Tokenomics #8 Premium Utility NFTs and How to Build a Tokenized Community

welcome friends it's time for another tokenomics i've got anton bachman principle at play ventures i've got oh mishka katkov the ceo at savage game studio [Music] and myself ethan levy the ep of legendary heroes unchained at network uh today on the podcast we've got two big topics the massive 280 million dollar launch of kevin rose's moon birds pfp project and the even more massive 320 million dollar drop of yugolabs other side land nfts and for those following the newsletter vindication for me as my top prediction about other side following their 450 million dollar raise was proved correct all that and more on today's tokenomics and by the way pfp proof for picture right profile picture pro just making sure with these acronyms like yeah of course throw around two

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gemini among others join us now and get ready to ride a rocket ship let's [ __ ] go all right so so now that we've listened to our first ad just uh i think we've got some plugs ourselves uh i'm still hiring on the legendary heroes on chain team i'm looking for a live ops pm i've brought on a lot of great people but if you are a live ops pm or a system designer looking for a new web 3 challenge please dm me on the deconstructor of fun slack or reach out to me on linkedin do you guys have anything to show today anthony's always showing the same thing just send him pictures hoverboards blockchain with your blockchain game he'll review it and decline uh candidly and politely so obviously obviously this never invest in investment advice but keep an eye out on uh on some of the some of the games in our portfolio and

their upcoming upcoming drops so so um really really good building interesting things we have uh we have trailblazer out of sweden we have uh sk block tackle building skatex out of the head of the us everyone free to play veterans uh having gone deep deep down the rabbit hole to get the get the the ropes of everything crypto and web3 and uh obviously personally that those are the kind of teams that that we're interested in uh in working with and first light games is also launching their first blockchain game i think it's coming out yes yes and actually actually as of actually as of today as of today uh if you have been a part of the community early on the the alpha has been open for for blast royale so um instructions and discord for for how to get in get into the game yeah awesome um i'm i have nothing to

show i i'm i'm still a white belt here but i feel like i'm earning my stripes because as we were going through the topics for for this podcast i was i was comfortably you know making notes about layer one layer two kind of discussing ethereum ethereum 1.0 theorem 2.0 so um as and i wrote you guys uh a message just basically saying [ __ ] you because you're turning me into a crypto pro slowly but surely uh the podcast has worked before that's the and that's the idea of the podcast is get me to uh to a blue belt uh so i think that's great first try burn i i'm starting to feel like you're just pulling the wool over our eyes and getting free consulting from us on how to become a crypto bro this is uh of course of course the the uh the blue belt will be earned with the uh dof nft drop like that is i'm like

we're not if we're not white if we're not white listed with ethan on the genesis drop you know who's gonna come knocking on your door you're going to be airdropped you're going to be aired off the mft of course we're going to do this project together uh that's that's the uh that's you know i'm going to i'm going to involve you and that is the true way to get free consulting yeah all right so so on that we're doing uh the first topic today is moon birds and how they've mooned to the moon and this is a pfp project this is kind of gaming adjacent but it's really interesting to us on the dof side as we think about could we launch a token oh my god i can't believe i'm about to say this could we launch a tokenized community for deconstructor of fun which is basically a way of saying could we find a way to use nfts or tokens uh to do some exclusive stuff that brings value to holders and uh helps us do more cool media creation

as long as it's something else than than ten thousand different versions of a cartoon mishka we're gonna be fine no it's gotta be mishka wait what does it mean or something it's it's mishka with different hats oh actually actually now that you said the teddy bear one is wearing a founder hat one is wearing a podcast host hat one is one is wearing an investor hat uh rocket teddies we've got okay we'll talk we'll talk moon bird so that we can learn about how to launch the deconstructor fun rocket teddies okay so let me give you the context um if if you follow the space you're probably familiar with kevin rose he's one of the co-founders of digg and he's really big into various nft projects um he's made his name in the space with a proof podcast and an nft community called the proof collective and now he's parlayed that success into a massive 280 million dollar launch for the moon birds

pfp project um here's a quote from the decrypt article that that shared that 280 million dollar figure i mean like getting it's actually a little hard to to figure out how to value how much how much money they actually made from different things it's it's weird to value it but they're the one who gave 280 million and they said proof collective ultimately released um 7 875 of the nfts for sale via an allow list which is formed via a raffle process each moonbird nft offered via that process was sold for 2.5 eth about 7 600 at the time of sande's sale another 2 000 of the images were granted as freeman's to holders of the proof collective nft membership pass which starts at a price above 97 each so a proof collective is a tokenized community they sold an nft and it's basically access to a private

slack or a private discord that you have to hold the nft to have uh they launched it um there are only a thousand of these passes and if you want into the community right now it'll cost you over 280 thousand dollars um each so the uh the collective has gotten air drops of previous projects or the ability to mint previous projects for the moon birds uh proof collective members were able to mint two and they're promising uh research so they're promising exclusive alpha on nft projects they're promising uh more an annual conference um that's that's like proof that proof collective is where i got the word tokenize community and i think as horrible as it feels to say those words out loud there is some inspiration there for us

