From Gacha to Derivatives: Inside the $8B On-Chain TCG Investment Landscape

Author: Max Wong, IOSG Ventures

Over the past few months in 2025, the on-chain TCG (Trading Card Games) scene has gained much mindshare. Since 2019, the TCG landscape in general has been rapidly rising in prominence, yet little know that TCG’s have been around for more than 50 years, and the ecosystem is actually extremely mature, with it being comparable to the sneakers / watches market in size. This piece should catch everyone up to date on the TCG scene, the angels within the space and their respective sizes, and aim to provide an outlook and thesis to our internal operations.

Key Insights/TLDR;

TCG is a real asset class, not a fad.

Global TCG is already a $8–10bn market, comparable in size to sneakers and below watches, with ~8% CAGR and 25+ years of cultural depth (Pokémon, MTG, Yu-Gi-Oh).

Offchain TCG Market structure is skewed and grey-market driven.

Supply flows from publisher → distributor → big-box / legacy shops → grey market → retail. True collectors rarely touch MSRP; ~50%+ of volume/price discovery happens in the grey market, pushing sustained upside on sealed and singles.

Grading is a huge, concentrated picks-and-shovels business.

• ~1.5m items/month @ ~18m/year @ ~$40/item: this is a ~$720mn annual industry with PSA holding ~77% marketshare.
• ~65% of grading volume is TCG, and slabs are the financialization layer that turns cardboard into tradable “assets.”

Sealed packs/product dwarfs Gacha in market size.

• For Pokémon alone: ~10B cards → ~1B packs/year at blended price of ~$15 → ~$15bn in sealed pack sales vs ~$800bn gacha. Gacha is loud on CT; sealed is the true economic heavyweight.
• Targets hardcore fans/TCG collectors who are much more retentive and sticky than Gacha gamblers.

Hardcore fans/TCG collectors (rip.fun’s consumer base) are willing to go digital and have immense spending power

• $1.3bn spent on digital Pokemon Pocket packs that have no monetary value
• $3bn GMV for whatnot (users buy packs from streamers who open it live for them) even with major trust issues which rip.fun solves)

Direct quotes from gacha heavyweights (Collector Crypt, Beezie) show they are not looking to enter into sealed products / live rips market

The opportunity: build infra, not just another casino. Biggest upside is in:

1. Access rails (fair onchain allocations, fractional box ownership, live rips at near-MSRP),
2. Liquidity rails (vaulting, tokenization, MM/AMM layers for slabs/sealed), and
3. Derivatives/credit (perps, indices, options, lending on TCG collateral).

On-chain TCG splits into four main verticals:

1. Gacha platforms (Courtyard, Collector Crypt, Phygitals) — unofficial TCG packs built from secondary market slabs. Big 3 already do ~$750–820m annual GMV at ~10% net margin, skewed 80/20 toward gamblers vs fans.
2. Digitized sealed/live-rip platforms — vault and rip official SKUs (packs, ETBs, boxes) with card management + grading flows, serving hardcore fans/collectors. Ops-heavy but much higher ARPU and stickiness.
3. Money markets — use tokenized slabs/sealed as collateral so collectors/shops can borrow instead of selling; PocketDex is the natural “portfolio + risk UI” to plug into lending rails.
4. Perp markets — synthetic exposure on TCG indices/sets; Trove is the leading example, offering perps on Pokémon indices and CS2 skins for hedging and speculation.

Context and Introduction

Firstly, what is TCG? TCG (Trading Card Games) is a type of collectible card game where players build and customize their own decks to compete against others. Players acquire new cards through booster packs, which contain a random assortment, or by trading with other players. However, aside from being a competitive game, individual TCG cards, due to it’s limited nature, have become collectibles, similar to artwork.

Some popular TCG games include:

Pokemon TCG — Est 1996

Yu-Gi-Oh TCG — Est 1996

Magic The Gathering — Est 1993

Giving the size of the TCG market some context; when the TCG with other popular collectibles in the market, it’s market size is quite in line with the dominant categories.

Currently, most reports place the annual TCG market in the ~$8bn — $10bn range and estimated to grow at a CAGR of 7.8%

TCG Market Structure and Landscape

Currently, the TCG market can be structured into off-chain TCG experience and on-chain + digitized TCG experience, both with different players. Evidently, the off-chain market is much more established, however the on-chain / digitized TCG environment has also been growing drastically in popularity. By all accounts, the TCG market as a whole in basically every segment is hitting all time highs.

