Author: LD Capital
I. Fundamental Analysis
1. Basic Information
xPET is a pet-raising game based on a browser extension embedded in Twitter. Pets can engage in activities such as accompanying on Twitter, farming, adventuring, PVE, etc., ultimately generating token income. By consuming tokens to upgrade pets, the related income can be expanded.
Source: xPET Official Website
The xPET game adopts a dual-token model, namely XPET and BPET. Since the addition of liquidity for the two tokens, their highest increases within a month have exceeded 30 times and 10 times, respectively, taking over the last frenzy of speculation in 23 years.
Source: Dexscreener-XPET
2. Core Mechanism - Farm
After owning a pet, the core mechanism of the project is to use the pet for farming. All pets at level 7 will automatically participate in the farm to produce berries (the higher the level of the pet, the faster the berry generation). When the pet reaches level 10, it can open a factory, which will convert berries into BPET (the higher the level of the factory, the faster the conversion from berry to BPET). BPET in the farm can be claimed to the wallet every 10 minutes. If all previously invested BPET is withdrawn and the pet is at a new level, a cycle ends.
Continuing to use the newly claimed BPET to further upgrade the pet will initiate a new cycle. The above repetitive cycle in the farm operates like a flywheel.
Source: xPET Official
As the level of the pet is positively correlated with berry production and the level of the factory is positively correlated with the efficiency of berry-BPET conversion, users will upgrade pets and factories to obtain higher farm income.
3. Introduction of New Gameplay - PVE
When a pet reaches level 10 or above, it can participate in adventures, which are divided into three levels:
Level 1: Pets at levels 10–29 are eligible to participate.
Level 2: Pets above level 30 are eligible to participate.
Level 3: Only open during special events (may be open to everyone or limited to those who meet specific criteria, depending on each event).
The rewards for adventures include BPET, food, and probability-dropped xEGG fragments (fragments can be combined to create NFTs of 1–5 stars). 10% of the BPET rewards come from the total income generated from game store purchases, pet upgrades, and factory upgrades on the previous day. This 10% of BPET is evenly distributed to the adventure levels based on the proportion of players in each level.
Since higher-level pets receive more BPET rewards in adventures, this also encourages players to upgrade pets to obtain additional rewards beyond the farm.
Source: xPET
4. Other Mechanisms
There are some other components surrounding the main mechanism to enrich the gameplay of the game, such as token acquisition and consumption. For example, players can obtain food by commenting "xpet" on Twitter to maintain the pet's health; through the referral code mechanism, players can obtain more berries; and the market allows direct purchase of higher-level and different-looking pets, etc.
II. Token Economics
The game adopts a dual-token mechanism. At the beginning of the game release, both tokens can be used together for in-game upgrades. Currently, only BPET can be used for in-game upgrades, and the specific use of XPET is not yet clear. The entire token economics design is still in the early stage, and version 2.0 is currently being updated, so there may be changes and adjustments in the future (including changes in game output parameters and other settings).
1. BPET - Game Token
Based on observation, BPET seems to be issued in an unlimited manner based on the output data of users in the game. The consumption of BPET will be divided into four parts: 10% for adventure rewards, 1% for the project team, 5% for rewarding XPET staking, and 84% for burning. Based on the daily output and consumption of users, BPET may dynamically trend towards inflation or deflation.
BPET tokens can be obtained by purchasing on DEX or waiting for in-game farm output.
2. XPET - Utility Token
The total supply of XPET is 300 million, with 40% allocated to the ecological fund, 15% for marketing, 30% for the community, 5% for liquidity, 5% for the team, and 5% reserved. Its future positioning is in social use, but detailed use cases are currently lacking disclosure.
Source: xPET Official
XPET tokens can be obtained by purchasing on DEX, converting BPET, or staking ETH to obtain XPET worth 90% of the corresponding value (based on market price). Note that the method of obtaining XPET through staking may face liquidation as XPET prices rise (which may also constitute a motivation for the project team to boost the market).
After XPET token consumption, 5% is allocated to the project team, 50% for marketing, and 45% for redeeming BPET-XPET conversions.
3. Suppressing Token Sell-Off
The game design of xPET hides some mechanisms to control token sell-offs to help stabilize the token price for the project team and leave time for updates. For example:
(1) There is a waiting period for BPET-XPET conversion: Each user can only execute 100 BPET conversion orders at a time. After the completion of the previous withdrawal order, the next conversion order can be initiated. Each user placing a conversion order is considered to be in the queue. The larger the queue, the longer it will take to receive the BPET tokens.
(2) BPET can continue to be obtained through farming, but the amount consumed for activities such as upgrades is high relative to the output. If relying solely on output for pet upgrades, it will take a long time, and there will be little tokens available for sale after the upgrade.
(3) Only level 7 pets can contribute berries, and only a level 10 factory can convert BPET. New players need to invest first and then accumulate returns during a waiting period.
(4) The introduction of the PVE mechanism adds ways to obtain BPET, but claiming BPET will reduce the pet's level by 3, reducing future PVE earnings and also suppressing quick token sell-offs.
