel. Of late Discord has been the go-to platform to interact better with the community.
AAA Development Studio, a partner that is already established in the gaming industry. (Name not yet revealed)
Defuse Studios: Digital asset creator for Unreal Engine 4, from 3D modeling, animation, level design, texturing, lighting and coding. One of the largest Unreal Marketplace sellers.
Halo Platform: experienced blockchain development team with a background in videogames.
Frame Machine: a creative production studio specialized in the development of AAA videogames.
5518 Studios: an art/animation studio delivering industry standard assets for high quality videogames.
Vicarious PR: a videogame marketing/PR agency for the videogames industry.
Fair & Reasonable
ICO will involve selling of DIO tokens in 3 tiers:
1st Tier- Private Sale I — 40% bonus
Window Period: — 3 months
2nd Tier — Private Sale Stage II — 20% bonus
Window Period: — 3 months
3rd Tier — Public ICO Stage — €0.05
Window Period: — ongoing
60% of tokens will be sold through token sales across 3 phases of the fundraising: Pre-sale, private sale and main token sale. This is a highly positive since majority of tokens (>50%) are held by the community and public. The management team is scheduled to keep only 1% of the tokens with 6-months lock-up period. Developer core members are allocated 0.10% each. Allocation for Advisors and and Finders is kept to 0.05–0.1% of the total token supply. The management of Decimated has kept a healthy yet calculated allocation for the team members leaving a massive 35% for marketing, airdrops, bounty, in-game usage of DIO of the tokens as well as for any additional unforeseen expenses in the future (token liquidity management, payments for development services). A lot of the tokens need to be kept for in-game development and usage of the token throughout the game as it is completed and the user base ecosystem grows.
Low allocation to the major team members also implies the team is highly transparent and not greedy to chip in profits very quickly. There is a long-standing fundamental value for all members and holders of the DIO tokens over the longer term. For investors tokens are locked for at least 6 months from purchase date. Moreover, the daily trading limited agreement restricts users going beyond €5000 daily hence mitigating risk in the long run. This leads to reduction is overall risk from excessive manipulation of the token price.
Addressable market share of DECIMATED can reach almost $160m by 2023. Until product development, user penetration rates have been taken at a cumulative increasing rate of 0.33% all the way up to 2.5%. This assumption specifies DECIMATED captures 2.5% of the online gaming market. Reason for high penetration rates owes to the number of token holders and early-adopters that the project plans to obtain by Q1 2019.
Untapped Potential: High
Use of Funds: Well-defined and detailed with adequate marketing Budgets; 25% Marketing & PR, 30% of the funds will be spent on programming, 30% on art and animation; 10% on Technical Development, and remaining 5% on Admin (business, legal and HR). High emphasis has been given on the actual platform and most of the spend will be on the development of the game.
Fracture Labs, the company developing Decimated will issue 600 million tokens (60%) of the entire total supply for token sales with the remaining
The project has assumed a decreasing velocity from 4 to 3 decreasing by 0.25 every year from 2019 to 2022
The monetary base keeps increasing as the project moves forward due to reduced velocity in the tokenized economy. The company’s tokens have been projected to cater to a $377 million economy. As the velocity is lowest from 2022; the tokenized economy becomes more addressable.
DECIMATED Token forecasted utility price
The project’s forecasted utility value per token has been estimated so as to give the average investor a return of approx. 1140% or a 11.4x return on investment by first quarter of 2024. This is just a forecast and one must bear in mind that it is the market price that will eventually determine investor returns post ICO. It would also depend on the “hype” around the project until then. We have assumed the investor holds the token for a long period of time and the token is viewed as an investment for the long haul.
Alternative Token Valuation
We used two discounted rates of 20% and 40% to map the current utility token price for DECIMATED.
We have assumed tokens are deployed from the reserve every 3 months since they will be used for project needs for various purposes. As mentioned in the whitepaper, 6 monthly token payouts have been assumed to pay management and advisors.
Total number of tokens in float includes 12.5 million tokens released every quarter from beginning of 2019
We have taken market growth rates based on the worldwide industry growth rate of 10.30%. Many sources suggested the expected CAGR of the industry to be between 8–12% hence 10.30% was an optimal estimate. [Source: Newzoo]
Fig 4: DECIMATED Network Valuation
One thing must be noted is that on speaking to the founder(s) we found that the average cost of playing the game is zero. It is free for users to join, sign up and play the game upon release. For forecasting purposes, we have assumed the cost to be $1per user. We also believe that over time as traction for the game improves, the initial cost to enter or be part of the DECIMATED game for a gamer would become around $2. This corresponds to the minimum value in fiat (or equivalent value held in DIO tokens) that the user must hold in order to play.
Fig 5 *Source for Industry Data: Newzoo
Current token price (discounted for 6 years) at 30% = $0.12 ≈ € 0.10
Current token price (discounted for 6 years) at 40% = $0.08 ≈ € 0.07
The token sale will be split as follows: —
Private Sale Issue Price [Period 1] = € 0.03 (40% Bonus) 150,000,000 DIO
Private Sale Issue Price [Period 2] = € 0.04 (20% Bonus) 150,000,000 DIO
Public Sale Issue Price [Period 3] = € 0.05 (actual price) 300,000,000 DIO
The project is in a good position to leverage on the growing shift in the gaming industry with the introduction of a token gaming economy within the current market landscape. Given high level of interest surrounding the project as we inch towards the next quarter, we are confident about the achievable milestones in accordance with the project roadmap whilst also believe the team is strong and has demonstrable experience to deliver.
Upside Potential at Private Sale Stage I = 95–177%
Upside Potential at Private Sale Stage II = 66–138%
Upside Potential at Private Sale Stage III = 40–100%
RECOMMENDATION: BUY — UNDERVALUED
Head over to https://www.decimated.net/ for more details.
Telegram ANN: https://t.me/decimated_game
Telegram Community: https://t.me/decimatedofficial
Reviewed by an investment fund analyst who wishes to remain anonymous.
Disclaimer: this article does not constitute legal or financial advice. Legal aspects of investing in an ICO varies from country to country. Before investing in any company, do your own due diligence to comply with all relevant regulation.
DECIMATED® and DIO® are both registered trademarks.