Offchain

Bottom Up View:

1. TCG publishers / factories
2. Distributors
3. Shops: Official TCG Retailers; Secondary market shops
4. Scalpers/Grey Market
5. Retail
6. Grading Companies

At present, this is more or less how the current flow looks like. The TCG Publisher / factories produce official packs and sealed products which then gets given to distributors. Distributors then allocate to shops/official TCG retailers such as Walmart, Target etc. or mom and pop stands. However, due to the huge demand and popularity of these items, such products get purchased in bulk by scalpers, who then go on and sell to true collectors/retail at a premium.

Shops <> Distributor Relationships

Regarding the relationships between shops and distributors, it is incredibly hard for new individual shops to get any sort of meaningful allocation from distributors, as demand is incredibly high. Most product goes to large players such as target/walmart, or shops with long histories and good relationships, with very minimal remaining product going to smaller mom and pops. As a result, many smaller shops buy from larger shops with better distributor allocation e.g,

• Shop A has an allocation of 5000 packs per month from the distributor
• Shop B has 100
• Shop A buys 5000 packs from distributor at MSRP
• Shop B buys 2500 packs from shop A at 15%+ MSRP
• Shop B sells to scalper/retail at 50% MSRP

Additionally, it is important to differentiate the types of shops. You have large shops such as walmart/target who sell at MSRP to the market. However you also have examples like Shop A and Shop B above who are individual brands that have distributor allocations, and sell to market at 10%-50% markup. In general, it is almost impossible for true retail collectors to get sealed product direct from Target/Walmart, and they often have to go to these smaller mom and pops or go completely grey to get product.

Grey Market

The grey market itself is 50% of the TCG market, or by some accounts, pushes even more volume than the main market. This is largely encapsulated by scalpers, eBay sellers, Whatnot / live breakers, Facebook/Discord sellers, and informal Telegram/Instagram networks that sit between official shops and true end collectors.

Instead of getting product from distributors, grey-market participants usually source from:

• Big-box retail (camping Target/Walmart restocks, store-hopping, etc.)
• Allocated shops like Shop A that flip part of their allocation at a markup
• Liquidating collectors/shops who need quick cash and are willing to accept a discount

Grey-market actors then repackage and remarket product in several ways:

• Flipping sealed cases/ETBs/booster boxes at a premium
• Running breaks e.g on Whatnot (you buy slots instead of whole boxes, often at a big implied markup)
• Grading and flipping singles on eBay/TCG player, or via consignment with bigger sellers
• Gacha curators

Because true retail cannot reliably access MSRP product, the grey market ends up being where price discovery actually happens. Distributors and big-box stores nominally sell at MSRP, but most of the economic surplus is captured by intermediaries extracting the secondary market premium from retail collectors. This also means that in hot releases, effective prices are set by grey-market clearing levels, not by Pokémon’s official MSRP. As a result, this has resulted in massive upwards price pressure for the whole TCG industry.

Pokemon Market Index

• Up 21.3% in 3 months
• Up ~250% in a year and a half

Grading

Grading companies sit as a layer on top of the entire off-chain TCG stack. They rarely touch sealed product or distributor allocations directly; instead, they receive raw singles from shops, breakers, and collectors, and convert them into slabs with standardized condition grades.

The main grading companies are:

• Professional Sports Authenticator
• Certified Guaranty Company
• Sportscard Guaranty Company
• Beckett Grading Services

Cards are graded on a scale of 1–10, with 10 being mint condition, and heavily affect a card’s value. E.g an ungraded raw card worth $100 could be worth $2000 if it was sent in for grading a received a PSA 10. Thus, the large majority of collectors and rippers choose to send in their high value cards for grading.

We can see here the amount of cards graded month by the big 5 grading companies. Since 2021, average monthly graded items have steadily increased M-o-M until present, and in discrete terms, has doubled than doubled in volume.

• ~1.5 million items per month
• ~18 million items annually not factoring in growth
• @ ~$40 dollars per item

This is $720 million annual industry dominated by 4 companies and more than 65% of this grading volume comes from TCG alone.

