DeFi-tainment: The key to the next 100 million Users
Written for Levana protocol
- Entertainment and gamification can be a power tool to educate and onboard a massive audience to DeFi
- DeFi is too complicated for casual users, most new participants in crypto are entering via entertainment
- A token model based on a hybrid of farming governance tokens and gamified NFTs can create long term incentives for participants coming from the Web2 world
DeFi (Decentralized Finance) exploded 2 years ago, proving itself the killer use-case for crypto and sparking the bull run of 2020. However, much of DeFi remains difficult to use and intimidating for the average newcomer to the space, and both the projected growth of market share and market cap has not materialized.
Though over 17.2 Million new blockchain wallets have been created since Dec. 2020, DeFi tokens, even the blue chip governance tokens, remain down 70–80% from their all time highs.
At the same time, crypto wallets related to gaming exploded from 29,563 at the start of 2021 to 754,000 in Q3, a 25x increase. Axie Infinity alone had 2 million active users as of October. (Front Office Sports)
One proposed reason adoption to DeFi protocols has slowed is because finance is complex. The average Web2 participant finds economics boring, and the explosion of new protocols has led to a fracture of best practices and common knowledge. The total addressable market of crypto remains huge, but over the next 5 years mass onboarding will come via entertainment, not finance.
Though bringing new users directly into DeFi has been unsuccessful, onboarding of new users into the NFT and entertainment space has been growing exponentially. The majority of newcomers to crypto in the last year have not been yield farming or aping into altcoins, but rather buying NFTs and memes (we are looking at you Shiba). These were the ice breakers that made people curious about crypto.
Today, the majority of entrants to crypto arrive in one of two ways:
- Buying random (meme) coins with hope of making massive gains
- Centralized futures trading / leverage trading
NFT’s and Gaming
- Play 2 Earn Gaming
- NFT Flipping
Following the conventional route, newcomers to crypto via centralized exchanges often buy Bitcoin as the first step on their journey, motivated by the narrative of digital gold to counter inflation.
Dipping their toes further, they might buy some Ethereum, Cardano, XRP, and go down the list to Doge and Shiba.
They may even find their way to leverage trading on Bybit, Binance or other futures trading, never once touching DeFi.
For them, crypto is simply a glorified, overly complicated casino. They do not internalize the core tenets of crypto’s importance, self sovereignty through composable, interoperable financial services.
By comparison, crypto newcomers via the NFT and P2E gaming spaces follow a different path: first, they discover a community and become intrigued. Next they interact with the community, often in the Discord, where they can explore and make friends. There they may also meet the creators and begin to actively participate in the project. They surround themselves with people who know the answer to their question: what is the next step?
The next step is onboarding, and the community teaches them how to participate. For Ethereum dapps, the first step is to install a metamask wallet. If on Terra, they get a Terra Station wallet, using familiar technology such as the Chrome browser extension. This participant learns about seed phrases and the importance of keeping them safe; they learn that if they lose access to their wallet they will lose everything. This educates them about self sovereignty and understand that assets created on one platform can find value and new use cases in another.
With a wallet (and sometimes a whitelist), the fledgling crypto user now has the right to mint. Gradually they may understand their wallet address has an element of reputation to it via airdrops and approvals. As they progress, they learn more about the ecosystem and involve themselves further. And they start to use dapps such as NFT marketplaces like OpenSea, or in Terra, Random Earth, Knowhere Art or Luart. These dapps are Defi protocols within the NFT space. In effect, the newly onboarded crypto users invests in themselves and their crypto education.
Entertainment is a major value driver, and verifiable collectibles play a significant psychological role in people’s desire for ownership. NFTs are a groundbreaking technology application. They allow their owners, traders and collectors to own a part of companies, people, arts, culture, ideas, communities and technology, just by holding a scarce digital collectible.
The Levana team first presented this idea roughly 6 months ago.
Even Brian Armstrong, CEO of Coinbase, recognizes that the market for non-fungible tokens could rival or grow even larger than the company’s cryptocurrency business.
The Mercenary Nature of the DeFi Community
Over the past 2 years DeFi has become mercenary. Participants with large amounts of liquidity farm governance tokens with little incentive to remain inside projects after chasing yield. They rotate from one project to the next, dumping their tokens for stablecoins when yields drop, and move on to their next strategy or new project.
