Project Introduction

Xterio is a Web3 game platform and publisher headquartered in Switzerland, dedicated to exploring Web3 games. It combines free games and on-chain games to provide high-quality gaming experiences and services for players and developers. Additionally, the platform offers a GameFi as a Service (GaaS) solution, allowing traditional game developers to easily integrate their games with blockchain technology and provide players with high-quality gaming experiences and digital asset ownership. Xterio's intellectual property strategy is to build future world-class IP franchise rights through a bottom-up storytelling approach and expand it beyond the gaming industry.

Author

JUMPENG, a senior researcher at World Chain Investment Research. With a master's degree in finance from Huazhong University of Science and Technology and 7 years of industry experience, specializing in areas such as Layer1, DeFi, NFT, Layer2, and Gamefi, having researched over 2000 projects and produced over 500 in-depth research reports.

1. Research Highlights

1.1. Core Investment Logic

Xterio is operated by a team of senior professionals in the gaming industry, laying a solid foundation for the project. The founding team members of Xterio come from top game developers such as FunPlus, EA, and NetEase, with over 15 years of rich experience in game product development and operations, giving Xterio a core competitive advantage in producing high-quality game content. Moreover, receiving recognition from multiple top institutions and establishing strategic partnerships with well-known blockchain institutions and game companies including Binance Labs, FunPlus, and FTX, provides Xterio with comprehensive support in game technology, user operations, and brand marketing. Leveraging the industry experience of the senior team and close collaboration with leading partners, Xterio has a clear competitive advantage in game content and Crypto technology capabilities. These strengths lay the foundation for Xterio to become a leading blockchain gaming platform in the future. Therefore, Xterio's long-term investment value is validated, and it has the potential to grow into a leader in the chain game industry based on its unique competitive strengths.

Xterio aims to address the pain points currently faced by chain games, with the goal of creating a high-quality on-chain gaming platform to open the doors to chain games for traditional game users. Through independent research and the discovery of high-quality game content, Xterio has preliminarily verified its strength and differentiation in product capabilities. This not only meets the demand for high-quality chain games but also reflects Xterio's clear market positioning and strategic execution. Overall, Xterio aligns well with market demand and industry pain points, and its product strength has been preliminarily validated. This strategic clarity and resource integration capability will help Xterio firmly establish its position in the market, expand its market share, and move towards the strategic goal of the on-chain gaming platform.

It is evident that Xterio has a leading market positioning and product perspective, making it a worthy investment target in the chain game field. With a clear strategic plan and validated product strength, it is expected that Xterio will achieve a leading position in the chain game field.

Xterio has conducted forward-looking innovative explorations in technology. Among them, NFT cross-chain and cross-game interoperability and AI-driven toolkits have enormous commercial monetization potential. NFT interoperability breaks the asset silos, enabling the cross-game flow of digital assets, significantly enhancing the use cases, liquidity, and monetization capabilities of NFTs. The AI toolkit improves content generation efficiency, enriches game resources, and optimizes user experience, directly leading to increased business revenue. It is evident that these technological innovations not only perfect the user experience but also make progress at the business level, driving transaction volume and revenue growth. With these technological innovations, Xterio has the advantage of a technology-driven business model, accelerating its commercialization process and enhancing its monetization capabilities. This technology-driven business perspective is a key support for Xterio's investment value.

Xterio has successfully secured funding of up to $55 million, providing strong financial support for its rapid development. These rounds of financing were led by top gaming and blockchain investment institutions, and the ample capital strength will effectively promote the product and technological iteration of Xterio. The abundant funds will help Xterio expand high-quality game content, attract more development teams to join the ecosystem, meet user demands, and expand its user base. At the same time, the funds will also be invested in the construction of the Xterio platform to create a better on-chain and off-chain user experience. It is evident that the advantage of financial capital will help Xterio increase investment in key areas such as content, technology, and platform, gaining a first-mover advantage and establishing a foothold in the competition. In summary, having strong financial strength is one of Xterio's core competitive advantages, significantly reducing investment risks and serving as a key support for its investment value. This capital-driven high investment strategy will help Xterio solidify its leadership position in the chain game track.

1.2. Valuation

According to PitchBook data, Xterio completed a $15 million financing round in July 2023, but its valuation was not disclosed. According to CoinDesk's report, Xterio completed a $40 million Series A financing round in August 2022, led by FunPlus, FTX Ventures, and XPLA, with a previous valuation of $300 million.

1.3. Project Risks

The main risks currently faced by Xterio include: limited operational experience in the crypto field as a new startup team, lack of large-scale commercialization cases for replication and promotion, the need to bear the cost of market education and user accumulation from 0 to 1, overall shrinkage of the chain game market, competition risks, and the difficulty of product and technology implementation impacting user experience. See 5.2. SWOT analysis for details.

2. Project Overview

2.1. Project Scope

1) Game Development and Publishing:

Xterio's platform includes a game library, NFT marketplace, on-chain interface, decentralized identity system, wallet, and community applications, providing players with a rich and diverse selection of games and functionalities.

① Developing and releasing its own Web3 games: Xterio has its own game development team that utilizes technology stacks and game engines from FunPlus, as well as its own AI toolkit, to create high-quality Web3 games. These games cover various popular game genres such as MMO, sandbox, strategy, RPG, MOBA, and shooting, catering to the preferences and needs of different users. These games also demonstrate Xterio's strength and level in game design, graphics quality, and gameplay innovation.