As for marketshare breakdown, PSA clearly is the leader here:

• PSA: ~77.5%
• CGC: ~11.1%
• SGC: ~8.8%
• Beckett: ~2.7%

Onchain + Digitized TCG

Now moving on to the onchain + Digitized TCG landscape, it can be broken down to:

• Gacha Platforms
• Sealed Products/Live rips and card management platforms
• Money markets
• Perp markets

Gacha Platforms

Evidently, Gacha platforms have been the centre of attention for most of CT, considering how crypto-adjacent these platforms inherently are. So what are Gacha machines?

In general, Gacha machines unofficial products curated by the third parties (Courtyard, Beezie, etc.). Gacha platforms pick and choose cards from the secondary/grey market, buy it for inventory and curate unofficial packs from them.

However, at its core, Gacha is just randomized item distribution for a fixed price. The term comes from Japanese capsule toy machines: you insert a coin, twist the knob, and receive a random toy from a known pool. For TCG, you buy a “spin” from a platform that returns random graded cards.

• You pay a fixed amount (e.g. $3 per “pull”)
• You get one or more cards drawn from a predefined pool
• The pool has different rarity tiers and probabilities (common / rare / ultra-rare)
• The whole economy is built around chasing specific rares or rolling multiple times

Thus, pricing by Gacha platforms for each spin is based on an EV mechanic:

• Items i = 1 … n
• Drop probabilities Pi (sum to 1)
• Secondary market fair value Vi (what you could actually sell it for, net of fees)
• Price/platform charge per pull P

Then the expected value to the user of one pull is

EVuser=∑pi⋅Vi

Hence the overarching goal for platforms is

P>EVuser

And the house edge

House Edge=P−EVuser

is effectively the platform’s margin per pull.

• The chase cards / heavy hitters contribute most of the EV.
• Commons/uncommons are almost EV-zero.
• Retail price per pack is set above the probability-weighted resale value of content

Some insight we received from Beezie / Collector Crypt (Verbatim)

“Net margin for most Gacha platforms is effectively ~10% of gross spending on Gacha machines. The reason for this is we typically buy cards/slabs in bulk from grey market shops looking to offload inventory @ 90% market value, then use this inventory for our Gacha machines.”

On Flow

Consumer:

1. Players deposit USDC/Crypto
2. Select and Buy Gacha pack they want to open
3. Sell received card back to platform for 90% MP or redeem physically
4. Receive card physically if redeemed

Platform:

1. Buys cards off grey market dealers in bulk or marketplaces for a discount
2. Curate Gacha packs and figure price pack based on EV
3. Buy card back from consumer or send to them if redeemed physically
4. Repeat

So what actually matters for the Gacha platforms here?

• Having a steady supply of graded cards that they can get at below market price
• Being able to curate +EV gacha machines that people still want to gamble on

In general, the few big players within the space can be broken down into:

Courtyard.io:

Users: ~250k

Gross Platform Spend (YTD): ~$536.5mn

Gross Income (YTD): ~$53.6mn

Collector Crypt ($CARDS):

Users: ~10k

Gross Platfrom Spend (YTD): ~$150mn

Gross Income: ~$21mn

Phygitals:

Users: ~20k

Gross Platform Spend (YTD): ~$61mn

Gross Income (YTD): ~$6.1mn

As a result, gross Gacha Industry Spend by the big 3 is $747.5mn, already eclipsing the subsector of the grading card market which has been integral to the industry for 10 years.

In general, volume distribution and growth over the past year for the whole Gacha industry looks like the below.

Sealed Products/Live Rips and Collector Card Management Platforms

Another recent new vertical within the onchain TCG space is sealed packs/live rips and card management platforms. So how is sealed packs/live rips different from Gacha?

In general, unlike Gacha machines which are unofficial products curated by third parties, sealed products are the official printed products by the publisher (Pokémon, MTG, etc.). They typically have limited quantities, and in Pokémon, often have these standardized offerings:

• Individual Packs (10 cards in one pack)
• Booster Boxes (36 Packs)
• Elite Trainer Boxes
• Tins
• Boxes

As such, sealed-pack / live-rip platforms are selling official TCG products rather than a synthetic prize pool the way gacha does. When you buy a sealed pack or booster box you are (in principle) buying exposure to the original factory collation and hit rates that Pokémon or MTG designed. The platform’s role is to source and custody these sealed products, match them to buyers, and then rip them on demand, rather than to remix the underlying cards into a custom “house-designed” gacha pool.

