Kyokoans, it’s no secret that the crypto market is in bumpy waters right now. Crypto market sentiment is at multi-year lows, and multiple scandals within the industry, including those at high-profile organizations such as Axie Infinity, 3AC, LUNA, FTX, and many more have shaken investor confidence. Industry losses have been staggering, and many stakeholders have left the market, with crypto’s industry market capitalization dropping by 64% over the past year. Market liquidity has also shrunken to levels unseen since early 2019, with daily trading volumes plummeting by 68%.
This trend is only more pronounced in the GameFi industry. GameFi was projected to be the fastest growing segment in the blockchain industry at the beginning of 2022; however, it has seen extreme decay over recent quarters. According to analytics company Footprint Analytics, industry users and volume within the GameFi industry have dropped to multi-year lows. Over the period from January 1, 2022, to January 1, 2023, GameFi users have dropped by 40% to roughly 750,000, and 24-hour GameFi asset trading volume dropped by 98% to 1.4 million USD.
It’s under these conditions that we announce that we are officially delisting our DAO-to-DAO loans business on January 10, 2023 at 14:00 UTC.
Here’s the deal. Projects that are well prepared to last through the bear market are well supplied and don’t need credit. They aren’t looking to explore alternative financing right now. We get it.
What leaves us more concerned are the projects that we see applying for our DAO-to-DAO loans. We were fortunate to be wholly unaffected by the FTX scandal and its fallout; however, many weren’t as lucky. As contagion from these high-profile bankruptcies continues to spread, the projects that we’ve seen apply for our loans are shaky at best. We’re noticing increased levels of systemic risk across the market and are uncomfortable attempting to conduct the quasi-forensic accounting required to assign credit risk at the most basic level to applicants. It’s the reason why we haven’t felt confident bringing any recent applicants to the community for a vote, and frankly, it’s unreasonable to even consider maintaining this business in the current market climate. It’s simply irresponsible to our product users, our community members, our investors, our partners, and even us.
This was a difficult decision to make. We have successfully built this product from the ground up. We’ve already extended loans to multiple organizations, all of whom repaid their loans on time and without incident. Unfortunately, it’s for the same reason that we got so excited about this product that we will delist it — on-chain lending is a huge and unfulfilled market, but we’re just not comfortable conducting risk analysis in an industry notorious for lack of verifiable information under the current market conditions.
This is not to say that our DAO-to-DAO loans are gone for good. We will re-evaluate the business line once market conditions begin to stabilize and systemic risk within the industry decreases. Once conditions return to a reasonable level, we may make the decision to bring our Web3 lending business back online. In the meantime, we stand by our decision to shelve this product and reallocate the funds earmarked for DAO-to-DAO to our cross-chain asset lending platform marketing budget.
Have questions? We’ve got the answers. Ask a Kyoko team member during our AMA on January 10, 2023 or ask a community manager in the official Kyoko Discord.
Kyoko is a DAO-to-DAO credit provider and cross-chain GameFi NFT lending market for guilds and players. Kyoko’s DAO-to-DAO lending offers liquidity to promote Web3 development, while its guild-to-guild lending, P2P NFT lending, and cross-chain asset lending platforms aim to solve the most pressing issues challenging the GameFi market, including the rising cost of entry and siloed in-game assets across different blockchains. Kyoko’s metaverse will also allow Guilds to display their history, progress, and other accomplishments, while players can connect with others in a world that can be built in, developed, and sold off.
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