BlackPool Quarterly Report - Q1 2022

BlackPool has had a very strong, healthy entry into 2022 with even more exciting things just around the corner. Dive in with us into the latest Quarterly Progress Report to find out everything about our financials, enjoy some intriguing conclusions from our Lab analyses and catch up what's been cooking on the governance front.

Without further ado, let's hit it!


TL;DR

  • BlackPool revenues remained constant during the last quarter, allowing for reward distribution to veBPT holders (until new tokenomics launch, 16 WETH have been sent to users),
  • BlackPool made 8 investments ($965k) in new projects and doubled down on key players who empower the gaming economy, such as Guild of Guardians.
  • As of March 2022, Assets Under Management amount to 6,198 ETH, distributed across the main verticals and other investments,
  • At the time of writing BlackPool’s Treasury is valued at over $7.7M.
  • BlackPool kicked off two new revenue generating verticals - Aavegotchi and CyBall, empowering more than 300 gamers to join the troop.

The roadmap ahead can be summarised as such:

  • BlackPool continues to support blockchain native innovation - for the previous Quarter BlackPool Labs incubated and sponsored 9 early-stage protocols injecting over $250k and 371 ETH into the ecosystem. We see further growth in this direction for Q2.
  • Expanding further into the web3 game economy by partnering with Web3 e-sports teams and players.
  • Enhancing our meta-verse verticals such as Aavegotchi and public release of other metaverse verticals currently in development and testing.
  • Exploration of vertical-specific access to yield as well as the launch of in-house NFT projects.

Financial Results

Profit & Loss

Revenues were generally stable in the last quarter for the Sorare vertical but decreased for Axie Infinity due to the consequential impacts of the Ronin Bridge Hack. All BlackPool-owned assets remain safe and in hand.

Even if the majority of revenues come from the Sorare vertical momentarily, we are seeing the birth of new verticals (Aavegotchi and CyBall), launched in the last weeks of March which are already generating yield by employing 300+ scholars. We anticipate increased inflows to BlackPool as these verticals evolve and scale.

The main cost items are:

  • Core Team Rewards: rewards for the team of 20 to 30 contributors. These costs have been increasing due to the onboarding of new team members in March. Moreover for on-chain accountability purposes, some contributors' costs for April have been taken into consideration for March, leading to an overall increase in March contributor expenses.
  • Infrastructure: costs linked to running and maintaining validators and servers, and other infrastructure expenses.
  • Liquidity Incentives: Liquidity-related expenses to build out liquidity for the BPT/wETH pair on Comethswap.

The Sorare Vertical

  • In-game rewards are accounted for as revenues using the floor price in wETH (Card/ETH).
  • It should be noted that in Q1 we undertook a restructuring following the replacement of Manager 1 in January. As a result, this was accounted for in the accounting for Q1.
  • In-game, Sorare increased the number of tournaments for each round, therefore we benefited from additional utility to lower-tier cards (Underdog League) as well as Legend’s cards. As a result, the vertical has benefited from an uptrend in asset utilisation by 10-15%.
  • New 2022/23 cards were launched for both the J League and K League with MLS expected to arrive next.
  • As part of their first major community update of the year, the first Sorare mobile app was released to a closed group of beta testers. Follow-up community questions led to the confirmation of an expected update to the user terms and conditions. Our initial understanding is that this is likely to result in us requiring to consolidate our 3 manager accounts into 1.

The Axie Vertical

  • Axie itself is still the market leader for the P2E model that new projects aspire to replicate. Despite a valuation in the billions, the growth potential remains high with the addition of yield from Land, Items, and other exotic features. That said, many new projects are hot on their heels, with many such as DeFi Kingdoms and Crabada learning and evolving the traditional P2E model to close the gap.
  • Our position and engagement are reflected in the former. We’ve seen benefits in shifting from a large number of Scholars to retaining highly talented players that pilot more assets and garnish leaderboard monthly finishes.
  • Land is going to be vital to the success of the Axie ecosystem - BlackPool are large holders of these assets. Recent announcements have had contrary content and have shown the Sky Mavis team to be reactive to criticism from the community - they will, of course, need to actually deliver on their promises to satisfy the many classes of the community.
  • We are looking at increasing our tooling in the Axie space, as it is an excellent testbed with lots of readily available data. The systems will likely be integrated into other verticals and have wider ranging applications.

Asset Under Management (ETH)

Asset Under Management accounts for the illiquid digital assets (mainly NFTs) which power the different P2E verticals.

The overall AuM increased by more than 16% in the last quarter, driven by an increase of 6.2% in Sorare Assets and an increase of more than 100% in the “Other Investments” category.

Investments (ETH)

Investments carried out in Q1 have been focused on doubling down on a few projects, as our in-house experts agreed to strengthen our positions, as well as making bold moves on highly promising, long-term projects on Ethereum mainnet and Arbitrum. Diversification was a core component of our strategy with an increasing proportion of investments made outside of our current well-established Troops, namely Sorare and Axie Infinity.

We established ourselves as key investors in the Treasure ecosystem with a strong involvement and much more yet to come in Q3. Projects on popular blockchains such as Solana and BSC have also been carefully selected for investment after a large-scope screening and in-depth investigations.

Liquid Assets in Treasury (ETH)

The BlackPool Treasury has been growing steadily and sustainably in the last quarter, due to price appreciation of assets/investments and net earnings coming from the verticals.

Moreover, we decided to deleverage completely in the last months, due to uncertainty in the market, reducing the debt amount to 0.  

The Treasury is divided mainly into three different wallets:

  • Treasury: 0x07DFF52fb8B38E55E6eCb407913cd847396Af4f0
  • Defi Kingdom Wallet: 0x3644e3d056e4ea1e20B529303E641e3Bef7102e8
  • Aavegotchi Wallet: 0x93468aDecDcCD18131ce1fd8cAEed68fB3de43e7

and is composed of different assets with the following breakdown, for a total DAO value of around $9M:

  • Assets: $7,690,858
  • Deposits: $0
  • Debt: $0
  • Other Assets (LPs): $11,233

Consolidated Balance Sheet

The consolidated Balance Sheet accounts for $24.46M and has the following breakdown:

x

The graph below shows the assets which are backing each BPT token and has been calculated as Total Asset/Circulating Supply.

At the moment, each BPT is backed by a combination of liquid and illiquid assets for a total of $3.75, making the token heavily undervalued in current market conditions.

Market Trading Analysis (ETH)


Governance

A new governance framework was proposed in Q1 to improve DAO activity.

Each proposal requires a 2 days feedback period minimum on the Forum before posting on Snapshot. The proposals can be filled in different categories depending on the topic:

BPIRs or BlackPool Integration Requests: New partnerships, public P2E integrations and DAO whitelists to lock BPT

Voting period: 3 Days


BPGPs or BlackPool Governance Proposals: DAO expenses and budgets, contributor rewards, grants, liquidity mining updates and Lab Budget.

Voting period: 5 Days


BPIPs or BlackPool Improvement Protocols: Modifications of smart contracts, multisigs and governance framework updates.

Voting period: 8 Days


As we’re still in the migration phase to veBPT, the quorum for each category will be voted on later.

A new category was created on the Forum for treasury allocations and reports.


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