Star ATLAS Analysis - Passive Income
A study and analysis to understand the current and future valuation of the ATLAS token in the Star Atlas game system on Solana Blockchain.
Over the last few years there have been evolving economic systems since the launch of Bitcoin and the evolution of Ethereum and Solana. Most notably the evolution of DeFi to take on the traditional banking system. Recently the initiation of DePIN in the Theta, Flux and Helium projects taking on traditional communications systems and traditional hosting infrastructure. At its core all Blockchain models (DeFI, DePIN, etc) are decentralized and for the most part permission-less. Free entry and free exit and integration to permission-less open markets and exchanges.
Now a new model is evolving. It’s being called Web3 Gaming or DeGEN. Using blockchain to provide exchanged value in open markets and using NFT’s to represent physical assets in a game world that require effort and investment to create. I’ve spent a few weeks/months/years listening to a lot of podcasts and also playing the game with some “gambling money”. I have some knowledge and viewpoints to throw at this. I’ve been an entrepreneur, banker and video gamer. But most importantly I used to play Eve Online.
Why is Eve so important in this analysis? Because Eve is a massive MMO game that has been around since 2003 and has a working internal game economy. Looking at Eve it is easy to see the same mine, construct, build and sell mechanics at play. The difference is Eve doesn’t have a tie into real world money like Star Atlas does with Solana BlockChain. Eve also did an economics study with the University of Iceland. Eventually they hired an economist to oversee their economy.1 Who produced monthly economic reports like a small government.2 Yea it’s that good for us finance and economic junkies.
Star Atlas’ CEO, Michael Wagner, mentioned in a Podcast he sees the game having an ongoing labor component.3 Where people work for the game. As if that could be considered “work”? Imagine, after your six months working at a fast food franchise trying to work yourself through college to make $12/hour and be limited to only 20 hours a week due to the corporation not wanting to pay benefits. You decide to become a miner on the outer belts of Neuno mining Helium. On Thursday and Friday you join up with your posse and do mining in high-risk areas mining Titanium. A lucrative metal for component and ship building. You work when you want to and have a Telegram open with your friends as you chat back and forth.
After several months of making your own money you decide to follow the path of Stede Bonnet and become a pirate. A gentleman pirate. Raiding shipping lanes in X-17|Y23. Arggg.
Is this possible? Could we see a possible change to the labor market. Is the world about to turn into Ready Player One?4 And how does that affect the valuation of ATLAS?
Let’s dig deeper. But first for all those wanting “a pirate’s life for me”: a pirate shanty:
When I was just a little lad or so me mammy told me
(Away Ho, Away Ho, Away Ho Joe)
That if I didn't kiss the girls me lips would grow a-moldy
(Away Ho, Away Ho, Away Ho Joe)
Away (ho!) Haul away, we'll haul away together
(Away Ho, Away Ho, Away Ho Joe)
Away (ho!) Haul away, we'll haul for better weather
(Away Ho, Away Ho, Away Ho Joe)
I used to have an Irish girl, but she got fat and lazy
(Away Ho, Away Ho, Away Ho Joe)
But now I've got a Bristol girl, and she just drives me crazy
(Away Ho, Away Ho, Away Ho Joe)5
All of Web3 projects including Star Atlas had a big uptick in token price at launch and then a steep decline over time as reality sets in. To understand that continued drop and when it will reverse as well as could be the possible upside you have to understand Star Atlas’ economy.
What’s important about Star Atlas and EVE is they both do a great job mimicking the real world. Capital with labor transforms resources into goods and services. The price of that good and/or services is determined by the market if the market is free and open. EVE did this incredibly well through its game mechanics. It created a galaxy which could be explored like Christopher Columbus to discover resources and then exploited like Christopher Columbus and Hernado de Soto. EVE also set up safe zones of the galaxy and treacherous zones (there be pirates here). Its algorithm which created an unbounded galaxy of millions of worlds and distributed raw resources such as iron ore, copper ore, titanium, helium throughout. The game mechanics though distributed the critical resources in the treacherous zones. Making them difficult to mine thus limiting supply. Thus the economics of supply and demand which makes critical resources worth more than resources that only require labor and no risk.
To further instantiate their value the critical resources are required to make the more powerful and efficient assets of the game. Mining Rigs, Weapons, Ship Types etc. This in the game mechanics much like the explorers of old establishes dominion, war and leverage of assets. Star Atlas has exactly this same game mechanic. Introduced differently but the scarcity, labor and mutual cooperation are exactly the same.