um some other uh context on moon birds um that on april 25th moonbird 2604 sold for 350 eath that's 1 million uh it sold on openc and the buyer was the sandbox so this is kind of a marketing stunt in a way that sandbox generated a headline but sandbox is super rich in various in many cryptocurrencies uh from the success in selling land and uh nfts and the success of the sand token um so what what is uh uh moon birds it's ten thousand it they say util okay picture for proof okay you were you were right i've been call me i've heard it both ways i guess uh mishka so mishka vindicated right now on their website they say picture for proof i've heard it as profile pics and maybe i've been wrong the whole time

it's picture for proof picture for proof you're ready to take my black belt away yeah i think both are adequate i'm not gonna take a breath i'm just gonna take another stripe okay so what is it it's ten thousand procedurally generated bird each bird owls each owl unlocks private club membership and additional benefits the longer you hold them we call it nesting so they're calling their version of staking nesting and uh their website and their road map um promises kind of a future metaverse that they're building so it's very uh you buy a piece of uh you buy a jpeg and the jpeg will give you access to a discord and future stuff and from this uh they they raised 280 million dollars so the question for you mishka you've been dming me incessantly about how we can ape in uh uh to something like this does this inspire you does this make you want to build a quote tokenized community unquote and

and what would that look like yeah so um yes uh of course now let me kind of like take a step back and and let's let's zoom in for all the listeners it's not about dof it's just about we're having a conversation of how to build a tokenized community and you can do this for games you can do it for for anything that you're doing even if you have a community right now so the title of this episode is building a tokenized community that's we're going to talk about we're going to use dof just as an example of our own thinking just because it's an easy way for us to kind of ground ourselves and of course moon birds is an example so why i'm interested is in terms of because i'm kind of like reading i was going through what proof was what bloomberg is and uh in terms of us like we have a content we have a a network for games professionals by game professionals on the slack group we have like a thousand people and and there could be a lot more we're just accepting like maybe one-fifth of the applicants uh and and got a big bouncer in front of that

velvet yeah exactly i'm not gonna name it name the balancer but anyway uh why i'm really interested about this tokenized community is because it allows you to build a core community that can help to steer the content creation now another interesting part about it is of course you can raise funds to level up your community so um and and finally like depending of course of what kind of a content you're producing in this case kevin rose uh kevin rose right yeah kevin rose was talking about um kind of like reliance on ad drip and sorry just using the constructor fund as an example we don't have reliance on ad drip even though we have ads they're more like a bonus but if you want to invest more into your product then you become more reliant on the ad drip and then it's a slippery slope to a point where i don't want to disrespect anybody but you start looking like venture beat where it's like ads on ads

on ads and it's really hard to even read the article and you're kind of chilling all the time for companies right deconstructor of fun isn't powered by ads it's actually powered by passion right like we're doing you're not paying me for blog posts i'm just doing it because i'm like i want to share with my colleagues um and same with the newsletter pieces same with same with this like i mean we do have ads but we're not nobody's nobody is making a full-time salary off a deconstructor of fun it's just like we're just sharing alpha across the channels yeah but but then again of course there's a there's a revenue share model for those who make content on regular intervals et cetera anyways that's that's our model now going back to there's a couple there's a couple of other examples i want to highlight on a couple of tokenized communities that have now been around for for roughly a year uh one is uh a bit of a more web3 native one called friends with benefits it's also one that andreessen invested

in and if you if you hold a certain amount of the benefit token as it is called uh then it's um then you're part of that group and they have their own uh social channels they have their own real life events uh where they try to bring interesting people also to attend and then it's more of a private club in in in a sense that is a bit more scattered the other one uh the other one i thought was interesting was uh uh elk boys be friends so the guys through the full send meta card uh fulson podcast i they raised roughly 23 million with their nft drop where they dropped this kind of exclusive passes from being being part of this this uh elk boss community i look at it a bit like you know patreon on steroids in a way that and because they feel like they're part owners in what's happening in elk voice the price point is very different from having this small patreon patreon subscription tears

and i i think they sold like a couple of thousand passes maybe uh and still raised 23 million so so i think that's that's pretty close to the thousand true fans uh some as i believe it's chris dixon from andreessen that has been has been has been so talking about that where you can have substantial revenues from a really really loyal user base all be that it's a it's a small small fan base or user base and if and of course the uh the granddaddy of this is gary vee with v friends i mean let's let's let's give respect where respect is due guys come on um so uh anyways like moon birds this this was an example that came actually from shahaf and shahaf was uh on a podcast like maybe an episode or two from from the time that this air so you can go back to uh to that and he's he's been in the industry for or in the in the industry but in the web 3 sector since really the beginning so that was kind of his alpha towards me i hate

saying that uh i'm not going to say alpha anymore i'm just going to say inside anyway so so what i like about the kevin rose's model was that it was very iterative because people really focus on like oh 280 million rays like this is it like this is all about money but when you really kind of when he kind of walks you back of where it started was like the podcast so basically content creation um and that podcast and that was focusing on a lot of nft projects that were happening and sharing insights sharing insights about all these different projects and then kind of guiding people to to join these nft projects and that led into the proof collective so that tokenized um community of thousand kind of like you know hardcore fans and members of this community and and they were doing a lot of things for the community and a lot of things of course regarding these nft projects and only later on they got into a phase where they did the the moon birds uh project or moon burst our moon

