Decentral Games’ native token, $DG is poised to explode after a successful token redenomination and additional investment from Binance Smart Chain under its 1 Billion growth fund.
Removing Unit Bias: $DG Token 1:1000 Split
Since its launch late last year Decentral Games’ $DG token has been one of the biggest crypto success stories in 2021, appreciating in value by over 2,150% over the last 12 months at the time of writing.
However, with exponential growth comes potential perceptions of unit bias, and having achieved its current price levels around $450/token, the DG project team was eager to mitigate the risk of price perception driving away potential new retail investors. A proposal to split $DG at a 1:1000 denomination was overwhelmingly accepted by over 99% of token holders when it was put to a vote.
As observed by crypto Analyst Jason Fernandez, CBO of NFT Technologies, “A token with a lower price has more potential to 20x or even 30x than one that has a higher price, mostly for psychological factors. Those tokens that cost fractions of cents rather than multiples of dollars have historically displayed a greater potential for price growth.”
With $DG’s redenomination from roughly $450/token to $0.45/token, the barrier to accumulating whole units is removed, which leaves many optimistic in the upside potential for the token in the coming months.
DG Price-To-Earnings
To approximate the price-to-earnings ratio of $DG, we must estimate how much profit investors are generating for each Decentral Games token in circulation.
Considering the current value of the assets aggregated in the DG DAO treasury, $56M, the growth and diversification of its cash flows have been exponential since just nine months ago in February when the total aggregate value was just $500K. That is $55.5M in growth over nine months.
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If we then take $55.5M and divide it by the number of tokens in circulation, 347K, we arrive at around $158 profit per token. This is to say that over the last nine months, each $DG token generated earnings of $158 for its investors. Annualizing this metric over 12 months, that yields a projection of $210 of earnings per token.
Given current price levels relative to earnings, these metrics suggest that if earnings continue at their current pace, $DG investors are only currently paying for a price to sales ratio of 2.1, meaning the asset is undervalued. For context, the average P/E ratio for the average S&P 500 stock today is 15.9.
The Rise Of Crypto Gaming and Metaverse
In recent comments, Jason Fernandez emphasized that DG’s prominence as a gaming company at the forefront of the play-to-earn trend makes the idea of executing a token split a no-brainer. “A token split, when coupled with the correct messaging, will almost always result in a price uptick in the medium to long term, Fernandez said. “In gaming, particularly, a token split makes sense because gamers tend to think in terms of whole tokens as opposed to fractions… old school gamers who remember dropping quarters in arcade machines as kids will find [the new token price] price particularly nostalgia-inducing,”
According to research from Bitkraft, the market for blockchain gaming is expected to grow at a 100% CAGR from 2021 through 2025, becoming a $50B industry in the next four years. This far outpaces the growth potential of the traditional gaming sector at a 9% CAGR, and even the emergent VR gaming sector at a 30% CAGR.
With a current market cap of just $157M, it seems unlikely that the market is crediting DG enough for their leadership in play-to-earn. Play-to-earn style gaming is integral to the growth of blockchain gaming for the long term because it empowers players to earn stable income merely based on their participation and engagement.
While most crypto-gaming projects have play-to-earn economics in their roadmaps, DG’s play-to-earn product, ICE Poker is already live. As players are rapidly beginning to discover the earning potential of games like ICE Poker, DG’s player counts have doubled in a matter of weeks. As these new players continue to become familiar with the platform, it’s likely DG will convert many of them into future token holders eager to participate in shaping the platform’s future.
Extending Beyond Gameplay: DG’s Diversification
As with all emerging business sectors, the risk of revenue concentration remains a consideration. When it comes to DG, however, prospective investors who label it simply as a play on crypto-gaming are missing hidden growth vectors in the organization that has great promise in delivering long-term value.
One area lies in the promising potential of virtual events and entertainment. DG’s immersive environments and expertise in driving metaverse engagement have allowed the company to seamlessly pivot towards embracing the future of virtual events, a trend that began with a large pull-forward in demand given the pandemic’s effect on in-person events.
DG has satiated this demand by opening a groundbreaking metaverse-based nightclub and engaged Amnesia Ibiza, a multi-decade leader in nightlife and entertainment as a partner. The club has had no trouble in courting top-notch talent the likes of Benny Benassi and Paul van Dyk, who is among the many DJs eager to find new ways to engage with fans given the restrictions around in-person shows that remain in place. Virtual concerts will begin representing a more sizable slice of the $50B pie that is the global music industry and expect Decentral Games to be a big part of that growth story.
That upside potential coincides well with the meteoric rise of NFT’s, another trend that will undoubtedly re-shape the creator economy. Decentral Games is also playing a role in this space and are fostering connections with key artists to develop merchandise for the future. Electronic such as deadmau5 and 3LAU has been pioneering proponents of NFT technology among creators, but many of them lack the wherewithal to enter the space with a thoughtful strategy. Decentral Games’ NFT infrastructure presents an opportunity for artists to enter the space while creating value in the form of another shared revenue stream for $DG token holders in the process.
Closing Thoughts
Over the last 12 months since the launch of the DG platform and its token, the team has been relentlessly executing a plan to disrupt multiple billion-dollar industries, and they are well on their way towards achieving a slice of the pie in all of them. While the $DG token returned early investors several multiples of their capital in the early part of 2021, unit bias may have played a role in driving investor demand, even as player counts and commerce on the platform grew exponentially month-over-month.
With the 1:1000 split successfully executed, many anticipate retail investors just discovering the powerful potential of Decentral Games will be incentivized to join their disruptive efforts, leading the price of $DG token to follow.