Scholarship System

The core mechanism where a Manager provides NFTs (e.g., Axies) to a Scholar who cannot afford the upfront cost. The Scholar uses the assets to play and generate in-game currency (e.g., SLP). The resulting revenue is automatically split according to pre-defined, on-chain smart contract terms (e.g., 70/30 Scholar/Manager split). This creates a trustless, programmable partnership.

All scholar activity and earnings are recorded immutably on the blockchain. Managers can transparently monitor:

• Daily/Weekly Yield generated per scholar or per asset.
• Win/Loss Ratios and gameplay efficiency.
• Payout History for accurate, dispute-free revenue distribution. This replaces manual spreadsheet tracking with verifiable, real-time data.

Revenue distribution is governed by smart contracts, eliminating manual payments and trust issues. Key functions include:

• Automatic Splitting: In-game earnings are routed to pre-set wallets based on the agreed percentage.
• Claim Mechanisms: Scholars can trigger a function to claim their share after a minimum threshold.
• Multi-Signature Controls: For large treasuries, multiple manager approvals can be required for withdrawals.

Systems include tools for vetting, onboarding, and managing a scholar cohort. This often involves:

• Application Portals: Where prospective scholars apply.
• Reputation Systems: Tracking scholar performance history.
• Asset Assignment Dashboards: For managers to allocate specific NFT teams to scholars.
• Communication Channels: Integrated chat or notification systems for coordination.

Modern scholarship platforms are evolving beyond a single game like Axie Infinity. They aim to be chain-agnostic frameworks that can support asset lending across multiple blockchain games and metaverses. This allows managers to diversify their NFT portfolios and scholars to access opportunities in various gaming economies from a single interface.

Features designed to protect the Manager's capital (the lent NFTs) and ensure fair play. These include:

• Escrow Contracts: NFTs are held in a secure smart contract, not the Scholar's personal wallet.
• Automated Slashing: Penalties for inactivity or violation of rules.
• Time-Locks & Cooldowns: Prevent scholars from immediately withdrawing assets after receiving them.
• Anti-Cheat Monitoring: Integration with game APIs to detect fraudulent activity.

The manager (or guild) acts as a venture capitalist, providing productive assets (NFTs) and infrastructure. Their return comes from the agreed revenue share, which must cover:

• Asset depreciation: NFT value fluctuation.
• Gas fees and operational costs.
• Scholar recruitment & management. Successful models require careful game selection, risk diversification, and scalable community tools.

Scholarships lower the barrier to entry for P2E gaming, which can require hundreds of dollars upfront. The process involves:

• Application: Scholars apply via guild Discord servers or platforms.
• KYC/Verification: Ensuring one account per person.
• Training: Learning game mechanics and earning strategies.
• Agreement: Signing a smart contract or terms for the profit-sharing model. This system enables global participation, particularly in emerging economies.

The model faces significant sustainability questions:

• Game Economics: Relies on continuous new player inflow or token sinks to maintain token value.
• Regulatory Risk: Could be viewed as unlicensed employment or securities issuance.
• Asset Concentration: Guilds holding large portions of game assets create systemic risk.
• Market Downturns: Sharp declines in token rewards can collapse the scholar-manager profit model, as seen in the 2022 Axie Infinity downturn.

The system formalizes the relationship between three key parties:

• Asset Manager (Manager/Guild): Owns the high-value, yield-generating NFT assets (e.g., Axie Infinity creatures). They provide these assets and manage the scholars.
• Scholar: A player who receives the assets, uses them to play the game, and earns in-game tokens or resources. They lack the capital to purchase the assets themselves.
• Smart Contract (Optional): In decentralized systems, an on-chain contract can automate reward splitting, asset escrow, and compliance, reducing trust requirements.

The economic engine of the system is a pre-agreed split of the yields generated. A common structure is a 70/30 split, where the scholar keeps 70% of the earned tokens (e.g., SLP in Axie Infinity) and the manager takes 30% as a fee for providing the capital asset. The split compensates the manager for the asset's cost, depreciation risk, and management overhead, while providing the scholar with accessible income.

