Make the On-chain Kingdoms Last: Welcome to 2001

[Music] [Music] i'd like to welcome to the stage uh we have a solo presentation from wapia's alex mukas on the previous presentation right let me make sort of three comments here because that was a lot of entrepreneurs sort of around here so it's important to um this is an important subject right so a problem sorry so i've probably raised maybe a billion dollars in my life unlike you guys i'm very old three takeaways so number one when you're raising money if you're raising from a vc whose model is hey i have 20

horses i'm okay for 15 of them to die but five of them are going to make me billions that's not necessarily a great partner for you the entrepreneur because you might be one of the five horses but chances are you're going to be one of the 15 so make sure that you select your investment partner your vc very very carefully let's say that's sort of number one number two because as entrepreneurs were drinking the kool-aid you see a valuation out there that's a complete outlier you say hey this monkey's got you know 50 times revenue i should be getting 50 times revenue these monkeys might be doing something better than you know the rest of us right i mean they are having a high mouthful because they're doing something right a lot of times we look at the highest multiple out there and we say hey this should be us that that's seldom the case so going back to should i sell now and for

what multiple if you have other ideas you know you take the money you run you sort of sell your company you start your next one so with that i'm gonna sort of conclude my preview statement and i'm gonna talk about 2001. so this is sort of blockchain right this is web3 this is wall gardens so something like sort of 20 years ago right now you look at they're probably half a dozen sort of companies out here presenting they're talking about how they're building the next sort of metaverse and everybody has a different sort of opinion of what that metaverse is and obviously things that work in one metaverse don't work sort of in the other metaphors so all of this sort of happened maybe 20 years ago when the first carriers came up and they say hey you're going to be able to do things just within my ecosystem my wall garden download your ringtones download your stupid sort of java games uh for your basic sort of cell phones and everything

is going to happen here it took several years for decent technology to come out and essentially start sort of bridging across the carriers to the point where carriers essentially became irrelevant they were they always want to not be just the pipes they eventually became just the pipes and people that started sort of making money real money sort of people sort of uh across this room and i remind you that sort of gaming and mobile games sort of fascinating because you know 15 years ago total revenue was what less than a billion right now depending on whose number you're looking at it's sort of 120 140 but on a gross profit basis this industry is quite larger than the automotive industry which again looking around sort of the table sort of is mind-blowing right that people like us are making more gross profit margin that you know companies like sort of toyota and tesla out there again it's sort of it's mind-blowing now

the other sort of uh interesting point here is that why sort of games and why the unchained space and why sort of web three so interesting enough if you look at the different abstraction levels out there we're looking at sort of a lot of different metaverses there's going to be some sort of interoperability i mean we're already talking to brands that want to sell you outfits that you can wear at any of half a dozen metaverses at any given time so you're talking about sort of utility nfcs but only at one of them at any given time so you cannot have obviously because you're single person right you're gonna have sort of two avatars at the same time wearing that let's say gucci outfit in more than one address but as you're switching meta verses you need to be able to sort of wear that and maybe nine months later go and buy and pick up the actual sort of item so one of the uh one of the sort of interesting sort of elements let's say of games and the only

change space is that in our mind and the way we're talking sort of difference of global brands out there it looks like there's going to be a material inflow of dollars brand dollars advertising dollars into the gaming space and into the onsen gaming space i mean one might argue couldn't they make that sort of off chain as well the answer is sort of probably yes but hey you know and if these are cool so we might as well ride the wave now a couple of a couple of other uh sort of interesting interesting things one is a lot of people are saying hey i have this sort of amazing sort of game i'm gonna retrofit it with nfts how would that work how do i design an economy that makes sense especially an economy where in-app purchases sort of are combined with nfts and that's a sort of a non-trivial task i mean we're looking at some sort of basic nft models that are let's call them sort of comically simplistic in

terms of play to earn if you look at a world where nfc is coexist within app purchases uh the environment in the world is much more complex so essentially you have to design an economy where you need to balance of in-app purchase revenue where and then fd revenue somebody might say hey i'm gonna sell this bottle as an in-app purchase i'm going to sell a bottle with twice the capacity as an nft and i'm going to charge three times the amount of money and that's obviously suicidal because an nft is there forever especially utility energies when that user sort of turns they're going to dump that back into the marketplace and that's going to kill future in-app purchase revenue so it's very important to sort of design a sort of a universe where in-app purchases and nfts coexist and be able to build that long-term economy in a way that makes sense because there are a lot of folks out there that are going for the quick buck right saying hey let me do a drop right now and i'm going to build an amazing game that might come in nine months or 18