Engagement metrics have also shown that most people don’t care about participation in governance. The motivation for active participation is lacking, and direct incentivization of governance has proven ineffective. Paying people to vote complicates incentives.
Lacking incentives, there is constant sell pressure and little impetus to hold a governance token long-term. Recognizing this disconnect, automated compounding services such as Apollo DAO, Harvest Finance or Pickle Finance (all great products btw) automate the selling of governance tokens for more LP, applying further sell pressure. This is why much of the hyped DeFi market is down; it isn’t because the model doesn’t work, but rather because the products have not yet achieved product market fit for a growing audience.
Product market fit is often overlooked due to misinterpreting high-yield chasing participants for engaged customers. Though it may attract new users, the high yield makes it difficult for product designers to filter the signal from the noise and ensure long-term use of the product.
A token economic model we call DeFi-tainment can solve the issues faced by emerging protocols:
- Building a dedicated community
- Solving the mercenary farmer crisis
- Long term alignment of interest
- Deflationary token economics
- Additional revenue streams
There is an untapped opportunity to attract a large audience to DeFi via a game built on perpetual swaps. Most P2E are built on an AMM exchange. We believe that perpetual swaps, which provide access to leverage and synthetic assets, are well positioned to be used in a P2E experience. The Levana Dragons NFT game is purpose-built for this market, motivating and attracting a wide audience drawn by gaming, that also teaches players about DeFi in a gamified adventure.
Strong storytelling and community engagement helps ensure a dedicated community that is personally invested in the story. To that end, Levana Dragons includes a world of backstory and lore around dragons (leverage), dragon riders (leverage traders), and the community of dragon keepers who enable the platform. The Levana Dragons game is now in Evolution 3, with team based Faction Wars to launch imminently. If you haven’t been a part of the fun until now, don’t worry — new users can jump into the story at any evolution.
Mechanics such as farming dust and LVN tokens reward players, while deflationary tokenomics such as burning/or reducing velocity of the LVN token to mint new assets and NFTs, as well as the fees generated by the leverage trading protocol, ensure a profitable ecosystem for the game. Players level up as they play; long term players are the most highly rewarded, and all players level up as they build and transform their assets along with the game.
While planning our Magnum Opus game, we started working with top tier gaming studios to create a list of requirements to ensure an open, accessible and highly entertaining experience.
While the overarching game is being designed and built, we plan to release a series of minigames every 6–8 weeks to keep the community engaged and enable players to level up in preparation for the open world metaverse to come. The first minigame, Salim’s Adventure, was released last week. Players who beat the game are eligible for Levana loot while supplies last.
If this was all too complicated, you may want to check out the ELI5 we created with JPEG Lord
Or this walkthrough with DeFi Dad
If you want to jump in and get started playing our games take start here:
- Set up a Terra Wallet Chrome Extension
- Pick up some meteors on the secondary market
- Your Mission: Join the Faction War and play P2E mini games to bring points to your faction in the battle for the future of Dragons of Mars
Step 1: Read the lore https://blog.levana.finance/levana-lore-part-1-of-4-8dde4b3f40bf
Step 2: Crack your meteors https://meteors.levana.finance (learn more at: https://blog.levana.finance/recap-of-the-levana-meteor-shower-128919193f9b)
Step 3: Nest your egg (if you didn’t get an egg in your meteors, let me know and I’ll send more meteors, or you can pick some up on http://Randomearth.io) https://blog.levana.finance/levana-egg-nesting-983de42b8546
Step 4: Choose your Faction https://blog.levana.finance/levana-talismans-6152920f7edc
Step 5: Play Salim’s Side Scroll Adventure https://blog.levana.finance/levana-salims-adventure-side-scroller-aa31523ad086
If you want to learn more about the core technology behind Levana start here:
Levana is founded on the pillars of what DeFi represents — sovereignty, trustlessness and fairness. We view DeFi-tainment as an opportunity to delight, entertain, and educate the next billion users of DeFi.
Using the perfect combination of DeFi, NFTs and Gaming, Levana is building the first DeFi-tainment project to consistently engage and grow since launch at the start of Q4 last year. Specifically targeting the next 100M incoming crypto users who’ve never before engaged with DeFi, we employ powerful storytelling and high level execution to keep our audience captivated and engaged.
If you want to get involved, check out our open positions: https://levana-protocol.notion.site/Job-Descriptions-1ca31065e7e544819f7cee005ad71324
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Join our Discord: https://bit.ly/discordlevana