0:13

Welcome to Epicenter, the show which talks

0:16

about the technologies, projects and people driving

0:18

decentralization and the blockchain revolution. I'm Sebastien

0:20

Couture. And today I'm very pleased to

0:22

be speaking with Yatsu. He's the co-founder

0:24

and chairman at Atomoga Brands. They're a

0:27

game development studio and venture fund. They

0:29

have helped incubate and have invested in

0:31

some of the largest Web3 games and

0:33

NFT brands. Yatsu is recognized

0:36

as a really forward thinker when it

0:38

comes to the impact of Web3 on

0:40

digital ownership, on culture and

0:43

on sort of the broader impact

0:46

of Web3 on the economy. And so very

0:48

happy to have him today and chat about

0:50

a whole bunch of things, including, of

0:53

course, NFT is the metaverse, blockchain gaming and

0:57

a whole bunch of other spicy stuff. So, Yatsu, thanks

0:59

for joining us today. It's a great

1:01

pleasure. Wonderful to be here and look

1:03

forward to having a spicy conversation, I

1:05

guess. Well, I

1:08

try to make it spicy once in a while, but also

1:10

hopefully I think like, you know,

1:12

we were talking about this earlier on Epicenter.

1:14

We tend to cover a

1:17

lot of infrastructure stuff. I mean, all of us hosts here

1:19

at Epicenter have been in crypto

1:21

for like, you know, eight or nine or

1:23

10 years. And of

1:26

course, you know, when you've been in the space

1:28

so long and you've came up with Bitcoin and

1:30

Ethereum, you sort of tend to

1:32

gravitate towards infrastructure. At least that's been the

1:35

case for us. And so gaming and NFTs

1:37

is something that we haven't covered a ton

1:39

on the show. Like, obviously, we've talked about

1:41

them. We've had some folks on, but it's

1:43

definitely one of the topics that maybe comes up every

1:45

couple of months. Like, you know, we had Immutable on

1:47

recently, but I can't remember before that,

1:50

like when we last talked about

1:52

NFTs. So probably during the last cycle. But,

1:55

you know, before we get started, like what sparked your

1:58

interest in NFTs

2:00

and you know at which

2:02

point did animoca decide like we're going

2:04

all in in this interesting

2:07

new technology and industry Well,

2:10

I mean, I think we've got into the

2:12

space really actively through, you know, crypto kitties

2:14

in 2017 our studio fuel

2:16

power was actually involved in

2:19

helping build a part of crypto kitties

2:21

and actually the

2:23

co-founder of fuel powered ended up becoming the

2:25

co-found one of the co-founders of Dafra labs

2:28

and That's about how that evolved and we

2:30

ended up becoming shareholders and of course publishers

2:32

of crypto kitties You know

2:34

literally a month and a half after their launch

2:36

in Asia So that's kind of how how

2:39

quickly we sort of wind in the space But I

2:41

think the main lens as to why we're

2:43

so fascinated with NFTs or its potential anyway

2:45

at the time Was that it

2:47

was really about the cultural power in these economies

2:49

that are being built around right? So when

2:52

we think of sort of the classic way that you might think

2:54

of an L1 L2 For instance, you

2:56

know We do have this lens that we think

2:59

of them as like national economies of sorts like

3:01

you can measure them as

3:03

a business you measure them essentially as a Sort

3:06

of you know this community values community network. Essentially.

3:08

It's almost like like a nation state And

3:12

one of the things that you create more

3:14

depth than any nation state think about the

3:16

physical world is culture Right

3:19

in fact, you know We describe culture as

3:21

the deepest TVL of any healthy economy Right

3:23

when you think about what we purchase in

3:25

the real world with its fashion and clothes

3:27

even the real estate You know cars, you

3:30

know, most of what we're buying is actually

3:32

not its utility We don't buy

3:34

a car just to take it from point A

3:37

to point B If we did then we'd go

3:39

for the cheapest possible car there is but no

3:41

we buy Ferraris We buy Lamborghinis who buy Rolls

3:43

Royce's we buy Tesla's Because they

3:45

have statements and the same goes for fashion

3:47

items with its broken bags or sort of

3:49

expensive shoes or you know Watches, I

3:52

mean who buys a Rolex to tell the time really

3:54

right? So so these are sort

3:56

of the cultural investments we have in that

3:58

space and one of the biggest areas

4:00

of culture investment in digital time that

4:02

we spend time on is gaming.

4:05

Gaming is a space that has over 3.2 billion

4:08

people that play, which is basically almost

4:11

two-thirds of the world's internet. It

4:13

is probably the cultural thing that we do online

4:15

that has its own new kind of meme framework

4:20

and culture framework that is gaming

4:22

native as in digitally native. It's

4:25

also the larger as an industry in

4:27

comparison to music and film, with over

4:29

$200 billion of

4:33

revenue in the gaming industry last year

4:35

and this year will probably be larger.

4:38

This does not include anything related to Web3 for

4:40

instance. These

4:42

are factors as to why we felt

4:44

that it made sense because gamers themselves

4:47

also already have a sense of

4:49

digital ownership, even though they don't own anything.

4:51

You ask a gamer who plays Fortnite and

4:53

he has skins in Fortnite, he's

4:55

not going to say, yeah, I read digital skins, it's great. It's

4:58

like going to the tax for a friend like, no. They

5:02

think they own it, right? When they own

5:04

currency inside a game, virtual currency in this

5:06

case, they think of it as

5:08

currency they own, which is not that far away

5:10

from cryptocurrency at least in terms of the concepts.

5:13

We focus on gaming not just because of

5:15

our own background as a gaming studio, but

5:17

also because we felt gamers had a more

5:19

natural path of adoption, which

5:21

I think is playing out

5:23

when you think about what happened with X Infinity

5:25

in 21 or Sandbox for instance. Now

5:29

basically, when you think about on-chain activity,

5:31

actually gaming is one of the biggest

5:34

on-chain activities throughout any chain for that

5:36

matter. I think we're seeing

5:38

those patterns evolve in Web3. I

5:42

think economists, you were talking about

5:44

Rolexes and Ferraris and all the

5:46

economists I think call these positional

5:48

goods, where I think

5:51

that's the technical term for it. There's

5:54

a whole sketch by a somewhat

5:57

emerging French comedian where he

5:59

goes to Switzerland and he goes and buys

6:01

a Rolex to see about whether or not he

6:03

feels better and our

6:06

French listeners will know what I'm talking about.

6:08

It's quite funny but yeah, basically he sort

6:10

of talks about these positional goods and I

6:12

think NFTs, when I saw this, I thought

6:14

this is just like NFTs. NFTs

6:18

are about an outward statement.

6:21

You own an NFT, you put it on

6:23

your PFP or whatever or you own a

6:25

skin in a game and it's more of

6:27

an outward statement about things that you identify

6:29

with or ideas that you might identify with

6:31

or community that you might identify with. I

6:33

think that that's incredibly powerful

6:35

and we're talking before the show about

6:37

how a lot of people in Web3 don't

6:40

get it. There

6:43

is I think a divide in the blockchain

6:46

industry where you have a lot of people

6:48

that are focused on crypto infrastructure, DeFi, these

6:50

sort of financial primitives and then there's an

6:52

entire other sector or part of the industry

6:55

that's really behind this sort

6:57

of like Web3 branding, gaming, NFTs and

7:00

gradients in between mind you. But I

7:02

think that the folks on the infrastructure

7:04

side maybe don't understand this so

7:06

well because their

7:08

monoliths and avatars are the DeFi protocols

7:10

themselves. They're sort of associated I think

7:13

very much to the culture

7:15

behind and the means behind the coins

7:17

themselves rather than the NFTs. Is that

7:19

something that you've observed as

7:22

well or how do you account for

7:24

this divide? So

7:26

first of all, I don't think there's a huge difference.

7:28

It's just a matter of how you understand the narrative

7:30

in your own construct because again it

7:32

comes down to culture. And so really

7:34

when we think about NFTs, we think about NFTs

7:37

as a way in which you can encapsulate culture

7:40

in a deeper sense because of the fact

7:42

that it is now unique in its nature.

7:44

So the example I often give is wedding

7:46

rings. Wedding rings in itself

7:48

could be argued to be quite fungible and certainly

7:50

when you go to a Tiffany's store, every wedding

7:52

ring is made the same way, way is exactly

7:54

the same and has the same value. But

7:57

the moment that ring goes into the ownership of…

8:00

you and your partner, it becomes

8:02

non-thungible in nature. It becomes something

8:04

special. And it shares in

8:07

the culture of only the two of you

8:09

and maybe a small community that's around it.

8:11

And that's really when we say non-thungible is what

8:14

we mean. We don't necessarily mean that it

8:16

has to be unique in the sense that it has

8:18

to have a different coloration. That's

8:20

obviously the more outward expression like what we

8:22

see with the random PFP generations of something

8:24

like board apes. But it isn't

8:27

actually the true meaning, at least from

8:29

a human perspective of non-thungible. Now

8:31

think about the things that we collect in the physical world. We

8:34

don't wanna give up, maybe a tennis racket that

8:36

we use to win an important tournament. Or if

8:38

we climb on Everest, then we will stick to

8:40

those clothes that we can. We don't throw them

8:42

out because they are entirely unique to

8:44

our history or our legacy. Why do we care about

8:47

things like ancestry? Why do we wanna look at our

8:49

history? Why are we inspired when we

8:51

see a flag, right? Of some nation or

8:53

some stories? I mean, these actually form our

8:56

culture, it's who we are. But

8:58

the construction of the story itself

9:00

is the shared culture. Meaning

9:02

that fungible tokens, when you think

9:05

about things like, and I don't mean just meme coins,

9:07

I mean just even things like Ethereum

9:09

or Bitcoin in and of itself, ownership

9:11

of that is already a kind of culture. But

9:13

it's not really as individual, it's more of a

9:16

collective culture that is shared across

9:18

the communities there. And maybe

9:20

with the challenging thing that I think

9:22

most people struggle with isn't the culture

9:24

side. It's the fact that they

9:27

don't think culture has value often, right?

9:29

They think culture is hard to

9:31

value versus something that is maybe

9:34

like currencies or

9:37

gold or infrastructure. There's a utility

9:39

behind it. And it's true the utility is important.

9:42

But when you think about us as people, and this is

9:44

the part where I would say if you're maybe

9:47

very technically focused and

9:49

you don't care about what you wear, for instance. But

9:52

you're, there may be- A lot of people in crypto

9:54

don't, you know, I guess they just

9:56

wear the teasers. Well, it depends, I mean, you know, it's funny.

9:58

I talk to someone that talks to people. And

10:00

then they have this really fancy watch or they have

10:02

this really expensive car, right? And you're like, why

10:04

did you buy that car? Oh, because it drives really fast.

10:07

Uh, sure. Like, you know, try that and,

10:10

you know, why do people buy really fast

10:12

cars in Hong Kong, which are really narrow

10:14

streets and you can't really drive fast, right?

10:17

So you're making a statement about who you

10:19

are. And it's again, membership of a culture

10:21

and of your own culture,

10:23

for instance. And I think as people, this

10:25

is really defining us, these stories, these narratives.

10:27

And by the way, if we don't have

10:29

them, we make them up in our

10:31

own head, right? We start creating our own

10:33

narratives in the absence of those that are shared

10:36

by others, but we want to be able to

10:38

be a member of something and share those stories. Like

10:41

sharing these stories in the vacuum isn't fun at

10:43

all. It's not human. So we want to

10:45

share them. And I think in the initial days, the

10:48

fungible token was one mechanism around that.

10:50

But the non-fungible, I think just creates

10:52

a much deeper expression and a much

10:54

more personalized expression, which is, uh, I

10:56

think, you know, why NFTs are so powerful. Yeah.

11:00

I'll, I've, I've retained from that, that,

11:02

uh, I'll have to let my wife

11:04

know that her, her, her wedding ring

11:06

is super special because it's non-fungible with

11:08

any other wedding ring. So

11:11

yeah, just make me be taking a

11:13

step back here and focusing on Anamoka

11:15

a little bit. So what is the

11:17

investment thesis of Anamoka and how, how

11:19

is Anamoka, um,

11:21

different from how other typical

11:23

investment funds operate? Well,

11:26

first of all, the investment funds of Anamoka

11:28

is different because it primarily, certainly historically has

11:30

come from balance sheet. So

11:32

we didn't invest as a fund. We

11:35

invested basically from, you know, corporate.

11:38

Uh, that meant that basically we have, you know,

11:40

we don't have a fun life cycle, right? That

11:42

meaning that we can hold things for the longterm.

11:45

And we're also really made these investments in the

11:47

past, really about how we help

11:49

build the sort of ecosystem and also how

11:51

it hopefully plays out in the ecosystem that

11:53

we're building. So for instance, when we, you

11:56

know, made the early investments in open C,

11:58

actually, you know, we, we. we had probably most

12:00

of the trade volume in office that wasn't very big.

12:03

Back in 2020 and 2019, we're

12:09

probably the top NFT collections back

12:11

in the day. And we

12:13

didn't want to build our own marketplace. We just

12:16

thought it made sense to use them and have

12:18

them focus on the expertise of marketplaces while we

12:20

focus on building games and have

12:22

all the portfolio companies that were building games such

12:24

as Ax Infinity trade their NFTs and open C

12:26

back in those days. So that's kind of what

12:29

we were focused on. And so

12:31

that's how we thought of it. But of

12:34

course, as time went on, we felt that

12:36

it was important to help see the ecosystem

12:38

broadly, such that Atamoka has now over 450

12:41

investments in Web3 and growing, because

12:43

we see these network effects compound

12:46

on themselves. So even if

12:49

the project itself might not have the

12:51

highest single returns, actually

12:53

their existence in our ecosystem helps

12:56

facilitate the growth of a dozen

12:58

or two dozen other companies. And

13:01

they all build network effects, and then they help each

13:03

other out because in Web3, you have

13:05

the ability to build on these networks

13:07

in a permissionless manner. You don't need

13:10

to have an API access. I can

13:12

basically just launch my NFTs on

13:14

open C and trade them pretty much from the

13:16

get-go, or whether this is

13:18

a sort of lending protocol or whatever. It doesn't

13:21

really need permission. And so

13:23

the fact that we can then make the

13:25

direct connections helpful to perhaps feature it or

13:27

do some marketing benefits, or from a technical

13:30

standpoint, the integration is pretty much

13:32

straightforward because of the fact that most of

13:34

it can be done through this permissionless nature

13:36

that is on chain. So anyway,

13:39

that's sort of the thesis

13:41

around building and compounding these network effects on

13:43

top of it, which

13:46

is also one of the reasons why we

13:48

started building Moka versus a way to help

13:50

sort of connect and unite these so

13:53

that we have a better way in which we

13:55

can help construct these network effects. So,

13:57

and Moka is thinking of the way

14:00

of Web 3, like, constructing almost like

14:02

a nation. And so that means

14:04

that we spend and invest in a manner where we

14:06

think these networks have developed that way. So

14:08

for instance, investing in guilds, we've

14:11

done quite a few of them, isn't necessarily because

14:13

we thought that each guild is going to be

14:15

the biggest home run ever, but rather because we

14:17

know that they were onboard Web 3 gamers. They

14:20

will educate them. They will tell them what to do

14:22

and maybe share the value or sort

14:25

of, you know, buy the goods that can be

14:27

rented to the players as an example. And

14:29

in so doing, training them about Web 3. So

14:32

that's valuable because that means every

14:34

other one of our games in the ecosystem, we've done over

14:36

140 games plus our

14:39

own, like, Sandal Galaxies or Sandbox or

14:41

Wreckleek or Gamey, for instance. And

14:43

they benefit from the fact that these guilds

14:45

exist in our ecosystem because they help trade

14:47

and onboard them. Right? So that's kind of

14:49

how we think about our investment pieces, which

14:52

is a bit different from traditional VCs,

14:55

which are obviously, because they're a fund

14:57

with third-party money, have to be very

15:00

much what directly sort of returns oriented.

15:02

Plus they have a lifestyle, right? So

15:04

timing matters to them. So for instance, in the early

15:06

days in 20, you know, we

15:08

couldn't raise any money from traditional VCs in 2018, 2019.

15:12

And most of the people, by the way, didn't

15:15

disagree with our thesis. They didn't say,

15:17

oh, Web 3 gaming isn't interesting. Or

15:20

back then they call it NST or blockchain gaming. They

15:22

understood the thesis. They were just worried

15:24

it was too early. And the reason why

15:27

it mattered is because the fund

15:29

life cycle was maybe already five years in

15:31

and if the cycle is wrong, then they

15:33

might be, you know, they might be sitting

15:35

on this investment for four years or five

15:37

years and there would be no exit. And

15:39

then they never know why they'd have a

15:41

loss, right? So timing really matters, which is

15:43

why it often appears that funds are very

15:45

momentum oriented. But in a way they

15:48

almost have to because the fund

15:50

life cycles are limited. Yeah,

15:53

interesting. And

15:55

how has the bear market affected,

15:58

say, animocas investors? over

16:00

the last 12 to 18 months,

16:02

I mean I guess more like, yeah, something like

16:04

12 months and, you know, has

16:06

the thesis evolved as a result

16:09

of the market downturn? Well,

16:11

I think the thesis, if anything, is strengthened because

16:13

of the fact that builders are going

16:16

to build in a bear market are the ones

16:18

you really want to invest in. I mean, you

16:20

think about sort of from a vintage perspective, which

16:22

ones were the companies that really made Animoka well-known,

16:25

were the ones that we invested in between 2018 and 2020. Those were

16:29

Dapper Labs and Dax Infinity and

16:32

WAX and Decentraland and Sandbox and

16:34

OpenSea, right? I mean, you know, and then

16:36

later on, UGA Labs, I mean, these are

16:38

the companies that defined the space, right? And

16:41

we got that, you know, in the early

16:43

or first stage rounds, and they basically are

16:45

the ones that sort of helped shape that

16:47

first wave. And sort of in the bear

16:49

market, you know, those opportunities come about because

16:52

also the builders who believe in the space

16:54

will build in this environment because it's not

16:56

necessarily just about the money, right? In this case, they're

16:59

sort of much more mission oriented because frankly speaking,

17:01

if it's about the money, you'll

17:04

have pivoted to AI, have pivoted to

17:06

some other industry out there that's more

17:08

obvious to raise capital from, for instance.

17:11

Whereas if you are a big believer in wave 3,

17:13

you will basically continue to build in the space because

17:16

you know, you're that passionate about it or

17:18

you see the impact on

17:20

purpose around whatever it is that you're building,

17:22

right? So those are typically the best conditions.

17:24

So while the quantum of companies

17:27

we invested in is reduced, not

17:29

because we necessarily don't want to make these investments

17:31

because there's just less of them that are good, right?

17:34

We still deployed capital and you see

17:36

us make multiple investments, big

17:39

and small. I mean, for instance, today, we

17:41

just announced our participation in TON and becoming,

17:43

you know, one of the

17:45

largest validators, for instance, in

17:47

that network. But also, you know, previously, literally,

17:50

you know, days before we announced investment in

17:52

another gaming project called Furcala, right? So

17:55

we continue to invest in

17:57

this space. We haven't really stopped. Cool.

18:01

Well, yeah, I mean, as a

18:04

first time fund manager, you know, raising in

18:06

this market, I fully

18:08

agree that now is like the best time to invest.

18:11

You know, we're investing in infrastructure

18:13

primitives along the, you know, the

18:15

modular stack interoperability primitives, things of

18:17

that nature, not so much in

18:19

gaming and in FTs for the

18:21

moment, at least. It

18:24

really feels like, you know, we're going

18:27

against the grain in terms of, you know, what,

18:29

what, what people are telling us, right? You

18:31

know, I got so many blank stares when I started raising the day

18:34

after FTX collapsed. And,

18:36

and so, you know, now we're very happy

18:38

to be, be able to deploy currently. Think

18:41

about all the projects that, you know, you would have invested

18:44

in over the last 12 months,

18:46

whether these are tokens or even live tokens,

18:48

for instance, even one of the big opportunities

18:50

in the last 12 months wasn't necessarily private

18:53

investments, but public ones in the sense that

18:55

total is already trading. And you

18:57

would have had incredible returns if you did that, but

18:59

you needed to have conviction in Web3 to do it.

19:01

If you didn't have conviction in Web3, if you were

19:04

like, I'm not sure about this, and it's hard. But

19:06

if you knew that, you know, and you believe that this was

19:08

something that was here to stay and the fundamentals are what they

19:11

are, then, you know, you don't

19:13

mind if it's one or two years of

19:15

a bear, because eventually it will come back. And

19:17

that's exactly what we've seen. And I mean,

19:19

you know, even something as large and fundamental

19:22

as Bitcoin has essentially doubled in

19:24

value from its lows from, say, 12 or

19:26

so months ago. Yeah,

19:29

absolutely. So let's

19:31

let's talk about me. You talked about Mokaverse and

19:33

I'd like to shift to

19:35

NFTs here more specifically. And

19:38

we'd love to understand, like, what is

19:40

Mokaverse and what's the vision here? But

19:43

first, I think one thing I'm

19:45

curious about is, you know,

19:47

Moka has, I think, lots

19:49

of connections with big brands and

19:52

has sort of

19:54

been a been a force to get

19:56

brands to understand, you know,

19:58

Web3 and these concepts. and

20:00

adopt them. What

20:02

kind of big brands are

20:05

approaching NFTs, utilizing

20:07

NFTs, experimenting? Who are

20:09

the early adopters and who are the most

20:13

forward thinking when it comes to adopting

20:15

Web3? Well, generally

20:17

I think the most forward thinking brands that we've

20:19

seen have been the luxury brands and the fashion

20:21

brands, because in some ways

20:24

they probably understand virtual value the best. When

20:28

you actually buy a Birkin bag, how much

20:30

of that value is different? The materials

20:33

or the pure utility or holding things in

20:35

the bag? And the answer is, of course,

20:37

nothing. That's not why you buy it.

20:39

So what you're buying is 90% virtual in its

20:41

construction. And that is

20:43

when you talk to them about the metaverse and

20:47

you talk about what's important and why people buy things that

20:49

they do, which is

20:51

about culture and community, they get it. So

20:53

that's one of the reasons why they were the first ones in

20:56

the space and continue to be investing in that space,

20:58

whether it's land or NFTs. And they buy

21:00

board apes. They decorate

21:02

on them. They address the community. So

21:05

they think they're quite forward, which is one of the reasons why,

21:07

for instance, in Europe, particularly France,

21:09

especially Paris, has actually, interestingly

21:11

enough, been a hotbed of

21:13

innovation. It's not

21:15

just Sandbox or Dogami or

21:18

just many other companies that are their wise life

21:21

beyond these studios all evolving out of

21:23

France because they understand that

21:26

very, very well. So that's

21:28

kind of those are the one type of

21:30

brands. The other ones that's interesting has been

21:33

sort of the financial services in Asia. For

21:35

instance, institutions like HSBC, Standard

21:37

Chartered, DBS,

21:40

all of these sort of financial institutions, and

21:42

also real estate companies like New World and Sumo Kai

21:45

and all those guys have actually been very active

21:47

in Web3 because they also

21:49

understand the value of these things. Like in the

21:51

case of, for instance, like an

21:53

HSBC, one of the reasons they would be

21:55

building on Sandbox isn't because it

21:57

looks like Minecraft. It looks like a game. game

22:00

or Metaverse, but it's because the

22:02

average landowner in Sandbox has

22:04

about half a million to a million dollars worth of assets

22:06

that is visible on chain. So

22:08

these are perfect private banking clients, right?

22:10

And in some ways, it's not that

22:13

different from basically opening

22:15

up a shop in Fifth Avenue, for

22:17

instance, or in Beverly Hills, because

22:19

you want to address that customer and that audience and

22:21

reach out to them, right? So

22:24

those are the type of early institutions that get

22:26

it. And in Japan, for

22:28

instance, our investors and partners are

22:31

groups like MUFG, which is one of the biggest banks

22:33

in the world, and Mitsui, right?

22:35

And again, these are financial institutions.

22:38

They get it. And I think there's

22:40

a correlation here as well. Those who understand financial

22:42

systems well also are ones

22:44

who are more easily attuned to

22:47

Web3, whereas the type of

22:49

brands and companies that are maybe not

22:51

as oriented towards sort of the

22:53

value of sort of things are

22:55

less likely to be attuned to them because

22:58

of the fact that that's not their reach and also

23:00

not their strategy and approach. And

23:02

many of their natural customers might

23:05

also not be that audience, right? So if

23:07

your luxury brand, the kind of people who can

23:09

afford a Rolex, right, for instance,

23:11

or LDMH type of stuff are

23:13

more likely going to be people who are

23:16

also more financially literate. And therefore,

23:18

the connection between that and Web3 is much more

23:20

natural. Actually,

23:22

you talked about Web3 and

23:25

financial literacy in a talk recently. I

23:28

saw a snippet of it on Twitter. I was

23:30

wondering if you could expand

23:32

on what you're trying to express there.

23:35

The first point that we discovered in this sort

23:38

of journey of Web3 is that most of the

23:40

world is not financially literate. And

23:42

the way that we define financial inclusion is

23:45

you have a bank account, and therefore, you're financially

23:47

included. Yes, you can get your paycheck. But

23:49

what do you do? Not very much. You

23:52

get your paycheck and you spend it. How

23:54

many people actually make investments or

23:56

actually think about their capital or

23:58

understand even compound interest? If

24:00

they did, then they wouldn't be taking out

24:03

credit cards with crazy interest rates and

24:05

all that type of stuff. Which

24:08

is one of the reasons why traditional

24:10

finance continues to take advantage of people

24:12

like that because they lack financial literacy.

24:16

It's one of the reasons why regulation has to exist

24:18

in order to control these type

24:20

of predatory tactics that we see the traditional

24:22

finance companies have done because they make money

24:24

for money and get away with it. I

24:27

think the version you look at

24:29

in the US, the first

24:32

time experience that most young people have

24:34

on true finances is student debt. And

24:37

it's a hot topic obviously, but it's

24:39

a problem because your first experience is essentially

24:41

one of indentured servitude by basically

24:43

taking a loan that you have to repay

24:45

probably for the next decade or less so

24:47

before you can even begin to build your

24:50

own financial portfolio for example. And that's just

24:52

not a great outcome. It also ensures

24:55

a setup that is really not very

24:57

strong and it gives a sort of

24:59

negative feeling towards finance and this

25:01

aspect of financial freedom becomes aspirational which is kind

25:03

of crazy if you think about it. So

25:07

the thing that we believe in is that

25:09

if you can teach children basically

25:12

algebra and all sorts of

25:14

math concepts, then you can certainly teach them about

25:16

compound interest and financial systems like you

25:18

don't need to understand complex derivatives. That's not what

25:20

you need to know. But you

25:22

need to have some financial awareness and so

25:25

we believe that it's entirely possible for

25:27

our kids to basically build portfolios, small as they

25:29

will be, so that by the

25:31

time they go to college even if they want to or

25:33

need to, they'll have ways in which

25:35

maybe you can pay for their studies or

25:38

have a portfolio of their own and will

25:40

understand what they're getting into as well as

25:42

a result of all of this

25:44

sort of financial stuff that's happening

25:46

around them that they don't understand until much later

25:48

in life. So we think that's

25:50

a key skill that's needed. But you

25:52

can't learn this in school in part

25:54

because the teachers are financially illiterate as well.

25:57

They don't have portfolios. In fact, teachers are among the ones.