months and you're going to be able to use this of utility and fts at that point this almost looks like an ico right and because a lot of people in the audience are sort of you know established of entities in the gaming space with a reputation they cannot necessarily afford to do that so in our mind building a long-term economy and optimizing revenue for the long term uh is sort of much more important that making a few quick let's call it million at the initial drop of the nfts as these items are essentially sort of built out the other thing that's important and uh this is an area where i don't envy our customers at all is that i mean we at what we were technology company right we're providing infrastructure or providing the right plumbing working across all of the chains out there uh to accelerate uh people sort of web three strategy

the typical gaming company out there though they have to select the chain they have to make sort of pick a horse and well hopefully stick with that horse for a while the problem is that if you look at the market out there it's so let me show you this slide sort of you know these are the chains we currently support i really don't envy our customers that have to pick a chain right now because if you were to ask me where do you know on pain of death where do you put your money right now what's the right chain sort of six months ago i would have given a different answer than four months ago than two months ago than today the market changes so quickly which means that when someone designs a game in terms of infrastructure it's more important to have a plan b in terms of how to make how to take the assets out of the chain they're going to be investing in now so let's say they pick chain x right it's very important at design level

right we have a plan b on how this assets can move to another chain because that might not be the right chain two years from now and again we go back to the point which is an nft is not an in-app purchase right and nft is there is there forever and you need to be able to support across same sort of universe you need to be able to sort of move assets across different chains you need to be able to change the smart contracts over time because designing something today doesn't mean that you can predict the future of two years from now so the smart contract need to be sort of let's call it sort of changeable yes let me talk sort of briefly about what we do as a company we are you know we are providing plumbing we are providing acceleration in terms of technology our customers are folks that typically say let me go back to let's see our customers somewhere okay so our customers are a lot of the big guys out there right obviously all of these folks have sort of you know

hundreds of people building stuff however we only focus on building sort of optimizing revenue optimizing fts pricing optimizing our purchase pricing and as importantly building enterprise software that helps our customers the global publishers to retrofit existing games with nfts and launch and ft first games what that means is that we have sort of 125 people well out of the 125 people we have 110 people essentially writing code and building world-class classes of infrastructure make things sort of quicker and we're doubling in size in terms of uh in terms of at least head count this year more than quadrupling in revenue why am i mentioning this because it's the problems we're trying to solve and the problems that need to be solved in the long run are sort of require serious technology so when you go from doing one soft things hey i'm gonna do a missile nfc drop and then maybe build a game to making let's

say web 3 a core part of the ongoing infrastructure and operationalizing sort of web 3 this is when people start to need technology i mean because i'm old i remember a time when you needed to have sort of software engineers to put up a single banner ad and click-through rates were 7 by the way this is 1996. so in a similar way it's one thing to do one soft things it's another thing to say hey this needs to work across half a dozen games need to work all the time without adding dozens of people in nfd live ops in the same way we have been adding sort of dozens of people in live ops on a per game basis so what that means in terms of functionality you know it has to work crosstalk right so pick a chain it has to be well fully customizable it has to be able to manage live ops like for instance automatically download from the different um

from let's say unreal or unity uh the assets distribute them to a hundred creators a 3d message allow the creators to add skins on that reimport them back pre-approve the creators and then do a dow voting on the 10 nfts out of the 100 designs that need to be minted and then for its design maybe mean a thousand nfcs and operationalize that right that is sort of software you don't need an army of people to do what i just uh what i just described uh then sort of [Music] gamification is sort of critical and important which is sort of the the second element and the third most and the other most important thing in our minds is sort of blockchain oracles and sort of smart contracts why because blockchain oracles gives you the ability to process gaming events and essentially automatically process them into nft so for instance you're only minting an nft a collectible lefty to the first person that killed the dragon in its country in your game

how do you get that information through a blockchain oracle that validates event and then a contract gets sort of executed the nft gets minted and well we're off to the races um how do you sort of validate different sort of smart contracts across a lot of different chains which is as important if a chain is even compatible then you know it's easy if it's not and there are a lot of sort of you know pretty decent are actually very good chains that are not evm compatible you need the same smart contracts to work across the different chains and being proven to work and they need to be audited so again that's a non-trivial task now on the automated nft ops as i mentioned before it's you know the auto asset import from the gaming engines and ft catalog management you can only do so many things by hand you need to be able to sort of manage hundreds of thousands of skus in terms