② Publishing and supporting third-party Web3 games: Xterio has established partnerships with well-known game companies such as FunPlus and Com2us, providing technical, financial, resource, and brand support for the platform and integrating some of their games into the platform ecosystem, increasing their value and cross-promotion between games.

2) Game Platform and Services:

Xterio provides an easy-to-use end-to-end, on-chain universal chain game solution for players and developers. Xterio offers a GameFi as a Service (GaaS) platform, providing a range of Web2 and Web3 toolkits and publishing services, as well as the ability to carry items and characters, offering convenient and secure access for players and developers. This includes APIs and ready-made smart contracts, allowing traditional game developers to easily integrate their games with blockchain technology and provide players with high-quality gaming experiences and digital asset ownership. Xterio also provides financial and publishing services for partner games to maximize growth in marketing, user acquisition, platform relationships, data analysis, and real-time operations.

2.2. Team Overview

2.2.1. Overall Situation

Xterio's team consists of senior professionals from global game developers and publishers, including individuals from major companies such as FunPlus, Electronic Arts, Zynga, Activision Blizzard, Krafton, Jam City, and NetEase. The team aims to leverage decades of game development and playing experience to bring legitimacy and user trust to new web3 games and provide an amazing world and gameplay for 3 billion gamers.

Xterio's team is distributed across multiple countries and regions globally, including the United States, China, South Korea, Japan, and Singapore, with diverse and international backgrounds and perspectives, capable of adapting to the needs and preferences of different markets and users.

2.2.2. Xterio Foundation

The Xterio Foundation is a non-profit foundation established in Switzerland as the operating entity of Xterio. Its purpose is to develop and maintain the Xterio platform in a way that best serves the interests of token holders. The Xterio Foundation has independent assets, no equity shareholders, and is composed solely of token holders, with all its income used to advance the development of the Xterio platform and cannot be distributed to any interested parties. Additionally, the board members of the Xterio Foundation do not own any ownership of the foundation and do not receive any compensation from the foundation, ensuring that they do not have conflicts of interest with token holders. The foundation is responsible for the technical development and operation of the Xterio platform, supervising the progress of various tasks, and will gradually transition to a community governance model. The Xterio Foundation chose to operate in Switzerland due to its friendly regulatory and international reputation, providing a favorable environment for the development of the Xterio project.

Overall, the Xterio Foundation provides institutionalized operational guarantees for the Xterio project, which is beneficial for enhancing the project's credibility and development prospects. However, as a newly established organization, the operational capabilities of the foundation still need to be verified.

2.2.3. Core Members

Jeremy Horn: Founder and Chief Operating Officer, responsible for brand promotion, user operations, and community building. Jeremy Horn holds a bachelor's degree in economics from the University of California, Berkeley, and previously served as Vice President of Business and Strategy at Jam City, a well-known mobile game developer, with notable titles such as "Harry Potter: Hogwarts Mystery." Jeremy Horn has over 15 years of rich experience in the gaming industry, particularly in the field of mobile social games, with extensive experience in free-to-play games. He was selected as one of the most influential figures of 2015 by the authoritative industry website Pocket Gamer. Jam City, where Jeremy Horn is also involved, has invested in the Xterio project, bringing strong gaming industry resources to Xterio.

Michael Tong: Co-founder and CEO of Xterio, also the Chief Strategy Officer of FunPlus. He has rich experience in technology, Web2 games, and entertainment companies, having held senior positions at Ubisoft, Krafton, Jam City, NetEase, and others. He provides extensive expertise in creating and maintaining high-revenue, free social games on PC and mobile. In 2022, he co-founded Xterio with Jeremy Horn and Yitao Guan, and is responsible for overall strategy, operations, and management at Xterio, establishing long-term strategic partnerships with partners such as FunPlus.

Darion Lowenstein: Chief Marketing Officer, responsible for marketing and branding at Xterio. With over 25 years of experience in the gaming industry, he has held senior positions at Electronic Arts, Activision Blizzard, Zynga, and has been involved in the promotion of popular games such as "Call of Duty," "StarCraft," and "FarmVille."

2.3. Financing Situation

According to disclosed information, Xterio has completed two rounds of financing totaling $55 million.

First Round: On August 30, 2022, Xterio completed a $40 million financing through SAFT sales at a valuation of $300 million, led by FunPlus, Makers Fund, FTX Ventures, and XPLA, with participation from Animoca Brands, HashKey, Foresight Ventures, Infinity Ventures Crypto, and Matrix Partners. This round of financing will be used for the development and release of Web3 games and expanding its team. Additionally, Xterio is expected to release multiple mobile and web games in the coming quarters.

Second Round: On July 13, 2023, Binance Labs announced a $15 million investment in Xterio to expand its game development capabilities in AI and Web3 fields.

2.4. External Investments

On February 6, 2023, Overworld announced a $2.5 million new round of financing, with Xterio participating.

On August 1, 2023, Abyss World's Abyss AI Arena completed the allocation of opponents through a lottery and officially started ticket sales, with Xterio sponsoring the prize pool for this season.

On September 12, 2023, Web3 game studio GamePhilos completed an $8 million seed round of financing, with Xterio and Animoca leading the investment.

2.5. Partners

According to information from the Xterio official website, Xterio has established partnerships with 23 well-known game companies and institutions. These partners include FunPlus, Com2us, FTX Ventures, XPLA, covering game development, operations, publishing, investment, technology, and other fields. These partnerships reflect Xterio's leadership and influence in the Web3 gaming field, providing support and advantages in technology, funding, resources, and brand. Xterio and these partners will work together to drive innovation and development in chain games, providing players with a richer gaming experience and player ownership.