versus nft so so it has been um a road and the kim rose doesn't come from nothing like a founder of dig and at some point they had like what 32 million monthly active users something like that so i used to i used to wake up uh i i tried to game their uh algorithm to get on the front page a couple times i used to wake up the min to to be online the minute a new zero punctuation dropped so that i could be the one to post it on dig so that i could get like the karma for my account uh by getting on the front page um yeah and all all that effort uh i don't think i even know how to log into my dig account anymore if anybody's using it i don't think anybody is using it but but definitely he gained a lot of experience and when he was talking about dig he said like you know 32 million monthly active users they had maybe 50 50 people working for dig and they were still not profitable so

so this kind of a thing kind of came a lot around that thinking is also the aspect is like how can they be profitable how can they get rid of the ad drip uh and the ad model and how they can get into a place where they do have this strong community where they have people but they are funding it in a different way in a way that brings value to the community uh so that kind of leads to like where we are right now i mean we have been doing content for 10 years uh we have a pretty sizable community we have i was actually going through some numbers for a different reason for dof and we were actually reaching for the last couple of months we've been reaching 100 000 unique people a month through all the different channels look yeah so it's pretty big for uh like we're not melting i call that the ethan levy effect when when you give me a podcast yes that's what happens since actually that that coincides pretty pretty closely to ethan levy when you when you when you get me and crest fighting on a podcast it's just audio gold it's audio gold

well i'll i'll i don't want to break anybody's bubble but it's really the podcast that is driving a lot of not a lot of podcasts but the other blog that is still driving a lot of interaction but yes events blog newsletter has been a big thing uh it has grown quite a lot the podcast i mean everything everything has been growing so we have a community that's what i'm trying to say yeah we have the content and we have proof that we've been able to deliver content at increasing pace because we have just grown the community the community comes to the content great so in many ways we're quite decentralized like i know you guys make what do you think is like it's um yeah go ahead what do you think are some of these more premium features that that that you could uh the dof could offer to to the token holders so so let's go let's let's go to these models uh the kind of like options that we've been thinking and and i'm not taking props of any of these models this is again this is coming from the community inside the slack channels inside some of the private conversations that we've been having i'm not gonna name any names because everybody works a different company so i'm not gonna say like this

guy from your company is actually planning it's like different i just realized i just realized we're gonna have to kick everybody out of slack and make them buy an nft to get back no no no no the way the way it actually works is and in discord uh people people will be joining to the discord channel and it would be automatically authenticated through the nft so through that pfp proof for picture that is the authentication anyway i've looked into it don't like i'm not i'm not a white belt without no strikes anymore so so basically there's kind of three options that have been outlined like the one is sort of an inspiration from the last event it's like hey we'll have nfts and there are tickets for event so it is a ticket it's an nft the biggest benefits are that the purchase can easily sell these tickets online if they don't no longer want to attend or can attend because it's in a country that is far away now dof will make some revenue each time the nft trades hands and these attendees will have a lifelong proof that they were at

the epic dof blockchain gaming miami beach event um so that's that's the os dof events will always have a hundred spots that are only reserved for token holders and uh that this is this is just once yeah yeah yes no i'm just throwing up some additional ideas here so yes this is a small quota small quota for them for the token holders they always have a spot at the events yeah right imagine that instead of a public event where you stream everything if you had a hundred people on a boat and everybody's got to put their cell phone in a box before the conference part starts and you like imagine the conference we would have if it was a hundred real game developers and no recording um we'd say some different stuff yeah it would be it would be like they are pretty recording but this i guess i i think this ticket thing is uh or this access thing is potentially one

of the for real life events it could be a cool use case for nft renting so let's say i i want to invest in a deconstructor fun ticket but i might not make it to all the events there might be someone local he wants to join so i put it out for rent for a couple of days and they can they can they can join the event with that one uh yeah interestingly enough interestingly enough this is not investment advice but we're invested in re-enft which is a protocol currently deployed on polygon looking to build look into deploying solana and they're basically building now this automation layer for nft rentals across across different products so so kind of going through like a ticket concept uh and again just take a look you know it doesn't we're using dft just as an example as we're talking about tokenized economy and how you can think about doing it so in this case you know it's it's great uh because it gives access and access is of course uh uh the probably number one form of of um of benefit from having an nft and and

you know a member the holders are definitely feeling that they're part of the community because they have priority access but at the same same time uh unless your organization unless your community is all about events it's kind of you creating yourself a treadmill of events and if you've never done an event you know they're they're not walking apart like you can do a meet-up in a pub but that's not an event that's not you know that's not what what based on the last one people are kind of expecting you know if there's no smoke machines if there's no custom animations that kick off if there's no you know top-tier speakers flying for all the world that's not the event that the people are expecting so that's that's kind of like nft as a ticket as a concept then option number two is similar but a little bit different where you use nfd as a member card and you become a member of a collective and this is what nelk boys has with the net voices uh nft which is called the meta card now what happens is in these type of uh tokens i don't know with with milk boys

