Crypto games have been all the rage this year, at least among VC investors who have poured hundreds of millions into the nascent segment, some of which has been squandered in high profile hacks.
To make entry into this world a little easier and smidgen safer, Lootrush is developing a platform to help onboard new players onto popular titles, and raised $12 million to do it in a seed round led by Paradigm with participation from a16z. The round also included included Y Combinator and angel investors like the founders of Axie Infinity.
Lootrush works a bit like Steam, the market leader platform for buying PC games online, but incorporates elements like wallets and NFT rentals.
The platform currently only has one game on the platform, Axie Infinity, the largest crypto game to date, and has 4 more games in the pipeline to be added this year.
Axie Infinity has a very complicated and costly onboarding process for players, making them set up multiple wallets to connect traditional cryptocurrencies to their native blockchain and requires players to purchase at least 3 NFTs to play which can cost hundreds of dollars each. Players around the world, especially in Asia, are willing to jump through these hoops as they can actually earn cryptocurrency as they play, and potentially make a nominal income from a game that looks and feels a bit like Pokemon.
"I didn't know about crypto gaming until July of last year," said LootRush founder and CEO Anderson Ferminiano. "One of my friends tried to play one of the titles and had a real hard time setting it up and thought it was really expensive."
Ferminiano a native Brazilian came up with the idea of a streamline crypto gaming platform while participating in the Summer 2021 Y Combinator batch. He had initially wanted to pursue a B2B idea, but decided against it as it was too similar to his last company he founded in Brazil, which delivered display ads to e-commerce sites.
Instead of purchasing the NFTs required to play Axie Infinity outright, LootRush allows players to rent them from the platform for an upfront fee and begin earning the game's in game currency.
Axie Infinity was notably the victim of a massive hack earlier this year, losing an around $625 million worth of cryptocurrency due to a vulnerability in their Ronin blockchain which allowed players to move cryptocurrency into and out of the game. The culprits were allegedly a North Korean hacking group, and VCs like a16z funded a round worth $162 million to help Axie's parent company reimburse victims of the hack.
Despite the significant drawback, it seems a16z is willing to keep investing money in Axie and supporting firms.
Ferminiano markets his platform as adding safety to the crypto gaming space by allowing players to more easily transfer money out of the Ronin blockchain to leave them less vulnerable to a future hack.
He says the platform currently leases $15,000 to $20,000 worth of NFTs per day to players, while the company employs 24 people. Ferminiano currently resides in LA and has employees scattered across the world, but Lootrush's website lists a headquarter address in the Castro.
