The Breakdown - Gaming as a Tool of Economic Empowerment

Episode Date: August 1, 2021

The broader crypto sector encompasses more than just policies and price action: Decentralized technology has given rise to immersive play-to-earn digital economies where players can maximize their gaming experience. In this “Long Reads Sunday,” NLW takes a step back from the recent regulatory focus to take a look at the world of gaming. He reads the piece “A Play-to-Earn Account Beats a Bank Account” from Beryl Li, co-founder of Yield Guild Games. Enjoying this content?   SUBSCRIBE to the Podcast Apple:  https://podcasts.apple.com/podcast/id1438693620?at=1000lSDb Spotify: https://open.spotify.com/show/538vuul1PuorUDwgkC8JWF?si=ddSvD-HST2e_E7wgxcjtfQ Google: https://podcasts.google.com/feed/aHR0cHM6Ly9ubHdjcnlwdG8ubGlic3luLmNvbS9yc3M=   Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW The Breakdown is written, produced by and features NLW, with editing by Rob Mitchell and additional production support by Eleanor Pahl. Adam B. Levine is our executive producer and our theme music is “Countdown” by Neon Beach. The music you heard today behind our sponsor is “Only in Time” by Abloom. Image credit: sasha85ru/iStock/Getty Images, modified by CoinDesk.

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. The breakdown is sponsored by Nidig and produced and distributed by CoinDesk. What's going on, guys? It is Sunday, August 1st, and listen, this week has been so full of craziness from Amazon rumors to just a non-stop barrage of regulatory action and intrigue. challenge that I thought that for Longreed Sunday this week, we'd do a little something different. Now, if you're paying attention to the broader crypto space, you've probably heard people talking about Axy Infinity and play to earn games. You also might have heard Mark Zuckerberg talking about the metaverse and why Facebook is making such a big bet on these new digital worlds and what

they'll mean. You take these things together and you see a totally new way of interacting with the world that's interfacing through digital experiences, digital worlds, and is creating new types of digital economies. As you guys know, I'm interested in the economic empowerment dimension of Bitcoin and the economic empowerment potential of other parts of the crypto space as well. So for this week's Long Read Sunday, I'm reading a piece by Beryl Lee, who's the co-founder of Yield Guild Guild Games. The piece was on Coin desk, and it was called A Play to Earn account beats a bank account, and her central contention is that, quote, NFT games are doing more to deliver financial inclusion than a bank account ever has or will.

Now, this is an example of an op-ed that I'm reading that is specifically talking about someone's project, so there's obviously a grain of sand, but I still think the perspective has a lot of value, and so I hope you enjoy it. It may be lauded as the hallmark of financial inclusion, but a bank account represents very little for those that don't have one yet. Even for the privileged ones who have access, an account alone does not necessarily qualify its holder to access a competitive interest-bearing savings account, a loan or insurance coverage. That is, all the type of products and services that could actually help someone improve his or her financial position and economic status in this world.

I am from the Philippines, born and raised, and over here, just 23% of adults have a bank account. According to a 2017 study on financial inclusion by our central bank, the main reason cited by respondents was that they just didn't have enough money to need one. For the vast majority of people here who earn little more than $300 a month, a bank account is just seen as a thing with expensive fees that eats away your balance for no reason. I've always believed there should be opportunities for people to invest and create wealth by contributing other valuable economic resources such as time and skill, even where they have zero money to begin with. Thinking in purely monetary terms is such an archaic way to look at the value that people can bring to an economy, especially as digital

infrastructure is lowering accessibility barriers and making inclusion goals more attainable than ever before. During my time as entrepreneur in residence in the very earliest days at coins.ph, a Philippine crypto exchange and mobile wallet founded in 2014 that serves over 10 million customers today, we did a lot to establish the necessary payment rails that would allow Filipinos to get in and out of crypto. For example, an unbanked person could deposit pesos in their e-wallet, and at their local 7-11, and from there the user could buy mobile data or pay bills electronically. The person also enjoyed improved efficiency for local and international remittances, with crypto-asset-back transfers costing far less in time and money than the traditional options.

At the time, this was revolutionary, and the metric of impact measurement that we displayed at our website was the number of hours we'd saved people from waiting in-line to make in-person payments. Of course, users could also buy and sell crypto via our mobile app, and still today, there are many who say their first ever experience with investing was thanks to coins.phiastopph. Well, this has allowed Filipinos to take significant steps towards their financial freedom, there is still more to do. Because for all of those aforementioned opportunities presented by crypto-based economies, users must have upfront capital in order to participate. And in a place where roughly a fifth of the population lives below the poverty line, that's going

to be an insurmountable hurdle for many. This is why the play-to-earned phenomenon in non-fungible token gaming is so powerful because users don't need to put money in. They can earn it through active participation in a video game. The breakdown is sponsored by NIDIG, the institutional grade platform for Bitcoin. As long-time listeners know, NIDIG is a major force in the Bitcoin space, and they're now making it possible for thousands of banks who have trusted relationships with hundreds of millions of customers to offer Bitcoin. That mainstream access is critical for all of us, and you can learn more about it at nydig.com slash nLW. That's nydig.com forward slash nLW.

