NFT in game land has a fixed supply and earns a passive commission. Earnings with no clicking or game play required. In game land might be the a good passive income source NFT collectors and crypto gamers should consider. Land in these games usually has a fixed supply and income is earned as other gamers mine the land or earn income from your land in the game. Game creators like fixed land supply because it can bring an element of stability and control to the games token-economics that can help with improving the long term health of the games token and economics. Having a fixed supply of a resource like land also ties the game to real world economics. In the real world, supply is fixed so using a fixed supply of land as a foundation for a game economy can be a great strategy for the future growth and health of the game. So how can one become a land owner? Well one way is to invent a time machine and go back to when they first released and buy land packs when they are first put up for sale. In the game, Alien Worlds a couple of hundred dollars would have got you a piece of land when the game first came out. The second way is on the secondary market on AtomicHub where existing land owners can sell their land for WAX.
Due to the explosion of interest in this game (why wouldn’t there be, it’s basically free money?), land sales have sky rocketed from about $4,000 (before the Binance launch) to about minimum, $12,000 as you can see from AtomicHub. Not too bad if you invested a couple of hundred bucks?
Return on Investment
Going back to the game Alien Worlds, Let me take you through my thinking process on the economics of such an investment. What is the potential Return on Investment (“ROI”) for this purchase? There are two components to consider, which I normally use to evaluate traditional real estate investments as well:
Yield is the potential future income as a % of the initial investment. I had to dig a little bit more to find out how much land owners are getting in TLM. There are essentially two components:
1) Daily Trilium Allocation to Landowners (DTAL) + 2) Commissions earned from mining activity on your land.
DTAL (weekly) is around 600 TLM if you search on the blockchain as distribution is made from the Terra.Worlds. Right now, the land rating feature has not yet been released which is why every land owner receives the same amount of TLM regardless of their land. But I expect this to change in the long term when this features is released. Land rating can be improved by using TLM which is going to create demand for the TLM token in the future.
The second part of the equation is dependent on the land itself and how many people are mining on it. The beauty of blockchain is that you can verify this if you were going to buy a piece of land by simply looking up the owner of the land. I picked out one of the lands for sale on AtomicHub and looked up their WAX username on the blockchain as well as AWStats.
So this land owner charges 1% commission for their land. The last column is the commission they receive for each mine. For the last 24 hours, this seems to be only 0.5 TLM in total.
There is really not much right now in the game to distinguish land lots besides their inherent abilities like Charge Time, TLM, NFT powers. This drives a lot of land owners to have to compete in terms of the commission charged. There are a lot of lands that charge 0% commission which makes sense because they still get a set TLM weekly from the Galactic Federation.
Once terraforming features are released for land, I expect this to change. Whereby land owners who upgrade their land will be able to charge higher commissions due to other abilities they offer in the game.
So for now, I will disregard the mining commissions given how small they are in comparison to DTAL.
This means the yield for owning land is:
(600 TLM x TLM / USD) * 52 / $12,000
Assuming a stable price of $0.50 /TLM, the yield for owning land is: 130%
2. Capital Gain
So the yield on the land is 130% which doesn’t take into account the potential capital gain of the land i.e. could you sell the land more than what you bought it for. If so, then your total return should be higher than 130%. We’ve just seen the price skyrocket from a couple of hundred to $12K so anything is possible. But I like to be conservative on this front, especially since the high price makes these land lots quite illiquid. Some might sit on the market for some time before someone buys it or the price needs to be lowered to make a quick sale.
For now, I’ll assume 0% for capital gain, because the price might come down or explode again. I don’t know.
Total return = yield + capital gain = 130% p.a.
3. Payback Period
We can also look at the investment in terms of the payback period. Payback period is the amount of time it takes to recover the initial investment.
Payback Period = Initial investment / Cash Flow per year
So with an initial investment in the land of $12,000, and a potential cash flow per year of $15,600, payback period is 0.77 of one year ~ 9 months time.
So equipped with the above analysis, it would seem to be a great investment (if you’re not chasing 1,000% returns) but with the high returns also comes with high degree with risk. There is a lot of other factors that you can’t control such as game dev, price of TLM, price of land, changes in DTAL etc. You will also have to consider whether a $12K can be better invested else where with better risk adjusted returns.
If you are looking to buy some land in a new game project and get in early with the hope of buying low priced game land before the games grows and prices rise take a look at the project Sailers World. Their game has 360 land plots only with PVP and PVE games planned to come out by the summer or fall of 2022. Sailers world Maritime Territories are limited. https://sailorsworld.io/ The graphics are good and the game will be playable in March of 2022 and Beta testing starts on Friday 2/25/25 check them out and let us know what you think.
Have fun and keep playing.
P.S. This is not financial advice. The above was an illustration for education and entertainment purposes only.