IOSG Ventures
Published in

IOSG Ventures

Metaverse 2021 Panel Recap | GameFi: Bringing the Next 10M Crypto Users?

On December 19, 2021, at the 8th Old Friends Reunion Metaverse Carnival, “GameFi”, as the recent talk of the town, has been brought to the table by these pioneers. They are Gabby Dizon, Co-founder of Yield Guild Games; Jason Brink, President of Blockchain of Gala Games; Kieran Warwick, Co-founder of Illuvium; Ryan Yang, Director of Growth of Big Time Studios.

Overview

Moderating by IOSG’s Gaming Lead, Alex Liu, this panel gathered together some of the most insightful guests from the GameFi space and go through some juicy ideas below:

General Direction:
1. What’s the biggest issue with Web2 Gaming industry and how will blockchain games shift the paradigm of gaming?
2. One of the largest games in terms of trading volume, cryptomines, lost almost 90% of its market cap in 48 hours. What’s your opinion on games like cryptomines?

DAO:
3. How can we use DAO to align incentives between developers and players and what are the things players can contribute to the ecosystem?
4. What’s the biggest challenge with running a DAO nowadays?

Guild:
5. What’s the role of guild today and in 5 years?
6. What kind of gaming infrastructure would you like to see in game-fi space?

P2E:
7. There’s has been an argument stating that extrinsic motivation(earn money) tend to crowd out intrinsic motivation(enjoy playing game). What’s your opinion on this?
8. Right now most of P2E relies on new capital coming into ecosystem, what will be the main source of liquidity once a P2E game hits DAU plateau?

We’ve captured the full learnings and takeaways from their words below:

🎤 Moderator — Alex Liu (IOSG Ventures)

All right. Before we go. Let me introduce myself a little bit. I’m Alex. I’m currently leading gaming investment here at IOSG. Before I joined the IOSG, I was in a traditional tech background. I was mostly working as an engineer and product manager, but aside from my career. I am a very hardcore gamer. I used to do a little bit of indie development myself. I think I’ve spent more than 10000 hours on various different games. I was actually ranked one on Hearthstone in North America once upon a Time. I’m a huge fan of Auto Chess. I’m a huge fan of Teamfight Tactics, and I was a challenger like 1400 points, so I’m super excited about Illuvium. Yeah, I used to be a semi-professional poker player as well. Yeah, that’s about me. I’m just super excited about all the cool projects everybody is working on right now.

Kieran Warwick (Illuvium)

Awesome background, thanks.

🎤 Moderator — Alex Liu (IOSG Ventures)

Cool. I guess we can just go straight in. Yeah, let’s start. Introduction. I think all of you are super influential in the space and really need no further introduction, but I’ll still give all of you a brief 2 minutes to introduce yourself. How about we start with Ryan just on the list?

Ryan Yang (Big Time Studios)

Yes. So my name is Ryan and I’m the director of Growth Big Time Studios. I used to be a petroleum engineer and then I had my own ad company. And then I thought, NFT and gaming is a very exciting space. I used to be diamond in League of Legends, so I jumped in to Big Time headfirst.

Kieran Warwick (Illuvium)

Sure. My name’s Kieran, I’m one of the co-founders of Illuvium. I won’t spend too much time talking about myself, but basically got into crypto five years ago, and I’m a massive fan of investing in the space. I love DeFi and I love gaming, so I thought, what? Why not blend them together? And a way was Illuvium.

Gabby Dizon (Yield Guild Games)

My name is Gabby, and I’m one of the co-founders of Yield Guild Games or YGG. We are a play-to-earn gaming guild. That means that we are a massive community of players around the world that play NFT based games that earn yield. And then we use that as a way for our player community to earn some form of income. So we started doing this in Axie Infinity, but now we’ve branched out to other games that we’ve invested in, like League of Kingdoms, Illuvium, Big Time as well, Star Atlas and many more. So we want to bring the next billion users into Web3 via blockchain gaming.

