Jun 22, 2022

A Deep Dive on Loot

Every so often, a novel NFT project is launched with the audacity to completely violate what many thought an NFT could be. One such rule-breaking project is Loot (for Adventurers), a collection of tokens listing weapons and equipment meant to be adorned by a character in a community-designed role-playing-game (RPG).

This article will offer a deep-dive on the origins of the Loot project and consider its position within the wider blockchain-based gaming market. In particular, the following subjects will be covered:

  1. The History Behind Loot
  2. An Overview of the Blockchain Gaming Market
  3. Benchmarking the Traction of Loot
  4. The Loot Investment Opportunity

The History Behind Loot

The Loot project was launched on August 27th, 2021, by internet entrepreneur Dom Hofmann, best known as a co-founder of the now-defunct short-form video platform Vine, as well as the creator of other social networks such as Peach and Byte. The project was conceptualized as a novel take on the world of blockchain-based gaming, essentially abstracting away the details of the game and equipping players with little more than a list of random RPG items around which they could then design their own games. These lists were issued in the form of 8,000 NFTs consisting of white text set against a black backdrop, and each list comprised 8 items representing a weapon, a ring, and armour for the chest, feet, hands, head, neck, and waist.

This was a drastic and polarizing design choice on the basis that Loot NFTs consisted only of text and left the illustration of in-game items to the imagination of developers seeking to integrate Loot into their virtual experiences. Naturally, this stands in stark contrast to the philosophies of other NFT projects whose value is in large part derived from their aesthetic appeal and relative rarities. In effect, it can be said that the Loot project has forgone the premium that users will place on the visual allure of a token in favour of the premium users might place on the creative freedoms afforded by the same token. 

Despite the criticism that the Loot project attracted – including that the tokens were a low-effort money-grab masquerading as a revolutionary advancement in blockchain gaming, as well as a sign that the NFT market had topped – a fervent community of crypto-natives and gaming enthusiasts quickly formed around the project. Mere days after its initial launch, individuals had already begun visualizing their lists of Loot items in varied and distinctive art styles. The Loot community continued to rapidly evolve and coalesce around this enigmatic project, forming guilds for the owners of certain items, tools for tracking NFTs containing specific types of equipment, and visualizers to generatively produce artistic interpretations of the items in each Loot bag.

Another major development in the Loot ecosystem was Hofmann’s September 1st introduction of synthetic Loot. In essence, this allows for the creation of synthetic tokens based on actual Loot bags, thereby enabling entry into Loot-based games for interested players who have been priced-out of the original project. It is important to note that synthetic Loot tokens are not actual NFTs, meaning they cannot be sold or transferred, and they are distinguishable from original Loot tokens. Effectively, this mechanism is designed to democratize access to Loot-based games without simultaneously devaluing Loot NFTs.

Loot’s Many Derivatives

Loot has also inspired countless derivative projects, many of which were clearly intended to enrich the ecosystem and solidify the tokens as potential foundations for the future of blockchain-based games. That said, many other projects were also blatant copycats seeking to profit from the frenzy which Loot had created around this new paradigm of minimalist, text-based NFTs. With respect to those projects that are ostensibly aiding in the ecosystem’s advancement, the following abridged list comprises some of Loot’s derivates:

  • Adventurers: attributes and backstories for the characters who will be equipping and wielding items contained in Loot bags
  • Ability Score: statistics for common RPG character attributes such as strength, intelligence, and charisma, among others 
  • Quests: quest packs around which in-game missions and objectives can be designed
  • Realms: generated maps with distinct provinces and cities to serve as the setting for in-game characters’ adventures

Evidently, many have followed Loot’s strategy of focusing on individual and yet vitally crucial aspects of RPGs, including character backstories, in-game missions, and open-world maps. The Loot community’s drive to lay the foundations for games based on distinct but composable building blocks has undoubtedly been a movement to behold. That said, as has been the case for several of the most highly valued and sought-after tokens during the current speculative craze in NFT markets, the popularity surrounding Loot has inspired derivatives which appear intent only on profiting off the projects’ traction. Examples of this include but are not limited to:

  • Diccs: statistics on in-game characters’ genitalia
  • Bloot (not for Weaks): short for ‘Based Loot’, comprises lists of vulgarly named in-game items (e.g., instead of characters wearing Ornate Chestplates as in Loot-based games, they wear ‘Zombie Top’ Tattooed Chests of Cock in Bloot-based games)
  • Dope Wars Loot: text-based NFTs listing in-game items in the spirit of Loot, but geared towards criminal enterprise games rather than RPGs

Among the most notable Loot derivatives is the ERC-20 token Adventure Gold ($AGLD). Launched by Will Papper, the co-founder of SyndicateDAO, $AGLD is intended to enable holders of Loot NFTs to vote on governance decisions as well as the directions of in-game storylines. Up to 10,000 $AGLD is available to be claimed for each Loot bag, and the minting and claim of new tokens is expected to take place on a seasonal basis as decided by the Loot community.

