DeFi meets NFT with Aavegotchi

Aavegotchi is a new crypto collectibles game that combines elements of Decentralized Finance (DeFi) and Non-Fungible Tokens (NFT’s). The team behind the project is Pixelcraft Studios, a Singapore-based game development company backed by none other than Aave protocol.

In short, Aaavegotchi allows players to stake NFT tokens in the form of avatars for interest-earning aTokens. Furthermore, players can use the avatars to interact and earn rewards within the game’s metaverse.

What is an Aavegotchi?

Aavegotchis are rare crypto-collectibles that exist on the Ethereum blockchain. They take the form of the ERC-721 standard tokens which can be found in popular blockchain games such as Cryptokitties, Decentraland, The Sandbox, Cryptovoxels, and Axie Infinity.

Within the Aavegotchi universe, three key attributes determine the value and rarity of a token.

Into to Aavegotchi

Collateral Staked

Firstly, each Aavegotchi NFT is connected to an escrow address which holds Aave backed aTokens as collateral. The aTokens within the wallet generate compounding yield through the Aave protocol. Therefore, over time, the number of aTokens within the wallet increases.


To begin with, Aavegotchis come with traits that determine their rarity. At first, Aavegotchis are assigned six randomly generated traits.

  • Aggressiveness
  • Energy
  • Spookiness
  • Brain Size
  • Eye Shape
  • Eye Color

Additionally, these traits change over time as Aavegotchis level up through interactions within the metaverse, or by performing well in mini-games. As a result, this encourages players to be active participants in the games.


Equally important, wearables can be equipped to increase rarity and value. However, some wearables are exclusive and Aavegotchis need to meet certain requirements to be eligible to wear them. These requirements may include acquiring certain collaterals and traits.

aavegotchi metaverse

What makes Aavegotchi valuable?

First of all, the value of an Aaavegotchi acquires value from both its rarity and intrinsic value.

Rarity Value

Generally speaking, it’s in the owners’ best interest to increase the rareness of their Aavegotchis. That is because rare Avegotchis command a higher secondary sales value, and perform better in rarity farming, a mini-game that rewards participants with GHST tokens.

Intrinsic Value

In short, this refers to the value of the Aavegotchis staked collateral. In other words, when aDai is staked within the Aavegotchi, the intrinsic value would be the staked aDai plus the extra aDai accurred through the Lending Pool.

GHST tokens

Ghost (GHST) is the base currency of the Aavagotchi ecosystem. They act as the games utility tokens and required to buy portals to summon Aavegotchis, as well as, purchasing wearables and collectibles.

Furthermore, owning GHST tokens come with added benefits.


To obtain wearables, users can stake their GHST tokens in return for FRENS tokens. Notably, FRENS tokens can only be obtained through staking and cannot be traded or purchased. Obviously, this is to incentivize users to stake.

There are two methods to stake.

  • First of all, users can stake directly on the Aavegotchi site. And, in return achieve a ratio of 1 GHST to 1 FREN per day.
  • Alternatively, users can stake on Uniswap through Matic to receive rewards of 14 FRENS per day.


Aavegotchi is working towards decentralized governance. With this intention, GHST holders have the power to vote on proposals and influence the future of the project. And, in return for participating in governance, token holders will receive GHST tokens as a reward.

There are two ways to vote.

  • Snapshot voting, through the Aavegotchi Snapshot page. This method remains off-chain and does not require gas fees,
  • Aragon voting, by means of the Aragon tool. However, this is an on-chain method and requires gas.
Aavegotchi game

Rarity Farming

Rarity Farming is a novel game mechanism that rewards users for active participation and raising rare Aavegotchis within the metaverse.

There are a number of ways to particapte in Rarity Farming.

  • Carefully selecting Aavegotchi with rare traits.
  • Enhancing traits by equipping wearable.
  • Interactions and engagement in mini-games.

With this in mind, the distribution of player rewards occurs every two weeks, with all results voted upon by the AavegotchiDAO.

For this reason, rarity scores are constantly shifting so players have to make strategic decisions on training and equipping wearables.


While, there are other projects that combine DeFi and NFTs, they mainly focuse on financial aspects.

On the other hand, Aavegotchi emphasizes crypto-collectibles. And in doing so, creates a more compelling and playful experience.

Furthermore, the addition of wearables and traits brings a whole new dimension to liquidity mining, as well as a strategic dimension.

All in all, Aavegotchi could very well be the missing link between DeFi and NFT’s.

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