if they do it but basically you get a gated access to a discord now in this through this meta card or through this dof coin the of card whatever whatever you want to call through this nft you get access to extra content so maybe you'll get some podcast outtakes maybe you have like monthly calls or or amas with uh with ethan levy and anthon bachmann all the we we cut out all the things where i say that joke will get us cancelled and then you get to listen yeah maybe maybe not not to that one not not to that type of content we're doing something different uh there will be an invite only meetups and the par the fun part about this is you can do it like i was just uh one of one of the people in the community actually a few people from the community connected with me today and they were talking about arranging a dof event in barcelona since there's so many people in in our community from barcelona and they were all excited and these guys are from different big companies in the in the area i mean it's a huge gaming hub so if you're an nft holder guess what you

have the community and now you can arrange your community events there and because um because there's some money that usually comes in with this with this sort of nft sales that the part of that fund can be used to support an event so if they want to do a meet up in barcelona we're going to be like hey you know what this pub over there not pub i don't know what they call pubs in barcelona this restaurant over in barcelona guess what everything is paid for you got a tab on the uf get some pinchos get some sangria uh you know start dancing saying that that we can set up a fun to fly me to barcelona so that i can get some sweet tapas yeah exactly right like that's that's what the fun will be used so in that sense again adding more values to correct my horrible yeah spanish accent good good luck ethan with your three kids flying to barcelona like let's be honest there's already barcelona so he'll handle he'll handle

that he'll handle it anyways uh so so uh when we're talking about these uh these nfts it's a lifelong unless you you sort of customize it or burn after a certain amount of time um and um through that you can actually start doing like different nft seasons and then i don't know it kind of i think it goes kind of to a weird place or maybe that's like the evolution or everything uh but most importantly there's no need to spend on any fancy art uh you kind of don't need an art at all if the gps are just a piece of metadata what did i say or but most likely rocket teddies most likely there will be art because we also have art directors in the dof community already right now so we can give somebody an nft if they if they uh create our one of these one of these art pieces with with you know thousand variabilities but at the same time when you're going with option one where you have a membership card you have to expect that you will have somebody who manages the community

because you have to maintain engagement well that's kind of like self-maintained already but at the same time you have to manage access you have to troubleshoot any kind of different issues and you you know you've set up a discord channel with paid members so there's some overhead uh that that is a part of it basically it sounds like uh free-to-play it basically sounds like you need uh to pull this off you need to do live ops essentially yeah well to some extent like when when i was listening to to to uh to rose's kind of like definition of what they do with proof collective not a lot it's considered more like a pvp game where people are creating the content themselves it's like a battle royale if you have 100 people on that and everybody's senior and everybody has paid in so it's it is a discord channel with a lot of a lot of conversations but there's still some amount of overhead that has to be contained and kind of going through option number three so if the first one is just a ticket the second one is nft with um with benefits let's let's put it this way the

third one which is kind of like the the you know the the everything is down so this is very murky uh it could be anything from uh very simple just a way to engage with the community uh to vote on different things or more complex version where entire dof organization or whatever community you have is is receiving funds paying bills commissioning work and all of that is governed through the dow and the way it works is you have a governance tokens in this case there will be of course called fund coins uh they will be distributed based on contributions so whether it's research blog posts podcasts editing transcription art design uh the distribution and or the airdrops will go through the community vote uh like small issues like ethan did ethan actually write this post and how did anton actually do the editing for it uh then there would be like two to three community members they need to agree in order to distribute these these tokens

uh spent on the government tokens to vote on big issues like should we hire someone to describe and translate all the tokenomics episode should we hire professional um editor to make the sound quality better etcetera should we buy ethan some decorations you like it when crest tells people to shut the [ __ ] up yeah well not not in that kind of stuff but definitely like something it can be anything dows can vote on anything yeah and the good part about dao is is that it allows instant incentivizing people to contribute to the community because you're essentially rewarding them out of this central chest the problem that i see in dao is it sounds like [ __ ] european union and it's a nightmare there's too many people making too many decisions a bunch of things that don't need to be don't need to have people making decisions on so i'm like categorically like i sound like a republican i'm i'm against big government and when i was

going through the description of dao that sounds like exactly what a big government is liberal yeah that's i think that's a liberal take on things right so so uh so yeah personally personally i'm more inclined to sort of an nft that allows you to build that very strong core community where people have certain benefits of being a part of this this central community and i think that's a great first step because from there on you can start going and investing into the next stages of web 3 development but just like with alex's case it's like that's the proof collective i think thousand is it too much i'm more inclined to 300 mainly because of course i mean the 300 the spartans come on so yes so that's that's what i thought of immediately i have good news for you if you're if you're uh afraid it's gonna be uh be european union so similar to how there's a bit of a less explored consensus mechanism across chains also known as because we

know proof of work we're not proof of stake there's also delegated proof of stake and uh it's just so showing that we're doing this whole 360 here uh understanding that democracy is probably the least the least rotten way of deciding things so i mean if if if we want if you want to structure structure the deconstructor fun dial in a way where let's say the voting power is delegated to a smaller group of people uh that the community trusts then then uh that's that's fully doable oh that's you know that's that's interesting and and we we are quite transparent like like all the for example with with the sponsorships and all the revenue like the contracts are distributed to people so they can actually so the content creators see the uh the money coming in and the money going out so we we have elements of this type of a thing and in many ways like i really enjoyed no okay i'll be honest i didn't enjoy listening to this podcast on on bank list we're gonna add the link the bank list with kevin rose and talking about universe because it was