26:00

some of the least paid people in

26:02

the world and therefore they live basically

26:04

paycheck by paycheck. Even if

26:07

they knew something about financial literacy, they can't even

26:09

experiment because the other thing about

26:11

financial literacy is an appetite and an

26:13

understanding of risk. If

26:15

your life is essentially living

26:17

hand to mouth type of

26:20

thing, then risk is

26:22

becoming a luxury that

26:24

you simply can't afford to do. We

26:26

have to train and experiment with that at a

26:28

younger age, but obviously not of things of great

26:31

value. We think Web3 and blockchain gaming

26:33

is a great way of doing it because

26:35

as children we learn through games and

26:37

to play anyway, but now as the

26:39

world has evolved from physical to digital

26:41

play, we spend in many cases something

26:43

like half of our time awake or

26:45

even more in some cases online in

26:47

one form or the other. We

26:50

can create essentially experiences where you learn

26:52

about financial literacy that way, that it

26:54

evolves us essentially as we get older.

26:57

In gaming, we're already dealing with virtual currency

27:00

and we're already dealing with skins and

27:02

some kind of goods, but right now in Web2

27:04

games, you're not allowed to trade. You're

27:07

not allowed to sell them. You're not allowed to

27:09

create any financial value, small as it may be

27:11

because it's against the interest of those Web2 game

27:13

studios, but in Web3, you're free to do all

27:15

of that. In that environment,

27:17

we believe that gaming, Web2 gaming, and

27:20

actually bring in financial inclusion. What

27:22

gaming has done, for instance, with Axi Infinity back

27:25

in 21 and 22 were millions of

27:28

Filipinos who don't have any

27:30

formal education, don't understand anything

27:32

about money, but were able to open

27:34

a crypto wallet and basically receive,

27:36

trade, and spend and fund basically

27:39

in crypto. That just

27:41

means that if they can do it, that

27:43

it's accessible to the world. There's

27:47

an interesting parallel to an article

27:49

I read recently. I

27:51

forgot who wrote the article,

27:53

but I have to look for it.

27:56

But basically, the article has claimed that...

28:00

the zoomers and

28:02

the generations to come after them

28:05

were going to be or were

28:07

demonstrating some

28:10

amount of delusion

28:13

about their actions in the real world because they

28:15

grew up on the internet and because they

28:17

grew up in sort of like a virtual environment

28:19

with no real repercussions, a

28:26

lot of them were sort of

28:28

socially awkward and did things in

28:30

the real world that were not

28:32

in their best interest or that

28:34

sort of mirrored

28:37

or echoed the types of behavior that

28:39

they would have online and

28:41

I thought it was interesting. I mean I don't know if there's like

28:43

any sort of real sort

28:46

of research behind that but I wonder here with the

28:48

risk thing, with the financial

28:50

literacy thing, if you

28:54

grow up taking these

28:56

sort of fake risks in a web 3

28:58

game or some sort of digital environment, are

29:01

you more predisposed to then taking

29:03

unnecessary risks in

29:05

the real world where the consequences can be

29:07

very different? I know this is sort of

29:09

getting deep philosophical here but... No, no, it's

29:11

a good point but I think this is

29:13

by the heart of many design questions when

29:15

you think about designing games or experiences and

29:17

even when you think about designing financial systems

29:19

in DeFi for instance, that's a part of

29:21

that. So first of all, I don't generally

29:23

subscribe to that view because if that were

29:26

true, then we take the view

29:28

that we need to protect people from

29:30

things of information or financial literacy

29:32

or whatever that may be. And

29:34

I mean I remember, so I

29:37

was there in the early internet in the

29:39

early 90s, I

29:41

was an accomplice of user in the 80s and

29:43

many of the arguments that were made at the time

29:45

was around too much information

29:48

is bad, we should basically limit

29:50

access, people aren't smart enough,

29:53

they got to abuse all of that, right? And

29:56

basically, these were incumbent

29:58

sort of information. monopolies

30:01

that didn't like the idea that suddenly there could

30:03

be user-generated content and that it could be

30:05

citizen journalism and that there could be someone

30:07

out there who was not working for

30:09

a newspaper or a magazine that suddenly had a

30:11

voice, right? And that somehow seems threatening. And

30:13

the same was, by the way, true when YouTube

30:15

came about and then people said there was no

30:17

way that it was going to work. It was a Gutenberg press. Yeah,

30:20

exactly, right? Or the car. Yeah,

30:23

exactly, right? I mean, so there's always that

30:25

type of scenario where you have persistence

30:27

because change is scary in some ways, but

30:30

also it's disruptive. And I think the key

30:32

point being is it's disruptive in

30:34

which way. And I think,

30:36

broadly speaking, anything that makes

30:39

access more egalitarian, more democratic,

30:42

we think is positive versus

30:45

the opposite, meaning that if it is

30:47

becoming more elitist or more controlled, that's

30:49

negative. Because even though

30:51

abuses will happen on a net

30:53

basis, more people have knowledge, it

30:55

becomes more of an insulation of

30:57

issues. For instance, if most of

30:59

the world was financially literate, then

31:02

the ability to perform financial crimes is very small.

31:04

The reason why financial crimes is possible is because most

31:07

people don't know what they're doing or

31:09

they get entitled. And so we need regulation for

31:11

good reasons because we need to protect people because

31:13

they truly don't know. But how do we define

31:15

that? Well, net worth. Okay,

31:17

but hold on, right? That means, in some ways, if

31:20

I don't achieve that net worth, I never have the

31:22

ability to get there in the first place. Or am

31:24

I actually able to participate? So

31:26

the system had good intentions, but it ended up

31:28

having an effect to protect them, had

31:32

to find a way to identify whether

31:34

you were financially literate or not, which

31:37

isn't the same. You could be financially literate and

31:39

not have a lot of money and therefore still be the right

31:41

person to do that. Think

31:43

about financial institutions.

31:46

Every person who starts off as an analyst in

31:49

one of the big banks didn't

31:51

start off as a millionaire. They came

31:53

fresh out of school. They probably have student

31:55

debt. They have negative equity. And

31:57

yet they got the opportunity to work there. So,

32:00

which means that we can take people who are

32:02

not financially successful

32:05

and bring them into the world of

32:07

financial success. And if

32:09

most of the world had this, then we

32:11

think it's more self-inoculating. And the same is

32:13

true for information as well. In

32:15

the early days, we just simply believed what

32:17

the newspaper wrote. And

32:19

today, frankly speaking, we realize that newspapers are

32:21

as biased as us, maybe even more so.

32:24

And so we take a more nuanced perspective.

32:26

Unfortunately, it hasn't been good for seeking truth.

32:29

It has been confusing for people who always thought

32:32

that maybe there was one source of truth. But

32:34

now we realize that there's multiple sources, and we need

32:37

to take perspectives, and we need to analyze, and we

32:39

need to basically not take things for granted the way

32:41

that we do. Right? So to

32:43

me, I think of it as a net positive, as

32:45

long as it becomes more open and democratic. This

32:49

kind of touches on another topic that I wanted

32:51

to ask you, which is about,

32:53

I think Web3

32:55

Games, probably because

32:57

of Axi Infinity, were quite

33:00

used in the Philippines, Southeast Asia.

33:03

What is it that most people

33:05

in the West fail to understand

33:07

about these markets and the relationship

33:09

with Web3 Gaming and NFTs? So

33:12

I actually think that the West, in particular

33:14

US, more so than even Europe, has

33:17

taken a very negative view to NFTs because

33:19

of the view they have on crypto, and

33:22

more specifically, the view on capitalism.

33:26

So the point is that there

33:29

was a recent Pew study that showed that, I

33:31

think, 60% of Americans under the

33:33

age of 30 preferred socialism over capitalism.

33:36

This analysis would have come out, say, a

33:38

decade or so ago in the US. That would have been impossible.

33:41

But today, actually being anti-capitalist

33:43

is a political platform. And

33:46

I mean, party members in the US

33:49

are basically campaigning against capitalism

33:51

effectively. Maybe they don't say it in

33:53

that way. But in effect, they are

33:55

going to war against capitalism. You know,

33:57

billionaires are fault in the system. you

34:00

know, you're working hard isn't really fair, right?

34:02

Inherited wealth, you know, now all these things

34:05

are basically things that have become points of

34:07

attack and for good reason, because

34:09

over the last two decades or three decades

34:11

or so, labor has basically

34:14

underperformed greatly in comparison to capital.

