CryptoKitties secures $12m for Ethereum-based virtual game

Blockchain-based virtual game CryptoKitties has raised $12m in Series A funding from a group of investors led by Andreessen Horowitz and Union Square Ventures. The digital-collectibles platform utilises Ethereum’s ERC-721 protocol and allows users to buy, sell, collect, breed and swap virtual cats. It is estimated that more than $23.2m worth of CryptoKitties’ virtual cats have been sold by consumers since the game’s inception.

CryptoKitties, the viral Ethereum-based virtual game, has raised US$12 million from a roster of prominent investors as it’s being spun out as a new company, breaking away from Canadian venture-studio Axiom Zen.

Andreessen Horowitz and Union Square Ventures led the Series A funding round which also included participation from top-notch angel investors Bill Tai, a renowned venture capitalist, Naval Ravikant, the CEO and founder of AngelList, Mark Pincus, the founder of Zynga, and Fred Ehrsam, the former founder of Coinbase, among others.

Commenting on his firm’s investment into CryptoKitties, Fred Wilson, co-founder of Union Square Ventures, wrote in a blog post:

“At USV, we think digital collectibles is one of many amazing things that blockchains enable that literally could not be done before this technology emerged.

“We also think digital collectibles and all of the games they enable will be one of the first, if not the first, big consumer use cases for blockchain technologies.”

Launched in November 2017, CryptoKitties allows users to buy, sell, collect, breed and exchange unique virtual cats. CryptoKitties utilizes Ethereum’s ERC-721 protocol, a non-fungible token standard originally authored by the CryptoKitties team.

The game quickly rose to fame with rare kitties going for well over US$100,000. At some point, CryptoKitties became the largest decentralized application on the Ethereum protocol, accounting for more than 13% of the network’s transactions. The craze peaked to the point that initial coin offerings (ICOs) could not launch due to network congestion caused by the sale and trading of digital kittens on CryptoKitties.

According to a third-party estimate, consumers have made 331,722 CryptoKitties transactions, selling more than US$23.2 million worth of virtual cats since the platform’s inception. For each transaction, the company charges a 3.75% commission of the total value, according to the Terms of Use.

CryptoKitties made its debut in China, Hong Kong and Taiwan earlier this month.

Since CryptoKitties introduced the concept of cryptocollectibles, a horde of similar blockchain-based virtual games have launched to tap into the mania. These include CryptoCelebrities, CryptoPuppies, CryptoPets, Cryptobots and CryptoBunnies by China’s smartphone maker Xiaomi.

Most recently, e-commerce startup Rare Bits launched a peer-to-peer marketplace for crypto-based assets and cryptocollectibles.