tough you know the guys were were so crypto bros if you think i'm a shill crypto bro like go listen to the the real chill crypto bros and you'll be like eating is like a mild pepper and they're like a ghost pepper well well exactly i mean uh super said it nicely like in in the in the previous twig where he actually gave you a lot of props and in terms of like you're still very balanced even though you're bullish but you're still very balanced but but nevertheless i think it's it's it's interesting way to think about tokenized uh communities and that's why we wanted to break it down here is of course we talked about dof as an example but just just just you know disregard uf it just you know dof because you're listening to this it could work with anything right yeah i it actually as you went through all that you know guilds are such a critical part of most mid-core liveops games which is you know i've worked on a lot of i've worked from hyper casual to mid core core

and and in the games i've worked the most on is mid core and guilds are a big part of it and you know one of the things that upsets guilds and guild leaders the most in my experience has been when when there are changes made that upset their strategy or planning that they weren't aware of or didn't see coming because they in the guild they spent a lot of time planning for events so you could imagine or what i started picturing and this is something you could do with or without tokens i think the tokens angle is really interesting is i could imagine air dropping 50 tokens to the guild leaders or 50 nfts to the guild leaders of my top 50 guilds and maybe maybe that's it no revenue just like here you go here it is when you own this token you get access to this discord channel uh once a week or once every other week

the developers will get on a call that only people in this channel can access and we'll go over and and we will share our event changes to you ahead of time for feedback in these right so like not even going as far as governance and not making it a revenue play just saying like hey if you own this token which we airdrop to you for being part of the community we're gonna start talking to you and if you don't value that you can sell it to somebody who does and you get the 95 of the revenue from it we only get five percent and this is this is the way we're establishing our trusted council of of our most devoted players like that as i say it out loud and i take the revenue angle out of it it gets really interesting to me i mean you can do the same thing without the tokens i just think that the tokens

um you know if you if you if you know prospect theory or you like read a lot of behavioral economics like i do prospect theory is one of the like foundational ideas and when somebody holds something they value it more right so like just saying you have access to a um a private channel that nobody else does doesn't give a human as much good feelings as if you said you own this thing and it gives you the private access and if you want to sell it you can but like that ownership will give you more good feelies um and uh happy to talk prospect theory with anybody in the future yeah and before we move to the next topic yeah i just wanted to get your clarification what do you mean by by tokens and nfts like do you in terms of building a community oh so nfts are a form of token right there's fungible tokens and non-fungible tokens

and so you know you could do this by saying hey we're minting the the dof token there's going to be an issue of 50 they're all the same and you can swap them on sushi swap that's that's what you would do with a fungible token a non-fungible token is uh we're minting 50 passes they have a serial number one through 50 and different art that's what makes them different so i i've realized like i sometimes i say token when i want to more specifically say non-fungible token got it got it well that's it i think speaking of speaking of non-functional tokens yeah should we move on to speaking of yes yeah let's have any feedback on by the way on the on the uh on tokenized communities just hit us up on info deconstructed fun or if you're on the slack channel just hit us up what do you think about about you know this particular example and how would you approach is that initiative

yes is that initiative going to be called the decentralizer of fun that's that's actually that's actually a good one good we're going out of detention another one fantastic another rocker like he came up with istanbul and now with this anyway consultant in my next life so i'm i'm gonna i'm gonna tease tease miss mishka a bit in in this one because i wanna talk about yugolabs other side and i want to say i was vindicated you gave me a lot of you gave me a lot of heat on my newsletter prediction piece i believe you said ethan stop being such a crypto shill i can't endorse these opinions you didn't say that i didn't apologize i was like extremely my comments were shitty like sometimes i also have shitty days and i said bad things and then i was like you know what i love you i'm sorry it's it's it's the it's the father's it's the fathers of

young children i understand the uh having a bad night of sleep maybe due to some crying or some wetting of beds and and having having a bad morning as a result so anyways um in march we talked about other side which is the forthcoming mmo slash metaverse from the bay uh board eight yacht club maker yugolabs uh we talked about it following their 450 million dollar raise i also wrote a prediction piece for the newsletter so if you're not signed up for the newsletter in the newsletter we put uh pieces that we don't post on the blog always so it's a great piece to get that alpha um let me let me read you a quote i made three predictions and here was my number one prediction unlike traditional game development the ability to generate revenue on web3 projects can be divorced from the release and operation of the game software itself as such i predict that you you labs will make millions in primary and secondary

revenue in the nft sales of codas land and other nfts for its other side metaverse this will likely be a profitable venture years before the game is actually playable and look here we are it's a few weeks later they've done their crazily successful nft land drop for other side and let me give you a quote from bloomberg yugolabs the creator of the popular board apes yacht club collection of nfts launched a sale on saturday a virtual land related to its highly anticipated metaverse project raising about 320 million dollars worth of cryptocurrency in the largest offering of its kind demand was so strong that activity related to the event caused ripple effects across the entire ethereum blockchain disrupting activity and sending transaction fees sorry soaring so um let me so like as i predicted massive business success

