09 September 2021

REVV Racing — Start your engine

REVV Racing is a new and original game in which drivers compete against the clock for a position on the leaderboard and a chance to win a share of the prize money.
What is the REVV Token?
REVV is an ERC-20 utility token that serves as the primary currency for purchase, utility and action in all REVV Motorsport blockchain games. It is designed to enable the digital ownership of gaming assets. Players can earn REVV through gameplay and can then use the token to purchase NFTs for the games or pay entry fees for the races. REVV is also designed to give gamers freedom and control over in-game assets across the growing metaverse of racing games.

Future titles will support the broader REVV ecosystem and the token itself. There are several ways in which REVV tokens can be used in the blockchain titles (each game is slightly different):

  • NFT Purchases: to purchase exclusive NFTs, such as cars, drivers, upgrade parts and land.
  • Gameplay Entry Fees: an entry fee to enter races.
  • Gameplay Rewards: a portion of the gameplay fees collected in each race will be used as player rewards based on their race performance. A portion of the gameplay fee will also be paid as dividends to the track’s NFT owners.
  • Staking: Owners of race car NFTs can "stake" them to earn REVV

The maximum supply of REVV has been set at three billion tokens, which will be allocated to the various games. Some 500 million REVV tokens — one sixth of the total supply — have been allotted to F1 Delta Time. An additional 400 million REVV is dedicated to MotoGP and 350 million REVV to the upcoming Formula EV: High Voltage.

The REVV token was launched in Sept 2020, hit a low of $ 0.01 and high of $ 0.63. As a utility token that players earn and spend within the racing games, the recent launch of REVV Racing and the auction of Formula E cars on the Binance marketplace are expected to driver additional demand for the token. The interesting thing about REVV is that more games are coming, with Animoca Brands expected to launch other classic racing games, increasing demand for the token.

We can see from the social media following that game launches (Delta and Revv Racing) led to a sharp increase in social media followers. The growing popularity of the ecosystem creates a positive environment in which to launch new games, features and asset sales.
What is the REVV Racing?
REVV Racing is an original browser-based racing game. Most blockchain games to date lack the graphics and gameplay of popular AAA games, but REVV Racing merges the thrill and skill of real-time 3D car racing with the advantage of blockchain, including true ownership of in-game assets, play-to-earn and enhanced security.

Cars for REVV Racing are made available as NFTs on the OpenSeas marketplace and through various giveaways. As an original title, the developers have more freedom and flexibility on game design and monetisation methods.
REVV Racing is a play-to-earn game that uses NFTs for important game assets, such as the car you race in. This means that after you purchase, earn, or win a REVV Racing NFT, that item is fully and rightfully yours, and you can sell or trade it however you like. REVV Racing launched on 11 August 2021, with a US$ 150,000 prize pot for the inaugural event. The inaugural event ran from 11−17 August, with the fastest 1,000 players getting a share of the prize pool, paid in REVV tokens.

Following the large-scale tournaments, REVV Racing will host smaller sprint sessions every two days. The prize pools for the Sprint Sessions are $ 10,000, with the winner receiving $ 500. Prizes are distributed as follows and paid in Polygon REVV:
Driver for hire
In a similar way to Axie Infinity, which gained a lot of attention recently due to its play to earn feature, REVV Racing has introduced a car loan scheme. The ‘Hire Driver' feature allows players who own cars to share their tries and cars with anyone else. This feature allows car owners to "rent" out their cars to other drivers, and still enjoy the benefits of Play-to-Earn without the need to race themselves — a great way to stimulate collaboration between more commercially minded players and those with the racing skills needed to win.

Alpha Inaugural Tournament (11−17 Aug) — 53,379 races were run by 5,173 players
Sprint Session 1 (20−23 Aug) — 1,595 races
Sprint Session 2 (24−26 Aug) — 1,295 races
Sprint Session 3 (27−29 Aug) — 1,199 races
Sprint Session 4 (31 Aug — 2 Sep) — 1,139 races

REVV Racing saw a tremendous growth in users since launch. Activity was driven by the Alpha Inaugural tournament, which coincided with a large drop of NFTs, featuring a wide variety of cars that could be used in the game. The large prize pool for the tournament explains much of the interest and was a significant driver of transaction volume. As of 28 August, there were 22,600 cars in the collection, with around 15,200 owners.
Currently, REVV Racing is ranked #1 in Games on the Polygon chain with 14,800 users over the past 30 days, according to DApp Radar. That is impressive given the game is less than one month old.

Near-term projections
Given that the game is less than a month old, it is difficult to project the platform growth over the next year. There are few details yet about the plans for the game development, or monetization efforts, but we can look at F1 Delta and other games for clues about the growth outlook.
Key assumption
  • An initial 22,600 cars were minted. We model the release of 100k cars in the first year, increasing in rarity and cost.
  • We assume that each car enters three races per day @ 5 REVV per race.
  • The number of races per day could be skewed rapidly higher if the "hire a driver" feature becomes financially attractive (we have yet to factor this into our model).
  • We assume that each car owner will also spend $ 30/month or $ 360/year on additional in-game items. This could be parts (improvements to the cars), track ownership rights etc.
  • Finally, we assume that there is an active second-hand market for cars. We assume that 10% of cars are traded (on OpenSea) every month, and REVV Racing takes a 3.5% share of profits. We conservatively estimate that 2nd hand car prices are in line with new cars.
  • Overall, our model suggests an annual game revenue of $ 41 million, of which around $ 8 million gets paid back out to drivers as part of the reward pool.
Our model suggests that REVV Racing could generate around $ 40m in first year revenues. We believe that the biggest source of revenue will be from asset sales, such as upgrades to cars and track sales. We assume that these asset sales generate around $ 2−3m per month, which equates to around $ 30/user/month.

In order to drive user activity and create a self-sustaining economy, the play-to-earn model will ensure a stream of weekly tournaments with a prize pool. We assume that around 20% of sales will be paid back to the users as rewards for competing in the major tournaments.

There are a lot of levers that the game developers can pull to drive further monetisation of the game, which could be an upside surprise to our base case:

  • Sponsorship deals with auto related companies
  • In-game advertising given abundant real estate on trackside and cars
  • Increase user base with asset rentals
  • Develop an in-game burnable currency.

Overall, we believe that REVV Racing alone could earn around $ 31 million in profits, implying a P/E of 1.5x for the circulating supply of $REVV. This valuation gives zero valuation to all the other REVV Motorsport titles that are currently operational or future releases. A fully diluted implied valuation for REVV (again ignoring all other titles) is around 21x PE.
We believe that REVV has the key ingredients to be a wildly successful project. Animoca has carved out a powerful niche in the motorsports sector and REVV has all the prerequisites to grow in value and attract a vibrant community. REVV is backed by one of the strongest teams in blockchain gaming and an unbeatable ecosystem to create synergies between the gaming products. Unlike the licensed gaming products, REVV Racing is an original concept that could pull additional levers for monetisation.
Disclosure: 3Commas Capital has invested in REVV. Members of our team may hold REVV and related NFTs and hold advisory roles. This statement is intended to disclose any conflict of interest and should not be misconstrued as a recommendation to purchase any token. This content is for informational purposes only, and you should not make decisions based solely on it. This is not investment advice.