DAO Maker Insights: Why We are Launching Gamestarter

4 min readJun 8, 2021

Token sales are a form of crowdfunding.
Token sales are not the only form of crowdfunding.
Token sales are not the first form of crowdfunding.

Public crowdfunding through tokens is in fact tiny compared to traditional public crowdfunding.

How Big is Traditional Crowdfunding?

Major companies like Facebook subsidiary Opulous were product crowdfunded
A single traditional crowdfunding platform, Kickstarter, has more traffic than all token sale platforms combined
Traditional crowdfunding is at almost 100 million users with billions
Individual platforms raise over a billion dollars a year

And yet…

Traditional Crowdfunding Sucks

If you are used to public token sales, it would be difficult for you to even imagine funding a project and then having no idea when your tokens will be listed, if ever.

It may also be difficult for you to cope with a team telling you to wait up to 10 years before listing.

If a project went bankrupt before it listed, then you’d likely sound the alarm that you participated in a scam.

All the above scenarios are VERY common in traditional funding. In fact, 99% or more scenarios are like that.

Traditional crowdfunding can be described with 4 factors:

Illiquid : your capital likely cannot be sold for many years
Risky : there is a very high chance your capital can never be sold
Limited : there is a high chance you are not even allowed to participate or the cost barrier to entry is just too high
Huge : you are not participating in something adopted by almost a 100 million people, in a sector that grows double-digits yearly with billions transacted already

So Why are Token Sales NOT the Norm?

Utility tokens cannot be securities. (this point is of critical importance.)

If a token commits to offering what equity crowdfunding offers, ownership in a startup, then the token sale is illegal.

This forces tokens to act solely on a utility basis, and that means they need to fit into some digital economy.

The necessity for tokens to only be valuable within a digital economy is a hyper limitation as then only blockchain-enabled products are reasonable fits.

Most products on Earth have no need to exist on a blockchain or to even implement a blockchain-based functionality. That also means most products cannot integrate utility tokens and hence cannot do token sales.

There Might be One Loophole

There is one product category that dominates traditional crowdfunding. It alone has over a million annual transactors, with hundreds of millions funded on just one platform.

This category involves ecosystems that have digital economies but do not exist on a blockchain.

Games.

Games are the holy grail of traditional crowdfunding.

Games are also perhaps the ONLY sustainable implementation of NFTs.

Game items are massive economies.
Game items are often non-fungible digital items with a utility: skins for showing off or celebrating, weapons for combat, resources for creation, etc.
Game items are heavily adopted among the global game economy, a $160 billion business that grows by 10% or more every year

Games: A Massive Informal Digital Economy

- Game items have sold for hundreds of thousands of dollars
- Game items generate tens of millions in fundraise through traditional crowdfunding

Game items are an incredibly popular way of fundraising.

Gamers participate because (a) they like games and (b) they know rare game items can be worth considerable amounts.

They are an entire class that is far bigger than all current NFT marketplaces put together.

Game item traditional crowdfunding is massive even though it has all the same problems:

Illiquid: most players do not know when they can trade their items
Risky: as some indie games may not deliver, there is no opportunity for gamers to cut risk early on to more risk-taking buyers, even at discounted selling prices
Limited: highly regulated platforms are the only places game items are funded
Huge: … game item crowdfunding is still absolutely massive

The Benefits of Crypto, Now Available in Game Item Funding

Tokens are liquid.
Tokens are accessible.
Tokens are low risk compared to traditional crowdfunding.
Token sales would be a dream come true for retail gamers.

However, most games cannot run token sales as they do not want to implement a utility token in their game.

Still, all games have items!

Digital items to be precise.

Enter NFTs.

Gamestarter is the first platform to combine traditional crowdfunding opportunities with the benefits of token funding.

Game developers do not have to issue utility tokens
Gamers do not need to participate in illiquid and high-risk equity

Game developers issue game items as NFTs, which can be purchased as class by gamers.

Keep in mind that there are millions of gamers funding hundreds of millions in game items even though the system is high-risky and illiquid. Gamestarter can not only absorb that market, but considerably grow the participation of gamers in crowdfunding by making the market: