EXCLUSIVE: Current Gaming and NFTs market with Yat Siu, Co-founder of Animoca Brands

You are the Co-founder of the largest investment fund in Gaming in our industry, Animoca Brands, and one of our top leaders. What’s your current Fear & Greed level in Gaming, as we are still waiting for that big winner to come?

Generally speaking, I am very bullish, and I think the difference is that for example, you know about what happened with TON and Telegram, before we didn’t have a distribution outlet, we didn’t have a way which would grow web3 games because platforms like Apple, Facebook, and Google, and Steam actually disallowed NFTs and now TON just opens that up, and, you know, hundreds of millions of users signing up. Of course, not all of them actually have wallets, but still, we talk about actual true users that are adopting and are tens of millions, which is a huge number actually, and so, even with just one application like GAMI, we have like 80 million users and millions of daily active users that are playing the game, so that is basically the beginning of that, so I think that’s pretty powerful.

The second one is that now we’re heading to the point where web3 gaming, the AAA ones, are reaching a quality they can actually compete with the best web3 games that are out there. So, for instance, one of our other portfolios by Gunzilla, which is Off the Grid, is now one of the top games on Epic and also really axes Xbox and PlayStation, and the people who play it don’t actually even know that it’s a web3 game, they just know it’s a fun game to play and it’s bringing in this type of users and we’re very excited about that development and so, now, we see the go of this and why I’m bullshit about this?!, and I have said this earlier, maybe even on your show, on ICN.talks, that we think in the next 12 to 18 months, there will be mass adoption in this area and I think it’s already beginning. I think we’re only six months in since we had that conversation, we still have another 12 months to go and stand by that prediction that hundreds of millions are coming to web3 because of gaming.

Do you see Crypto Gaming as one of the most powerful channels to make a comeback for NFTs?

So I think the primary comeback for NFTs, Gaming, provides utility NFTs, but either is just Gaming or just, broadly speaking, sort of Art NFTs or community NFTs like PFPs, is all around cultural status. So, in other words, if you can bring and deliver a kind of cultural status towards your NFT collection then you will have created essentially a comeback on these NFTs and that’s important to understand because people look at NFTs purely in utility. Look in real life, the things you spend purely on the utility you don’t spend as much on, but if you build things that have cultural meaning to you..maybe it’s a Gucci bag or maybe it’s a shoe, it’s a car you have, a house you own, these are things that mean something to you, emotionally and culturally, and they are also things that project status and that’s actually what most successful NFTs collections will do.

So we can say, oh look at Bored Apes, you know the prices went down from its peak, but it is still a $30,000-$40,000 asset from the floor price standpoint and it is still the number one Ethereum NFT collection. And why is this?! because in that community, it’s become a status item. In other words, you’ve made money in web3 and you want to demonstrate that you have made it in web3. In the physical world maybe that’s a Rolex watch, but in the digital world, that could be a Bored Ape and that’s actually where these worlds emerged. We spend most of our money on cultural assets, so I think the NFTs are severely undervalued just because of the cycle we’re in, but as more people will have sort of more capital, whether is investments or meme coins or Gaming or whatever project, they will then move onto towards wanting only the status items, which are the NFTs.

How are NFTs involved in another beautiful project that you support, I am talking about Open Campus?

So Open Campus is about education and really started up to empower teachers who were able to protect their educational content in the form of an NFT and then they could sell it on as a capital asset. That’s a perfect example of how NFTs become containers of intellectual property rights and cultural value that you couldn’t do before. So imagine what the music industry would be like if there was no IP protection. We would have no Taylor Swift or Michael Jackson or BTS, none of this stuff would be possible, but because we can protect the IP, there is a royalty stream income which then brings more money to musicians, which means musicians can invest in making better music and that’s how an industry grows.