2.5.1. FunPlus

FunPlus is a well-known mobile game developer and publisher headquartered in Beijing. Established in 2010, FunPlus' notable works include "King of Avalon," "Rescue Heroes," and other popular mobile games. FunPlus has strong game development and publishing capabilities, with its games reaching over 200 million players globally through different channels. It is one of the few Chinese game companies to globalize mobile free games. FunPlus' notable games and key achievements include:

• "King of Avalon": A strategy role-playing game based on the legend of King Arthur, with over 1 billion in sales and over 100 million downloads since its launch in 2016. It has been widely recognized and acclaimed globally, named one of the best games on Google Play Store and Apple App Store.

• "Guns of Glory": A strategy role-playing game set in 17th-century Europe, with over 80 million downloads and over $500 million in sales since its launch in 2017. The game is loved for its exquisite graphics, rich gameplay, and exciting battles.

• "State of Survival": A strategy role-playing game with a post-apocalyptic zombie theme, with over 100 million downloads and over $300 million in sales since its launch in 2019. The game's innovative gameplay, humorous style, and diverse characters have attracted a large player base.

In addition, FunPlus has developed and published multiple card, simulation, and casual games. Overall, FunPlus has strong development and operation capabilities in the casual competitive mobile game field.

2.5.2. Connection between FunPlus and Xterio

FunPlus is an important investor and strategic partner of Xterio, leading the A-round financing of Xterio and sending executives to join the Xterio team. Xterio has obtained authorization for FunPlus' game engine and technology, significantly enhancing Xterio's game development capabilities. FunPlus will provide comprehensive professional technical support and consulting services to Xterio, benefiting Xterio's game development and publishing from FunPlus' rich experience and resources in this area. Through deep cooperation, both parties will promote their layout and development in the Web3 gaming field. If the cooperation is successful, FunPlus may also become one of Xterio's important game publishing platforms.

The close strategic partnership between FunPlus and Xterio has significant positive effects on Xterio's growth, with the potential for deep collaboration in the Web3 gaming field to create greater business value.

2.5.3. Com2uS

Com2uS is a well-known South Korean listed game company, established in 1998 and headquartered in Seoul, South Korea. Com2uS primarily develops and publishes mobile games and card games, with its flagship work being the "Summoners War" series. "Summoners War" is a strategy role-playing game based on collecting and nurturing monsters, with over 1 billion downloads and over $2 billion in sales since its launch in 2014. It has been widely acclaimed globally, named one of the best games on Google Play Store and Apple App Store.

In addition, Com2uS has developed and published multiple card, simulation, and casual games. Overall, Com2uS is a globally renowned mobile game developer and publisher.

2.5.4. Connection between Com2uS and Xterio

Com2uS is one of the founding partners of XPLA, and the connection between Com2uS and Xterio is primarily established through XPLA. XPLA has entered into a strategic partnership with Xterio, allowing Xterio to integrate its games and digital assets into the XPLA ecosystem. Additionally, XPLA is one of the lead investors in Xterio's $40 million financing round. Xterio will provide technical support and distribution services for blockchain games developed by XPLA. If the cooperation is successful, more well-known games from Com2uS may land on the Xterio platform in the future. Through strategic cooperation, both parties aim to jointly develop the field of blockchain games.

2.5.5. Collaboration with UPSHOT

According to a tweet from Xterio on August 28, Upshot and Xterio announced a new partnership aimed at providing a richer gaming experience and player ownership for gamers. Upshot is a professional NFT data analysis and growth hacking platform, providing machine learning models and network analysis tools for game studios like Xterio. Through this collaboration, Xterio will utilize Upshot's data insights to better understand and interact with gamers. Upshot provides wallet analysis and tracking, offering valuable insights into holder behavior for Xterio, which can help in strategic decision-making related to community building, incentives, and partnerships. Upshot also elucidates patterns, clusters, and cross-interests among gamers and various NFT collections, enriching Xterio's understanding of the broader NFT field. By identifying these complex connections, Xterio can identify collaborative partnerships and determine communities with common interests. Upshot provides tools and knowledge for Xterio to thrive in the Web3 gaming field. Their proprietary machine learning framework eliminates the need for a large internal data team, bringing the following benefits to Xterio:

• More successful NFT launches: Their wallet analysis tools facilitate a data-driven approach, increasing the likelihood of successful NFT minting.
• Stronger incentive programs: Utilizing their tools can significantly enhance Xterio's incentive structure and user acquisition plans, ensuring they are targeted towards long-term holders rather than bots.
• Revenue and efficiency maximization: Using their wallet analysis and network analysis tools could save weeks of work, allowing Xterio to focus on strategic decision-making rather than time-consuming manual processes.
• Building with lower risk: They utilize state-of-the-art security measures to ensure the protection and integrity of Xterio and its player data.
• Building a stronger, more valuable community: Identifying high-performance wallets can help Xterio build a strong community of actively engaged and dedicated users.

