Does the Rise in YGG's Price Drive the Recovery of GameFi?

In the past week, the gaming guild token YGG saw a peak increase of over 400%. As a leading guild in the GameFi sector, the sharp rise in YGG's price has sparked discussions among players about whether the GameFi sector is experiencing a revival.

First and foremost, YGG started its development as a blockchain gaming guild. Its business logic involves purchasing equity NFTs from GameFi projects to nurture players. These equity NFTs are then loaned to players for gaming purposes, with the resulting profits shared between YGG and the players. This creates a self-contained business cycle.

With the accumulation of funds and users, YGG has transformed into a capital entity with its own user base. It now invests in various early-stage GameFi projects, allowing it to participate in the gaming industry at a lower cost. YGG's business model roughly encompasses these two forms. In theory, the rapid increase in the

YGG token

's price could be attributed to its participation in popular GameFi projects, enabling it to benefit from gaming dividends and subsequently gaining traction among secondary market investors.

In fact, after the sharp price increase of YGG, followed by a significant drop, it can be observed that both market makers and institutions were involved.

DWF Labs functions both as an investment institution and a market maker. According to an article titled “DWF Labs is ruffling feathers as it climbs the ranks of cryptos most active investors” published by The Block, DWF Labs has frequently invested in various projects as the sole investor, committing funds amounting to hundreds of millions of dollars across numerous projects. However, due to the opaque nature of their investment process, it's been observed from on-chain data that DWF Labs often transfers the tokens of invested projects to exchanges for sale. An individual with direct knowledge of DWF's operations disclosed to The Block that DWF's investment process essentially involves over-the-counter trading.

On February 17th, according to a report by Tech in Asia, blockchain gaming guild Yield Guild Games (YGG) raised $13.8 million through the sale of tokens, with DWF Labs and a16z leading the investment. The address 0xddAcAd3B1edee8E2F5b2e84f658202534fcb0374 is noted as the address through which DWF holds YGG tokens, while the address 0x10eAF73B62F145f79eD415e63975f62695574e59 is identified as Binance's private deposit address.

During the gradual increase in YGG's price, DWF Labs transferred their held YGG tokens to Binance. The specific operations conducted by DWF on Binance remain undisclosed. However, by analyzing the projects invested in by DWF Labs and reviewing the price trends of various tokens such as CFX and Mask, it can be observed that DWF Labs often acquires tokens at a lower price through investment and then utilizes market-making strategies to drive up the

token price

before selling.

According to Gracy Chen, the Managing Director of Bitget, insights from Bitget Research Institute's on-chain data analysis have revealed that during YGG's price increase, DWF Labs, BITKRAFT Ventures, a certain whale entity, Youbi Capital, Sfermion, and Wintermute transferred a total of 3.64 million, 1.57 million, 2 million, 1 million, 1.2 million, and 11.1 million YGG tokens respectively to Binance.

Summing up the above analysis, we can draw the following conclusions: 1. The significant price surge of YGG tokens is not directly related to any groundbreaking GameFi game in which YGG has participated. 2. Considering various pieces of information, including on-chain behavior of institutions holding YGG, retrospective analysis of projects invested by DWF Labs, and their market-making activities, it's reasonable to speculate that the price surge of YGG might be attributed to market-making efforts by institutions aiming to offload their holdings.