Analysis of the value of NFT: Aavegotch’s role in DeFi, PLAY, and Polygon

Aavegotchi is a crypto collectible based on DeFi. The reason why Mars Investment Research pays attention to Aavegotch is that it is a project that has the potential to combine the explosive potential of DeFi and NFT.

What’s more interesting is that in the process of understanding the connection between Aavegotch and DeFi, we found that the plasticity of the NFT ecosystem is not limited to its connection with DeFi. It iterates itself with the Polygon system, and it and the PLAY index can bring us more gameplay together...

We can see that a new economic system is being built.

DeFi is becoming more interesting and NFT is becoming more financialized

Aavegotchi is an NFT-like product developed by the Pixelcraft Studios team. Pixelcraft Studios was originally funded by the Aave Ecosystem Grant and was Aave’s first official investment after rebranding from ETHLend in 2018.

Since its birth, Aavegotchi has had the gene of "making DeFi fun and NFT financial", and is an important combination of NFT+DeFi.

Aavegotchis, like other popular blockchain games such as Cryptokitties, Axie Infinity, and Cryptovoxels, use the ERC721 standard protocol and are crypto collectibles that exist on the Ethereum blockchain.

Each Aavegotchi ERC721 NFT manages an escrow contract address that holds Aave-backed ERC20 collateral, or "aTokens." "aTokens" generate yield through Aave's LendingPool, which increases the number of aTokens held in the wallet. Therefore, over time, the number of aTokens held in the Aavegotchi escrow address will continue to increase. Popular tokens for acquiring aTokens include aDAI, aUSDT, aLINK, aLEND, and aSNX, among others.

Aavegotchis have a variety of traits that affect their rarity, how they perform in mini-games, and the wearables they can equip. Some are randomly generated at birth, while others depend on the user's interaction with the Aavegotchi. In addition to managing aToken custody, Aavegotchis also extend the ERC998 Composables standard to enable them to manage child NFTs, i.e. wearables in the Aavegotchi ecosystem.

Not every wearable can be equipped by every Aavegotchi, though. Some wearables may only be equipped by Aavegotchis with certain attachments, Aavegotchis of a certain level, and Aavegotchis with certain traits. Some wearables can increase or decrease certain traits of an Aavegotchi. For example, equipping a sword might slightly increase an Aavegotchi's aggression, while equipping a Bob Marley shirt might lower its energy level.

Aavegotchi's community is centered around gamified DAO governance built on web3, and the entire Aavegotchi experience is driven by GHST (Aavegotchi's ecosystem governance token), which is used to purchase various digital assets in the Aavegotchi universe, such as Aavegotchi portals and wearable devices. Own GHST so that your Aavegotchi can participate in DAO governance, and you can also earn GHST by achieving results in rare mining on Aavegotchi.

The Imp is an NFT in the Aavegotchi system. To obtain the NFT Imp, you need to follow the steps below:

First, buy GHST tokens, which are available on many exchanges;

Use GHST to purchase portals, one portal is worth 100 GHST;

You need to pledge crypto assets into AAVE to obtain aToken;

Stake aToken to get Gotchi.

This is the inherent genetic advantage of NFT+DeFi that Aavegotchi possesses: aToken is the certificate of your deposit, and all deposited assets in the Aave protocol have a corresponding "aToken". This is an Aave interest-bearing token that is 1:1 pegged to the value of the underlying asset - if you deposit 100 DAI, you can get 100 aDAI. These aTokens generate interest in your wallet in real time.

If aToken is obtained by staking crypto assets into AAVE, there will be deposit interest. Different aTokens (such as aDAI, aETH, aWBTC, aUSDC) have different properties corresponding to the ghost. If you open a door and only see a ghost, you can think of it as a dead ghost. Only after staking aToken, the ghost will officially become your NFT asset.

In the Aave ecosystem, NFT collections are positioned as DeFi collateral. Due to the non-interchangeability of NFTs, their poor liquidity limits their growth potential, but the development of DeFi has given rise to "DeFi + NFTs", which have brought new development vitality and possibilities to each other.