34:16

And unfortunately, those people who

34:19

have not been in the capital class and have basically

34:21

been in the labor class, which is still the majority

34:23

of people in the world and like in America, for

34:25

instance, they basically been on

34:27

the net basis are probably making less money than

34:30

their parents have. And

34:32

that's basically unprecedented in the

34:35

case of, you know, recent

34:37

history. And also means

34:39

that people who don't have access to

34:41

this money, then look at money

34:43

as fuel themselves. It's like, that's unfair. Like, why

34:45

do you have this, right? Whereas I remember when

34:47

I first went to the US in 90s, even

34:49

though it was a recession, it was

34:51

still about sort of a meritocratic approach, which was

34:53

like, if you work hard, you'll make it. Everyone

34:56

just had this goal. And if you had

34:58

success and you made money, then it was

35:01

celebrated as, you know, self made men and

35:03

or women or whatever that may be. That's

35:06

kind of that narrative doesn't really seem to exist

35:08

anymore. Right. And you

35:10

know, when I was basically stuck during COVID

35:12

in California, I, you know, I began

35:14

to understand this, when I

35:16

started seeing sort of the sentiment, you know,

35:19

what was happening in San Francisco, for instance, right, I

35:21

was stuck in in the Bay Area, and

35:23

sort of this sort of, sort of incredible

35:25

anti sort of, you know, sort of

35:27

campaign against those that had had wealth

35:29

or, you know, Silicon Valley, people

35:31

even, you know, who are working in Silicon

35:33

Valley companies wasn't even related to, you know,

35:36

founders of these businesses, people

35:38

really didn't like them because, because

35:40

of the fact that, you know, they were

35:42

wealthier, and it seemed unfair to them. And

35:45

so now you take this into the world of gaming,

35:48

which is thrived by its design, quite meritocratic in

35:50

terms of skill, if you're a good gamer, you

35:52

don't have to pay money to be a good

35:54

gamer. And then you introduce things

35:56

like NFTs. The first reaction you have

35:58

is, wait, does it mean that I need users

36:00

suddenly pay thousands of dollars

36:02

to enjoy my favorite game or even worse,

36:04

if someone who spends thousands of dollars doesn't

36:06

mean he is better than me now in

36:09

the game, then he shows things and

36:11

presents themselves in a way that I couldn't anymore. Whoa,

36:13

whoa, whoa, whoa, whoa, right? That's something we just, we

36:16

can't have, right? And I

36:18

think this is something that's not just felt

36:20

inside sort of the

36:23

gamers themselves, but also in

36:25

the studios that make games because game

36:27

designers and game developers themselves are kind

36:29

of in the same category. Now

36:31

you go to Asia, for instance, the opposite is true,

36:34

where people are excited. The biggest game

36:36

studios and game companies in the world,

36:38

I mean, outside of ourselves, like Square

36:40

Enix or Sega and so on, they're

36:42

all embracing Web3 and they're talking about

36:44

tokenizing their gaming systems and they talk

36:46

about NFTs and blockchain because they are

36:49

excited about property. And I think this

36:51

has to do with the history of Asia as well. We

36:53

think about a place like South Korea, which is one of

36:55

the biggest gaming places in the world today, 12th

36:57

or 13th largest GDP. Forty

37:00

years ago, its GDP was smaller

37:02

than North Korea. It was

37:04

one of the poorest countries in the world. And

37:07

actually that is true for most of Southeast Asia. If you look

37:09

at Indonesia, if you look at the Philippines, if you look at

37:11

all these places, these were for the

37:13

most part, pretty desolate places. The Philippines is a bit

37:15

of an exception, but that's a different story. But anyway,

37:17

China, for instance, also, you know, hundreds of millions of

37:20

people lifted out of poverty over the last 40 years.

37:23

So how is it possible? Community

37:26

rights, basically, embracing capitalism.

37:29

I mean, yes, you know, China

37:31

may have the sort of communist

37:33

mantle, but it's more and

37:35

more capitalist than most of Europe in

37:37

terms of when it comes to economics and

37:40

business. And so that

37:42

embrace and people have benefited from that,

37:44

have basically seen how that

37:46

worked. And so they're excited about capitalism. And

37:49

I sometimes joke about this, but it's

37:51

sort of somewhat true. The American

37:53

dream seems to be more alive and well in

37:56

Asia than it is in America itself. And

37:58

so things like Web3. property rights,

38:01

NFTs, land and

38:03

sandbox, these are things

38:05

that actually excite them and they see the

38:07

opportunity because in living memory this

38:09

has benefited them in the real world versus

38:12

what they have experienced in the US. I

38:15

think that kind of echoes a

38:18

lot of ways. You

38:20

grew up in Austria, right? I'm

38:23

here in France. I

38:25

think there is this sort

38:27

of working class sentiment that,

38:31

at least in France, I'm not

38:33

entirely sure about Austria, I think this

38:35

kind of overlaps with Germany a little bit. Oh,

38:38

definitely. Definitely. There is this

38:40

working class sentiment that work

38:43

is a burden that

38:47

sort of like

38:49

this anti-miracratic kind

38:51

of ideology that permeates through some

38:54

aspects, some parts of society. I

38:57

think that that in a lot of

38:59

ways echoes in

39:01

the sentiment that crypto is

39:04

not like a serious thing or that it's a scam. It

39:08

is like sort of downplaying this thing

39:10

that is inherently miracratic and

39:13

I sort of see that all around me

39:15

and then I sort of wonder

39:17

why the US,

39:19

I think in the US it's particularly

39:24

like interesting how there's

39:26

been this shift from the

39:28

miracratic ideology to like this

39:30

anti-capitalist sort of ideology. I

39:34

grew up in Austria in the 70s

39:36

and 80s and that was still the time

39:38

when there was the Iron Curtain. So basically,

39:40

going from east to west, my mom used

39:42

to work in the eastern side of Germany

39:44

in East Berlin. So when I would

39:46

cross over to see her, I

39:48

was a totally different world and I think it

39:50

did shape my thinking around why capitalism is better,

39:53

why we need property rights, although back in the day when I was

39:55

a kid, I didn't really think about it this way, but it certainly

39:58

is a vivid memory that I have in terms of. sort

40:00

of the desolate environment that was, I mean it was literally 1984

40:02

in East Germany for

40:06

instance. But the other thing

40:08

is that in the social democratic countries, meaning

40:11

Germany and Austria, and

40:13

maybe to a certain extent France, I think France is a

40:15

little bit different but still sort of shares much in the

40:17

same sentiment, you can't really talk about

40:19

money in the same way. You

40:21

know like money is almost dirty to talk

40:24

about money. And then

40:26

I went to the US and then there was like

40:28

money, money, money and look

40:30

at my stuff that I bought. And then I came

40:32

to Hong Kong and that was basically capitalism on steroids

40:34

where it wasn't, it was like

40:36

everything was about money and if you didn't

40:38

have any then you were worth nothing. And

40:41

then you had the other side of the problem which was the

40:43

extreme side of what happens when you have sort

40:45

of excess capitalism and where you basically sort

40:47

of, you know, capitalism at all costs,

40:50

right? It didn't matter basically

40:52

at what expense it was, right? So that

40:55

definitely shaped the thinking. But

40:57

I think also when you look at Germany

40:59

and Austria, and I think the American

41:02

influence in the early days is

41:04

that work and labor was considered

41:06

good, right? I mean it was pure. If

41:08

you worked hard, that was how you

41:11

identified yourself. And that was kind of the, really

41:13

it was the Protestant and eventually evangelical

41:15

sort of perspective. Abeit

41:17

Maxheil actually came from like, from

41:20

Dieffenwag. It was not the Nazis. I mean

41:22

they stole it. I mean they stole a

41:25

lot of things. But this sentence, you know,

41:27

this philosophy came from the Protestant philosophy,

41:30

right? And of like work sets you free,

41:32

work makes you a better person and so,

41:34

you know, a lot of people confuse that

41:36

but yeah. No, absolutely. And it was sort

41:39

of this, I guess the original

41:41

sort of Martin Lutheran perspective, which

41:43

then, you know, because of the

41:46

first wave of immigrants, basically

41:48

you went from Europe to the US, were

41:51

basically very Protestant or I guess evangelical

41:53

in nature. And so they brought that

41:55

work culture with them. And

41:58

it worked for them as well because it was a new land. There

42:00

was a new opportunity and you had to work

42:02

hard and sacrifices were made. But

42:04

also because everyone started almost at the same

42:06

ground zero. So you didn't

42:08

have the issues of inherited wealth. You didn't

42:10

have the issues of a

42:13

king or queen or royalty that

42:15

basically sort of had structures around

42:17

delimiting your success and these monopolies

42:19

that were established. And so that

42:21

worked for a while. But

42:23

of course in the US in

42:25

the last 20, 30 years, inadvertently,

42:28

partially because of the inflation of money, right?

42:31

And partially because of the economics involved

42:33

and money and because of the way that

42:36

inheritance works and so on. Money

42:38

became futile in its own way. If you had

42:40

money, you would make more money. If you had

42:42

money, you could get to better universities. You could

42:44

get access to better education. And

42:47

suddenly this whole merit-traumatic idea was destroyed

42:49

because it's like, wait, I can't get

42:51

into that school even though I seem

42:53

to be pretty smart. Working

42:55

hard doesn't give me that effort. And

42:59

that's really I think kind of what

43:01

America is searching for. I think the battle

43:03

of America's soul is kind of based a

43:05

little bit on that over the last sort

43:08

of, I would say, decade in American politics,

43:12

which I think is impacting as a result sort

43:15

of the perspectives on crypto and Web3.

43:18

And you can kind of see that from the perspective of

43:21

the Democratic versus the Republican Party, you

43:23

know, where their battle lines are being formed.

43:26

Absolutely. Absolutely. I mean, we've kind

43:28

of departed here from the topic of NFTs.

43:31

But this is really interesting. Let's

43:33

maybe really back in. What

43:37

are some of the other use cases for

43:39

NFTs that you're really excited about? I think

43:41

everybody knows about the PSPs and, you know,

43:43

like gaming skins and maybe to some extent

43:45

some financial applications like using NFTs

43:49

to represent liquidity positions or even domain names

43:51

in the case of VNS. But

43:54

what are some of the like in

43:56

the next cycle, what are going to be like

43:58

the hot, like the really. interesting

44:01

NFT use cases that you're most interested

44:03

in and that animoka is investing in.