uh a great uh you know ape coin which didn't exist a couple weeks ago is one of the top tokens in the world has over uh uh it's got a couple billion dollar market cap they've got this huge nf new nft collection in other side um and and let me tell you a little bit about the sale um there were 55 000 land parcels sold for 305 8coin each so that's about six thousand dollars uh was about the cost on the day of and it was only accessible to approved wallets uh 45 000 land deeds were allocated to board a yacht club and mutinate yacht club holders and they're reserving another 100 000 parcels of land to be awarded later gas fees went insane it crushed the ethereum network i think i saw somebody saying like a gas fee was four thousand five thousand dollars people in the uh in the discord in our um

slack community said i i avoided this just because of the gas fees so yeah and you had uh you had i mean this was across ethereum so you had people trading uh nft worth worth five hundred dollars and paying a gas fees for several thousand so uh yeah a bit of a mess so so this one this one has been a pretty uh ethan and mishka heavy episode so anton let me let me uh ask you uh for some your opinion what went right here what went wrong here and and i know there was a lot of controversy on twitter following the sale what was the controversy so maybe starting what went right i don't think it's a very long list i think it's mostly from uh from the perspective of yoga labs and uh the the revenues they were able to make uh now obviously going up to to to to this amount of gas fees people are paying i think there were there was

earlier a statement issued by by you collapsed they were gonna refund uh this gas but but um if we start um piecing a bid on on what went wrong there so obviously one thing was was the interest towards this sale uh i think yoga event said that you know not be on their wildest expectations but i would that's [ __ ] obviously they knew that there was going to be a lot of demand yeah demand for this and um they had some problematic statements actually later but i'll get to that in a in a moment but technically what went wrong here is that the smart contracts that yoga was using uh they had um near zero gas optimizations uh in their in in in their code there was a great uh thread on twitter by uh will papper who is a co-founder of syndicate dao and he's been doing a lot of a lot of smart contract uh gas optimization previously and he

outlined more technical specs in his twitter thread on what actually went wrong here but but um according to according to his his calculations and his uh kind of suggestions for improvement that he had for the contracts that yoga was using they could have more or less saved uh 90 of of of the gas fees that were that were being spent so so in simple terms you go allowed you got allowed people to spend too much gas on these transactions and they could have sort of reduced that amount uh by uh but by fair amount even though they had these kyc kyc wallet procedures in place where they were whitelisting and addresses for this sale but it went went off the off the hook anyway um an interesting posted by yoga labs later where they quote want to say a few words about the

mint uh obviously going through the different steps that kind of went wrong there but this was the most interesting one and i'm paraphrasing this tweet uh we're sorry for turning off the lights on ethereum for a while it seems abundantly clear that apecoin will need to migrate to its own chain in order to properly scale we'd like to encourage the dog to start thinking in this direction so the interesting thing about this tweet is that it spurred a lot of controversy on twitter because google apps can't with a straight face say that they wouldn't have expected ethereum congestion with this sale right there are tried and proven block chains that can handle this sort of scale we could be looking at ronin for example that have are more now despite the despite the problem with the bridge still battle tested in terms of what they can what they can handle not congest on fees or an activity uh and that there

i saw several tweets and discussions uh online about uh kind of suggesting that that's a this was a way for yoga uh to to um justify their own change justify justify their own chain uh and their own solution and obviously that's again if if they would do that it's again a revenue event for the company and it's gonna if if they do it they're on layer one or layer two it's to mean it's going to be money for them but um that left clearly a bit of a salty taste uh in in with many people that um this should not be used as a way to kind of try to convince your users to migrate uh to your own chain because obviously people people paying hundred million to ethereum if they're invalidators i mean they were the ones who were laughing laughing they were their way to the bank but um

so all in all uh pretty messy bad pr uh i don't know how long that's gonna last there was a couple of uh bigger discussions about people starting to sell their yoga labs assets et cetera but i don't think that's i think we're talking about very few the floor price on other deeds right now looks like double the minting cost so yeah and uh and then then maybe a smaller thing a smaller thing i found interesting with the sale there were there was also obviously with the expectation that the land or the deeds you're getting have uh certain traits to them uh but multiple people started posting uh the trades they had paid six thousand dollars plus the gas v4 and they had zero trades zero coda uh and yeah uh not nothing so they felt they they felt a bit uh empty-handed yeah from a design standpoint it this does not feel like it was a very

rewarding it would it it was too punishment punishing and not rewarding enough right like if i spent ten thousand dollars on on a thing and i mean i saw someone say i love my piece of land so much and there are six traits and it said artifact none coda none s resource none so three of the six traits they had nothing and i just like when you when you think of uh game design a very common i can't remember where i i got this piece of advice but something it's it's struck with me for years i think maybe from tracy and chris in college like 20 years ago it's like you can you can take almost anything and frame it as a characteristic as a reward or a punishment and humans like carrots a lot more than sticks so like there is a way to have designed these like getting none is a punishment right getting some trait that provides some

value even if it's the lowest tier of value and because and most common in the system would make you feel infinitely better about your plot of land than getting artifact none code and none like instead of ins you need to find a way to make coda's like landing a coda feel like a bonus i mean so like actually one way to do it would have been to have a trait called bonus or resource and everybody is guaranteed to resources and some p and a lot of people get turnips but some people get codas right so at least somebody goes hey i got turnip as my resource not i got no coda just you know just game design you have to just think about how to frame things as rewards and not punishments because like i would be pissed if i spent ten thousand dollars on that i would never tell my wife about that ten thousand dollars yeah i would hide that that was clear from