A long time ago in college during my finance classes I learned several things but the biggest thing I learned: It takes money to make money. Money 101. When you start Star Atlas, any player that doesn’t want to just buy stuff and blow things up will have to have a business plan and be a producer. Some will just buy stuff. If they want to race or be in a first person shooter or participate in arena flight combat. Which is great because they will destroy stuff and then have to buy more stuff. In either case the buyers will have to bring money into the game. More on that later.
Star Atlas mechanics has a very advanced and complex technology tree of various ships, components and sectors where the player has to set up a system, factory and fleet and allocate capital in a mix that is efficient with their dollars and time to earn profit. Wow. Just like the real world. Except in this case you can do it with $100 or $500 or $30,000. So how does this affect the price of ATLAS? It’s in the mechanics. Most of the Assets. The big ticket Assets (Ships, Crew, etc) can be purchased in USDC or ATLAS on the Solana blockchain. However the cost of goods and services are all in ATLAS. Unless you use the goods to make ships which can be sold in USDC or ATLAS you will need ATLAS to make these assets. You will also need your time and hopefully the time of a few close shipmates also.
Where Star Atlas differs from EVE is not only the blockchain component but the entertainment component. If multiple players come into the space and need to consume items created by other players this will create a demand for ATLAS. It will also create a demand for valuable resources which in turn will create war and some awe inspiring battles. Which in turn will destroy more assets and require more assets to come into the game. Get the picture?
As I start this substack I’m going to end each piece with kinda a wrap up looking at how an asset is significantly undervalued or what makes up the potential or risks for significant upside to the asset.
ATLAS since launch as I mentioned before went up really fast then down and down over time. It’s probably at fair market value for what is currently a web based low end graphic game with players mining and crafting resources. The upside here is the Unreal Engine client the company is currently working on that will tie into the blockchain and thus the economics. The Unreal Engine could allow you to buy that cool NFT of a hot hover-bike. Add special modifications. Paint it with stripes, polkadots, neon lights and go racing!!!! The Unreal Engine with great game play has the chance to bring in more players to race, mine, craft, explore or fight. All of which creates demand for ATLAS. To appropriate price this I’m going to do some comparison with EVE and look at some of the numbers Star Atlas is doing currently. This should help paint a picture of the potential.
EVE Online reached five hundred thousand (500,000) registered players in February 2013. In 2024 EVE Online usually has about thirty thousand (30,000) active concurrent players. That’s a lot of people breaking stuff and making stuff. The entire time EVE had a decent game client with good graphics that has constantly improved.
In contrast Star Atlas as of August 2024 does not have a decent graphics game client. As of August 2024 Star Atlas had XXX,XXX players with on average 1,600 players on the web client game per week. Not a lot but it shows significant interest in the platform. Also some of the ships range from $200 to $3,000 in the open market. So of the active 1,600 players there is enough market demand to sustain those prices. The Unreal Engine release is slated for October, 2024. Doing a little research it appears the company (ATMTA, Inc) has not had a good track record of releases. I’m paraphrasing the CEO here. Too many features, eyes bigger than our screens, slow unworkable apps, bloated feature sets, etc. Coming from the CEO he definitely understands their challenges. Which is good. Let’s be clear though. They are doing something no game company has done. Massive MMO using UnReal, Blockchain and running on centrally hosted servers. They are also essentially a centralized block chain. If the game server goes down the NFT that represents your ship is worthless. They’ve also been working on the Unreal client since 2022.
The valuation of ATLAS or its potential valuation all depends on the Unreal Graphic Client. As of this writing I think the talent in the team, the business experience of the CEO, and the community involvement makes this a seriously undervalued asset at the time of this press. The Open Source release of the Unreal SDK to Solana creates a game changing ecosystem (pun intended). If Star Atlas achieves the same popularity of EVE, at a minimum it could be 5,000% undervalued.
Ready to quit your day job and stop stuffing Tacos for the man and mine asteroids? It’s a pirate’s life for you then!!! I would start by buying some ATLAS and learn the game system. Or just invest in ATLAS and hold off on the pirate’s life. You could turn out to be the next Black Beard. Lose your ship and your head. Your head is valuable. But that ship is a real world Asset!!!!
More to follow and more to unfold.
https://web.uri.edu/quadangles/the-virtual-economist/
https://www.eveonline.com/article/q624rx/monthly-economic-report-january-2020
Michael Youtube Interview:
https://www.imdb.com/title/tt1677720/
Haul Away Joe