Now, we don’t have this for education except for some large institutions like publishers, the teachers who create content, actually are creators, don’t have a way of doing it and the reason why is because the money they make teaching is actually quite small, maybe it’s just a few hundred dollars that they can make, but if it is something that you sell as a capital asset then the value is 10 or 15 or 5x of that, then the wealth of assets has been created. So this is kind of one example but the other area where we see huge potential with NFTs and Open Campus, is basically looking at how we create a student loan with DeFi which is a massive, massive market. Student loans today is a $2.2 trillion market and that is very traditional and actually not solved in a very old way, so again if you can solve it that way, we think it’s gonna be a very positive narrative for crypto as well because you can help students and teachers.

Do you see MEME coins like a real asset where they can have their own place in this industry or is it just a matter of the fact that the industry is at this certain stage of maturity right now, and sooner or later these narratives will just disappear?

No. We don’t think this narrative will disappear, in fact, I think they are here to stay, but the question is which ones. And to us, it has to do with how you think of the strength of the network effects. So, in other words, in any kind of token economy, this is a matter of the MEMEs, L2s, or Gaming, is all related to how strong the network effect is. And very similar to 20-25 years ago when people launched blogs and chat groups, really what they were trying to do is create networks by harvesting and farming the attention, so whether this is a chat group around dogs or a website about cats, it’s the same thing, except now, in web3, where you can actually create much more financial construct around it, becomes much more financial by nature, but it’s the same thing.

Now, that being said, what other areas of capital that become important? so there’s economic, social, symbolic, and cultural capital. And what MEME coins currently play is mostly economic with some social capital, meaning: “I have a MEME, you have the same MEME…hey, we have the same MEME coin”.., that’s kind of the conversation that people have, which is very similar to NFTs as well. But then when you start differentiate, people are looking for cultural, symbolic capital, status capital that actually elevates them. It’s kind of like the real world. For instance, you might be a millionaire, good for you, but if someone has a million more than you, you might have 2 million or 3 million, the difference in terms of reputation between 1 million and 3 million is not that big anymore, that’s why we have classifications like millionaire or billionaire that type of stuff, right?!

So what do they do? they look towards cultural artifacts that give them that status whether this is art or car you have, maybe it’s a luxury good, maybe it’s a Board Ape NFT, these are all these elements that give you that elevated status and that actually becomes at next level. The MEME coins that will be able to succeed are the ones that can embed and not just be economic but can become social and cultural as well and you can see the big MEME coins have done this.

I want you to pick up one narrative only from the entire industry that you are the most bullish on.

Alright. Right now, I think the most important narrative which actually nobody talks about, we like to talk about things that people don’t talk about cause that’s actually how you build the future, ( you don’t build the future when something is really happening ), is reputation. I think the reputation layer in blockchain is the most important thing that would help build a better web3 because we need to have better trust. Statistics show that in any society, country, or network that has a high degree of trust, the economy is good, the GDP is good, and the growth is there. And just think about your own environment, if you work in an environment where you don’t have much trust, actually doesn’t work and the problem about web3, the way we solve trust in this trustless system, is you put up collateral. You can trust me because I have this asset, but that becomes really hard to be inclusive and it actually only creates a limit in the market because I have to own some bitcoin to enter the market, right?!

So you need to build a reputation. And Blockchain is perfect for that, for like zero-knowledge proof, this is what we’re trying to build with Mocaverse. And imagine if I can actually have a reputation with zero knowledge without knowing who you are but I know that you are someone who has a good reputation, that means I can give you better airdrops, that means I can give you more value. Today, most of the projects suffer because of being basically airdrop-farmed by bots who are faking their own traffic. It’s a form of, it’s not right to call it a fraud, but it’s actually not the intention. It’s like marketing to people that actually aren’t real people and that’s because those people don’t have a consequence for reputation. And, unfortunately, in blockchain, it’s like I can steal, you know, on one layer, and then I can move to another layer and nothing’s happened, right?! It’s like I can do bad things in Dubai and then come to Hong Kong and try again. That’s not how the real world works and that’s not how you built trust.

So I think there’s one thing that we need to focus on to make the space broadly better where everything, whether it’s Gaming, NFTs, tokens, or memes, it doesn’t really matter, layer one or layer two become better, it’s about building better trust and the antidote to that is reputation.

PART 2 of the interview you can read it inside of the next edition of ICN.letter, which will be issued on Friday, 1st of Nov.