those uh twitter discussions where people were posting their their empty empty deeds yeah that uh yeah can i can i pick up from for from where on the left because because you talked a lot about um a lot about the other practicalities and and i think like on a high level this whole incident of kind of renews the conversation or the question about whether these smart contracts uh smart contract network is up to the challenges the new businesses is built on on on on it so meaning that the issue is that there's a lot of money being poured in into web3 that's why most of the people are listening to this podcast because there's just so much money in it and the fact is that that um that the whole the whole you know industry or or branch or whatever you will web 3 is very much in the infancy yet investors want to see it scale up already and and we're seeing these issues with with smart contract networks as it is now we we talk about

the uh the gas prices which is again why do you say gas price when it's transaction cost there's literally a word for it so i'm going to use a word transaction cost for for people to uh to kind of understand it and and the big issue is it's actually ethereum as a layer one protocol and um ethereum is kind of known for very high transaction fees and slow execution speed and that has been well documented through multiple multiple uh sources uh and that is why they're actually do coming up with ethereum 2.0 that will have sharding that should uh limit the the transaction fees uh by by breaking down the transaction transactions anyways but but at the same time they've been saying that the ethereum 2.0 is coming and it's four to six months away for a long time now because of this massive demand uh and because of ethereum's you know high transaction fees due to slow execution speed that cost the gas fees to spike up so

gas is transaction fee and then when the ethereum fee spiked up um that cost higher than actual cost of purchasing of the underlying nfts themselves so you're actually paying more for the transaction than for the actual item you're getting through the transaction even the craziest thing that that when you go through this for people who haven't minted uh the craziest thing is that you have to pay this transaction fee even if your transaction fails so i don't know if any of the listeners or you guys use sneaker app from from nike so basically when nike drops a new sneaker like 10 a.m on saturday you have to sort of like pay for it and they fund you the money back if you didn't get the jordan ones that the the rare drop of your size now imagine like if this would work in the same way i would pay my 170 euros for the for the jordan ones that sell in the on stockx for 350 or 450

but i wouldn't get it like normally you don't get it because they're rare uh but nevertheless nike would take my 170 euros they're like thanks dude uh good luck the next time you know to use to use the transaction fee it would be like if it cost 170 euros and they and they sent you back 120 because 50 was the transaction fee yes yeah yeah exactly exactly not all the money was uh destroyed but a really big part of it was a very big part and and and that is and that is the craziest thing that's that that should give you the perspective of how much of an infancy this this whole web 3 is still because of these high transaction costs and actually the good projects in in web3 they are regularly refunding the transaction fees for failed transactions so if ethan goes he tries to buy something for 5000 ends up paying the gas fee only and doesn't even get the uh the uh the nft

then then in this case you would have gotten back your transaction fee so you ended up with you know not spending on anything since you didn't get anything now the reasons and that's what anton was talking about like like um the uh the the blockchain that that um google apps would be building is because having like layer one blockchain layer one meaning solana ethereum avalanche any of these um having that one okay so it's just step back so layer one it's a lot of avalanche and so forth and then when you build on top of it that's called layer two so for example yuga yuga's ape coin is layer two on layer one being ethereum and you know the dos future coin the fun coin would be on layer two unknown something like that no no layer two is like when you're on polygon which is a network on top of ethereum so it is i'm i'm pretty sure i'm going to check right now but just think about it

just to makes this soup a bit still i think polygon is widely considered not anymore being a sort of layered two but it's it's a distinct distinct layer one but it borrows a lot from ethereum's code it's essentially a fork of ethereum okay and they get to piggyback but if you look at some there used to be a solution called plasma uh some other ones then you're talking about something that's built on top or or around ethereum if you will where transactions take a step outside of the main chain and then they return back to the main chain with them in batch somewhere 1.5 right yeah if i go to if i am trading someone uh my eth for their apecoin that transaction happens on the ethereum network yeah and if they would now consider their own chain then it

could very well be a sort of an ethereum derivative again an ethereum fork so essentially it's it's it's it's on layer one again but then they might decide on building on some layer two but but they would they would basically form form their own layer one got it and and the reason for that is like they would they would um avoid these transaction these high transaction fees and will be able better to cater to the uh to the demand of of the public and we've seen these examples happening before because dapper labs actually did this they it took them i think two years and they now launched their own blockchain called flow um the verdict is out on it whether it's good or not uh whether it solved all the problems that they were having or they perceived that they would be having but um yeah and we've we've seen this a few times and the whole dapper the whole dapper or flow was the result of cryptokitties congesting ethereum in 2018 uh you had uh ronin for actually moving

on to roni because they just couldn't fit on ethereum anymore uh but again this was not news for yuga so so but it was a very weird way for them to now uh allegedly uh justify justify their own their own chain and uh but it's a it's a way to get control as well because um if you're looking at something like ronin arguably it's not very decentralized if if there's uh under 10 validators that are able to control what's happening on the chain or if they're kind of the weak link so i mean it's always going to be uh it's always going to be a trade-off between how secure it is and how fast it is and it says you can't have you can't have you kind of both of those because the more the more so to speak people you want to to validate what's happening the slower it's going to get because um it is kind of a physical limitation for these chains uh so so i think that's debunking so there used to be this

