I Bought a Digital Horse: A Different Type of Bull Case for $ETH
NFT's are booming.
Another essay here, this one was originally posted to Commonstock.com. I have been a large bull on Ethereum and this rise of NFT’s has just helped.
I will be transitioning this newsletter to something similar to GZV in the coming weeks, but still need to figure it out. Thanks for sticking with me through this transition.
Stay tuned.
Some Background:
This last Tuesday (Aug 5th) my friends and I were playing poker at 10:30pm. Fast forward 30 minutes into the game and I am trying to convince my friends to go in with me to buy a racehorse on Zed.run. Yes, at its core this is a fun, new thing to try on the internet, but for me, I love discovering new and fun ways to make money in the Great Online Game.
To describe Zed.run best, I want to quote a piece from Alternitiveasset.club...
"Zed Run is a new blockchain-based game that lets you own and race digital racehorses. That’s right, you buy them, breed them, raise them, sell them, and of course race them. All transactions are in Ethereum, and all money earned is real. Each horse has its own unique characteristics, ancestry and stats passed on through blockchain-based genetics."
When Zed Run started back in early 2019, horses were selling for as little as $30. Now, some horses are selling for upwards of $150,000 on secondary markets. While some NFT fads faded away in recent months, Zed has done the opposite. On July 21st, Zed Run announced a $20 million Series A led by A16z and the Chernin Group, and just yesterday Nascar announced a partnership with Zed Run in hopes to dive deeper into the metaverse.
How Zed Run Works
I've learned a lot in my life, but Zed Run had one of the steepest learning curves I have seen. Personally, I would still say I am a beginner so take everything I say with a grain of salt.
First things first, you have to buy a horse. To buy a horse you either buy one when Zed does a drop of a few hundred horses, which routinely sell out in a few hours, or you can buy one from another user on OpenSea.io. There are a few things you need to look for when buying a horse...
Breed type
Z number
Male or Female
# of races
Plus many more factors, but I'd recommend checking out this link to learn them all so I don't write the longest memo ever.
First, what Breed is the horse?
The best thing to do when looking at breed is to reference this chart from the community section of Zed Run
The breed of your horse is determined by the breed of the male and female parents. Ex. top left, when a Genesis and Genesis horse breed together, they produce a legendary horse. A Genesis horse is the best type of horse you can have in the game and are only released by Zed themselves and cannot be bred. Legendary and Exclusive are the 2nd and 3rd best types of horse and so on and so forth.
Second, the Z number.
The Z number is a DNA characteristic for each horse that determines how far away it is from their ancestors. This number is determined by combining the two Z # of the parents. (For example, a Z2 dad and a Z4 mom makes a Z6 horse). The lower your Z # the better. A lower Z # also means it has a higher potential to be a sought after horse to breed with. Z # max out at 268.
Third, are you looking for a male or female?
This strictly matters if you're looking to be breeding or want to be racing. If you want to breed horses, the recommendation is to buy females (obviously).
Fourth, it's important to look at how many times your horse has raced.
This is super helpful when determining the potential for your horse. If the horse you buy has raced 1-10 times with no wins, it isn't the end of the world. It is all about determining what distance suits the horse best. For example, one horse may be very good at running 1400m, but very bad at 2200m. For my stable, we bought an unraced horse. This means we have no idea which distance it runs best and have to determine it for ourselves.
Yes, I will show you our horse...
We named it after a famous cartoon show from when we were all kids...Carl Wheezer. It is a z14 Legendary horse with a Dark Moss coat. Buterin is the most common bloodline. For total transparency, we paid $220 in ETH. We wanted to learn so aired on the cheap side.
Now for the real question: Can you make money?
Yes you can, but it isn’t easy (when is it easy to make money though?). It's kind of like a game of chess, you have to make the right moves and be smart with how you buy, race, and breed your horse, but if done right, you can make it a worthwhile investment.
You have to maintain a heavy focus on your stable though, by all means this is an active investment. You need to make the right management decisions and be sure to network within the community. The main ways to make money are by winning races, which isn’t life changing money, but certainly enough to break even. The real money comes through breeding. If you can buy a racehorse that wins over 33% of the time and breed it with a female who is a decent winner, you can sell the offspring of your horse for a lot more than you bought the original horse for. That said there are many other strategies to make money through this game, it is just all about how you want to run your stable.
Why is this bullish for $ETH.X
$ETH in my mind has become the first cryptocurrency with concrete use cases, don’t get me wrong, I love Bitcoin and believe it is a great store of value, but with the rise of NFT’s, ETH has really shown how good of a use case it can be. When you are buying a Zed horse with ETH it is just a NFT, but instead of digital art, it can be used in a game.
On top of this, when my friends and I went to purchase the horse, 3 of the 5 $ETH.Xhad to acquire $ETH.X (don’t worry I wasn’t one of them). Now as this game and the entire metaverse grows, more people are going to want to acquire digital assets for themselves and for entertainment purposes. I believe that this provides support$ETH the thesis that $ETH has successfully positioned itself as the asset people need to play in this Great Online Game.
Additional thoughts, comments, and questions are welcome!