Further, why does sealed products/live rips products cater more towards hardcore fans?

• Sealed products are often limited in nature and only fall into specific series with specific production dates
• Collectors and fans chase cards from specifc series, so are only looking to open sealed products
• Collectors/fans want to get raw cards graded themselves, and in order to get raw cards, they need to open sealed packs

On the Flow

Consumer:

1. Players deposit USDC/Crypto
2. Select the official sealed pack they want to open
3. Wait for platform to open pack and watch live opening
4. Sell received card back to platform for 90% MP, redeem physically or ask platform to send out for grading
5. Receive card physically if redeemed / Wait for grading to return

Platform:

1. Buys official packs direct from distributors or other shops with distributor allocations in bulk
2. List packs for a set amount of margin (10%-50%)
3. Physically open packs, store cards and manage them
4. Buy raw card back from consumer, send to them if redeemed physically or send them out for grading
5. Repeat

So what actually matters for the sealed products/live rip platforms here?

• Having a steady supply of distributor relationships that they can rely on to get sealed product t MSRP, or a network of shops that will give them their allocation
• Warehouse/infrastructure setup to actually physically manage the pack opening process and prove these packs are real
• Offering sealed product at a reasonable price that will attract consumers fans to purchase

In general, the overhead for these sealed products/live rips platforms are much higher than Gacha. Whilst Gacha platforms also need to manage and store cards, they don’t have to deal with sourcing official packs (which is a huge capacity constraint), actually opening them, scanning cards, helping clients send off for grading etc. This requires huge operational expenses stemming from execution + warehouse costs.

To quote Beezie and Collector Crypt (verbatim):

No interest from both ends to enter the live rip market and sealed products market

Very specifically asked them, and they said no

All Either

Didn’t have too much knowledge of the space;

Think the operational burden is too high, and doesn’t know how to get the infrastructure set up

Doesn’t have the distributor relationships

They are heavily developing more Gacha lines towards non-Pokemon TCG products, rather than the sealed pack routes. However, this also means that players who can enter this space effectively have massive moats, and can dominate the market easily.

So to recap, main differentiators:

Insights from John @ Cardmint

He’s one of the largest buyers and suppliers of graded slabs for Courtyard, Beezie etc, does millions of volume per month and (Ex-engineering at Chainlink)

Gamblers / Fans distribution for onchain TCG is 80/20

However, even though the number of fans is less, they are much more retentive and sticky than gamblers, and have immense spending power

Consumer Preferences and Sealed Product Demand

It’s also important to touch on consumer preferences for Gacha v Sealed Products/live rips. Whereas Gacha products cater more towards gamblers/web3 enthusiasts who simply care about the value of the graded card they get and not the actual card itself, consumers who buy sealed products and live rips are more so hardcore fans of the specific TCG series. Objectively, there is demand for Gacha, so the main question here is, is there demand for sealed products and does the core TCG fanbase have spending power/willigness to spend as Gacha buyers?

Some Key Datapoints:

Pokemon Pocket is an official Pokemon app that is the casual digital version of Pokemon TCG. Players spend money to open packs digitally, however there is no monetary value to the cards, nor can the cards be physically redeemed. It is just for memorabilia.

• $1.3bn in it’s first year
• 18 million packs opened

Additionally, Whatnot is already doing billions in GMV. On whatnot, Pokemon fans pay streamers to open packs live, and have them ship the cards to them.

• 3bn GMV in 2024
• 6bn GMV in 2025 (Exp)

Further, Whatnot suffers from massive trust issues. Sellers on whatnot often steal cards, weigh packs or switch out cards before sending to their viewers. Yet, TCG fans are still willing to spend this much on their platform to get access to sealed product.

Both of these objectively present that hardcore TCG fans are willing to not only give up the physical experience of ripping packs with their own hands and go digital, but also shows the spending power of this consumer base and the the dedication of these fans to the game. Pokemon Pocket packs literally have 0 monetary value and this core fanbase are still ripping them.