2.6. Development History and Roadmap

2.6.1. Development History

• Date Event
• December 2021: Xterio was officially established and began team building and project preparation.
• April 7, 2023: Released its whitepaper, detailing its vision, mission, goals, strategies, team, platform, games, and token economic model.
• August 30, 2022: Raised $40 million in funding, led by partner FunPlus.
• September 2, 2022: Launched its official website, showcasing previews and introductions of its platform and games, as well as links to its community and media.
• September 3, 2022: Released the first version of the whitepaper.
• February 7, 2023: Invested $2.5 million in the multiplayer RPG studio OverWorld.
• February 20, 2023: Announced a partnership with Puffverse.
• May 8, 2023: Xterio platform test version launched.
• June 8, 2023: Announced investment in the game AbyssWorld.
• July 13, 2023: Binance Labs invested $15 million in Xterio.
• August 21, 2023: Xterio announced the upcoming launch of an NFT Marketplace within a few weeks.
• September 1, 2023: Xterio announced that the protocol token XTER will power the Xterio game ecosystem.

2.6.2. Current Progress

Xterio is actively developing and testing its games and platform, as well as games developed in collaboration with partners. The first game, Titan Legend, has entered open beta testing, and multiple games are in development. Xterio is also continuously improving its technology and features, including AI toolkits, content provider data matrices, and decentralized identity systems. Additionally, Xterio is actively expanding its user and community base through various channels for promotion and advertising.

2.6.3. Development Plan and Roadmap

The roadmap for Xterio's development includes the following milestones:

2.7. Social Media Data

As of September 11, 2023, Xterio has performed well on social media platforms, with high project popularity. The main media channels for Xterio are Discord and X platform. The Discord channel has attracted over 94,000 followers, but interaction in the sub-servers is limited aside from the promotional channel, with only about 3,000 online users. The X platform account has attracted over 150,000 followers, becoming one of the most popular social channels, with frequent content updates and user interaction. However, Xterio has not yet established a Chinese community, and there is room for further community building and maintenance to increase community engagement and attract more users.

3. Project Analysis

3.1. Project Background

1) Pain Points of Traditional Games

The current traditional game platforms have many systemic pain points that are difficult to overcome. The most significant issue is the excessive concentration of platform power, where most games can only run on a few mainstream platforms, and the power of development and distribution is firmly controlled by the platform. On the other hand, players' needs are not fully met, as although player feedback may have some influence on development, the platform and developers retain the ultimate decision-making power, leaving player needs in a marginalized position. Additionally, the unreasonable use of user data is a common problem on traditional game platforms, where users create significant value for the platform but rarely receive fair compensation. Related to this, the true ownership of various virtual game assets owned by players is unclear and easily subject to arbitrary deprivation by the platform. It is evident that in terms of economic relationships, there is a severe imbalance between current games and users, with users unable to attain the rightful position on the platform. Furthermore, the social functionality of traditional games is relatively weak, making it difficult to stimulate positive interaction among users and lacking an active community atmosphere. The interoperability of the gaming world is also very limited, with users' virtual assets and identities difficult to maintain consistency across different games. These pain points hinder the development of the gaming world and impede the potential for higher-level relationships between games and users.

2) Current Pain Points of Blockchain Games

The core problem facing blockchain games at present is the inability to effectively attract traditional game users. Blockchain game users are purpose-driven, focusing on profiting from the game rather than the game itself. This results in a relatively homogeneous user base and limited market size. Additionally, blockchain game users have limited knowledge of games, with many coming from the crypto community rather than the traditional gaming community, which also limits the possibilities for product design.

The channels for traditional game users to obtain information about blockchain games are limited. Mainstream game platforms and media rarely cover blockchain content, leading to a severe lack of information. Even if users become familiar with blockchain games, they still need to learn a significant amount of new concepts and operations to enter the game, resulting in high learning costs.

The pricing mechanism of blockchain games is not well-received by traditional game users. High entry ticket prices, inconsistent game content quality, and fluctuating token prices create uncertainty for users. Some blockchain game mechanisms are also designed to cater more to speculation rather than enhancing enjoyment.

Technically, blockchain games prioritize decentralization and security, which compromises game performance and user experience. These factors confine blockchain game users to a small circle and prevent them from reaching a broader audience of traditional game users, thereby limiting further market growth. Finding effective solutions to attract traditional game users is crucial for unlocking the potential of blockchain games. Otherwise, blockchain games will struggle to achieve explosive growth.

3.2. Project Principles

To address the pain points of traditional games and blockchain games, Xterio aims to solve these problems by building a closed-loop ecosystem for blockchain games.

1) Building an Organic Closed-loop Game Ecosystem

Xterio platform is committed to providing high-quality on-chain game content, not only with independently developed games but also by discovering excellent third-party blockchain game content to enhance the overall gaming experience and change the stereotypical impression of blockchain game quality. At the same time, the ecosystem built by Xterio aims to attract traditional game users, covering multiple groups such as players, developers, and investors, to achieve an organic closed-loop of user relationships within the platform.

2) NFT Interoperability

Xterio has achieved interoperability of NFTs across different chains and games. This means that users can use the same NFT assets in games within the Xterio ecosystem. This interoperability is achieved through Xterio's proprietary CPDM technology, which allows game developers to read data from NFTs in other games and model and apply them in their own games. Interoperability increases the liquidity and utilization of NFT assets, allowing users to apply them in more games, thereby increasing the value of NFTs.

3) Simplifying Entry Barriers

For players, Xterio simplifies the learning curve for blockchain games by integrating encrypted wallets and supporting third-party account logins to help more novice users get started quickly. For developers, Xterio provides a complete toolkit and documentation support to help developers build blockchain games. Additionally, from a technical perspective, Xterio will support a multi-chain environment, compatible with mainstream public chains to expand the user base. In designing game economic mechanisms, Xterio also aims to balance investment demands and user experience to prevent excessive speculation.

