What is Gala Games?
Gala Games is the company behind a rich ecosystem of blockchain-based games, also called Gala Games. Gala Games’ mission emphasizes the goal of building player-owned, community-governed games. Using the Ethereum blockchain, each in-game item is a non-fungible token, or NFT, that can be fully owned, controlled, and traded by users, rather than only by the game developers. Players can operate nodes from their home computers to support the Gala Games ecosystem and earn rewards while doing so. Townstar, the first game produced for the Gala Games ecosystem, has a unique reward structure that awards the top players GALA tokens.
Founded by Eric Schiermeyer, co-founder of Zynga Games, the studio behind games like Mafia Wars and Farmville, Gala Games launched in 2019. Since then, it boasts 1.3 million active users, 26,000 NFTs sold, and up to $3 million spent on a single in-game NFT. So far, only one game, Townstar, is available to play, but seven additional games are in active development. The Gala Games team has grown to over 90 employees and continues to partner with game studios, like Ion Games and Certain Affinity, to pursue new game development.
What is GALA?
The Gala Games ecosystem of games is powered by its utility token, GALA. The GALA token runs on, and is secured by, both the Ethereum and Binance Smart Chain blockchains. However, Wealthsimple only supports the ERC-20 token that runs on the Ethereum blockchain. GALA can primarily be used to purchase and sell in-game items. However, it’s also sold on public exchanges independent of the game. Games may also come with their own individual tokens, which should not be confused with GALA, such as the TOWN token used in the Town Star ecosystem.
GALA can also be used to purchase Founder Nodes. Once purchased, users can run the Founder node to earn additional GALA as rewards and participate in distributed voting mechanisms to, for example, help determine what games should be developed and receive funding. Gala Games will only sell 50,000 Founder Nodes, of which 23,000 have been purchased so far.
How does GALA compare to Bitcoin?
First, Bitcoin is a “coin” and GALA is a “token”. Bitcoin powers the Bitcoin blockchain and it is mined by a decentralized network of computers that solve complicated puzzles to verify transactions. By contrast, GALA is a token that runs on the Ethereum and Binance Smart Chain blockchains. On Ethereum, ETH is the only coin that can be mined. And miners mine ETH to process GALA transactions. It is what is known as an ERC-20 token, the name applied to the generic token standard for the Ethereum blockchain. The Binance Smart Chain is a separate blockchain that uses a proof-of-stake consensus mechanism, where participants can stake BNB tokens to validate GALA transactions.
Second, Bitcoin is far larger and older than GALA. While Bitcoin, the largest cryptocurrency by market capitalization, has a market cap of roughly $870 billion, GALA has a market cap of around $1.8 billion (as of February 2022.) And, while GALA launched in 2019, and its development is still in progress, Bitcoin has been around for over a decade.
Finally, GALA’s value is largely tied to the success of its games whereas Bitcoin derives much of its value from being a medium of exchange and store of value. Because GALA’s primary use-case is to buy and sell in-game NFT items, the more people who play Gala Games’ games, the more demand there will be for GALA. Gala Games reports that 600 million people have played Town Star so far. As Gala Games develops more games and develops existing games, including by bringing Town Star out of beta development, GALA will have more use-cases.
Before trading any crypto assets it is important to understand the risks. This overview is a starting point for you to perform your own research prior to investing in a crypto asset. First and foremost:
No Canadian securities regulatory authority has expressed an opinion about GALA, including an opinion that GALA is not itself a security and/or derivative.
Wealthsimple has performed a legal assessment of GALA prior to making it available on Wealthsimple Crypto and has concluded that GALA is not and is unlikely to be deemed a security or derivative. However, there is a risk that this conclusion could change in the future and the impact of this on an asset’s value is outlined in our Product Disclosure.
We evaluated GALA based on publicly available information, including (but not limited to):
- The creation, governance, usage and design of GALA, including the source code, security and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that first created Gala Games;
- The supply, demand, maturity, utility and liquidity of GALA;
- Material technical risks associated with GALA, including any code defects, security breaches and other threats concerning GALA and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them; and
- Legal and regulatory risks associated with GALA, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of GALA.
Like all other crypto assets, there are some general risks to investing in GALA. These include short history risk, volatility risk, liquidity risk, demand risk, forking risk, cryptography risk, regulatory risk, concentration risk, electronic trading risk and cyber security risk. Each of these risks are described in more detail in our in-app Product Disclosure. As the founding team continues to play an important role in ongoing development of Gala Games, fixes to any issues or bugs with the blockchain’s operations may be dependent on the core team. Gala Games also presents higher short history risk and its value is tied, in part, to the popularity of the games within the Gala Games ecosystem. While the GALA ERC-20 smart contract is open-source, Gala Games has not open-sourced the Gala Node software nor have they provided comprehensive documentation explaining its technical characteristics. As such, if Gala Games stops operating, developing, or updating Gala Node software, the Gala Games ecosystem may cease to function, leaving GALA token holders without recourse.
The Gala Games team and community are not under any legal or regulatory obligation to disclose material information to the public regarding their activities. Holders of GALA have no recourse to Gala Games or Wealthsimple if GALA declines in value for any reason.
We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading GALA. Investors should perform their own assessment to determine the appropriate level of risk for their personal circumstances.
WDA is offering Crypto Contracts in reliance on a prospectus exemption contained in the exemptive relief decision Re Wealthsimple Digital Assets Inc. dated June 18, 2021. Please be aware that the statutory rights of action for damages and the right of rescission in the securities legislation of each province and territory of Canada would not apply to a misrepresentation in this Statement.