Marketing Techniques

Loot was initially conceived as a side project of Dom Hofmann’s, merely meant as an exploratory creative endeavour rather than one of the most notable stories of the 2021 NFT Summer. On this basis, little was done in the way of formal marketing for the project at launch. However, given the surge in community involvement as well as the explosive growth in the market for Loot bags, it can be said that the project’s promotion has been primarily crowdsourced in much the same way that games built upon the project are intended to be.

Thanks to the Loot community’s ardent and vocal support for the project’s unopinionated approach to blockchain game development, the project has attracted votes of confidence from some of the highest-profile figures in the NFT sphere. For instance, Andy Chorlian – best known as the founder of NFT marketplace Fractional Art – has expressed bullish views on Loot and the integral role it will play in shaping future blockchain-based games. Chorlian’s sentiment and advocacy for Loot has been largely positive, so much so that he developed the aforementioned ‘Ability Score’ derivative project as a tie-in for Loot-based games.

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An Overview of the Blockchain Gaming Market

The blockchain gaming market has comprised a small fraction of cumulative sales and transactions of the wider NFT market in 2021, per That said, the market for NFT-based video game assets has expanded drastically throughout 2021. Overall rolling 30-day sales of gaming NFTs skyrocketed in late-summer while rolling 30-day transaction counts remained relatively stagnant, suggesting that a lower-volume of higher-value sales has begun to characterize the wider blockchain-based gaming market as it has continued to mature.

One of the leading functional use-cases that has emerged for NFTs centers on leveraging the technology to serve as the backbone for video game assets. By tokenizing in-game goods, new economic decisions become available to gamers. For instance, creating virtual goods in the form of NFTs enables a marketplace for secondary trading of these goods, thereby allowing gamers to buy and sell their assets in a broader market than what might be available through a primitive in-game economy. Additionally, when gamers grow tired of a particular game, having their assets as NFTs allows them to liquidate their in-game holdings such that they may recoup at least some of the money they invested in the game world.

This latter use-case has seen extreme growth in popularity and become among the key distinguishing features of blockchain-based gaming as compared to traditional gaming. This phenomenon of earning fiat money in exchange for selling NFT-based game assets has given rise to an all-new gaming business model known as play-to-earn (P2E). At a high-level, P2E differs from predecessor business models in that it centers on making gamers the primary beneficiaries of a game’s success. Effectively, P2E games reward users for their active engagement with in-game assets. These assets have active secondary markets where gamers can exchange their goods for cryptocurrency, which in turn can be translated to real-world fiat money.

One specific example of the surge in interest for P2E gaming is Axie Infinity. This game revolves around the collection of small, NFT-based creatures known as Axies. Players work to improve the strength of their Axies by deploying them into combat. In addition, players can breed Axies to create unique genetic variations, buy and sell land, and trade their Axies and in-game resources as part of a player-owned economy. The game has gained impressive traction, recently generating USD$288M in revenue over a 30-day window; this was roughly USD$100M more than the combined revenues of the next 28 closest protocols over the same period. 

Benchmarking the Traction of Loot

Many in the NFT sphere have begun to refer to the new paradigm of game development enabled by Loot as the bottom-up model. In essence, this refers to an approach wherein community members dictate design choices rather than having the creative decisions of a centralized development team imposed upon them. Should the spirit of bottom-up game development gain significant enough traction to rival more traditional methods, there is little doubt that Loot will be viewed as the catalyzing force behind a movement of gamers seeking to exercise their creative abilities. 

Considering that Loot is the first-of-its-kind in the world of text-based gaming NFTs, and the fact that many of its derivative projects have been launched either as supplements to the original collection or unashamed copycats, it can be said with assurance that Loot has no direct comparables. For better or worse, the project is a pioneer in a 2-week-old category of NFTs and there has not been sufficient opportunity for distinctive text-based projects to go to market. On this basis, the traction of Loot will have to be assessed purely from an absolute perspective.

Examining transaction volumes, it is unequivocally clear that the Loot market has seen a sharp decline since its peaks in late-August. In particular, the number of transactions has fallen to the lowest level on record – representing a 97% haircut from the August 31st peak – and sales volume as measured in USD has dropped to the lowest level since the project’s second day of trading, representing a 98% decline from the September 2nd peak. It goes without saying that neither of these observations are particularly favourable for Loot, with the mountain-like shape of the volume trends screaming of a market which was initially fueled by speculation and is enjoying far less liquidity in the aftermath.

A similar dynamic is evident in the trend of unique buyers in the Loot market. After peaking at 675 on August 31st, that number plummeted to a record-low of 27 on September 11th, representing a 96% decline from peak to trough. The sharp fall in unique buyers of Loot is also a negative signal for the project, indicating that investors have either grown disillusioned with the concept of decentralized game development or have simply realized that prevailing prices are far too high for such a simplistic and easily reproducible project. In either case, it appears that an exodus of buyers from the market has taken hold, with far less investors willing to pay for Loot bags at their current price-point.