In summary, Xterio aims to involve more users in blockchain games by providing high-quality content, simplifying entry barriers, building an ecosystem, and enhancing asset value.

3.3. Technical Features

1) CPDM Technology

CPDM, short for Contents Provider Data Matrix, is a network developed by Xterio for asset and data transmission among game developers while ensuring user privacy protection. It utilizes zero-knowledge proof (ZKP) technology to verify and transmit NFT data without revealing users' private information. Specifically, when Game A needs to verify NFTs from Game B, Game B acts as the data storage and privacy computing role, extracting NFT data and processing it with privacy protection, then transmitting only the minimal data required for verification to Game A. Throughout this process, user privacy is protected, and real identities and other sensitive information are not disclosed to third parties.

The workflow of the CPDM network is as follows:

• Data Storage: Each developer stores the data required for their in-game assets in a dedicated database.
• Data Request: Developers wishing to verify external assets (verifiers) send requests to smart contracts on the blockchain via input oracles. The smart contracts forward the requests to the developers of the asset source (provers).
• Data Processing: The output oracle of the prover receives the request from the smart contract and extracts relevant data from the database. The data undergoes privacy computing processing to ensure its security.
• Data Transmission: The prover sends the data to the verifier, completing the transmission.

Xterio has deeply integrated AI technology into its games through a collaboration with Palio. Palio is an AI agent project aimed at creating a universal conversational agent that can learn from any text input and generate natural and engaging responses. Palio is based on using large language models (LLM) as the core of the agent system and enhances their ideas through memory, planning, and tool usage capabilities. The Palio team, consisting of researchers and engineers from OpenAI, Stanford University, and Google Brain, has developed Palio to serve as an AI partner in Xterio's games, interacting with players to assist in completing tasks, providing game information, and offering advice. Palio's specific applications in Xterio's games include:

• Assisting players in completing tasks by providing instructions and hints.
• Providing game information such as background stories, character introductions, and gameplay explanations to help players better understand the game.
• Offering game advice based on the player's progress and performance to help improve their gaming skills.

Additionally, Xterio has developed an AI toolkit that allows developers to use AI to generate content, optimize designs, improve graphics quality, and analyze user behavior, optimize recommendation systems, and enhance operational effectiveness.

3.4. Platform Architecture

Xterio does not intend to provide a single game that mimics the real world but aims to offer a complete ecosystem containing numerous exciting games for global players. Xterio positions itself as a gateway for cross-game interoperability, providing the best experience for players and platform services for developers. Xterio's games can be deployed across platforms on any device that allows connection to a crypto wallet, enabling players to play games on large screens or mobile devices anytime, anywhere. The platform will provide all necessary services for players, including game libraries, third-party wallets, game management, NFT markets, SBT, on-chain operations, and community applications. With these services, players can explore a Web3 game metaverse platform without requiring specialized or advanced knowledge.

3.4.1. Games

Xterio is currently developing multiple core games, including three independently incubated by Xterio and several others released through acquisitions or partnerships, with a total of 12 games showcased on the official website. Here are detailed introductions to the three games independently incubated by Xterio:

① AGE OF DINO (Pre-registration)

"Age of Dino" is a next-generation MMO strategy game that combines Web3.0 and traditional game platform elements, supported by well-known companies such as FunPlus, Xterio, and Imagendary Studios. Players can raise dinosaurs, build parks, explore, and battle in a captivating virtual universe while owning in-game assets and income based on blockchain technology. "Age of Dino" adopts the innovative GameFi 2.0 model, creating a sustainable in-game economy, robust gameplay, and strong social elements, aiming to become a Web3.0 game that adapts to a continuously evolving game ecosystem. The game emphasizes community and collaboration among players, allowing real-time chat and strategy discussions through in-game channels, enabling players to make friends, defeat opponents together, and participate in PvP battles. "Age of Dino" aims to propel the industry into a new era of transformation and success, providing an unparalleled experience for gamers and digital collectors.

② OVERWORLD (In Development)

On February 6, 2023, Xterio announced a $2.5 million investment in Overworld, a Web3 game studio based on digital collectibles. Overworld is dedicated to providing a gaming experience for players using digital collectibles and blockchain technology. The first game developed by Overworld is a multiplayer adventure game where players can explore an open world, complete missions, and acquire digital collectibles. Xterio's investment in Overworld reflects the potential of digital collectible games and aims to enrich Xterio's game ecosystem with its content.

③ TTT (In Development)

"TTT" is a AAA-level blockchain game recommended by the Vice President of Investments at Animoca, and it is a PvP shooting combat game similar to GTA. It is one of the three blockchain games independently incubated by Xterio. The game's leader, Aaron, is the former producer of "Call of Duty Mobile," and the game has completed development and testing. "TTT" aims to create a "truly fun and innovative" game for Web3.0 players and is designed to be more innovative and enjoyable than traditional mobile games in the Web2.0 era. The game's team has focused primarily on game development rather than excessive hype and marketing. According to core team members revealed in a Twitter Space:

• The team has over 10 years of game design experience and has been involved in the development of games such as "CrossFire Mobile" and "PUBG Mobile."
• The team leader has been fully involved in the development of "Call of Duty Mobile" since 2016.

In addition to the three blockchain games incubated by Xterio, there are 12 high-quality cooperative blockchain games, a few of which are briefly introduced here.

