NFT gaming platform Balthazar banks $3 million despite crypto meltdown


The gaming platform is backed by Finder founder Fred Schebesta’s investment firm, Hive Empire Capital. In the past 12 months, it’s raised a total of $8.5 million.

John Stefanidis is a self-proclaimed mega-nerd. At 19, he started a business selling gaming gold (in-game currency). “It was pretty fun,” he says. “That was my first introduction into gaming business.”

In 2021, he co-founded the non-fungible token (NFT) gaming platform, Balthazar DAO. Today, it’s just secured a further US$2 million (AU$3.01 million) in its second private round token sale. Its fully diluted valuation (what the project will be valued at once all tokens have been released into circulation) is US$60 million (AU$90.3 million). That brings the DAO’s total token sales to US$5.6 million in the last 12 months, after closing its first private token sale of US$3 million in February this year.

Finder founder Fred Schebesta’s investment firm, Hive Empire Capital, has invested in both rounds. Animoca brands, which has also backed NFT exchange platform Immutable, was part of the DAO’s first token sale.

Stefanidis says the funds will be used to help accelerate the business’ Babylon SDK (software development kit) division, which aims to bring Web 2 games into Web 3.

“The first problem for game studios is, when building a game, part of the reason it’s not fun is because there’s no standardisation. If you’re a game developer and you have experience building a game, it’s difficult to tie the blockchain into that if you don’t have those skills in-house. It can get quite complicated.”

In comes Balthazar’s Babylon software, with a suite of infrastructure that game developers can use to create Web 3 games. Rather than having to already own a crypto wallet and link it to an NFT-based game, users can sign up to a game using just a username and password. Games integrated with Babylon’s SDK will automatically create the user a noncustodial wallet (a wallet that is not owned by the game creators or Balthazar) for the users to collect in-game assets into.

So far, Balthazar is in talks with more than 200 games to get its infrastructure into use.

“For Web3 gaming to hit the growth rates we expect, UX improvement is critical,” co-founder and CEO of DACM, Richard Galvin, an investor in Balthazar’s recent token round, says.

“What Balthazar is building with their Babylon SDK should be a big leap forward.”

“…When you buy an NFT it won’t just be buying a piece of digital imagery, you’ll actually buy something bigger that’s attached to that photo.”

– John Stefanidis, co-founder of Balthazar DAO

Babylon, Stefanidis says, is also chain agnostic.

“We are top-level infrastructure,” he says. “You can use our wallet system to build on any chain. We realised very quickly there’s product-market fit,” Stefanidis adds.

One of the key features of Babylon’s SDK will be its recovery feature. Generally with noncustodial wallets, you’re responsible for your own assets, Stefanidis says. The problem with that is, if you lose your private key or your recovery phrase, you can’t recover thew allet.

“That’s why it’s important to have a system that allows you to recover that wallet or that account, without anyone else actually owning it,” he says. “This is one of the key features we’re working on building into Babylon.”

But 2022 has been damaging for the NFT and wider crypto industry. At the time of writing, Bitcoin was down to $25,258, with new lows triggered by the collapse of one of the world’s largest crypto exchanges, FTX.

Stefanidis brushes it off: “That [FTX] was just an example of alleged fraud and mismanagement. It could have happened in any industry, could have happened in construction. The guy was just inexperienced.”

NFT sales have also declined across the top five largest NFT marketplaces (OpenSea, Magic Eden, X2Y2, LooksRare and Solanart). Total sales volume across the marketplaces for November was US$394.02 million – down by over US$100 million compared to October.

“It makes sense for the NFT market to have slowed down this year due to macroeconomic pressures as well as the three cataclysms of 2022: Terra Luna, Three Arrows Capital and FTX,” Stefanidis says.

“But what we’re starting to see is really cool and different applications of NFTs. For instance, someone bought a house with NFT technology. So perhaps in 2023, 2024 and onwards, when you buy an NFT it won’t just be buying a piece of digital imagery, you’ll actually buy something bigger that’s attached to that photo. 

“So it’s a really exciting, thriving space but understandably, people are waiting for more uses of the technology.”

And despite the downturn in the market, PWC’s Global Crypto Mergers and Acquisitions Fundraising report shows crypto fundraising in 2022 is set to outperform the 2021 total of US$36.6 billion. In the first half of the year, total funds raised in the crypto market toppled US$24 billion – 20% more than the same period in 2021. NFT and metaverse projects received one-third of all deals in the first half of 2022, compared to just 4% in the same period last year.

“Different applications [of NFTs] are going to start exploding,” Stefanidis says. “People are really excited about collecting assets.”