Jason Brink (Gala Games)

Hey, guys, I’m Jason. Do you know me as BitBender? I’ve been in the blockchain space since 2013 2014. My voice is absolutely shredded because we just came off of a 3-day event here in Las Vegas, where we had a bunch of interesting announcements and whatnot. But yeah, we Gala Games, makes AAA games and partnership with studios around the world. We currently have about 15 different AAA level titles in progress and we will be launching several of those in Q1 of next year. They’re all designed with a play-to-earn component and NFT integrations within them.

🎤 Moderator — Alex Liu (IOSG Ventures)

Got it. Awesome, let’s just dive into the panel. The first question is what do you think is the biggest issue with Web2 gaming industry and how will blockchain game shift that paradigm? Anyone want to take a go on this?

Ryan Yang (Big Time Studios)

I can start. I would say that like a lot of the gaming right now, it’s a little bit hard to start, mainly because you have to have a MetaMask wallet or some kind of a wallet, right? Then going to Coinbase or Binance and then withdrawing that money to your wallet and then having custody of those funds and assets. It’s a very scary process. I think that one thing is that whoever will be able to bridge the gap for gamers and crypto natives will have a really good player onboarding experience. So I would say it’s more about getting gamers familiar with crypto rather than getting crypto familiar with gaming.

Jason Brink (Gala Games)

To build on that a little bit, I think directing it specifically at Web2 and more traditional gaming, I think that before we even get to the point where we’re talking about MetaMask and onboarding and things like that, there are the fundamental flaws that are built into the entire Web2 traditional gaming ecosystem whereby you don’t actually own anything. You pay money for something. You never receive it. You can’t do what you want with it. You can’t spend it, you can’t sell it, you can’t gift it. I think that the concept of ownership has up until very recently been completely stripped out of gaming and that is central to the Web2 centralized ethos. I think that all of us working in a Web3 world, regardless of whether it’s with a painful, high friction onboarding process or not, need to address the fact that we need to let players actually own stuff. We need to let players take an active interest in the growth and development of projects that they find fascinating. We need to really take a stand against the Web2 ethos of centralization and corporate control of in-game assets.

Kieran Warwick (Illuvium)

I mean, I certainly echo those thoughts. Like all of us have on this panel. We’ve all been playing games for decades and decades, and the fact that you can’t actually own your assets in a game is a massive flaw. It’s been something that gamers. It’s something that really surprises me about traditional gamers when they hear about NFTs, and I know there’s the whole environmental issue and we’ll maybe get into that. But the fact that players can actually own their assets, sell them, do whatever as Jason saying, give them, do whatever you want with them because you actually own them. If the game dies or they move on or there’s a new version, you still own your asset and you can do whatever you like with that. That has been a concept that those traditional gamers have been wanting for so many years that it almost surprises me that the reaction of traditional gamers around these new NFT games that are launching, and I can only think that that the reason that they haven’t really jumped into is purely because they’re looking for the same quality of games that they would get in the mainstream right now. But we’ll see.

Gabby Dizon (Yield Guild Games)

Yeah, I’ve been in game development for around 18 years now. I think there’s actually not that much to add to everything that’s been said, but in these games that have virtual economies, game farming has been done in games like WOW and Runescape. But these have been against the terms of service and it’s a very gray market. So people have to use third-party websites to do their trading and there’s a lot of scams around. Actually having this as part of the core game loop where people can own their assets and trade them, I think is a massive improvement over that because as long as you’re creating things within value in a virtual world environment, people will find ways to trade them, so better to just make it explicitly part of the game.

🎤 Moderator — Alex Liu (IOSG Ventures)

Exactly. Yeah, definitely. Yeah, 100% agree. I totally agree with the ownership element of crypto gaming. But speaking of ownership, this kind of leads to the next question. So last week, one of the largest games in terms of trading volume CryptoMines lost almost 95% of its market cap in 48 hours. The highest is like $800, and now it’s sitting at like 2 or 3 dollars. What’s your opinion on games like CryptoMines? I mean, players still have the ownership of their NFT, but the value is really fleeing away from them.

