Play-to-Earn (P2E) has gone through a steady redefinition during the crypto bear market, joined by Engage-to-Earn (E2E), Move-to-Earn (M2E), and a host of other acronyms that are all efforts to reinvent the gamification and incentives meant to draw players to GameFi platforms and keep them interacting.

Aavegotchi (CRYPTO: GHST) is one of the first GameFi projects deployed on Polygon (CRYPTO: MATIC). It offers a novel approach to incentivizing players by combining familiar concepts in NFT rarity with earning mechanics drawn from DeFi.

Aavegotchi’s name is a combination of Aave Protocol (CRYPTO: AAVE), a sidechain of Ethereum (CRYPTO: ETH), and Tamagotchi, handheld digital pets that sold by the millions in the 1990s. In Aavegotchi, you are "raising" an adorably pixelated digital pet – but the pet is a dynamic NFT that can be trained, leveled up, and equipped with items that give players buffs in PVP combat. Also, you can enhance your "Gotchi" to improve the rarity and value of the NFT.

Aavegotchi has been a bright project in this dreary market – appearing on lists from AltCoinBuzz for top Polygon Ecosystem tokens and top Polygon NFT collections.

The newly formed AavegotchiDAO showed foresight in its recent decision-making – such as decoupling its GHST utility token from DAI tokens on March 11, just before DAI lost its USD-peg.

Aavegotchi head developer and CEO of Pixelcraft Studios, Coder Dan, noted the fortuitous timing on Twitter.

when this shitstorm is over i fully expect all of the mainstream crypto news to writes articles on how @aavegotchi somehow picked the EXACT DAY OF DAI'S DEPEG to close the $GHST bonding curve

holy shit what a story
— coderdan.eth | aavegotchi (@coderdannn) March 11, 2023

We spoke with Coder Dan to understand their work in mutable NFTs with flexible rarity and DeFi sensibilities for incentivizing users.

BZ: How did Aavegotchi begin? What was the intention behind it?

Coder Dan: Aavegotchi came from the idea of value into NFTs. We asked, 'what if we took a DeFi token, this Ave token that actually generates interest, and put it inside an NFT? What would that look like?'

From that brainstorm came Aavegotchi, which is part DeFi and part NFT. It's like a crypto pet that doubles as a piggy bank and generates interest for its owner. So, the crypto pet side is the Gotchi part, and the DeFi part is the Aave. Together, they form Aavegotchi.

BZ: How have you incorporated the ability to build the value of the NFTs on-chain?

Coder Dan: Aavegotchii uses what we call the Spirit Force. That's the token collateral that you have the NFT linked to. And it's the interest-bearing version of that token provided by Aave. It is like the soul of the Aavegotchi.

Also Read: Sony PlayStation NFTs Could Be Here Soon And Users Might Get To Use Them On Xbox, Switch Consoles

BZ: How can you enhance your NFT rarity in-game?

Coder Dan: We said, ‘if it's a pet, we should be able to interact with it on chain.’ So we created a system called Kinship, where every day you have to pet your Aavegotchi, which means you have to do an on-chain transaction. But simulating the old Tamagotchi vibes, if you ignore it the kinship value does go down by one point every day and the NFT loses value. We call it Proof of Attention (POA). You pay attention to it, and you devote some of your time and energy to doing these on chain transactions, and it actually loves you more and becomes more valuable.

Your avatar can also level up on-chain. We have XP events where community members will come to, like, a discord call or Twitter spaces. Or they will also when they vote in our DAO. We have one of the most active DAOs in the world because their Aavegotchi actually improves when they vote in our DAO.

BZ: Are you using wearables to enhance the value of characters’ NFTs?

Coder Dan: There are six traits that are randomly generated. Energy, aggression, spookiness, and brain size are the four numeric traits that are randomly generated when you make your Aavegotchi. And then there are two others - eye shape and eye color. Of these six traits, four of them are mutable. We also have wearables, which are other NFTs that can be equipped onto your Aavegotchi, it not only looks cooler, because it has some gear to show off, but it actually makes it more rare because you're equipping these child NFTs which also have different rarity tiers. We're definitely one of the first NFTs to experiment with on-chain wearables that are equipped on your Aavegotchi.

BZ: How does keeping so many of the mechanics on-chain serve the players better?

Coder Dan: We’re on-chain maximalists. We love everything to be on chain. If you buy most NFTs, and the server that hosts that picture goes down, suddenly, your NFT picture is gone. We thought that was ridiculous. So we put all of the Aavegotchi data – the image and character data – on-chain. You can actually go on to the smart contract and there's a call function that shows you the latest state of your Aavegotchi with all of its wearables. We even have views of all four sides, with wearables equipped, and you can call that, and you can get your Aavegotchi. And then you can put it into a world like the Gotchiverse, and you can use it as your avatar in an actual game. It can raise its hands, it has different emotions that it can show. So it's a fully equipped on-chain avatar that you can kind of plug and play into a game that you're creating.

We're also going to put all the stats about the Aavegotchi on the chain. So at the XP level, that kinship, the different traits that it has are tracked and available if you want to recreate and play your character in another game.

Summary
At the time of writing, Aavegotchi has about 2,000 daily players on average, though they said that they have peaks of 10,000 players. The game is still rolling out in phases, but according to their 2023 timeline, it seems to be on track with the recent launch of AavegotchiDAO.

This year, Aavegotchi is partnering with Polygon to be one of the first projects to use its "Supernet" technology – a permissioned offshoot of the Polygon that will use the Aavegotchi GHST tokens as gas for transactions.

Expectations need to be recalibrated around what P2E can bring to users. Users may not be able to make a living playing Web3 video games, but putting value into the development of your character seems like a reasonable incentive. It's just a little game with big ideas, and, like the Gotchis in the game, those ideas will grow and evolve.

Now Read: The Dark Side Of Crypto: Over 600,000 ETH Worth $1.15B Vanishes Into Thin Air

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