discussion of of a leading layer one and which one is going to be be the one chain to rule them all if you will if there's going to be one it's likely ethereum but i don't believe it's for the reasons that people people believe i think because it's already shown that if you have one runaway success uh an app that has a lot of usage it's likely going to need its own chain and it doesn't make sense that a transaction that is worth 10 cents needs it needs the same security requirements as a transaction worth one million so i think where the ethereum will be an important go to market chain because it has an existing community it has proven tech a lot of different tools and platforms built to it but when products find product market fit they find uh escape velocity they're going to have to look for other solutions now obviously there's new options coming to the market all the time you have stuff like polygon uh and they're also moving into a bit of

a similar direction as avalanche with a subnet uh subnet solution where basically you launch in essentially you launch a new chain for each specific application or a new chain first or for a specific type of use case where where kind of the the transaction patterns are quite similar so you can tailor that to that experience uh and then the consensus is brought from kind of a shared layer underneath all of those all of those subjects but but that tech is still uh in development and that's why it's so important when you're making that choice of the blockchain uh exactly the reasons how you underlined and understanding your product but it's still you know easy to make mistakes because you don't know what the demand would be uh and how many transactions people are doing etc so um so yeah um overall like i wanted to uh to you know finish up my part just by by quoting anand gravala ceo and co-founder of spatchio it's a virtual gallery for metaverse services and um

the quote was like the challenge with selling land model is that incentivized incentives aren't a lot always aligned many people buy land as an asset and try to maximize price while creators who can actually develop amazing experiences in it get priced out and you end up with lots of empty lots so basically speculators this was an interesting quote uh kind of resonating with me i mean what do you think ethan that that that quote kind of assumes a sandbox or decentralized style metaverse that's intended for um creators if if you go back to our uh yugolabs pitch deck episode or my newsletter piece you know it looks more like they want to build an mmo um like a world of warcraft which isn't like sandbox where p or roblox where people are building experiences so um i i mean i agree there are many many potential problems with selling land

before the the product is out i think they're gonna have a a different problem i don't think the problem of um uh of other side of other deeds is that i'm not gonna be able to create anything that people want to do on my land i think the problem is as i predicted in in the newsletter pieces it's going to be very hard to build an mmo that achieves their ambitions and it might not be 2020 until 2027 till other side is playable right and uh uh so it's like when when will these land plots have in-game utility i think it's going to be a long time so i just sorry sorry i just like don't uh this quote i think is uh making an assumption about what other deeds are for that i don't think matches the information from the leaked pitch deck yeah interesting yeah i mean i wanted to kind of even get your take on it because it was a it was an interesting um

interesting quote resonated as a quote yeah itself yeah for sure so let's uh let's close this segment now let's take a bet in what year and quarter will other side be playable first playable um 2020 that was 2022 2024 q3 uh the four the full playable of the full game or or the mini game that's going to be announced next year first when will other side be first playable which whichever oh a mini game okay yeah i didn't i mean no no let's not count the mini games because it's uh that's the easy way out that's what uh that's what star atlas did uh they pushed roadmap back with a year and said we're coming out with a minigame instead yeah yeah did a one sprint to launch some kind of a breeding game yeah all right 2024 in 2024 i'll i'll take i'll take uh

what is it now i'll take uh q3 2020 it's going to take a long time to build another i'll land i'll land somewhere in between i say q 2 20 25. okay winner uh will er uh win winner gets a steak dinner from from the other two uh we'll have to meet in person actually or metaverse steak no no no real real steak no no no it's it's it's a it's a it's it's a it's a zoom dinner where we'll just do we'll just participate in some staking staking contracts all right let's let's close it out it's been a great episode let's close it out with some new hotness um i have no new token assets i have been too busy selling a piece of real land and buying a piece of real land so i did uh a real land transaction in the real universe and uh we're downsizing to a smaller

house with a a great family-friendly neighborhood and i've been too busy with real land to uh mess around with fake land so no no new tokens for me uh have you added any tokens do you have your first token as cash back you have to hold for i think a year and then you get the card so i was incentivized by the card and um well this our little household has held first bitcoin since 2014 so you know wow relax we've got some gains i've been i've been making fun of you all these new hotnesses any nfts yet no uh no i never owned any of these um

the whole your first nft will be the dof nft yes yes and yours your you guys will be airdropped the overarching project is called decentralizer fun and the first the first drop is called game games and games now let's we're too broly we're too broadway okay okay yeah yeah i think i'll think about it i'll think about a couple of suggestions okay any any new hotness for you uh not right there's there's a couple when i'm looking real closely so maybe i can i can drop some alpha in future episodes if i end up getting them why is it called alpha alpha is like inside or ahead right like like why is it if no if you if you look at um sort of investing you already invest in beta you invest in an index or estimate alpha which beats the index got it okay now i understand a little bit because it just sounds so

brawlish it sounds very broadish all right with that i blame i with that i think tokenomics number eight is in the bag thank you both uh thank you audience for listening and thank you recur for being our first ever tokenomics sponsor all right shout out my friend bye