Kieran Warwick (Illuvium)

I mean, yeah, I think firstly, if I’m not mistaken, it was launched on Binance, which you’re typically going to get the standard humongous pump and then it settles back down to a more realistic price target. But I mean, I’m seeing and even myself, I’m investing in a lot of these games that I would say a classified as indie GameFi games. They come out with a trailer. It looks decent, you know? But I think what people need to be wary of is it’s very easy to get access to capital in the Web3 gaming zone. So that access to capital, even if you do a poor job, you’re still getting yourself $5–10 million in funding. That’s going to allow you to without even having a team to go out. I’m not saying this project has done this. So please, I don’t know that much about it. I’m just saying this is a trend that I’m seeing where they can basically use that funding, go out, get a trailer done that doesn’t necessarily have any gameplay or anything like that. There’s no team to back it up. There’s not that large a community, and all of a sudden, they put out these advertisements, these trailers and people like typically the BSC crowd, will jump onto projects like that. They’re not going to have longevity to the thing that people don’t realize is we’re still in our infancy. But it takes a long time to make really, really good games. So I think that there’s going to be many, many, many more examples of projects like that that are indie games that people think are much, much, much bigger than they are. Then they start doing the research and they go, OK, this is probably a little bit overvalued, and that’s why you see the major correction.

Jason Brink (Gala Games)

I couldn’t possibly agree with that more. I mean, one of the central tenets that we have a Gala Games is that games should be fun first, if you’re building your game specifically so that it is purely a financial tool with a bunch of stickers stuck on top of it. If it’s a DeFi platform, but there really isn’t any gameplay, then at the end of the day, it’s not a game. It’s something that you’re really hoping people ape into that you can then skate on for a little while.

Yesterday or 2 days ago, sorry, we announced the upcoming launch of Last Expedition, which is a full-on hardcore team-based PvE and PvP FPS. It’s got a team of I think it’s about 120 that have been working on this for several years, and we’ve been working very closely with them on the blockchain side of things. And, core to this concept of to make a real game, like you said, it takes time. Ideally before what would really change things is if these games started releasing actual playable demos, putting people in chairs with games and saying, here, try this out before they bothered doing any of the other token stuff. That as an industry, we need to start asking for that. That will prevent these sort of meteoric rises and collapses that come from pure speculation or people jumping in because they see a cool trailer. Then when they realize there’s it’s essentially vaporware, they jump out to somewhere else. We need to get that pathway reversed so that we’re putting the game and the gameplay first and the future token and earning potential second.

🎤 Moderator — Alex Liu (IOSG Ventures)

Hundred percent, yeah. Although I don’t think having a cool trailer is the issue here. I think not having what’s behind, it’s more of the issue because Illuvium has one of the best trailers on the planet right now in crypto space.

Kieran Warwick (Illuvium)

Yeah. I totally agree with that and 100 percent like these trailers don’t have… That resonates with me and I get where you’re coming from. The only thing that I would say differently is the fact that we have such untapped access to capital is going to allow us to have an extreme amount of growth in this sector of crypto, which is going to bring so many people in. And yes, there’s always going to be warnings with crypto if you don’t do your research and you don’t look into it. When we first started, we were just a trailer, but we’re a team of now 175. We’re always building on that. But if you looked originally, you would go, OK, it’s just a trailer. And now we’ve turned into this huge studio that’s actually building something that will have longevity. So the fact that we had access to the capital early and we tokenized and we went down first, allowed us to build this entire community and game. We’re doing our private data probably sometime in January. That’s like a 13-month cycle for a AAA game for the graphics quality that we have, I do not think that that’s ever been done in the mainstream, and I don’t think it’s even possible to be done. When you think about literally a brand new studio, and the reason is we have access to so much capital. Plus, we then have the ability to issue tokens to team members, which is highly motivating for them to start building at a rapid rate versus, oh, I got to go into Ubisoft today or Epic or whatever and just mumble along.

