Our 1st Telegram Townhall recap: Anime, tokenomics, and more!
We had our very first Townhall on April 6th and we had an amazing time interacting with our Community from all over the world.
- Expect bridges for XET and XET powered assets like MzaaloNFTs to popular protocols in the coming months
- The future of content and media on Mzaalo and other dapps in the ecosystem is to create and distribute a hybrid of user-generated and studio production led content
- Experiments and road mapping for the progressive decentralization to make XET a Community owned network will start next month
- No plans to artificially increase scarcity to increase the value of the token, XET’s value should come from the utility of end-users and the Community
- The current tokenomics of XET will help scale a community-driven entertainment ecosystem
- Eventually the Mzaalo ecosystem will scale to different devices, platforms, and touchpoints
We ran a Twitter poll and competition to both decide the theme of the AMA along with the best questions.
Give below are the winning questions and their answers (edited for clarity). If you feel like we missed out on something or want to know more, leave a comment or hop into our Telegram!
Question on expansion to other forms/kinds of content
I would like to know if there are any future plans for Mzaalo to have anime or more diverse video content, I noticed the majority of the content is on Bollywood. What are the future plans for content?
That is a good observation. Most of our content is regionally focused. The current Mzaalo model is studio focused, we would like to scale this to a user-generated model eventually over time. That’s where I think XET will play a key role. If you look at our tokenomics, and how we are designing this token, we are looking at certain experiments to eventually go there. However, the challenge is that there is an existing process and a system in place and for that to actually change, a better system has to come and replace it. That better system in my view is a system that is powered and backed by a token.
So today, the content ecosystem of creators and consumers is not deriving value out of the content supply chain. Platforms (including Mzaalo which fell in this category until we launched XET) became the gatekeepers of this content. This is what XET or Xfinite, is trying to break. We’ve actually changed tokenomics a little bit and introduced a new release schedule and we are looking at certain community-owned activities to eventually get there.
There’s a progressive decentralization roadmap for Xfinite to become a DAO. And there are initial experiments that are being made today. Stay tuned for a very exciting announcement we’ll make next month about this.
This question also has a long term impact on how Xfinite operates and how Mzaalo evolves from where it is today. That’s why I am not able to answer this question in one sentence because it’s it requires a longer explanation. Yes, we would like to introduce more diverse content. But the way we introduce that content needs to change. And that requires certain mechanisms to go back to our token incentive models. Once we have this in place, we would like to do a pilot. And eventually, we will evolve to a point where anybody who has content should be able to come join the ecosystem and put that on Mzaalo or get incentivized for doing that as Mzaalo moves from a pre-revenue to revenue model. And once we have a definitive mechanism we will come up with a progressive decentralization roadmap for Mzaalo to go from a studio license model to a hybrid model where we have an opportunity to have both studio-quality content as well as user-generated content.
Question on expansion to other markets
What kind of challenges do you see that we’ll be facing when we are developing for the South Asian market? And if we are going to start producing our own original movies going forward?
You can already draw upon from the largest OTT platforms today that most of them are producing their own content as well but in a centralized way. So ideally, when there’s a decentralized model for this, yes, it would accommodate user-generated content as well as help that content get produced. There are multidimensional challenges to transforming Mzaalo from a studio license model to a user-generated model but it should start at an economic level first for us to actually change an existing system.
That includes not only incentivizing somebody who is generating content as a user but also wants to come in and produce some sort of studio-quality content model, we should be in a capacity to make that happen. But the good part is, that we have the backing of some of the largest production studios already. The biggest challenge for this particular question is the off-chain to blockchain dynamic. Unfortunately, most content production today happens in a very opaque model, where you have various production houses, that are using capital to produce a particular studio quality piece of content. And also, most of these transactions happen in a non-crypto native way. So the challenge to solving this is multifold. And it requires a more long term approach to be able to do what we’re talking about.
Content is part of our daily lives, right, and everybody’s consuming so much content on a daily basis. And in the end, for us, to truly transform that into a decentralized model requires a robust economic structure, which incentivizes creators, producers, and decentralized on the platform.
Question on token fundamentals
There are a large number of failed projects where investors are only interested in pumping the, you know, the value of the token and having a lot of ghost developers. How do we handle that?
As a token how do you lower your dependence/correlation in value to L1s like Bitcoin and Ethereum?
The first part is the question is around prices and impacts on the network. This is nothing new. I think it also applies to all kinds of projects. I am a firm believer that the current stock price is never a true reflection of the value of a company. But it’s an indicator of how the ecosystem is behaving or valuing that particular company and the same applies to a network.
However, you should always take a long-run perspective to see how token prices would impact crypto networks because like it or not, all crypto networks are highly dependent on this. And I often tell this to people who are outside of crypto when they ask me, ”Why does crypto have volatility”.
Let’s say if we take stocks of most early-stage startups and we put them on a stock exchange, I think they will behave very similar to how cryptocurrency behaves as well. I say similar and not exactly because there are other factors that will affect this, but we will face the same challenges as a network. People value the company based on the potential revenue and different factors which will impact it over the long run. You should take a similar approach on what is an addressable market for a token and go from there.
I firmly believe every crypto network has two similarities to a web 2.0 project for it to be successful. First, it needs to have a product that people want to use and second, it needs to have a business model that is sustainable. This is common to web 2.0 or web 3.0 startups. The unique part of a crypto network is it needs to have a token economic model which can bring network effects to the two factors.