The new economic system of NFT: play and wealth accumulation

Let’s first introduce PLAY, a product of the collaboration between PieDAO and the NFTX community. It consists of 14 carefully selected NFT assets - you only need to hold one ERC-20 token to gain NFT exposure and liquidity in the rapidly expanding Metaverse virtual world.

As mentioned above, Aavegotchi is a "DeFi + NFT" gameplay, partly a digital electronic pet game, and partly a DeFi mining attribute. Connect your digital friend with Aave aToken, and you can earn income while playing games.

Based on this, Aavegotchi has the potential to develop in another dimension. You have to first understand Metaverse, an emerging virtual world that transcends the boundaries of the material world and revitalizes the economy of creators. Metaverse has different shapes and formats, and it has existed for some time: from basic video games to more immersive experiences involving AR and VR recently.

Then there is the advent of crypto, which has taken the Metaverse to a whole new level, providing its inhabitants with the means to govern, trade, create, own, invest, and build.

The Metaverse theory states that cryptocurrencies will actually play an important role in creating a new economic system that is independent of the physical world but capable of creating value that can be transferred to the physical world. NFTs (non-fungible tokens) play an important role in this regard because they are able to capture the unique identity of digitally created items that cannot be interchanged.

Metaverse and NFTs are an important component, allowing anyone, regardless of economic status or geographic location, to accumulate wealth while playing, living, and creating in virtual worlds - Metaverse has become the latest focus of the PieDAO community, which is the background for the birth of PLAY.

In addition to Aavegotchi, PLAY index tokens will also involve the following projects: NFTX, Axie, Hashmasks, PUNK-BASIC, UniSocks, The Sandbox, Decentraland, Red Fox Labs, Atari, Ultra, Enjin, ComETH... PLAY covers some recognized NFT collections. You can get PLAY from the PieDAO exchange, mint your own tokens through ETH, or use the community oven to mint, which can greatly save gas fees. Like all PieDAO products, PLAY is fully backed by the underlying assets in the reserve.

Cross-chain games that are affordable for everyone

Aavegotchi can be freely traded and equipped with wearable devices - especially after connecting to the Polygon (Matic) sidechain, all gaming activities are affordable for players.

Aavegotchi smart contracts are written in Solidity and leverage the Diamond standard for easy upgradability. The main Aavegotchi smart contract inherits the ERC721 and ERC998 standards to enable asset portfolios.

Before the launch of Polygon, some Aavegotchi features were not economically meaningful due to high gas fees. Polygon (Matic) is an Ethereum expansion Layer2 project that mainly solves the problems of Ethereum congestion and high mining fees, and has extremely fast transaction speeds (1-2s). A single sidechain can reach a speed of up to 7200TPS by adding more sidechains.

After upgrading to Polygon, in addition to the PoS chain and Plasma chain remaining unchanged, Polygon will also provide a variety of Layer2 technology solutions such as zkRollups, Optimistic Rollups, Validium, etc. Polygon (Matic)'s Layer2 chain has been widely used. In addition to Aavegotchi, it also has more than 100 DAPPs including DeFi, NFT, games, etc., more than 13 million on-chain transactions, and more than 260,000 independent address users.

Polygon already has a good history and experience in supporting games and NFT projects. Polygon supports environmentally friendly and low-cost NFT casting, high-speed and low-fee transactions, NFT loans, sharding and mining, and has the advantages of composability and Ethereum compatibility. According to the project party, the focus of Polygon's development will continue to be NFT infrastructure, realizing fast and low-cost markets, NFT casting machines, NFT loans, games and other applications.

In the future, the application of off-chain assets on the chain will be developed, including the on-chain distribution of artworks, the chain-linking of music copyrights, real estate, loans... Many scenarios can be mapped to the chain through NFT. The area he is most looking forward to is the cross-chain NFT bridge.

After Layer2 is gradually launched, Ethereum has entered the multi-chain era. Applications and games in the multi-chain ecosystem will tend to be deployed on multiple chains. Along with this will come the rigid demand for NFT cross-chain in many applications including Aavegotchi.