• ABYSS WORLD (Pre-registration)

"Abyss World" is a fantasy-style space adventure ARPG blockchain game developed by Metagame Industries, utilizing Web3.0 technology and game experience to create a virtual world where players can experience immersive gameplay in both PVE and PVP. The game's characters, maps, and storyline are supported by Sui blockchain technology, creating a realistic game world for players. "Abyss World" has received support from AMD, Epic Games, and IGN. The game divides players into two categories: casual players who can participate for free, and professional players who can enhance their strength by continuously upgrading equipment and learning new strategies, with the opportunity to earn honors, rewards, and valuable equipment. "Abyss World" also features a separate section—the Abyss AI Arena, a mode similar to The Rug Game, where users holding the same token within a 30-60 day cycle form a group and increase their competitiveness through token staking or bribery, ultimately sharing the profits from the winning hero NFTs.

• BLACKDAWN (In Development)

BLACKDAWN is a futuristic action-adventure game developed and published by 10 Chambers Collective. The game was released on July 20, 2022, and is available on PC, PS4, PS5, Xbox One, and Xbox Series X/S platforms. The story is set in 2035, with human civilization on the brink of extinction. Players take on the role of a female soldier named RIA, who is sent to investigate a mysterious phenomenon. During the investigation, RIA discovers a new substance that grants her superpowers. The gameplay combines action, adventure, and RPG elements, allowing players to use various weapons and skills to battle and explore a vast world. The game is challenging, requiring players to master its mechanics to progress.

BLACKDAWN has received widespread acclaim, with IGN giving it an 8/10 rating, praising the gameplay, story, and visual effects. PC Gamer awarded it an 88/100 rating, highlighting the game's challenge and replayability.

It is evident that Xterio's independently incubated and cooperative game works have high quality within the current blockchain gaming industry. Most games are still in the development process, and information related to the economic model is not yet sufficient. It remains to be seen whether Xterio can address the "death spiral" issue present in GameFi 1.0, and its performance needs to be continuously observed. The core of the "death spiral" faced by GameFi 1.0 lies in the flawed token economic design, making it difficult to establish sustainable incentives and positive cycles. As a new force, Xterio's economic model design and operational level are worth continuous attention, as they will be key to its long-term and healthy development. It is hoped that Xterio can bring positive inspiration to address industry pain points.

3.4.2. XSOUL

Xsoul is the first soul-bound token (SBT) issued by Xterio, aimed at rewarding and recognizing important members of the Xterio community. Xsoul is non-transferable, non-tradable, and permanently owned by the user.

The goal of Xsoul is to create a unique verifiable certificate system that provides honor and adds value to community members. Additionally, Xterio plans to provide a range of exclusive benefits and increasing privileges to Xsoul owners, such as:

• VIP treatment
• Eligibility for airdrops in future Xterio events or increased chances of receiving airdrops
• Inclusion in the whitelist for NFTs offered for Xterio games in the future
• Greater influence or voting rights on the future agenda of Xsoul

Xterio community members can obtain Xsoul by acquiring badges in the Xterio Badge system. The Xterio Badge system evaluates user behavior, characteristics, and contributions, with each badge representing a specific aspect of Xterio's appreciation for members' contributions. The Xterio Badge system will enable Xterio to reward community members who possess one or more Xterio badges. The Xsoul plan currently requires at least 3 different Xterio badges to be obtained for Xsoul.

Categories of Xterio badges:

• Pink Badge: Target audience - influencers creating Web3 or gaming content with over 10,000 followers on any social platform.
• Yellow Badge: Target holders - users certified by Xterio partner projects.
• Chocolate Badge: Target holders - users who share/recommend/invite others to participate.
• Green Badge: Target - community contributors.
• Blue Badge: Target holders - native crypto users.
• Orange Badge: Target holders - Web2 game players.
• Purple Badge: Target holders - community OG.

3.4.3. LAUNCHPAD (Upcoming)

Xterio's launchpad is a platform designed for Web3.0 game developers and players, aiming to assist game projects in fundraising, promotion, incubation, and release. Xterio's launchpad is committed to creating a high-quality, efficient, and transparent game ecosystem, allowing developers and players to enjoy the advantages and fun of Web3.0 games.

Xterio's Launchpad has not yet been launched. According to official Twitter messages, they are seeking excellent Web3 game projects for collaboration. If recommended projects meet the criteria, the official will provide a $499 reward.

3.4.4. NFT MarketPlace

According to the news on August 22, Xterio announced the upcoming launch of an NFT marketplace, offering innovative minting, holding, and trading rewards.

Given the current environment's unfriendliness to creators, such as BLUR's pressure on NFT floor prices, Opensea's cancellation of royalties, lack of sustained incentives, project development slowdown, and holder confidence loss, Xterio aims to provide comprehensive support for creators. This includes building an active community, providing professional guidance, developing creator-friendly tools, and designing fair incentive mechanisms. Xterio will launch a creator initiation program, offering various solutions to support creators' continuous growth, such as enforcing royalty ERC-721C standard contracts, sustainable token incentives, and an ecosystem fund. Xterio hopes to change the rules, allowing creators and holders to grow and succeed in a fair and open environment.

• ERC-721C: ERC-721C is a contract standard that adds the functionality of enforcing royalties to the ERC-721 standard. It aims to protect the interests of creators and holders, ensuring they receive a certain percentage of revenue from each NFT transaction. Proposed by Xterio, ERC-721C is part of its PRO-CREATOR initiative and Marketplace, providing a fair and open environment for Web3.0 game developers and players.