44:05

So I mean first in

44:07

gaming applications obviously the utility side but

44:10

the one thing that we think is really important

44:12

when it comes to NFTs is you

44:14

can't not marry and include the

44:16

financial aspect of NFTs in and

44:18

of itself right even if it's

44:20

not intrinsic you know and before it

44:22

was just in a trading patterns but now

44:24

basically you can actually really have it as

44:26

a way in which you can share ownership

44:28

in things on an individual basis.

44:30

So for instance I have two examples one

44:33

of them is in games and the other one

44:35

is in education which we're really excited about and

44:37

that's something we're really pushing with open campus and

44:39

tiny tap but let me first talk about the

44:42

gaming example. In rec league for instance if

44:44

you're basically owning the NFTs

44:47

then if a web 2 gamer plays the game

44:49

he doesn't have to buy the NFT but

44:51

he can rent them which is effectively what they do

44:53

in all the games. He may think of it as

44:55

buying the skin but effectively he's renting it. The

44:58

owner of the original NFT of that design

45:00

now receives a revenue share directly because it's

45:02

his NFT right it's like and

45:04

that actually creates a nice blend between

45:07

the web 3 and the web 2 gamer that can

45:09

still enjoy the game but they have different ways

45:11

in which to interact with that financial layer shall

45:14

we say right because the web 2 gamer meant

45:16

only want to pay a dollar or two to

45:18

enjoy the experience he doesn't want to buy and

45:20

own something and that's okay right same people why

45:23

people rent a house versus buy a house for

45:25

instance or rent a car versus buy a car

45:27

for instance right. So I think the

45:30

new web 3 games that are coming out

45:32

are more elegantly sort of marrying the blend

45:34

between that two and I think you

45:36

know in 24 we're going to see some very interesting

45:38

developments because many of these games are about to come

45:40

out for instance. And then the

45:42

other area which I'm really excited about this what's happening

45:45

in education you know for instance with

45:47

you know most recently we just did another batch

45:49

of sales of what we call publisher NFTs and

45:51

publisher NFTs are NFTs that teachers

45:54

created to create learning content could be

45:56

like English, Spanish whatever courses and these

45:59

courses are currently being rented essentially or

46:01

sold in places like TinyTap and

46:03

they could they earn a yield right

46:06

you know they might make $10 or $50 or $100 a year it's paid for

46:09

by parents or teachers who then give it to

46:11

their kids right think of it as a as

46:14

a kind of Coursera or a sort of

46:16

you know YouTube learning program where you pay

46:18

a subscription fee and whoever makes a content

46:20

gets a fee for that but now when

46:22

you only NFT of that course content you

46:25

now own basically the revenue stream from that

46:27

you also can promote it so you can

46:29

make it more famous if you want or

46:31

more more desirable or improve on it

46:33

and you don't maybe make more of it so

46:35

you this is yours now but the point is

46:37

that you a teacher is now

46:39

able to create their own yield instrument and one

46:42

of the problems is that before selling on these

46:45

type of intellectual property assets wasn't

46:47

possible or feasible because

46:49

the cost of doing so was very

46:51

high so unless it made at least tens if

46:53

not hundreds of thousands of dollars a year you

46:56

wouldn't be able to sell it on to someone

46:58

because the cost of the lawyer the contract rights

47:00

and whatever is that they need to do in

47:02

negotiation was just too lengthy so you

47:04

just couldn't do it but that's a problem for

47:07

places like New Princess Venezuela or

47:09

Philippines where teachers might only make

47:11

ten or twenty dollars a month and

47:14

were whatever content they create might

47:17

only generate an additional ten or twenty dollars a year

47:19

right so that's nice add-on income but it's

47:21

not going to be life-changing but

47:24

now I can buy that same content

47:27

maybe for fifty or hundred dollars and

47:29

in so doing I get a twenty percent yield

47:32

but the teacher basically makes half a year

47:34

of the salary and that

47:36

becomes life-changing and that changes and of course what

47:38

happens when we did that is that the teachers

47:41

then start to make more content and

47:43

start to create businesses around it and

47:45

that's basically what happens when you have property wise and

47:47

intellectual property protection right you can build foundations of

47:49

businesses on top of it I mean if you

47:51

didn't have property rights in the democratic

47:54

institutions that we live in today for America didn't

47:56

have property rights then you wouldn't have businesses and

47:58

you wouldn't have mortgages and banking facilities, and the

48:00

way in which you didn't have capital formation, which

48:03

is basically now possible with NFTs that

48:05

can be represented. Because through a transaction

48:07

of less than a dollar, I

48:09

can have the contract rights, the IP rights,

48:12

the finite where the money goes, everything

48:14

done in one single transaction. And

48:16

I don't need a lawyer, I don't need all that kind of

48:18

stuff to be able to sort of do that.

48:21

And I think this, this is really powerful,

48:23

not just for developing countries, but also for

48:26

any other place for other type of assets

48:28

that you want to sell or offer, and

48:31

opens up intellectual property rights

48:33

management to every segment of

48:35

concentration. For instance, even with something like

48:38

Dance Fight. You know, dancers are

48:40

not able to immortalize their moves

48:42

as in a tease. And again,

48:44

that sounds whimsical and silly and stupid, you might

48:46

say, why would you do that? But you know,

48:48

these dancers have had their moves ripped off by

48:50

big games like in Fortnite, who basically

48:52

turn them into emotes and emojis.

48:55

And they don't give credit to the creators

48:57

because they had no way of basically in

48:59

sort of demonstrating that they were the creators

49:01

of this. And again, NFTs consult that. So

49:03

there's many cool use cases that are evolving

49:05

and many more that we haven't even imagined,

49:08

that I think will sort of really

49:10

create space in the culture and entertainment

49:12

and education space. You

49:15

know, in in the kind of web three

49:17

infra, like crypto infra, we've seen like this

49:19

module ization of the stack and also a

49:22

module ization of the application level. Is

49:25

this also happening in the NFT space? I

49:27

mean, it sounds like it right from what

49:29

you're describing, right? Like how does that like

49:32

overlap? Well, I mean, what happens is that

49:34

we describe it generally as interoperability. But really

49:36

what happens is that owning an NFT or

49:38

NFTs makes you the owner and

49:41

the platform and the NFTs themselves platforms, meaning

49:44

that companies and businesses are now building

49:47

experiences, stacks or even new chains on

49:49

top of the ownership of

49:51

essentially the the NFTs

49:54

in question, because they become targeted audiences

49:56

and customers. Like an example I gave

49:58

about people who are interested in Sandboxes

50:01

because they want to address the customers of Sandbox.

50:04

Or for instance, if you want to build something for

50:06

people who own board apes, they don't do it because

50:08

they just love board apes, but because the

50:10

board apes represent a community of very

50:12

high-net-width individuals. Or for instance,

50:14

one of the Web3 games, which is also

50:17

part of our portfolio called Pixels, is

50:19

becoming very successful, but we built

50:21

on Ronin. And Ronin is a

50:24

chain which is basically supported by

50:26

the guys behind X Infinity's Skymebius.

50:29

And why did that sort of take off?

50:31

Because people on Ronin were gamers on

50:34

X Infinity, and so it was natural

50:36

for them to basically play another

50:38

game within the

50:40

network because they had already amassed network effects of that

50:42

effect. So the thing

50:45

is that the culture layer, as

50:47

it were, was represented through NFTs,

50:49

allows basically people to then compose all

50:52

sorts of brand-new experiences on top because

50:55

it's on chain. That's exactly the beautiful part

50:57

about it and its permissionless nature. I

50:59

mean, they could be vampire attacks, but the

51:01

reality is that it's of value to the

51:03

owner. If I own

51:05

this NFT, then I

51:07

receive potentially valuable experiences

51:10

because people would build to reach me as

51:12

opposed to I have to go somewhere and

51:15

seek permission to have

51:17

access. I mean, today in

51:19

Web2 games, if Apple or

51:21

Steam doesn't like you, then forget it.

51:25

You don't exist, for instance. You don't have a

51:27

way for gamers to reach out to you, for

51:29

instance, properly because they are

51:31

the gatekeepers. And here, essentially, it's decentralized

51:33

down to the point to the end

51:36

user. Yeah,

51:39

that makes sense. You

51:41

think that Web3

51:44

games and this concept of

51:46

the metaverse, do you

51:48

think that the value here is decentralization

51:51

in the long term? Because like having

51:53

a fully like building a

51:55

powerful brand or a powerful

51:57

IP. or

52:00

even leveraging existing IP costs a lot

52:02

of money and

52:05

requires a lot of funding. And

52:08

is the value

52:10

here that these networks are truly

52:12

decentralized or that we have record

52:14

of ownership and audit trail

52:18

of ownership? Is

52:21

the censorship-resistant aspect here as

52:23

important as, say, with

52:26

financial assets or more

52:28

fungible assets? So

52:31

one of the things that we love about the space is

52:34

the irony of the way that

52:36

in some ways, the more you give up

52:38

control, the more value is retained

52:40

in the network and

52:42

the community. So the best parallel, I

52:45

could say, is that if

52:47

Bitcoin happened to be a

52:50

set of miners that basically controlled

52:52

the hashrate of Bitcoin, for instance,

52:55

what would the value of Bitcoin be at

52:58

that moment? It would basically

53:00

sink down to probably almost zero

53:03

because it would be so heavily compromised and nobody would

53:05

trust it the same way. And so

53:07

there's a lot of reasons why people don't want

53:09

to see that happen. And in

53:11

a way, maintaining its decentralization is

53:14

retaining your self-interest. And

53:17

that's actually, I would say, very true in

53:20

sort of what we talk about L2 and L1s as well

53:22

in the early constructions and also in the game

53:25

systems that are out there. Because it's early, it

53:27

is often working on the premise

53:29

of the promise. But if the promise

53:32

is broken or is something you

53:34

don't have faith in, then you move on

53:36

to the other one that actually says they'll

53:38

do that for you. And so again, Ethereum,

53:40

for instance, is even though

53:43

it has expensive gas and it's

53:45

not the most

53:47

efficient, the fact that it is

53:50

so decentralized is actually one of the

53:52

main reasons why most of

53:54

the volume and most of the valuable assets exist

53:56

in Ethereum because you know it's the one network

53:58

that is hardest to compromise. Whereas

54:00

there's examples of many other L2s, for

54:04

instance, that are arguably much cheaper,

54:06

much more efficient, but yet don't

54:08

have the same traction despite its

54:10

technical efficiency because they

54:12

haven't actually captured the cultural

54:14

aspect of it, which is the trust of

54:16

the network, which comes from decentralization, but

54:19

also from the way

54:21

that they've built communities around it. And

54:23

if the community can't have a sense of ownership, then

54:26

actually they, because they don't

54:29

have control over it, so does it work, then

54:31

they start to, it

54:34

compromises the trust in the network, which by

54:36

the way, is the same as it

54:38

runs for nations and governments and countries as well, right?

