Hat Swap City in the Bear Market

For the followers of Hat Swap City, a needed update. It’s early July and the market has crashed over 50% since we launched the alpha market plaza. Everyone in crypto is feeling the burn, and I hope that you have not been adversely affected by the tragic destruction of retail in Celsius, LUNA, and many other recent disasters. This blog post is a formal update from myself to you, the citizen, about what the strategy for Hat Swap City is now, the setbacks we have faced, and what we have accomplished.

First, a brief timeline of the frenetic pace I have led this project.

August: Wrote product whitepaper.
September: Produced NFT series.
October: Launched NFTs, produced a innovative token with reflections to NFT holders.
November: Launched innovative token, minted out NFTs.
December: Beta of Hatman core game.
January: Formation of Corporation, hired a stack of developers and artists.
February: Full Hatman core game released, p2e launch failure.
March: Hat Swap City Alpha released.
April: In-game videos and partner NFT integration added to HSC.
May: Finalize NFT series 2, massive administrative work for taxes.
June: Launch NFT series 2.

The strategy was to work like madmen, knowing that a bear market was just around the corner. In December, I decided to be as aggressive as possible to build and launch quickly.

Where we are now.

It’s now July and the major market downtrend has adversely affected our ability to profitably sell NFTs to raise more money quickly. When I hired the first team of builders and marketers in September, they were paid on sales commissions as I had no capital to run with. Every sale was worth 3x as much per BNB and people were 10x more active on chain. Due to this, I generated a substantial profit, paid my team, and then had runway to build out to the alpha. The strategy was then to secure VC funding and/or sell a second NFT series.

The reality of the situation is that while NFTs can sell, it is a full-time job for 1–2 guys and also requires marketing budget. Gio and myself would be the people to operate that part of the business, but with the market as it is, it is extremely difficult to pay us two a living wage with enough profit to pay for marketing AND development. Continuing at this pace, we may mint out all 5k in Q3 of this year but have almost no more development. I don’t want to sell people products and know that it won’t fund more features.

I have had many conversations with excellent VC firms and they all believe HSC is too early for the market. The core business model of HSC necessitates mass adoption of blockchain enabled gaming universes in order to effectively draw thousands of active daily players into the City. Currently, even AXIE has crashed to nearly 0. People right now are still trying to prove that there is a market in the West for blockchain games, so I think it is a fair assessment that while us, the crypto native degens see the possibility, the realistic expectations of sustainable revenue generated out of HSC (which is a costly enterprise to build), is still 2+ years in the future.

What We Have Accomplished.

I’m extremely proud to say that we have been responsible project developers and have accomplished a great deal more than many NFT or token projects in terms of raw development from 0. Two Web3 games. An Innovative token. Two NFT series. A great community. All of this done in roughly 9 months.

While it is obvious there were many setbacks (which I’ll talk about) and we all want HSC to be MORE, NOW, when I look at the crypto landscape today what I see is 99% husks with 0 product despite promising it all. In our case, we could not develop the vision fast enough to dodge the market crash and secure another significant capital infusion.

Setbacks.

The main setback for our company has been technology problems and taxes. Since the launch of Hatcoin, I became aware that our technical team was struggling. There were errors in the Hatcoin contract that still cause users issues today. I tried to remedy this issue by hiring a CTO and a larger team of dedicated developers. Despite this, we had the following challenges:

• Blockchain engineer turned out to (essentially) be a fraud, never delivering a fully integrated p2e system that he had said would be ready by January.
• Same blockchain engineer timerugged the release of NFT series 2 by a MONTH to do a couple days of work on the minting Dapp, losing community interest and thus momentum when we released the new series.
• Lead Engineer made a good push to get up the Alpha in March but we have been unable to transition critical information from him to new leads.
• High turnover rate with junior developers.

As the Founder & CEO I assume responsibility for the failure of the technical department. It has been the stinking albatross weighing our head down ever since the first Hatman delay in December. I feel that the right strategy was employed (beef it up and replace myself as a CTO), but that the hires we made were clearly not good.

Furthermore, it’s somewhat unfortunate that we had to spend so much time and focus on Hatman. The promise of Hatman and a token brought a lot of attention to the project but ultimately it stole features out of the City. Something of a poison pill, because Hatman attracted the wrong userbase.

What Is The Plan Now?

Good news: faith is strong in the vision.

The plan is simple. Gio and I are firing up our normal careers to feed the village. Once those are secured, we will use the NFT series as a way to steadily rebuild a warchest and continue development. This is a long term strategy that can work. This will effectively make every BNB of net profit turn into game features instead of paying for organizational leaders and marketers to promote the NFTs.

Simply put: we are at a standstill in terms of development until we can sell NFTs and bank it for the company, instead of paying founder salaries.

Speaking for myself, I’m in interviews with great companies. I hope that within the next couple of months I’m able to cut out 20 hours a week to keep pushing the project along and fund continued development.

Q: Does this mean HSC is over?

A: Development is paused while we pivot into a longer-term strategy that’s more sustainable in the bear market.

Q: How long will the servers stay up?

A: I’ll be taking down the game servers soon, until we can roll out enough features on a beta to make them more engaging to play.

Q: What about my hats/tokens?

A: I’m thinking of ways to provide value to holders. I have some people requesting BSC shitcoins and if there’s demand from the community, I could get free whitelist spots on those coins to holders.

Q: Is BNB the right chain for this project?
A: Ultimately, I don’t think so. All of us BNB people have realized that most people active on-chain are just in it for quick ponzi and there isn’t a very sustainable gaming or NFT market. If we do transition to a new chain, NFTs will be airdropped 1:1 on the new protocol.

Thank you all for your involvement in HSC. It’s a transformational experience for me to produce this work and have real, earnest interest from an international audience. I have deep respect and appreciation for the community and felt it was important to give this update as soon as it was clear that this is the strategy direction going forward.

Alonso