of potential nfcs uh at the same time sort of price them token economy optimization so a lot of people are optimizing for the initial drop that doesn't make sense we have many many levers here it's not just sort of price your sort of initial meeting fees you have smart contracts and the royalties that go back to the publisher you might have primary marketplace sales revenue you might have secondary marketplace sales revenue so pricing nfts is more of an art right now most of the pricing is a bit how do i put this sort of hub hazard and the optimization is for the initial money that comes in right hey i'm gonna do a sort of a private sale i'm gonna sort of white list and i will give you loot boxes with delayed sort of reveal all of that doesn't sound like long-term optimization of the economy it sounds like take the money and run and there is a lot of that going on

right now in our mind this is not sustainable so i think 22 is going to be an interesting year because i think a lot of let's say the hype is going to give way to sort of more pragmatic approach that's also a more long-term approach in terms of what we're what we're trying to uh what we're trying to achieve here also i remind you i mean if you look at the the engagement tools the automated airdrops and the way things happen i remind you that there's so many people out there that are really really familiar with buying things off the stores and they're very it's a tiny minority in terms of the people that own crypto wallets and do things so in our minds there needs to be a store compliant way to buy nfts without forcing people through a web3 kyc workflow where you have to buy cryptocurrency so if you look at our technology you can go and mean that any change you want so your tokens you can

buy tokens to the store then you can go and meet the nft sort of phone chain and use the tokens to buy and fees without necessarily having to drive people to work through sort of workflow there are a lot of folks out there and a big part of the crypto community is almost militant sometimes hey we're gonna bring down the stores i think reality is much more let's call it nuance and there's so much there there are so many consumers that are really sort of familiar with the store workflows it makes a lot of sense to cater to them and offer them some sort of an ft exposure without necessarily pushing them into a web3 sort of workflow now going back and i think the previous panel was also interesting because it talked about what is the right timing right what do you do when there's a correction how much do you invest it's people's perception of reality is a funny thing so uh it was probably 15

years ago 2008 and 8. there's a big sort of advertising festival called can lion and it happens in at can in the summer uh and that's the the advertising festival so there was a panel there and it was three of us sort of the moderator me being the mobile guy uh and uh the ceo of second life was there you guys how many remembers do you remember second life okay that's not bad that's not bad i was just talking to a guy that built the first agency on second life and he's doing wonders right now so i asked the question of the audience how many of you and the audience of cmos right cmos of global companies how many of you think what's going to be bigger in five years and that's probably 2007 six seven mobile or second life believe it or not 80 percent of the cmos these are sort of global cmos right they said second life

which is sort of mind-blowing i mean it reminds you that there were electric cars running in the street of new york in 1902 however having something a single data point sort of happen and then sort of commercialize that sort of single thing where it's sort of you to the point where you have mass adoption these are very to com these are two very very different things right so in retrospect i think the cmos were right because in maybe 25 year horizon as opposed to five years i think that web 3 is going to transform the world in bigger ways than let's say mobile transformed the world which was which is shocking because mobile was pretty you know pretty freaking uh transformative and the reason that's going to happen is because of smart contracts right because for the first time since the beginning of history us humans usually transacted based on natural language right either in terms of the variable contract or in terms of a written contra guy

smart contracts though is the first time we were using sort of computer code and that sort of that's quite interesting for a few different reasons number one smart contracts get automatically executed when blockchain oracle conditions are there you know you will only pay an incremental insure i'm sorry am i moving too much are you sure sorry man i'll it's the cameraman so um i'm going to execute this blockchain oracle only if let's say x number of uh your employees are not uh are speeding and then you're paying an extra premium so you have sort of conditions that are pre-approved then you have computer code that gets executed that's not really it's indisputable you don't need lawyers to say hey what i really meant to say in this paragraph was x or y you know exactly what the computer code is going to do when it gets executed and is irreversible so there's no arbitration

there's no legal system there's no jurisdiction as i was recently trying to explain to my uh to my general counsel so i think the world is going to change sort of profoundly i think that the amount of money that's going to come into gaming because gaming is essentially sort of starts to power all of these virtual worlds in terms of real economy money coming into the virtual world is going to be unprecedented i mean it's going to take a while and all entrepreneurs you know we're drinking the kool-aid so it's it's an extraordinary care right it typically takes longer people underestimate how long it's gonna take but they also understand how big it's gonna be so i think we're sitting at a very very interesting sort of point in history where the rate of change is going to dramatically increase so i think that's it guys and i have well zero seconds to spare but

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