4. Industry Space and Potential

4.1. Industry Overview

4.1.1. Project Classification

According to the blockchain gaming industry chain, Xterio belongs to the category of content distribution platforms in the GameFi upstream and downstream.

4.1.2. Upstream and Downstream Classification of Blockchain Gaming

The blockchain gaming industry chain is divided into four levels: infrastructure layer, middleware layer, service/tool layer, and application/game layer.

1) Infrastructure Layer: This includes engines, rendering, game application chains, decentralized cloud platforms, and decentralized computing.

• Engines: Most blockchain games are currently partial on-chain games and do not require the development of exclusive engines from scratch. They can use existing engines such as UE, Unity, and Cocos.
• Rendering: The most famous rendering infrastructure in Web2.0 is the Unreal Engine. In Web3.0, a distributed rendering protocol called RNDR has been developed, combining decentralized features to build a distributed rendering network.
• Game Application Chains: Platforms like Ronin and XPLA are suitable for large-scale users and high activity games, but they face issues with cross-chain asset and cross-chain bridge security. Game-specific chains like WAX and Immutable X, where WAX has been very successful in operation, while Immutable X needs to attract more users.
• Decentralized Cloud Platforms: The core is to build nodes using decentralized computing power to provide computational support. For example, Fluence can to some extent solve the problem of real-time computation on the chain, but this field is still relatively early.
• Decentralized Computing: Platforms like Fluence and LivePeer have to some extent addressed some issues with real-time computation on the chain.

2) Middleware Layer: This includes lightweight game development tools, one-stop service providers, and communication protocols.

• Lightweight Game Development Tools: SDK stores, in-game services, and in-game store system SDKs. These stores aggregate various SDKs, allowing developers to choose as needed. For example, the Unity Asset Store contains SDK packages that provide verified mainstream public chain SDKs. Unreal Engine developers can consider Web3 SDKs like Game7, Emergence, or Mirage.
• One-Stop Service Providers: Forte is a one-stop service provider dedicated to building an accessible blockchain gaming ecosystem. It provides services for the entire lifecycle of game development, including market-making, compliance, tool development, player community building services, game creation and economic model design services, and provides creation funds.

3) Service/Tool Layer: This includes channel distributors, gold farming guilds, IGO platforms, payment protocols, and identity protocols.

• Channel Distributors: Content distribution platforms like Xterio, Gala, and Come2Us operate differently from traditional gaming platforms. Their platform tokens have stronger use cases, allowing them to be exchanged for entry into games to obtain native tokens, and then exchanged back to platform tokens when sold, capturing value for content providers. They also have independent value control mechanisms, such as burning and issuance mechanisms, and content providers can publish games and other content on the platform.
• IGO Platforms: Similar to content incubation platforms, providing resources for blockchain game incubation. Whether they will integrate with content distribution platforms to form an oligopoly in the upstream and downstream industry chain needs to be observed.
• Gold Farming Guilds: YGG, MC, Guildfi, etc. These guilds have a clear regional presence, mainly in areas with high population but low income, and do not have significant head clustering effects, with low business barriers. The guild valuation logic is similar to profitable DAOs, but with high primary asset valuation and weak secondary token value capture, with limited premium space. Potential issues may include limited token use cases, a small user base, low income, and questionable long-term profitability.

4.2. Track Analysis

The core competitiveness of content distribution platforms lies in their ability to form bidirectional stickiness with content creators and consumers. The core competitive factors in this field include the level of technological innovation, ecosystem partnership advantages, platform traffic scale, operational experience, and content quality control capabilities. To achieve bidirectional stickiness with creators and consumers, platforms need to have comprehensive advantages in content richness, distribution channel breadth, technical strength, user scale, brand influence, monetization capabilities, operational level, business innovation, and ecosystem cooperation, truly realizing symmetrical value appreciation and win-win sharing of content value, thus becoming industry leaders. Content and users are the lifeline of distribution platforms, and continuous improvement of core competitiveness around bidirectional stickiness is essential.

4.2.1. Track Pattern

In the Web2.0 era, there were two main game distribution models. One relied on platform traffic, such as Steam and Epic, which attracted and retained users through platform traffic and well-known IP, continuously improving platform services, features, and social interaction, forming comprehensive game ecosystems, and enhancing brand influence and competitiveness. The other relied on hardware and terminal manufacturers, such as Huawei and Apple, which obtained users by providing high-quality devices and increasing device penetration, leading users into the platform's ecosystem and services, making them important game distribution channels.

These two types of distributors rely on user traffic as a core success factor, accumulating users through hit games, unique IPs, and ecosystem building, gradually transitioning from game merchants to platforms, enhancing user stickiness. Distributors assist in the growth of the gaming industry by leveraging traffic and ecosystem, playing a key role in the industry.

Currently, the Web3 gaming field has not yet formed a mature distribution system and can be classified into two categories based on different development strategies: Web2 approach and Crypto native exploration.

4.2.2. Competitive Analysis

1) Web2 Approach

This strategy follows a path similar to platforms like Steam in the Web2 era, aiming to become the TapTap of the Web3 field by acquiring users through high-quality games and gradually evolving into a distribution platform. Xterio currently adopts this approach. While this strategy has been proven effective in Web2, its implementation in Web3 is extremely challenging, requiring high funding and execution capabilities. The target user group for Web3 games is still unclear, leading to debates on whether to focus on Web3 native users or Web2 users, making the target market for distribution platforms unclear and challenging product strategy. Overall, while this distribution platform strategy has been effective in Web2, its direct replication in the Web3 field is uncertain and faces many uncertainties. Competitors on this path include:

• Cartridge: Provides developers with tools and services, including Cartridge Controller and Dojo Engine, to simplify the development process and lower the barrier to entry for game development.

