Should I become a landowner on Alien Worlds?

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invest0x

Crypto newbie trying to navigate the crazy crypto world

3 years ago

In community: Cryptocurrency and Blockchain(7b7f)

Topics: Alien worlds, Free crypto, Mining, Earn crypto, TLM, ...

I have never been a big gamer. I mean I used to play NeoPets and Maple Story when I was in high school and I was hooked big time. But I played to play. Nothing else. I'm one of those boring adults that don't even have any games on my phone. This all changed when I discovered Alien Worlds due to their token (TLM) being listed on Binance. Since then, I've been "playing" the game which entails a series of clicks every 40 minutes. It's quite mindless and it's perfect. Because I'm not actually playing to have fun. I'm playing for the economics of it.

In my previous post, I outlined my earnings from playing the game for 10 days. Depending on the price of TLM, this could be great or so-so per day. When I don't keep getting the "Out of CPU Error", I can probably get 0.3-0.5 TLM per 40 minutes. So that is anywhere between 5-7.5 TLM per day. At the current TLM price, that is about $3 per day. I'm intending to hold the token as mining gets more difficult as more players join, there is a chance for TLM to increase in price. New game feature releases will also help.

Land Owners

As mining got more and more monotonous, I started thinking about the potential passive ways to earn more TLM. Currently, there is no staking options that would automatically earn you more TLM in-game unfortunately. The only way to earn truly passive income on Alien Worlds is to become one of the 3,343 land owners. f you're not familiar with the game, land owners have the chance to set their land commission which they will earn when miners mine on their land. I've seen commissions as low as 0% to 20%.

Land For Sale

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 the land packs which were auctioned off. A couple of hundred dollars would have earned you a piece of land. The second way is on the secondary market on AtomicHub where existing land owners can sell their land for WAX (don't you just love the blockchain ecosystem).

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 title of this article, "Should I become a land owner on Alien Worlds?" Let me take you through my thinking process on the economics of such an investment. You are investing $12K after all, so you have to think about it as an investment (not a game). 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:

1. Yield

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.

The first part of the equation is below from the AW Technical Blueprint:

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.