Hence, on the onchain live rips/sealed packs end; yes this inherently caters alot more to hardcore fans, however these hardcore fans have way more immense spending power and is willing to adapt to the digitized experience. It’s clear that hardcore TCG fans have a very big appetite for general sealed products regardless if they’re digital or physical.

Anecdotally on the market end, we also see massive demand drivers.

Pokemon TCG cards at retail stores sell out immediately, and retailers (Walmart, Target etc.) often have to limit quantities per person.

Gacha vs Sealed Products Market Size

Although the TCG market is not only Pokemon, most Gacha platforms only offer Pokemon Gachas. Hence for an apples to apples comparison, only Pokemon TCG will be considered.

Sealed Products

• Pokemon TCG printed 10 billion cards in 2024
• ~50 mn players/buyers estimated
• 10 cards per pack → 1.02 billion packs a year
• ~$15 per pack (mixed pricing of MSRP + Grey Market)

~$15 billion annually in sealed pack sales

Gacha

The big 3 dominate the industry and have 90% marketshare.

~$747.5 mn annually in Gacha sales. If adjusting for other players ~+10%, Gacha would be a $822.5 mn industry.

The sealed product industry is much larger than the on-chain gacha industry.

Money Markets

Money markets are also something that has only just started to be explored around onchain TCG, but logically sit as the next layer once cards are properly digitized and vaulted. The core idea is simple: turn slabs and sealed product into collateral, so collectors and shops can borrow stables against their collections instead of being forced sellers every time they need liquidity.

In an onchain TCG money market, tokenized TCG assets (vault NFTs / ERC-1155s representing slabs or sealed) can be deposited into a lending protocol, and users can borrow USDC or other liquid assets against them. This requires:

(i) robust floor/index pricing

(ii) conservative LTVs to account for reprint risk and pop-report shocks

(iii) enough secondary liquidity that liquidators can actually offload collateral

This is where something like PocketDex becomes a natural fit in the stack: PocketDex-type products already act as card databases + portfolio trackers for Pokémon/TCG collectors, aggregating card info, prices, and user collections in one place. If you plug that view into onchain vaults and lending, PocketDex can effectively become the discovery + risk UI for money markets:

• Users see their tokenized collection, live marks, and suggested borrowing power;
• One click routes them into a lending protocol to open a line of credit against specific slabs/sets;
• Repayments, health factors, and liquidation warnings can all surface in the same “collector app” they already use daily

For collectors, this feels like margin on their collection. For shops and breakers, it behaves like a warehouse line backed by vaulted inventory, letting them smooth cashflow and scale operations without fire-selling grails.

Perp Markets

Perp markets extend this one step further by letting people trade pure synthetic exposure to TCG prices, long/short, with leverage, without ever touching a physical card. Instead of buying and vaulting an Evolving Skies box, a trader can go long an “EVSK Box Index Perp”; instead of building a huge Charizard portfolio, they trade a “Charizard PSA-10 Index Perp.”

Trove is the clearest live example here: it’s a decentralized perpetual futures exchange specifically for collectibles, starting with Pokémon card indices and CS2 skins, and offering up to ~5x leverage. Trove aggregates pricing data from major marketplaces, builds onchain indices (e.g., Pokémon Card Index, Charizard PSA-10 benchmark), and lets users long or short those indices via perps. In practice this:

• Gives collectors and shops a way to hedge downside on their physical/vaulted inventory (short Trove when they’re long cardboard);
• Lets traders express views on sets, eras, or the overall Pokémon market without dealing with grading, shipping, or storage;
• Creates an arbitrage loop between physical spot, tokenized spot (Courtyard / Collector Crypt / Phygitals), and derivatives.

What really matters here is index construction and data quality: if Trove (and similar platforms) can become the canonical pricing and hedging venue for TCG, then perps turn cards from illiquid collectibles into a tradeable macro surface. Combined with money markets, you end up with the full stack: hold → borrow → hedge → speculate on TCG exposure entirely onchain, with Trove as the derivatives layer sitting on top of the vaults, gacha platforms, and sealed/live-rip rails.