• Gala Games: A rapidly rising content distribution platform in the Web3 gaming field, attracting users through self-developed and distributed high-quality blockchain games.

• XPLA: A public chain developed by the Com2uS group, focusing on blockchain game distribution and providing tools for game developers to tokenize game assets.

2) Crypto Native Exploration

This path focuses on gathering users through player interaction systems, such as achievements, airdrops, education systems, and decentralized identities. This approach is more lightweight and requires lower funding but demands stronger user operation capabilities. The feasibility of this path needs market validation, and the best mode is still unclear, with significant uncertainty. Competitors on this path include:

• Carv: A GameID platform based on an achievement system, focusing on building a game community and ecosystem for Crypto Native users.

• DeQuest: A GameID platform based on a quest system, aiming to create a GameID platform for Crypto Native users through virtual avatars and task-based reward mechanisms.

In conclusion, Xterio faces challenges and pressure from competitors in both categories, but also has its own advantages and opportunities. Compared to competitors, Xterio has a seasoned professional team in the gaming industry and top-tier blockchain gaming partners, giving it a competitive edge and development potential. Xterio has an advantage in independent content and operational level, but user scale needs improvement, and differentiation in competition is the core demand. It needs to explore its strengths and meet real user needs. Continuous optimization of products and services, attention to user demands, and positive interaction with ecosystem partners are crucial. Only by deepening its own value can Xterio stand out in the competition.

4.3. Token Economic Model Analysis

Xterio released its first whitepaper in August 2022, but it has been taken down, possibly due to changes in the crypto and blockchain gaming market and the popularity of AIGC. On September 1, Xterio announced the launch of the protocol token XTER on the X platform, intended to incentivize participants in the Xterio game ecosystem, including traders, holders, and players. It is speculated that Xterio may soon release a second version of the whitepaper, so we will refrain from evaluating Xterio's economic model at this time and closely monitor its latest developments.

5. Preliminary Valuation

5.1. Core Issues

What stage of the business cycle is the project in? Is it in the mature stage or in the early to mid-stage of development?

Xterio is currently in the early stage of development, with some distance from the mature stage. The main characteristics are that the technology, product, and business model are still in the early exploration stage, with many core uncertainties and in the process of validation. However, considering the industry's prospects, if the team can gradually validate its technology and business hypotheses, there is tremendous growth potential in the future.

Does the project have reliable competitive advantages? Where do these competitive advantages come from?

The project has an excellent team background and industry resource advantages, with rich resources to provide high-quality content, which is a competitive barrier. Additionally, the one-stop platform has been designed in a closed loop, with outstanding product features, but operational and commercialization capabilities still need validation.

What are the main variable factors in the project's operations? Are these factors easy to quantify and measure?

Xterio's project operations are mainly influenced by user scale and the commercialization capability of the business model. These two variables need to be validated after the game products are launched. Other key variables in project operations include user activity, content quality, ecosystem development, and technological iteration, which can be categorized into three dimensions: users, content, and technology. They can be effectively monitored and measured through quantifiable metrics.

What is the project's management and governance approach?

The project is currently controlled by the core team and will transition to community governance as the business progresses. The alignment of the core team's interests with the project's development goals is achieved through token revenue sharing and maintaining transparency of core information. The project is driven by commercialization and closely integrated with commercial applications. Xterio's project management and governance adopt a professional and institutionalized approach, incorporating various mechanisms such as team governance, community autonomy, investment supervision, and commercialization drive.

5.2. SWOT Analysis

5.2.1. Strengths

The project's strengths are detailed in section 1.1 Core Investment Logic

• The team has a strong background and extensive experience in game development and operations.
• It has received recognition from multiple top-tier institutions.
• It has partnerships with mainstream game developers.
• Technological innovations such as AI, NFT interoperability, and CPDM have the potential to increase monetization and change the gaming industry.
• It has demonstrated strong product operational capabilities and industry resources in the current downturn of the blockchain gaming environment, positioning itself to become a high-quality online gaming platform.

5.2.2. Weaknesses

• As a new team, it has relatively limited operational experience in the crypto field.
• Traditional teams often lack the ability to mobilize communities from the bottom up, and the coordination ability of the entire industry chain needs validation.
• There are no large-scale commercialization cases that can be replicated and promoted.

5.2.3. Opportunities

• The blockchain gaming market has vast potential for future growth.
• High-quality content can attract traditional gamers to enter the Web3 space.
• Technological innovations such as the metaverse and AI can unlock new scenarios.

5.2.4. Threats

• The overall contraction of the blockchain gaming market may hinder growth expectations.
• The entry of potential competitors may intensify industry competition.
• The difficulty of implementing technology and products may impact user experience expectations.

1. References

• Xterio Official Website: https://xter.io/
• Xterio Official Twitter: https://twitter.com/XterioGames
• Xterio Official Medium: https://medium.com/@XterioGames
• Xterio LinkedIn: https://www.linkedin.cn/
• Funplus Official Website: https://funplus.com/
• Upshot Announcement: https://upshot.xyz/post/xterio-announcement
• Binance Blog: https://www.binance.com/en/blog
• Full Chain Game Revelation: Web2 and Web3 Game Value Chain Comparison: https://www.panewslab.com/zh/articledetails/j3ciq4tl.html

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