Jason Brink (Gala Games)

Sure. No, that’s totally fair, man. I mean, and one of the things that differentiates you guys is that you actually went and did that. When there are lots and lots and lots of people that are like, I’ve bought some random assets on the unreal store. I’ve dumped them into a quick demo. We slapped together a 30-second reel and raise 35 million dollars on it, that sort of crap. You know, it’s very reminiscent of the worst of the worst of the ICO craze of a few years ago. The less of that we have, the better. Kudos to you guys for pulling it off and making it work.

Gabby Dizon (Yield Guild Games)

Yeah to add what Kieren and Jason were building. The great thing about crypto is that we were able to do capital formation and then build products after. This is something that’s pretty much unheard of in the game industry, obviously. But in most other markets, it’s hard to raise the kind of money that the founders here have been able to raise for their game companies and what truly separates what the good founders are, those that are here to stay, that are building products and really thinking about their community long term. Unfortunately, it’s very easy right now to raise that capital and just bring up smoke and mirrors and actually deliver nothing of value. But if you look at the founders who are delivering something, as everyone here said it takes time to create a good game, a good game that will have a good economy, polished assets, really good gameplay that will drive years and years and years of value. You just can’t do that in a couple of months. So the good founders here are the ones that are engaging community, building value, having them own the assets in the economy. And when the game comes out, this is something that will propel the value of these games even further. And yeah, it’s hard to tell in the, I guess, first three six months. But if your horizon is 2 years, 5 years, 10 years, then you can see who’s here to stay.

Ryan Yang (Big Time Studios)

Yeah, definitely. To add to that, for example, like the best games, the cream of the crop will always rise to the top right. If we want gaming assets to be a store of value, it’s for the teams and the developers that are going to be building through that, not just for like 6 months or like a year, but continuing, adding new mods or anything for the next 5 to 10 years. And then during that long-term cycle, that’s where the real value comes in.

🎤 Moderator — Alex Liu (IOSG Ventures)

Yeah, most definitely, I can’t agree more on that, it’s I’m super impressed with how long term everybody is on the crypto space and crypto gaming space. I think that really matters. A lot of you guys have started way before the hype, and that’s what differentiates us from everybody else from an investment perspective, we actually see a surge of project founders just jump into the space after the hype, and they are so different from the previous founders. They just come in and say, we’re going to do ICO in like a half a month. We’re going to sell like a bunch of NFTs in like 40 days and boom.

Kieran Warwick (Illuvium)

I remember the DD process that we had to go through with you guys. The amount of rigor you guys have. No one’s flipping through those cracks.

🎤 Moderator — Alex Liu (IOSG Ventures)

Yeah. Nowadays, the standard for those founders is like first minute. Like the first line is we’re way oversubscribed. Consider we’ll make you rich in like five days. Yeah, stuff like that.

Kieran Warwick (Illuvium)

Give them five minutes with a shiny and she’ll sort them out.

🎤 Moderator — Alex Liu (IOSG Ventures)

Yeah. All right. I love how everybody talks about long-term vision and the ownership stuff like that. I really agree. Just kind of leads to our next discussion. Personally, I think ownership a major part of crypto gaming is incentive alignment. It aligns the incentive between developers and gamers and community builders because in traditional like Web2 games, I feel like it’s a zero-sum game. If the player pays money, then developer wins. If developer releases new items/ their assets, then the player loses. But with the new structure and with the token economy, everybody is on the same boat and everybody wants the game to be better to be prosperous. I think one key tool for building that is using DAO, I think Illuvium is very heavy on DAO, YGG is also a DAO and Big Time hasn’t released too much information. But according to Jocy, you’re not even giving investors tokens. So I believe it’s super decentralized. Also like Gala, you guys are famous for running the decentralized nodes. What’s your opinion on the decentralization part of the crypto gaming element?