So how do you combat this token price problem? I would say we should first look at it by creating community building blocks, because crypto networks often take, in my view a longer approach than startups themselves, because a startup is a company but a crypto network is a community. And, and the final goal for a crypto network is to become community-owned. That’s how I value the legitimacy of a particular network over the long run. Again, these are all my opinions, I’m happy to also understand how people think about it.
To go back to these three foundations. We need a product that people want, a business model which becomes sustainable over the long run, and an economic model, which can get network effects to one and two.
Unfortunately, crypto native people understand this is not how tokens are evaluated today. Because the industry is quite early at this point. But eventually, this is how theoretically a network is supposed to be evaluated. And a token should derive price from this. However, you will always see a lot more short term focused community members who are more interested in the trading side of the token. If you ask me, What is your current priority? I would say community, product, and token price in that order.
Why in that order? Because if you have all these things in place, you can always think about how much capital you can need later and bring strong investors in. But if you don’t have one of the three it doesn’t matter how much noise you make in the ecosystem, you would not have a sustainable economic model.
Yes, can become 10x and go to the moon as most people would say. But one man’s 10x gain is another man’s loss if you don’t have these things in place. So these are the things we are currently trying to rectify or get right for this particular module. And why be bullish on Xfinite is just because of the opportunity it is tapping into. We’re not a developer protocol, we are a consumer protocol because there are more consumers than developers in the world.
We are also reshaping an industry that is so fundamental to our everyday life. You may not necessarily develop a dApp on Layer 1 every single day, but you’re watching content every single day. So if we actually truly succeed at transforming how content gets consumed, and how people who are part of this ecosystem get incentivized, there is a pretty large share of the total addressable market for us, and it is larger than Layer 1s. That’s essentially why I am so bullish about consumer protocols for this decade.
And coming to the second part of how much a token is dependent on other Layer 1 tokens? Every single crypto token is dependent on how Bitcoin or Ethereum performs. There is no point in shying away from saying so. That’s how the market is. But eventually, the challenge is to come out of that. These challenges exist because there aren’t enough on ramps or even consumer behaviour for using tokens to convert fiat to crypto. But there are a few exciting projects to look at. For example, NBA Top Shot had more revenue in fiat rather than crypto, although they will be classified as a crypto stock. I think the dependency and the correlation on Layer 1, tokens will start reducing. But this only happens in the long term. Another challenge is also how mainstream adoption comes in because today, most crypto products are used only by crypto native people who also end up holding the token. And that is actually a huge challenge that contributes to this correlation. That means their wealth is coming to them through major tokens. So when the market goes down, it impacts another token.
Question on token burning/buyback:
Do we have any plans for a token buyback or token burning in order to attract more holders for the XET token and increase its value?
Yes, I love all these questions. These are the problems I face on a daily basis. The current change in the release schedule and the way XET is structured is a warm-up to actually bringing such a model into the ecosystem. If you had a chance to look at the most recent blog, we’ve published about XET, there is an illustration we’ve made on how we would achieve income or inflow from the ecosystem into a network fee pool and how that gets distributed to users and stakeholders.
We’re currently working on this model because as you’re aware, for a successful buyback or burn model to actually work, the ecosystem has to move from pre-revenue to revenue. Once that kicks in, Xfinite will have revenue from product lines such as streaming, NFTs, and ad sales from redemption partners. A portion of that will go back to the network pool and we can implement a burn or buyback.
The first step we have done in this direction is to connect XET to Mzaalo with a soft launch. Over the next few weeks, we will start rolling out that opportunity to all the millions of users registered on Mzaalo. I’m inclined to create a hybrid between burning and buyback because burning is not the only way to increase the economic value of an ecosystem and the scarcity of your token is not the only parameter to increase the value of the economic system. You also need to have a model on how you provide liquidity across different decentralized exchanges. I think the network fee pool will be able to do all these things.
There are plans to connect all these mechanisms back to a DAO. We’re currently working on this. But it makes sense for us to do this as soon as we start integrating all of this into a revenue module. As you’re aware Mzaalo is currently pre-revenue and also the reason around this is the majority of revenue models today in the ecosystem are advertiser dependent. And for existing ad models to succeed, unfortunately, most ad models today still operate in CPM like structure where it’s based on cost per 1000 impressions.
So you as a network face the same challenge, i.e., how do I acquire more impressions to get my ad revenue kicking. We have to figure out different revenue channels to make this happen and eventually move this ad dependent or subscription dependent content consumption model to a hybrid of video-on-demand plus engagement or interaction dependent models.
That in turn requires us to move our product from where it is to another version, and move our existing business model into a more revenue-focused model. And that’s when having our buyback models would bring more value to our economic system. All of this is part of the roadmap and we are thinking about these challenges. That’s why these questions are super exciting for me because we already have a community identifying these other challenges and roadblocks for us to solve to make Xfinite into a larger and a vibrant ecosystem.
Question on platforms
What other platforms or streaming services can we see Mzaalo on?
So once we understand how to do this well and how to create the right arrangements with existing streaming platforms you will see us on more streaming platforms. We also have great business discussions with existing streaming platforms to replicate. The integration can happen in multiple other ways, some can integrate Mzaalo coins, or some can integrate Mzaalo as a service. Few of them can even integrate XET. And this is can be for platforms outside of India.