Disclaimer: Not financial advice. Always DYOR before making any investments. The NFT and crypto spaces are highly volatile and risky investment classes. You can lose your entire investment capital very quickly. I also have purchased the NFT from this collection based on this research.

Introduction

In order to make money in the NFT space you need to constantly be keeping up with current trends. In 2021, the trend was profile pictures and communities. Everyone was trying to get the most in demand and clout heavy profile picture they can get their ethereum covered hands on. This led to a few winners, and a lot of derivatives. Coming into January of this year my thesis was Defi NFT’s with full ecosystems around them would take over. This thesis proved to be correct. My first high conviction call of the year was Creepz. When I posted this call the price of creepz was .35 eth per invasion pass. This turned out to be a 28 bagger within 2 weeks and went all the way up to 10 eth. My thesis proved to be true. Now that this clear trend has taken over the NFT space there’s a new project coming up I’m making my next call on. This is my 3rd high conviction call since getting into NFT’s. My first was Sandbox in March of 2021, followed by Creepz last month. My next high conviction call is Look Labs 420 Game. Here is why I think this game is built to change the way P2E NFT experiences are built and will take the NFT world by storm very quickly.

Quick context before I get into things. I want to cover some terms I’ll be using throughout:

P2E: Play 2 Earn. A new NFT model in which you earn value, typically tokens, for participating in an experience.

Tokenomics: The systems and mechanics built around a token to ensure continuous growth in value.

Over the past month many P2E NFT projects have launched and almost all have ran into one major issue: poorly planned tokenomics. What I mean by this is on a fundamental level P2E games exist to do one thing, reward you with value for participating in a decentralized experience. The issue is due to poor economic planning, the value that is being returned to NFT holders diminishes quickly. The tokenomics have generally been “print as many utility tokens as we can to reward holders”. Any economic major will tell you when you print an unlimited supply of something the value drops quickly. While this has led to many project founders collecting tens, if not hundreds of millions of dollars in mints and royalties, it has left the actual players holding the bags. What is required to make a P2E experience successful is carefully thought out and well planned tokenomics. I believe 420 Game has the most well thought out Tokenomics I have ever seen in the space.

Project Basics

420 Game is a newly minted project. It minted on 2/11/22. It’s a P2E experience built around building your own weed empire. If you ever played Drug Wars as a kid in your web browser you know what I’m talking about. You manage your empire, decide what cannabis strains to grow, cross breed in order to create more potent strains, and yield $HIGH token based on your weed potency. Take a look at this gorgeous UI:

Right now it is currently in the mint pass phase. These mint passes will mint you one bud guaranteed, with up to 3 more optionally based on availability. This was the absolute express description of how the game works. One of the best whitepapers I’ve ever read (green paper in this case) can be found here. It goes over all the game mechanics as well as the insane tokenomics. I highly implore you to check this out for all the details I might miss here.

Tokenomics

But let’s dive into why I’m so high on this project. First, the tokenomics. As I mentioned earlier, a lot of P2E experiences have failed because the utility token wasn’t able to maintain value. The economy built around the token was either poorly planned or poorly executed. After reading the green paper I am 100% convinced the plan going into this is the best I’ve ever seen. With plenty of compelling deflationary measures that in my opinion will keep supply down, as well as even burn mechanics for the NFT’s themselves, I think the tokens as well as the NFT’s will maintain and grow in value consistently. $HIGH coin is needed to do everything. Cross breed buds, buy more land, open up shops, level up your product. It goes on and on. The utility token will constantly be burned, ensuring hyper-inflation does not take over. On top of that, many mechanics are put in place to ensure NFT’s are staked for long periods and coins aren’t withdrawn often. Cross breeding will sometimes take weeks and dispensaries will take a cut of all coins withdrawn. The plan is clearly thought out well by what appears to be industry veterans. This in my opinion is the most critical part to a P2E project.

Community

Next I want to talk to you about the potential for community building. I think this is also another factor critical for sustained NFT projects. This is what made Creepz so strong and able to withstand some early token challenges. 420 Game is built to capitalize on a massive subsection of NFT culture- cannabis. If you spend 5 minutes on NFT Twitter you know the Stoner NFT community is strong. And while other projects have attempted to capitalize on this subculture, none have been successful so far. I think 420 Games will be successful. By engaging NFT holders with a compelling game experience while also potentially providing real life utility through partnerships with different Cannabis companies, I think this is the first project to truly have a shot at capturing this market. As for the Discord, it seems like a highly engaged helpful group who chooses to chat more about life experiences and the space as a whole, rather than just post an endless stream of gifs and memes. I think this will be critical to long term sustainability.

Current Valuation

So far we’ve covered the strong game mechanics, the impeccable tokenomics, as well as the community and cultural aspects of the project. Next I want to talk the investment side. Pure numbers for those looking to invest and potentially make a profit. At time of writing the price of a green pass is .34 ETH. When the game launches in 2 weeks you will be able to use this green pass to mint a couple things. First, you will be able to mint your buds. You are guaranteed one free bud with your pass, plus, based on availability, the option to mint 3 more for the price of .0420 each (naturally). It also grants you the ability to mint a Goat PFP. Let’s do some quick math: if you buy a green pass and mint max buds, that will cost you .466 eth at current prices. That means if each bud resells for at least .1165 on secondary market you’ve broken even. I personally believe since the buds will yield $HIGH token they will go for more than this. On top of that, the PFP NFT you get will hold value as well, further reducing your cost basis. The buds you produce will yield $HIGH, which will again further reduce your cost basis. In my opinion at current prices the potential reward far outweighs the risk. This is the kind of risk/reward ratios I look for when making investments. Reminder, this math is completely based on current prices.

Risks

The NFT space has been a passion of mine for a while now. I’ve researched hundreds of projects and only put my money into projects I believe in long term. Based on my research 420 Games seems like a winner. I will say this though. No investment is a slam dunk. There is still risk involved here and in the name of balance I want to cover that here too. First and most importantly, the game hasn’t launched yet. This means that the dev and founding team needs to execute well. In the NFT space this is never guaranteed. This is actually the stage where the highest failure rate happens. In an environment littered with rug pulls and scams, execution is never guaranteed. Another risk I’m keeping an eye on is on the technical side. This is the most technically complex P2E experience I’ve ever seen. With so many different game mechanics and a sleek UI, the Solidity programming needs to be flawless. Any errors can lead to the entire game economy being thrown off, destroying the project from the inside. It will be critical for the dev team to not only nail this, but to execute it literally perfectly. Any kind of small exploit can send the entire project to 0. THIS IS NOT TO BE OVERLOOKED. And lastly the tokenomics. Tokenomics have nuked many projects before this. After reading the green paper I’m the most optimistic I’ve ever been about a P2E economy. But in order to maintain the economy the founders need to play Jerome Powell and figure out a way to keep the party going over an extended period of time. This will not be easy. But still, I place my bets.

Conclusion

I covered a lot here and I hope you found some good information. My goal is not to make you invest, it is to hopefully teach you something about my investment style and how I do research. Hopefully some of the information here will help you in the future when you do your own research. As always, this is not financial advice, just simply my own findings. If you found this helpful feel free to subscribe to my newsletter. It’s completely free and I send all my research there first. Also follow my Twitter and feel free to engage with me there. Thanks for reading.