Jason Brink (Gala Games)

Ultimately at the end of the day, decentralization as a requirement for forward progress not just in this industry, but in a lot of different industries. People are sort of tired of being told that they don’t get to have a say in whatever it is that they happen to be working on. They’re going to want to be able to have their own opinions heard. I think that a DAO is a great way to do that. A node network to which we put governance vote is another great way to do that. I think that it’s absolutely critical going forward into the future.

Kieran Warwick (Illuvium)

Yeah, aligning incentives is a huge one. That’s another thing that I don’t even think necessarily the mainstream gamers were aware that it’s even possible, and I think this is where it almost goes to the narrative of is this too good to be true? The skeptical people are staying away from it. In our case, we’re giving 100% of the in-game revenues and not just in-game, whether it’s land sale, Illuvitars, any of the things that we ever do that generate revenue. 100% of that goes back to the people that own the token that has got it staked in the protocol. That aligns the incentives with the developers and the players. It makes sure that the community wants you to do well. The community wants to spend more money because they know it’s going back to them. It’s not going to be a corporate centralized entity that is just getting richer and richer and richer. It’s actually being distributed fairly back to people who are putting the value into the system in the first place. So I think that’s where the alignment really, really sets in.

Gabby Dizon (Yield Guild Games)

Long term, I think we’re going to see a lot more in network effects on DAOs and protocols versus traditional companies because we’re allowing all of the participants of the network to be owners of the value that they’re creating. This is the most, I would say, a significant difference between running a company and running a DAO. You have a lot of stakeholders and a lot of them really care about what they’re doing in the guild. We have a lot of people who are doing, for example, their own shows to surface new games. They are suggesting which games that why YGG should be invested in forming their own subDAOs within YGG. So we really love this kind of community participation and rewarding those with tokens, YGG tokens. We have 45% of the token supply of TGG to be earned via play to earn. So some form of initiatives where people can earn our tokens instead of buying them by providing value to the network. This is something that we are focusing on in the coming years.

Ryan Yang (Big Time Studios)

We don’t have a DAO right now, but we want one of the things that we are doing is we’re doing a 100% community-driven approach for the token itself. We only plan to have one token that has multifaceted use cases. In this instance of where it’s only acquired by the token by the gamers, it creates a very nice decentralization process. Then this also provides a lot of power to those that play our games to where the real value can be returned to them, rather than letting people do like presales and the presale like 10x. And then the people that got into the presale get dumped. Our goal is to have as very fair of launch as possible.

🎤 Moderator — Alex Liu (IOSG Ventures)

Yeah, fair launch is the way to go nowadays. Awesome. Cool. Let’s move to our next topic, which is guild. I think Gabby can obviously talk about your perspective on Guild, the role. What kind of strategic role really plays in this industry right now and maybe in 3 to 5 years? All the founders can maybe talk about what’s your plan for integrating guild with your game and the project?

Gabby Dizon (Yield Guild Games)

First of all, guilds aren’t the new concept in games. We’ve probably all been part of some guild, whether it’s World of Warcraft or Runescape or any other game. The big difference is that in the same way that we’ve externalized the assets in games via NFTs. With guilds, we’ve externalized the player group that is inside the game. Now the guild is operating as an entity that owns assets in different games and then organizes the DAO coming into this game. So this is a major innovation in a way that you have a group of players that are organized and as a collective, they have the buying power to go into these games. What that means is that you can bring a lot of players into these games via guilds, and we love to do that. We’re supporting big time, we’re supporting Illuvium, we’re supporting Star Atlas and a lot of other games that are coming in. We want to partner with the best games out there because the way we see it, we’re buying these assets and our favorite holding period is forever.

We haven’t really flipped any of the assets that we bought, so we only want to buy games that will be enduring for the next few years because we want our players to be playing very actively in this community, having fun and earning an income while they’re at it. So I think guilds are a very crucial part of building these player communities together. We’re also easing the onboarding into Web3. You know, people here have mentioned that it’s very hard to onboard people into Web3 via community-based structure. We’re going from city to city, town to town, village to village. Via the community structure, we are onboarding people into these games, teaching them about Web3, teaching them how to use a wallet to play the game, cash out the fiat. So these are just some of the things that our guilds provide to games in this space.