This is providing unprecedented access to wealth creation opportunities in crypto, especially in developing countries where we've seen a huge influx of people wanting to get in on the craze. But rising demand has dramatically increased the cost of the NFTs needed to play the game, which places us right back to where we started, with expensive admission fees putting play-to-earned games out of reach for those who could benefit from them the most. This exact problem is what inspired my co-founders and me to establish Yield Guild Guild Games,

YG. With the vision to onboard millions of players to the Metaverse, we began investing in yield-bearing NFTs in the most promising play to earn games, for the purposes of lending those assets to our guild members on an uncollateralized loan. The players are entitled to 70% of what they earn in game, while 20% goes to the community manager who is responsible for recruiting and onboarding players to be competitive. The remaining 10% goes back to YGG.

to cover the cost associated with acquiring the assets, including gas fees, and ensuring their safe custody. The model is not only popular, it is successful. To date, our Guild has onboarded 3,300 new players and collectively earned over 27 million SLP. That's the reward token earned by players of Axi Infinity. At today's prices, those tokens are worth around $7.29 million, and at this point, it's important to note that these are not your average startup growth metrics. These numbers represent thousands of lives that have significantly improved because of the guild's efforts in countries such as the Philippines, Indonesia, India, Venezuela, and Brazil. This is redefining what it means to spend time in game. In the past, a game account was something

that gobbled up hours of time for little return. But now, with NFT games, a player's time and skill has real-world ROI, generating income and contributing to wealth creation, breaking the curse of poverty in the cycle of debt. It then becomes a vehicle to provide other relevant financial services as well as financial education. Ultimately, play-to-earned games represent a chance for people to become more than the financial situation they were born into. Yield Guild Guild is already making yield-generating NFTs accessible for its members. Next could be more accessible crypto borrowing, particularly to individuals and businesses in developing countries, with fewer tangible assets to address typical collateral requirements and providing access to capital that is

not being served in these markets. Data from their wallet activities, such as hours spent playing, and in-game rewards earned, could be used to inform alternative credit scoring models, making players eligible to apply for other forms of non-collateralized loans. This new intersection between gaming and finance is completely subverting the way we think about financial participation and wealth creation. More than banking the unbanked, play-to-earn is a system that rewards and propels time and skill as opposed to privilege. Through the gamified experience, communities can generate an income, reinvest their earnings, and elevate their economic status. What's more, these NFT games can be a gateway to accessing alternative financial services and a module

for improving financial literacy. Also, they make learning, earning, and investing fun. That's more than anyone ever said about a bank account. All right, so back to NLW now, and there's just a couple things I want to point out. I mean, I straight up think this is super, super cool. And I think that there's a bunch of reasons for that. And the first is that it just seems impossible to me that in the future that we're headed into, we don't revolutionize the way that people work, including totally transforming what people think is an economically valuable activity. It might seem nuts to some of us who grew up with video games being a thing that you just got to do for fun, and it seems extra nuts to our parents who thought that video games were going to rot our brains. But given how big gaming is as an industry,

as a pastime, as an entertainment space, why wouldn't we assume that gaming takes on a bigger role in economic activity? Usually shifts like that are driven by the already wealthy, the already time having the already money having. So to see some of that potential shift being driven by a totally different segment of the global economy, I think is really encouraging. Second, I think what's really notable about this is that this is not some charitable project with people saying, hey, look, over there, only 23% of adults have a bank account. Let's go do something to fix it. It's people who are from these places who saw the opportunity, who are onboarding their peers, and that's a totally different type of thing. Third, for those who lived through the 2017-2018 bull run and saw a fair

number of tokens promise some form of economic freedom for people in the developing world, and who have PTSD because of that, I think there's a meaningful difference in this type of activity where there is an already existing and flourishing community. There is an activity. There are people who are already invested in this community, and there's specific action being taken and rewarded in the short term by specific value. It's not just a game of speculation. Now, that's not to say that this opportunity continues to remain with Axy Infinity specifically or any one of these games, but it sounds to me like just reading this and just being introduced to this startup now that their focus is on this larger notion of playing to earn and trying to make that

and keep that accessible to people from a different socioeconomic standpoint, regardless of which game happens to be in vogue right now. Is there a possibility that the entire field doesn't work out, that people realize that they really more want to play games to play games and that the monetization models around entertainment in the form of streaming and things like that are better than playing to earn? Totally. It's totally possible that that's how it plays out. But along the way, a lot of people are going to make a lot of money. And so I, for one, am super stoked to see some of that going to people who don't normally have access to it by way of just a clever new type of partner. So I think it's a cool project. I thought the perspective shared in this article was really neat.

And I think we're going to be discussing a lot more about what the economies in these digital worlds looks like going forward. So I hope that you enjoyed this very different long read Sunday, maybe a breath of fresh air after this crazy regulatory week. But as always, I appreciate you listening. And until tomorrow, be safe and take care of each other. Peace.