III. Revenue Model
Game Mining Revenue and Token Speculation Revenue
The main revenue method in the game is currently obtained through farming. However, because the game token BPET price fluctuates, if BPET is purchased at a high price for pet and factory upgrades, and the subsequent BPET price decreases, the payback period in terms of US dollar value will be extended. Conversely, upgrading when the price is relatively low and selling at a higher price in terms of token value will shorten the payback period or increase profits.
And the important aspect of token speculation is buying low and selling high, referring to excellent Farmers to seize the opportunity of short-term undervaluation and overvaluation to gain profits. Due to the limited supply and the impact of the token exchange conversion period, the inflation of XPET's price should be significantly higher than BPET.
Since upgrading pets at the current token price requires a considerable amount of BPET, it's best to seize the opportunity to maximize mining income. Here's a table showing the upgrade costs and berry output:
Source: "Getting Started with xPET Pet Raising Tutorial"
IV. Potential Risks
1. Economic Model Risk
The rise in token price will increase the project's popularity and early participants' profits, but it will also raise the barrier for latecomers. When the price of BPET is $1, it costs $285 worth of BPET to upgrade to level 7. To have a level 10 pet and a level 5 factory, it requires $685 worth of BPET, which is not a low price for most retail investors.
Balancing growth expectations and continuous user acquisition while preventing the economic model from collapsing as the token price rises is the most challenging task for the project team. Currently, there are no good solutions available. However, a healthy model should maintain a gradually oscillating upward token price, allowing new users to have growth expectations and wealth creation effects, and be willing to spend at the entry for future returns.
I temporarily believe that the model of token income in adventures planned by the project team also applies to the overall token economics.
Source: xPET Official
2. Centralization Risk
According to the audit by the third-party blockchain security firm Beosin in December, the xPET project has centralized characteristics, which pose potential risks. For example, the main contract of xPET is an upgradeable contract ERC1967, responsible for handling the lending and borrowing logic of ETH and xPET. However, since the main contract is an upgradeable contract and the project has not disclosed the logic contract within this upgradeable contract, potential logic errors or risks in the logic contract cannot be detected. The xPET token contract inherits ERC20 and AccessControl contracts, which designate the deployer as the administrator role, forming a centralized control point. An attack on the deployer's account would pose significant risks. In terms of token accessibility, this contract centralizes token movement because all tokens are minted to the contract itself. This design centralizes token movement.
However, centralization is a common issue in many projects in the blockchain space, and whether problems arise ultimately depends on the technical capabilities and vision of the project team. Users should do their own research.
3. Competition Risk
After the popularity of xPET, many imitations have emerged recently, such as XSaiyan, Bitpet, zPET, xKingdom, etc., with XSaiyan being relatively popular. It is based on the world view of Dragon Ball Z, and the token is deployed as both BRC20 and ERC20.
V. Data and Roadmap
1. Current Data Performance
The game has been officially running for less than a month, with a total of only 15,000 users. Given its foundation on a platform with billions of users and its simple gameplay, it is not difficult to capture X platform users through continuous marketing. Overall trading volume trends, changes in ETH value, and other data are not in a phase of stable growth, but appear significantly with price increases. In terms of actual functionality and operational data, it is still in the early stages, but the project's overall situation is good, and there is huge potential market growth, indicating considerable room for future development.
Source: Dune
2. Roadmap Planning
xPet has announced a 3-month roadmap, which can be mainly divided into three parts:
(1) PVE (Already Launched)
Adventures (PvE) - Week 1 (December 21, 2023 - December 28, 2023):
Launch the adventure (Player vs. Environment) feature.
Allow users to engage their pets in exciting adventures.
(2) PvP (Under Development)
PvP Beta Version (Private) - Weeks 2–3 (December 29, 2023 - January 11, 2024):
Develop and release a test version of the player vs. player (PvP) feature; limited access to private testing by the internal team to identify and address potential issues.
PvP Ver1 (Public) - Week 4 (January 12, 2024 - January 18, 2024):
Release the first public version of the PvP feature; allow users to participate in enhanced PvP battles.
PvP Ver2 (Completed) - Weeks 5–6 (January 19, 2024 - February 1, 2024):
Finalize and complete the PvP feature based on user feedback and testing; introduce additional elements and improvements to enhance the PvP experience.
(3) Multi-Chain and SocialFi
Multi-Chain - Weeks 7–9 (February 2, 2024 - February 22, 2024):
Begin implementing multi-chain support; explore and integrate compatibility with multiple blockchain networks to enhance flexibility.
More SocialFi Features - Weeks 10–12 (February 23, 2024 - March 14, 2024):
Introduce additional social finance (Social Fi) features; enhance the platform's social and interactive aspects to provide a more attractive experience.
VI. Conclusion
Rational participation in xPET requires seizing the rhythm of token fluctuations, entering at low points, selling at high points, and stabilizing income.
The biggest challenge for xPET is how to solve the economic model problem to make its tokens rise without collapsing, and imitations will follow the price without the ability to solve this problem.
Projects like xPET are still in the early stages, but the market has confirmed the huge potential of this track, making it worth paying attention to.
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