Kieran Warwick (Illuvium)

No kidding. Get involved. I was going to say you’re not going to get more from us when that’s the god of guilds himself telling you how it is. But yeah, I honestly think it’s just about supporting, it’s about educating and providing the stuff that. This is again, why it’s so critical to have access to capital in crypto. These guilds are forming, and right now there is a huge bottleneck of people who want scholarships, but there’s just not enough infrastructure in place yet because it’s such a new concept.

YGG is probably the furthest long out of everyone and has been doing it for the longest. But even still, there’s still so much room to grow. We’re talking about tens of millions of players that need to be onboarded. It’s been a big learning process for me to get my head around how much we do need guilds to be able to support the ecosystem and really, really that education process is critical. Yeah, that’s what I had.

Ryan Yang (Big Time Studios)

So from a game developer perspective, a guild will provide a lot of ways to bootstrap community growth. In Big Time, we have three forms that you can play the game. The first one is you just enjoy the storyline and then there’s no paying component of it. This allows a lot of exposure to the mechanics of the game without any kind of risk. So you have all the enjoyment of the game and then the next to you have more of a player-owned economy component of where guilds you can think of them as like business entities, those have skin in the game and that they want to curate the best players or lead the development of potential players. The third option is, of course, you can be a scholar, as I say, in other games or a player to where they play for a guild. In this aspect, there is a very mutualistic relationship between the player and the guild to where the player’s skill can be clearly defined alongside the guild's asset exposure.

Jason Brink (Gala Games)

At Gala Games, we’ve taken a little bit of a different approach here, and there’s really it’s very much a two-pronged approach. The first is that we want people to be able to get involved and play whether or not they have access to assets personally. This is where we have things like the Town Star Market Board that was just demoed yesterday, where any player can come in and step into the game, select an asset that is owned by somebody else that has added this to the market board and play for some sort of revenue share on that asset. The other thing that we are doing is and this is something that we have been we’ve been talking to a few different guilds about recently is forming the Guild Advisory Council. What we see is that guilds play a very, very important role in community building and education, but they should not play a role in gatekeeping access to game player content. We don’t like the idea of it. I mean, I always hate it on Twitter. When somebody posts saying that they’re looking for a scholar, you get 400 people who are all starting to dump their resumes and stuff with all sorts of personally identifiable information saying, Oh, please, please, please, please, please, can I play a game? That’s not the way the game should work, but we see that guilds play a very important role. Our Guild Advisory Council and we’re working with a few different guilds and we would love to work with YGG as well, are specifically targeted at how can we build games in such a way that it can magnify the network effect of the guild, provide unique services for the guild, allow the guild access to potentially preferential pricing on items and NFTs and organizational structures, and allow them to get a very clear picture on how profits can be made in the game from players.

Kieran Warwick (Illuvium)

Yeah, I would also agree, but at the same time, I think that most I mean, the very early examples of the games that existed had high barriers to entry. It was just the natural progression of guilds to OK, well, you do need these assets. There aren’t free-to-play games or free-to-earn games that yet exist. So therefore the first couple of guilds had to take that approach. That’s kind of the scalability that I talk about. I think that there almost needs to be a platform out there that that provides the assets and the liquidity on one side, and then you have the consumers on the other side. But I think naturally, as games progress in the space where we’re learning as developers, you can’t present those barriers to entry because that’s what is going to happen. People are going to need to borrow hundreds of dollars to play the game. But also, we need to accept that at a certain point, we are creating play-to-earn games. So there is a mix there where we’re not going to be able to. Yes, we can allow a free version of the game and I think all three developers on here have that. But as well, there’s going to be challenges that are presented with our own in-game economies. I don’t think we can get to a stage where we can completely abolish the need for someone to need access to capital. I just don’t think we can get to that stage. Not yet, anyway. But I do certainly take your point that and I was doing the exact same boat as you. It was very jarring to see that, but I am more open to why it’s occurred, and I think we can optimize it as we as we go through.