54:40

I mean, I live in

54:42

Hong Kong, and China is an

54:45

extremely well-run country. I mean, if

54:47

you've experienced it, things are efficient,

54:50

stuff gets done much faster than in the

54:52

US, right? You can build railways and train

54:54

stations and stuff with no fuss. And

54:57

yet there's a liquidity discount in

54:59

businesses and companies in China. Why

55:01

is that? It's because there is

55:04

a perceived centralization risk, right?

55:06

And we've seen that effect. If China wants

55:08

to make a change, they can make that change

55:10

in good and bad ways, right, in

55:12

a very top-down manner. And many

55:15

people in China have been affected

55:17

by that. And while prior to

55:19

COVID, a lot of people were

55:21

lauding the fact that China was really efficient

55:24

in everything they did. And many

55:26

people in the US were saying,

55:28

hey, it's just much more efficient this

55:30

way. We should just all go towards that kind of

55:32

setup. And then when the decision

55:34

was flipped the other way, it's like, oh, hold it

55:37

a second, wait a second. We're not sure

55:39

about that, right? Whereas in the US, it's chaotic. It's the

55:41

other way around. If you want to make a change, it

55:43

takes forever to get that change. And you have to go

55:45

through voting, and you have to go through institutions, and you

55:47

have to lobby, and it may never happen. But

55:50

that means that your property rights, in that sense,

55:52

is secure, right? If someone

55:54

wanted to be making a

55:56

fundamental change to the ownership of your things,

55:59

I'd outside of you doing illegal stuff obviously,

56:02

then it requires such a major constitutional

56:04

change that most of the country has

56:07

to agree, which probably won't happen. Therefore,

56:10

you have a premium for

56:12

that. I think the same

56:14

principles apply in blockchain. Obviously,

56:16

because it's young and

56:19

the markets are still early in

56:21

development, you have these early developmental

56:24

cycle issues. You have price

56:27

imbalances and you have these

56:29

things that happen when projects emerge.

56:33

Because of the speculative nature, because capitalism is

56:35

heavily embedded in web3, you

56:37

also have people who participate in ways that

56:39

might not seem logical because of greed,

56:42

for instance. That's however

56:44

distinct from the long-term values. These

56:47

might be short-term issues, but these

56:49

aren't the ones that build long-term

56:51

value. Long-term value are the ones

56:53

that embrace decentralization, which means also

56:55

gaming projects, if they want to

56:57

succeed for the long-term, have

56:59

to be decentralized. NFT collections by definition

57:02

are decentralized. If you

57:04

end up maintaining 80% of the

57:06

supply of your NFTs, it'll have a

57:08

very different feel that when the community

57:10

owns a majority of the NFT collection and

57:13

has rights over it. Very

57:17

interesting points. I think

57:21

this premium for

57:23

decentralization, even when we're talking about nation-states,

57:25

is a good way to look at

57:29

economies of different countries or even

57:32

different areas. We've got a couple

57:34

more minutes here and I do

57:37

want to ask you a little

57:39

bit about Mochaverse

57:41

and some of the brands

57:46

that Animoca has in its

57:49

portfolio. What

57:52

is the Mochaverse and what's interesting about

57:54

this IP? I think Cool Cats also

57:56

is one of the brands that in

57:59

the portfolio. Yeah, isn't someone invested in

58:01

is kind of like similar to board apes,

58:03

but it's cats and you know It's the

58:05

internet who love everyone loves cats You

58:08

know and it's it's not to me is you

58:10

know I guess the class of people just did

58:12

a partnership with them outside of the investment who

58:14

is Was a Japan operation with

58:17

a be animo co-brand KK or

58:19

basically turning them into sort of you know I

58:21

guess a manga brand as well in Japan and

58:23

opening that up. So that's a pretty exciting And

58:26

that's really about the culture and community side of things and

58:29

so this brand actually has like a Show

58:32

like there's episodes and characters. It's going to

58:34

have stuff. It's not there yet, right? So

58:36

our partnership is basically helping them build up

58:38

some some cool developments And

58:41

which by the way is just another example of what

58:43

you can do with with cool IP and

58:45

you know, just as a parallel I Would

58:48

say rarely if ever in my own history

58:50

have I seen you know

58:52

major brands of balls The

58:55

way that they have of sort of influence

58:57

and financial capacity Then

58:59

those brands in web 3 right if you look

59:01

at you Gollab so sport apes if you look

59:03

at cool cats if you look at even our

59:06

own mocha verse or if you look at Sandbox

59:08

or you know, as uki for instance, right or

59:10

you know, Pachi penguins and so on right? I

59:12

mean, these are all incredible projects

59:15

that were Non-existent brands some

59:18

two three years ago And

59:20

have now become brands that are maybe

59:22

more influential than some longer standing

59:24

brands out there, right? So that's that's that

59:26

sort of demonstrates Then you know

59:28

the power of sort of you know How web

59:30

3 community building and sort of capital formation can

59:33

give effect now, what is mocha

59:35

verse mocha verse is really a way for

59:37

initially We're in an empty collection

59:39

as well that started off this way and the

59:41

mocha ID Is the next

59:43

phase which you started to launch which is a way in

59:45

which you create soulbound and if tease that

59:47

essentially create a digital decentralized

59:50

digital identity right

59:53

and I think the the the whole

59:55

concept around this decentralized ID is that

59:58

you have a way in which you can now address

1:00:01

our community in a

1:00:03

sort of permissionless manner that is

1:00:05

also sort of I guess in some

1:00:07

ways verified. So one of the

1:00:09

experiences we have as we launch games, we

1:00:12

sometimes do KYC because

1:00:14

of an entertainment. We did this with other detail, we did

1:00:17

it with Red League and a bunch of other games. And

1:00:19

every time we do this, we have to

1:00:22

re-KYC because the wallets get

1:00:24

tossed around, right? So for instance

1:00:26

in our most recent sale, I

1:00:28

think something like 30 or 40 thousand wallets in

1:00:31

our allow list ended up in the

1:00:33

hands of people that were not actually doing the

1:00:35

KYC because they can trade the wallets. They're

1:00:38

like, wait a second, that's an issue. So

1:00:40

that's the first one. The second point is

1:00:43

that it's costly to do KYC over

1:00:45

and over again. And so if

1:00:47

we end up having, again with a sort

1:00:50

of DID, you don't have to

1:00:52

disclose who the person is. But

1:00:54

now you know that it's KYC. And

1:00:56

so I mean that I can do an NXT mint

1:00:58

or I can do something with them without actually necessarily

1:01:00

having to re-KYC and pay money time and time again.

