Post-game, that’s wen token
Repositioning cart and horse
I wouldn’t go so far as to yet herald it a “growing consensus”, but I do think some of the more nuaunced thinkers in the sector are concluding that in-game cryptocurrencies are currently more trouble than they’re worth.
The reason is singular and timely; how/can you recover your project when your token is down >95% from its all-time high?
For, this is the situation pretty much every blockchain project — high quality or dirty scam — is now facing.
And if they haven’t managed their treasuries sensibly, they’re likely already running out of cash and there’s little appetite in the market for further token-based funding. There’s no-one to buy those pump-and-dump bags. Such retail investors are wiped out.
The question of rebound is not unanswerable, though.
More established games such as Axie Infinity, Splinterlands and DeFi Kingdoms continue to build out features, also making some significant changes to their economies in the process even as their token prices and player numbers fall. I’m pretty sure both will return in time.
Most developers with games that have live and unrestricted tokens circulating aren’t going to have the inclination, much less the experience and dedication to attempt this, however.
Bye-bye moon.
So perhaps a more interesting question is how will the next generation of blockchain games in development deal with this situation?
Of course, market conditions are such that no-one in their right mind is currently thinking about launching a token.
But given every blockchain game whitepaper details how value transfers in its economy are tied to the flow of least one token, they are going to have to launch a token.
Up-to-this point, the only two variables triggering a token launch have been market conditions and whether a game has enough assets — typically the whitepaper — and industry network to launch and raise the money it needs to actually start making the game.
And it’s this deterministic ‘can launch, will launch’ attitude which I hope is dying out.
For despite the growing sophisitication of economic modelling tools - shout out to Machinations — it’s clear to me that until a game is actually live with gameplay and perhaps NFTs, it’s very difficult to understand significant factors such as:
How big is your player base?
Are guilds feeding in players?
What’s the percentage of bots?
How are players interacting with the gameplay?
How are they interacting with assets such as NFTs?
How are rewards being distributed and then utilitized?
Equally important is the realisation that you don’t need a dedicated token in order to launch a game.
As pointed out before, Skyweaver has been live for months using the USDC stablecoin for its marketplace.
Similarly, when Big Time goes live, players will extract the token through gameplay rather than it being launched ahead of time to raise money — something that would have certainly generated tens of millions of dollars.
Another example on a much smaller scale, during its testing phase indie game The Seventh Seal has a dynamic allocation of tokens, which get distributed to players and map creators on a daily basis.
I’m sure there are many more games taking similar approachs, and there’s going to be more.
Of course, this isn’t to undercut the fundamental nature of a token to any decentralized economy in the long term.
I’m a firm believer in the unique value of cryptocurrencies to create deep incentives to shape sophisticated community behaviors, which in turn will generate new incentives etc. But that also means most cryptocurrencies will fail to achieve this high bar.
Launching a game — especially one with some level of monetization — and seeing what the community actually does with it and then rolling out a token to better tie together those two elements seems to be a much better approach to me.
You could even call it putting the cart behind the horse.
This Substack is sponsored by Hiro Capital — now at the Develop Conference. Drop me an email if you want to meet up.
Funding news
Taking its overall funding to $675 million, Animoca Brands has announced it’s raised $75 million to invest in “open metaverse projects”.
The money was generated by issuing 3,237,058 new shares at the subscription price of A$4.50 per share, valuing Animoca at $5.9 billion.
This raise is a continuation of the $359 million it announced — at a $5 billion valuation — in January 2022, with investors including participants in that previous round such as Liberty City Ventures, Kingsway Capital, Alpha Wave Ventures and 10T.
Crypto Says Bye-Bye Hong Kong news
No real surprises here but Hong Kong is further tightening up its crypto laws with the Hong Kong Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022 expected to come into force in 2023.
This will require existing Hong Kong-based companies such as Hashkey and Huobi to apply for further licenses. Some high profile outfits — notably FTX — have already moved their corporate headquarters, in the case of FTX to the Bahamas.
Singapore is another popular location for Chinese-operated crypto companies looking for better corporate protection.
South Korean Corporate Agreement news
Mobile social network LINE has announced a strategic 10 company deal worth $10 million to build out its global NFT platform DOSI.
DOSI is part of its US LINE NEXT subsidiary, with the partners including many familar names in the South Korean tech sector, including SoftBank Corp, CJ ENM, YG PLUS, SHINSEGAE and Hashed.
The companies will share IP such as DIA TV and Street Man Fighter, with users able to log into the DOSI wallet using the Naver credientals, also using Naver Pay to buy NFTs.
It’s expected the NFTs and marketplace will launch later in 2022.