Thesis and Angles to Look At

In general, it’s clear that there’s massive demand drivers for offchain TCG, that we have seen that has started to foster an on-chain TCG climate. In most views, the value of crypto to society is to abstract away the difficulties we see in the traditional finance landscape, and to offer new opportunities to expand the frontier of financial technology. And in many respects, this is also the same relationship between offchain TCG <> onchain TCG, with the latter being there to reduce the friction largely seen for consumers and the TCG fanbase, and also offer greater usecases, opportunities and access to their hobby.

We can also deduce that this market is here to stay; the value is there for capture and this market is ripe for opportunity. This is not simply a new hobby/market, TCG’s has been popularised over the past 25 years since it’s inception and the cards/collectibles have turned into valuable assets much like artwork or NFTs.

Magic the Gathering, Black Lotus- PSA 10: $3 million sale price

Pokémon, Pikachu Illustrator — PSA 10: $5.25 million sale price

With that being said, there appears to be multiple interesting angles to look at:

1. Products that bridge the supply <> demand issue for retail

Right now, retail demand is very much under-served: big-box + distributors allocate most supply to whales, and well-connected shops, while true collectors are pushed into the grey market and are forced to pay a big premium. Onchain + digitized TCG infra can directly attack that. Gaining access here means: giving retail a credible, fair, and near-MSRP path to sealed product or rips

Examples of product directions:

Onchain live rip platforms, where a collector / fan is able to directly buy and rip packs online for a small premium, whilst still being able to redeem their physical cards if they want to

• Removes the need for retail to camp Target;
• or pay 2–3x markup to scalpers

Pack-or box-share fractional ownership, where a retail user can buy a slice of sealed inventory (e.g., 1/36th of a box) at a sane price instead of overpaying for a full box they can’t afford.

Aggregator rails that source at scale from distributors / large shops, then repackage access into smaller, fairer chunks for global retail, rather than relationships.

Onchain queues / raffles / allowlists for sealed product, where each wallet has capped allocation and transparent odds.

These products don’t necessarily change the total supply of Pokémon, but they can radically change who actually gets to touch it, and at what effective price.

2. Platforms that increase overall instant liquidity for the TCG market

Most off-chain TCG value is stuck in slow, high-friction form: physical collections, slabs in someone’s closet or sealed cases in storage. Selling usually means eBay listings, fees, and weeks of delay. Onchain card-management + vaulting platforms flip that into instant, programmable liquidity.

The core play is: vault physical → tokenize → plug into DeFi-like rails.

• Platforms that allows for slab vaulting and tokenization, allowing it to be traded and transferred 24/7 without physically moving the item.
• Live-rip solutions can immediately push hits into a user’s digital inventory, ready to list, auction and collateralize.
• Yield vault platforms that act as MMs between different marketplaces that can stand on both sides of popular SKUs (chase cards, key slabs, flagship packs), tightening spreads versus eBay and enabling instant sell rather than “wait 10 days for auction to end.”

This unlocks:

• Faster turnover for shops and collectors.
• Global price discovery instead of fragmented local pricing.
• The ability to compose TCG assets into other protocols (lending, AMMs, indices, etc.), which is impossible if everything lives as raw cardboard.

3. Auxiliary products that build on top of the on-chain TCG market and allow for derivatives

Tying into the final point above; once TCG assets are properly digitized (NFTs, vault tokens, price feeds), you can start building derivatives and structured products on top turning the collection into a proper financial primitive.

Examples of what this layer could look like:

Perpetuals / futures on:

• Indexes of top graded cards (e.g., “Top 50 Pokémon slabs index”)
• Specific sealed products (e.g., evolving skies booster box perp)

Options or vault strategies that let users bet on volatility or upside of a set without holding specific cards

Money markets using slabs / sealed as collateral, where floor-priced cards are risk-managed by robust oracles and liquidators

Prediction markets around releases, reprint risk, or PSA pop growth, letting traders hedge or speculate on meta factors that drive TCG prices

These auxiliary products don’t compete directly with Gacha or live rips; they sit on top of them. Gacha and sealed/live-rip platforms handle primary engagement and inventory ingestion, while derivatives and money markets handle risk transfer, leverage, and hedging. Together, they shift TCG from a niche collectibles ecosystem into something that increasingly resembles a proper, multi-layered, onchain financial market.

From Gacha to Derivatives: Inside the $8B On-Chain TCG Investment Landscape was originally published in IOSG Ventures on Medium, where people are continuing the conversation by highlighting and responding to this story.