1:01:04

So that's again something of valuable. And

1:01:07

of course with our 450 portfolio

1:01:09

companies with the millions of users

1:01:11

in that network and the

1:01:13

addressable space being actually in the hundreds of millions, we

1:01:16

can now create a way in which

1:01:18

we can sort of combine and connect

1:01:20

essentially all of these users in a

1:01:22

kind of I guess social network, not

1:01:24

really saying social five, but really

1:01:26

in social network where then third parties who

1:01:29

are not necessarily part of Adelmoka can now

1:01:31

benefit from its network effect as well. Like

1:01:33

meaning if you're launching a game, you can

1:01:35

use Mocha ID and Mochaverse to

1:01:37

launch that and access this

1:01:40

community without actually necessarily having to

1:01:42

be a portfolio company for instance, which currently

1:01:44

is quite manual. We

1:01:46

launch, we do a partnership, we do announcements, we

1:01:48

do that kind of stuff. And that's

1:01:51

okay, but that actually ends up becoming quite tedious. Whereas

1:01:54

now basically we can create essentially our

1:01:56

own, I guess we could call it like a

1:01:58

quasi-L2 of culture. where everyone who can

1:02:01

participate in MOCOvres can now get the benefit of

1:02:03

that. And the other thing that we've also

1:02:05

done is we've added a governance layer. So

1:02:08

if you own the MOCOvres NFTs, you

1:02:10

basically are able to vote on

1:02:12

our treasuries. So

1:02:14

the most famous example that we've done is with

1:02:16

AIPcoin. So we have basically

1:02:19

millions of AIPcoin that is basically

1:02:22

with the MOCOvres community, which is decentralized the

1:02:24

ownership of the NFTs. And they

1:02:27

vote basically on

1:02:29

our treasury or part of our treasury what AIPcoin

1:02:31

from a doubt perspective

1:02:35

cannot do. And it's

1:02:37

interesting in the beginning, obviously it was viewed

1:02:39

a little bit sensitive because it's a separate

1:02:41

community that has a say in AIPcoin. But

1:02:44

we thought that was better because it ended up

1:02:46

bringing the two communities together. And now

1:02:49

many sort of MOCOvres holders have born apes

1:02:51

in AIPcoin and AIPcoin holders have MOCOvres and

1:02:53

they become an integrated community as it kind

1:02:55

of become a kind of super PAC, if

1:02:57

you will, for AIPcoin and

1:02:59

have ended up creating these

1:03:02

interesting political structures that have

1:03:04

become more inclusive and has grown the ecosystem as

1:03:06

a result, which is what we think will happen

1:03:08

broadly across the board. And

1:03:10

for us, that's how we want our communities to

1:03:13

grow. We have large token reserves

1:03:15

and token balances, but

1:03:17

we don't want to be the ones that

1:03:19

are sort of voting on them. We want

1:03:21

our community to basically to

1:03:24

have votes over them because it also teaches

1:03:26

them about the space and gives them

1:03:28

a sense of ownership, even if it's

1:03:30

not economic. And that's basically giving

1:03:32

them rights or tokens from a

1:03:34

government standpoint. And that's how MOCOvres plays a role

1:03:36

as well. So it's kind of almost

1:03:38

like a Dow of Dows, if you will, and

1:03:40

it's in top level construction. It's

1:03:43

a Dow Dow. Cool.

1:03:45

Well, I've got so many more

1:03:48

questions that I didn't get a chance to go

1:03:50

through, but this has been really fascinating. And I

1:03:52

want to thank you so much for your time

1:03:54

and your really thoughtful answers. Before

1:03:56

we wrap up here, what's

1:03:58

the endgame? I mean, you

1:04:01

know, in five to ten years, what is

1:04:03

this space going to look like? And

1:04:06

maybe because I didn't use the Metaverse buzzword yet,

1:04:08

I'm going to ask you this, like, how

1:04:10

does the Metaverse tie into the endgame? You

1:04:14

know, I think in the next

1:04:16

couple of years, we're going to start seeing

1:04:18

Apple Glass and Facebook Glasses and, you know,

1:04:20

all these sort of AAR devices,

1:04:24

you know, does it tie into the

1:04:26

endgame? And, yeah, what's your sort of

1:04:28

long-term view here? So

1:04:31

first, when we talk

1:04:33

about the Metaverse, specifically,

1:04:35

we mean the open Metaverse, we

1:04:37

talk about digital property rights as

1:04:39

the foundation of that. And

1:04:41

things like AR and VR and, you

1:04:44

know, screens and other great experiences are

1:04:46

wonderful in that they enhance and deepen

1:04:48

our experiences, but they're not the

1:04:50

meaning of the Metaverse itself. And

1:04:52

I think this is a part where a lot of people

1:04:54

get confused because, you know, you are

1:04:57

already kind of in the Metaverse when you're

1:04:59

playing a game and having a VR

1:05:01

goggle doesn't actually make that experience sort

1:05:04

of, you know, more fundamentally different. Yes,

1:05:07

it's deeper as an experience. It's

1:05:09

more immersive. But ultimately,

1:05:11

if you're not owning the things that you

1:05:13

do in the Metaverse, it's all meaningless anyway.

1:05:16

Right. So we think the foundation starts with property

1:05:18

rights. And that's only possible in

1:05:20

Web3 and blockchain. Whether that is

1:05:22

on this chain, that chain, that doesn't really matter. In fact,

1:05:24

we believe in a multi-chain future. That's

1:05:27

the other thing. And so when we think of

1:05:29

the endgame, what we believe in is that, you

1:05:31

know, because we spend so much time digitally, because

1:05:33

of most of the value is constructed

1:05:35

and built in a digital way, we

1:05:38

think that the end, no one call

1:05:40

it an endgame, it's ever evolving. But

1:05:42

the way that we're advancing to, I think it will sort

1:05:45

of give us ownership in everything that

1:05:48

we do online. So we need

1:05:50

the new social networks of the future, the

1:05:52

games that we play in the future, the environments that

1:05:54

we're online. We through our

1:05:56

participation become essentially owners

1:05:59

of the network. become stakeholders, which

1:06:01

basically means to me that it's just

1:06:04

a fair form of capitalism, which has

1:06:06

gone kind of wrong with shareholder capitalism,

1:06:08

where only a select few get to

1:06:10

benefit from the benefits of something and

1:06:12

everyone else is just there to be

1:06:14

extracted from. Whereas in this

1:06:16

kind of stakeholder capitalism, everyone

1:06:18

basically, through their contribution

1:06:21

gets to share in that. Because today,

1:06:23

if I'm a user in Instagram, actually

1:06:26

I contribute value. I basically work for

1:06:28

Instagram. I bring my users there.

1:06:30

I engage with them. But actually what I

1:06:32

get is it's

1:06:35

likes, which is basically the cheapest

1:06:37

zero value currency there is,

1:06:39

right? Which

1:06:41

arguably we could say is probably the biggest

1:06:43

scam out there, because you're giving them a

1:06:45

form of a zero value token that really

1:06:48

doesn't mean anything. But it

1:06:50

gives you the illusion that it's something of value.

1:06:54

And the platform is a benefit. But in this

1:06:56

future network, whether it's in games

1:06:58

or whether it's in social networks, you

1:07:00

basically accrue value in the networks that you

1:07:02

help construct. Because after all, if there's no

1:07:04

users in Instagram, Instagram's value is zero. And

1:07:06

that's not to be true for games and

1:07:08

every single digital experience. And

1:07:10

so we think that really what will happen,

1:07:12

and we think there'll be thousands and tens

1:07:14

of thousands of these experiences, and

1:07:16

we will have ownership in our various communities, big

1:07:19

and small, that we get to participate in, we

1:07:23

will see a reshaping of

1:07:26

capitalism. So meaning that I

1:07:28

think this could be the way in which

1:07:30

capitalism is rescued from its narrative. Where

1:07:32

people say, wait, actually capitalism is

1:07:34

this beneficial for us. Because without capitalism,

1:07:36

we won't have entrepreneurship, we won't

1:07:39

have innovation, we won't have the incentives. It's just gone

1:07:41

a little bit off the rails. We used to have

1:07:43

things like antitrust, which helped

1:07:45

break up monopolies, which they've

1:07:47

become powerless in the data

1:07:49

paradigm. And so web3 actually

1:07:52

is the solution to that. And so,

1:07:54

you know, sort of a thought

1:07:57

experiment I sometimes give to people when they ask

1:07:59

me to think about this more deeply is to say,

1:08:01

well, why, for instance,

1:08:04

isn't every Uber driver also

1:08:06

not a shareholder in Uber? It doesn't

1:08:08

make sense to me. But now,

1:08:11

because of that, Uber in

1:08:13

the future is going to have driverless cars. But

1:08:15

the people who helped make Uber are the

1:08:17

drivers. And now

1:08:20

they're going to be basically pushed

1:08:22

out of a job eventually with

1:08:24

driverless cars because Uber doesn't really

1:08:26

need them. And that is

1:08:29

one of the reasons why there's so much

1:08:31

frustration. This, by the way, isn't only in

1:08:33

the case of Uber, it's in case for

1:08:35

everything that's happening in the classic shareholder capitalist

1:08:37

framework. And I think

1:08:39

in the web trees, through tokenization

1:08:41

effectively, you make everyone a

1:08:43

stakeholder, big and small, right? Nobody said you

1:08:46

have to have the same value or the

1:08:48

same contribution, right? Capitalism doesn't work if

1:08:50

everyone gets exactly the same, right? That's

1:08:52

one like communism. But through

1:08:55

your effort and your work and your contribution

1:08:57

to the network, you receive essentially something

1:08:59

of value, right? Perhaps it's sort

1:09:02

of a kind of different iteration of proof

1:09:04

of work, although not, you know, obviously in

1:09:06

sort of the in

1:09:08

the blockchain narrative, but it is essentially,

1:09:10

you know, if you think about the

1:09:12

oldest forms of value in our capitalist

1:09:14

economies, it was our work that

1:09:17

we did and the proof of work that we

1:09:19

performed in the physical way. So I

1:09:21

think that's basically the next step that we can sort

1:09:23

of come back to in this future

1:09:25

metaverse that's sort of building out in the

1:09:27

web tree and blockchain. Hot

1:09:30

take the future of crypto is proof of work.

1:09:33

Yes. Let's end on that. Sure. Cool.

1:09:39

Well, yeah, thanks so much for coming on the

1:09:41

podcast. It's been great chatting. And yeah, hope we

1:09:43

can do this at some other point. We didn't

1:09:45

even talk about AI. We didn't really go in

1:09:47

depth on gaming. Maybe I can get you on

1:09:49

my other podcast. We could do another another show

1:09:52

there. Of course, a little bit more in depth

1:09:54

on the gaming side. But yeah, thanks a lot.

1:09:56

Thanks again. And I look forward to chatting soon.

1:09:58

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1:10:02

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1:10:04

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