Gabby Dizon (Yield Guild Games)

Yeah, I’d like to add to that there’s an evolution of the business model of play to earn, and definitely what we’re seeing is a hybrid of free to play and then having some kind of purchase where you have to buy an NFT and maybe the earning opportunities start coming after that. I do expect most of the industry to move towards this direction, but you still need to have players, guilds, entities that will be investing into assets in the game, buying into the economy for there to be some type of reward that people will earn. This is why we have blockchain-based economies in these games to be able to facilitate this kind of value transfer. So yeah, I do expect to see the guild model or the play-to-earn models evolving. There will be some aspects that are free to play. There will be some aspects that need to purchase, but even at the free to play level, I expect guilds to be a very strong force inside these games because it’s not just about the money or the assets, it’s also about community being part of a team playing with people that you want to play with. This has always existed in games in the past 30 or so years.

Kieran Warwick (Illuvium)

They are just not valued at $10 billion.

Gabby Dizon (Yield Guild Games)

One tiny difference.

🎤 Moderator — Alex Liu (IOSG Ventures)

I couldn’t agree more. I love to see the evolution of the guild. Yeah, initially I was skeptical. But now is actually, as investors from the perspective of investment, we actually see guild being far better investors, especially like early round angel seed investors than traditional VC. You guys don’t understand the game much more. You studied the tokenomics, you study the team, you study the structure and also you provide not only liquidity, but access and players and scholarships. That’s just the next level. Maybe in like five years, the line between VC and guild will be more blurred.

Kieran Warwick (Illuvium)

Maybe guilds will be VCs. Who knows?

🎤 Moderator — Alex Liu (IOSG Ventures)

Yeah. Well, we definitely want to work with YGG very closely on that to not be abandoned at that time. All right. Yeah, I think the discussion of guild sort of led to the next discussion, which is also very debated in this space, which is P2E. Right now, the market is now doing super well. I think Axie Infinity, the SLP has dropped to a very low level right now. I think playing Axie Infinity, a single account for most scholars, will make less money than the minimum wage. What’s your opinion about play to earn? Are we going to see more people full-time playing games in the next couple of years? Or is this more like a fusion playing for hobby and make like pocket cash? What’s the model going to be? Your perspective?

Gabby Dizon (Yield Guild Games)

I’d like to start in this because when I started playing actually and when the SLP model, no one was really using SLP as a way to augment their income. During the pandemic, then players started coming in and playing, buying into AXS and then SLP prices skyrocketed to the point where at times it was kind of earning better money than the full-time job. The way to really think about this is that you have an in-game economy, whether it’s Axie or any other game that has, of course, its inputs and outputs. People are coming in and buying, in this case, SLP, because they want to breed and they want to they want to breed because they want to provide AXS for people who are coming in. So in the player-owned economy, if you’re creating assets that have some kind of value to other players, then you’re facilitating an economy that will work in the long term. This is complicated by the fact that you can do speculation on the assets that are using the in-game economy. So in this case, specifically, SLP is listed in the major exchanges such as Binance and other exchanges. While that’s great for distribution now, people who are playing the game can easily change SLP to ether and maybe cash it out. It also leads to the unfortunate speculation where people who are outside of the game economy are kind of betting on the direction of the market, so this leads to wild swings in the price of in-game reward tokens.

This is problematic because if it changes people’s perceptions of earning the game that may not be in sync with what the game economy is, what is able to provide. I see this as the main problem that happened with SLP when it was up 30 cents. A lot of there was so much more volume, probably 100x more volume trading on the exchanges than was actually happening inside the game. This is something for game developers to take note of and be very careful with. If speculation happens on your token, then it may provide unrealistic expectations of the player base. So how to do this from a tokenomics economic standpoint, from a mechanism standpoint is really important so that you can keep the expectation of earnings and reward in your game in line with what the game economy is providing.