The trajectory of prices for Loot bags has exhibited a markedly slower decline than that of transaction volumes or unique buyers, however it has exhibited a decline nonetheless. As the initial discussion of Loot copycats would suggest, the initial hype around the project propelled average prices to a level in excess of USD$80,000 per Loot bag. This figure has since fallen drastically, with average prices as of September 11th just shy of USD$27,000. Although this does represent a roughly 68% decline in prices, the trend suggests that a sort of lower support level has formed in the range of the mid-USD$20,000s. Whether the price ultimately falls below this support is something that will be observed in due time. However, the large drop in prices over a relatively short period of time is yet another negative signal for the project.

Overall, a common conclusion can be drawn from the analysis of transaction volumes, unique buyers, and average prices, being that the initial speculative mania around Loot NFTs has died down in a substantial way and what remains is a project with far less investor interest than the initial numbers might suggest.

The Loot Investment Opportunity

An investment thesis against Loot bags can be constructed around the following three core pillars:

  1. The project is the first in an unproven category of NFTs, and there is substantial risk that games built using Loot and its derivatives either do not materialize or simply fail to achieve quality standards. The fact that Loot has inspired several copycats is not a noteworthy risk – after all, the wave of avatar projects was modeled largely after CryptoPunks and yet markets still have utmost confidence in their value as antique NFTs. Rather, one of the riskiest aspects of Loot is the fact that no precedent exists for text-based NFTs which outperform and have longevity. Given this paradigm of NFTs remains unproven, the concept of a bottom-up approach to game development is also relatively untested. Accordingly, investors in Loot will not only bear the risk that this category of NFTs ultimately flops, but they also must bear the risk that a high-quality game which integrates Loot bags as a central mechanic never comes to fruition. Factoring in the current average price of USD$26,800 and the fact that it has been on a downward spiral over the past week, Loot’s price return is unlikely to be commensurate with the outsize risk that investors must bear.
  2. On a long-term horizon, it is unlikely that decentralized game development will prove to be a sustainable model for creating games which rival the quality of centralized studios. Even in the questionable scenario where a high-quality game is developed with Loot as the foundational inventory system, there are doubts as to whether the bottom-up approach can consistently and efficiently deliver the optimal solution. Decentralized governance seems a workable model when the choices being debated are purely focused on operations. This is because such business decisions typically have a finite set of reasonable courses of action, and thus members of the community must choose between a limited selection of options. In contrast, game development and creative endeavours writ large are effectively unbounded in terms of the different choices that can be made. With a practically infinite set of options to choose from, it is unlikely that putting every design or narrative decision to a vote could be a sustainable long-term strategy. Thus, irrespective of any near-term success that might be enjoyed by Loot and its community, the method of crowdsourcing creative decisions may prove difficult in the long-term.
  3. Key metrics including transaction volumes, unique buyers, and average prices all point to the project having lost significant investor mindshare and being overpriced. Viewed holistically, the immediately preceding analysis of the market for Loot bags clearly indicates an unfavourable investment environment and a project whose traction is poised to continue slumping unless some significant developments help it to reverse course. For one, less sales are occurring in the market and less value is being exchanged on a day-to-day basis. Concurrently, the number of unique buyers has continued to decline. Overall, the lower supply of Loot bags on the market has been met with greater force by a decrease in the number of interested buyers, the result of which has sent average prices tumbling. Accounting for the inflated levels of these metrics in the few days following the project’s launch, the Loot market crash seems to suggest that many investors came to realize the absurdity of paying hundreds of thousands for random lists of text which are neither technologically nor conceptually defensible. Irrespective of Loot’s promise to reform game development, there is little reason to believe that investor interest would once again rise to its initial levels, and the signal appears to instead be that prices will continue to fall.

Where this Thesis Fails

For one, it may be the case that we are either underestimating the upside potential of loot or overestimating the risk factors involved. Although the model of text-based NFTs is unproven and has been met with derision and skepticism from many, it may be pre-emptive to simply assume that the risk will manifest and that the price might rise only marginally in the future. In effect, if text-based NFTs receive wider acceptance and the Loot community proves deft at working cohesively to design games around the NFTs, then an appropriate return may be realized.

Additionally, it may be the case that blockchain game developers realize the lack of sustainability in a model which requires all creative decisions to be put to vote. To address this, adapted governance models may be designed to strike a greater balance between decentralization and efficiency. If such approaches experience wider uptake, then the concern that bottom-up game development may not be sustainable long-term would effectively be moot.

Finally, there may be reason to believe that the short span in which the Loot project has been active, and thus the small sample size of data used in the analysis, paint an unfairly grim picture of a project which has not had enough opportunity to establish itself. This will be especially true if metrics such as transaction volumes and unique buyers participating in the Loot market begin to rebound.

Closing Remarks

The concept behind the Loot project is one that, despite its flaws, is a fascinating breath-of-fresh-air in a market that has grown increasingly homogenized. The implications of designing media by leveraging community-created building blocks are tremendous. However, given the nascence of text-based NFTs, the potential inefficiencies in the governance model, and the recent underperformance of the project, Loot is an investment opportunity that would be best forgone.


Russell, K. (2021, September 3). The Loot project flips the script on NFTs. Retrieved from TechCrunch:

Thurman, A. (2021, September 1). The Latest NFT Fad Is a Text-Based Fantasy Game Building Block. Retrieved from CoinDesk:

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