Operational scale requires specialized tools:

• Guild Management Platforms (e.g., Yield Guild Games): Provide dashboards for tracking scholar performance, automating payouts, and managing large asset portfolios.
• On-Chain Coordination Tools: Use smart contracts for transparent, permissionless scholarship agreements, automating the distribution of rewards directly to wallets based on pre-coded rules.
• Analytics & Compliance: Tools to monitor scholar activity, prevent multi-accounting, and ensure adherence to game terms of service.

Scholarship systems solve critical barriers to entry in Web3 gaming:

• Democratizes Access: Allows players without capital to participate in P2E economies, often in developing regions.
• Asset Utilization: Maximizes the yield-generating potential of idle NFTs by putting them to work.
• Creates Micro-Economies: Fosters a labor market and management layer, creating jobs and complex economic interactions around game assets.

The model introduces several points of friction:

• Custodial Risk: Scholars typically do not hold the private keys to the assets, relying on the manager's trustworthiness.
• Regulatory Uncertainty: The manager-scholar relationship can blur lines between asset leasing, employment, and securities law.
• Game Economics Dependency: The entire model collapses if the underlying game's tokenomics fail or the play-to-earn rewards diminish significantly.

The concept is evolving beyond simple P2E:

• Delegated Staking: Analogous system in Proof-of-Stake networks, where token holders (delegators) lend their stake to validators (operators) to earn rewards, sharing them for a fee.
• NFT Rental Protocols: Permissionless platforms like reNFT and IQ Protocol enable fixed-term, collateralized renting of any NFT, applying the scholarship model generically across gaming, DeFi, and metaverse assets.

The asset owner (manager) bears significant financial and operational exposure. Key risks include:

• Asset Depreciation: The value of provided NFTs can plummet due to game economics or market shifts.
• Scholar Default: A scholar can underperform, disappear with assets, or violate terms, requiring robust on-chain verification and smart contract enforcement.
• Revenue Share Complexity: Manual profit-splitting is error-prone; automated systems via smart contracts introduce their own technical and gas cost overhead.

Players (scholars) face risks related to compensation and platform dependency.

• Unfair Revenue Splits: Opaque or manually adjusted profit-sharing can disadvantage the scholar.
• Account Seizure: Managers typically retain custody of the primary wallet, giving them ultimate control over assets and earned rewards.
• Lack of Provenance: Scholars usually do not build ownership history or reputation tied to the assets they use, limiting their ability to access other opportunities.

Automated scholarship platforms rely on smart contracts to manage assets and distribute yields, introducing technical risk.

• Code Exploits: Bugs or logic errors in the contract can lead to permanent loss of locked assets.
• Admin Key Risk: Contracts often have privileged admin functions; a compromised private key can result in fund theft or protocol shutdown.
• Oracle Failures: Contracts that depend on price oracles for valuation in profit calculations are susceptible to manipulation or failure.

The legal status of scholarship arrangements is often unclear across jurisdictions.

• Employment Law: Could be classified as an employment or contractor relationship, triggering tax and labor law obligations.
• Securities Regulation: If the shared rewards are deemed investment returns, the arrangement may fall under securities laws.
• Global Enforcement: Differing international regulations make consistent compliance and dispute resolution challenging.

The entire model depends on the underlying game's economic health.

• Inflation & Tokenomics: Poorly designed game tokenomics can lead to hyperinflation, rendering earned rewards worthless.
• Player Exodus: A decline in the game's player base reduces asset utility and resale value.
• Developer Actions: Game developers can alter rules, nerf assets, or change revenue models, directly impacting scholarship profitability.

Managing a scholarship program at scale introduces significant logistical challenges.

• Vetting & Onboarding: Screening reliable scholars requires time and effective reputation systems.
• Performance Tracking: Monitoring scholar activity and yield generation demands tools for transparent reporting.
• Payout Management: Executing frequent, small transactions for profit sharing accrues substantial gas fees on some blockchains, eroding margins.