Kieran Warwick (Illuvium)

I agree with that, I think as well, though, there are two distinctions here of the types of plays that are going to be jumping into GameFi. There are the mainstream people who are trying to adopt and bring over. Then there are actual people who weren’t necessarily gamers. But as Gabby was saying, when you’re earning more than your full-time job from sitting at home gaming, you’re probably going to do that, then start driving a taxi or doing construction and stuff like that.

So you do need to strike a balance and where it sort of falls down is if the game isn’t fundamentally fun to play, then it’s going to be very hard to derive value out of your customers long term or your players long term. Where Fortnite does so well is people love playing the game so much and they like to show off their accounts so their entire revenue model is built on skins. Now that’s purely cosmetic. It does nothing. It doesn’t make you a better player in the game. It’s just to show up and say, look at me, look at my player right now, I’ve got the coolest character in the game, it’s rare. All of these different things, and they’re happy to park with their twenty dollars or one hundred dollars or a thousand dollars or whatever it is. So while again, I’m assuming that all of the developers on this call that the games that we’re making, all have in-game yields. Ours is something like 1.2 billion that was set to give out, and that will be eaten up by a lot of these new players that are coming from developing nations that are looking to play the games for that reason. Not necessarily fun, but that’s OK. We need those people. That’s totally fine.

But they’re not going to be the people that are going to go into your marketplace and start buying cosmetics and things that derive value from essentially nothing, right? In terms of decentralized games like ours, there’s even more incentive to go and start spending within the game because it doesn’t get distributed to that one centralized entity. It goes back to all of the players that are literally playing the game. So I think you need to strike a balance of both. The cool thing is when that. When that in-game yield runs out, if you don’t have a mechanism, if you don’t have a player base that is willing to spend money inside the game, then the economy is going to break down and that’s just the simple.

🎤 Moderator — Alex Liu (IOSG Ventures)

Yeah. Thank you so much for sharing your insight on this one. I think that’s definitely very critical. It’s very important for games to strike a balance between fun entertainment and earning. And also, I think maybe in the industry we’ll see a rise of infrastructure that kind of mitigate some of the risks from the speculators. Maybe we’ll see some like yield insurance in the future. Anyways, I think we are overtime here and thank you so much for your participation on this panel and sharing. It’s really great insight. I think everybody is excited to hear about this conversation. Yeah, thank you so much!

❄️ About Us

IOSG Ventures, founded in 2017, is a community-friendly and research-driven early-stage venture firm. We focus on open finance, Web 3.0 and infrastructure for a decentralized economy. As a developer-friendly fund with long-term values, we launch the Kickstarter Program, which offers innovative and courageous developers capital and resources. Since we consistently cooperate with our partners and connect with communities, we work closely with our portfolio projects throughout their journey of entrepreneurship.

IOSG Ventures, founded in 2017, is a community-friendly and research-driven early-stage venture firm across China, the US and Singapore. We focus on open finance, Web 3.0 and infrastructure for decentralized economy.

Recommended from Medium

Artificial Intelligence Has Yet to Fully Infiltrate Online Gaming

Spider Solitaire — A Winning Strategy

DOUBLE TOP AMA: Perion [ENG]

Making a board game for the first time

Gameplay Journal Entry #3

Check Out This Week’s Heroes’ Battle Skills

New Ideas Into Tekken Never Before Revealed

PLAY TO EARN -Heroes Land Community Airdrop Announcement

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
IOSG

IOSG

Community & Thesis Driven Investing iosg.eth

More from Medium

Metaverse Carnival 2021 Panel Recap | Designing Fun 2 Earn Games

Metalist DAO Club

Project Trident: The Triple DAO And The Future of AAG Ventures

Totem, the first Phygital Metaverse OS built on Vera, Raises $400k on Polkastarter IDO in 2 minutes…