The Wolf Of All Streets - Yat Siu Made Me SO BULLISH On Web3 And The Metaverse

Episode Date: December 3, 2023

There was no bear market for Yat Siu, Chairman of Animoca Games - there was simply a time to continue building and investing. If this podcast does not make you bullish, than nothing well! ►►TRADING ALPHA READY TO TRADE LIKE THE PROS? THE BEST TRADERS IN CRYPTO ARE RELYING ON THESE INDICATORS TO MAKE TRADES. USE CODE ‘2MONTHSOFF’ WHEN VISITING MY LINK. 👉 https://tradingalpha.io/?via=scottmelker ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEK DAY! 👉https://thewolfden.substack.com/ ►► OKX Sign up for an OKX Trading Account then deposit & trade to unlock mystery box rewards of up to $10,000! 👉 https://www.okx.com/join/SCOTTMELKER ►►NGRAVE This is the coldest hardware wallet in the world and the only one that I personally use. 👉https://www.ngrave.io/?sca_ref=4531319.pgXuTYJlYd ►►THE DAILY CLOSE BRAND NEW NEWSLETTER! INSTITUTIONAL GRADE INDICATORS AND DATA DELIVERED DIRECTLY TO YOUR INBOX, EVERY DAY AT THE DAILY CLOSE. TRADE LIKE THE BIG BOYS. 👉 https://www.thedailyclose.io/ ►►NORD VPN GET EXCLUSIVE NORDVPN DEAL - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets Follow Scott Melker: Twitter: https://twitter.com/scottmelker Web: https://www.thewolfofallstreets.io Spotify: https://spoti.fi/30N5FDe Apple podcast: https://apple.co/3FASB2c #Bitcoin #Crypto #Trading The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

You know, humans as a race comes from our sense of optimism. We want to be optimistic. We want to be hopeful. We want to see progress and improvement. Years and years of pain. Then, you know, something doubles and all of a sudden we're back, baby. Right. We're so back. I mean, these are not just survivors.

These are believers, right? The last 30 days was close to 900 million US dollars. So we're hitting a billion dollars a month almost now. Again, think 2024 is going to be a pretty good year from all accounts. It's just such a better future. This one conversation made me insanely bullish about the future of Web3, the metaverse and NFTs. While everybody was declaring it dead, people like Yatsu, the chairman of Animoca Brands were building and investing in the space. And what comes next when the crypto cycle ramps back up

is going to blow your mind. You have to listen to this if you want to know about the future of Web3. So you're my last gig of the day. Last gig of the day at 1 o'clock in the morning. Do you usually keep those out? I'm also a non-sleeper, four or five hours for me. And I feel like I've already wasted part of my day. But I hear everyone tells me that's really unhealthy

and I should be sleeping nine hours a day and tracking my sleep. I can't. You know, that's what people used to say to me as well. But I don't feel low energy. See, that's the thing. So if I was, I think I was reading a study and this is not for everyone of course but i was in a study that there are some people who are just fine with three or four hours of sleep

and while technically on average it's not supposed to be healthy i think even i think even in the hooberman podcast was like pretty pretty good about this stuff, he was kind of saying, look, there are some people who this is fine and that's not him. And there seems to be no sort of debilitating effects. So maybe we're those kind of guys. I have no idea. I hope so, because it feels like that means we get a meaningful percentage more of a wake life to enjoy over everybody else but it's never bothered me i've read similar articles but i think i seek them out so i can cope with my uh yeah confirmation confirmation bias yeah exactly so yeah so speaking of confirmation bias uh you have

the mocha verse coming right i thought the metaverse was dead i thought the metaverse was dead we had buried it we were a bunch of uh people with no legs running around and to our graves. But apparently, a lot of the narratives from the last cycle that people have been diligently working on are not, in fact, dead. Is that true? Absolutely. It's come back really strong. I mean, when you think of...

But I think one of the reasons why people talk about the metaverse as being dead, and this is something that I experienced when I gave my TED Talk actually earlier this year, it feels like ages ago, was that a lot of people thought it was dead because they thought the metaverse was meta, as in Facebook. And so for people who are in Web3, we would sort of kind of scoff at the thought that Facebook is the metaverse. But for people outside of our industry actually you know you know it's it's their reality because so so when meta's version of the metaverse which is oculus and which is horizon and all that stuff is not working out then they take the perspective that it must be failing but actually even during the bear market there was building there was economies

there was employment right obviously it wasn't like the bull market of like years before. But, you know, we're ending the year pretty strongly in the sense that NFT sales are now, you know, which to us are the digital properties of the metaverse. The last three days was close to 900 million US dollars. So we're hitting a billion dollars a month almost now, again. And the total sort of, I guess, asset value of essentially all of, I guess, the token values, underpinned obviously by Bitcoin, I think is now somewhere between $1.4 to $1.5 trillion. And so that basically creates a lot of economic scale and activity and growth

and income and usage. So I would say, you know, it was a bear market for everything, not just in crypto, but in the open metaverse. But it's come back pretty strong. And I think 2024 is going to be a pretty good year from all accounts. I think that we know that human beings expect things to happen much quickly than they do. Right. So in each cycle, we say, oh, the metaverse is here. NFs are here it's now we're gonna see it all come to fruition and then it takes quite a few years but they're equally bad at understanding what happens after they go exponential right that parabolic hockey stick of things i think we were just a bit early in the last phase uh we were just seeing the early iterations of what all of

these things could be and that maybe in this cycle whether you know i don't know how the cycles will play out we'll start to see the real sort of use cases and adoption of the most impactful parts of it do you agree with that yeah i agree with that and i think it's also because it takes time to develop the ecosystems in the metaverse or any kind of product that you're building so for instance many of the utilities in the metaverse or any kind of product that you're building so for instance many of the utilities in the metaverse you know it's like you know basically gaming activities for instance like game five being a really big big sort of area it takes two three four years to make really good games it doesn't really matter you know whether this is traditional games or web three games it just takes time to make good games. Most of those games that we funded

and other companies funded were around 21 and 22. So they're just about coming out actually in the next 12 months, right? And those are the games that people are going to love. And those are the games that are going to sort of meet the kind of bar that traditional gamers might say, oh, actually, I think I'll play that as well, irrespective of whether it's Web3 or

not. They're just going to enjoy it and they're going to sort of experience the benefit of what digital ownership really means in the open metaverse and the ability to basically potentially sort of trade them, transact with them, do other things with them that you couldn't actually normally do in game items, for instance. So I think that's going to be a big part of that transition. The other thing, of course, is maturation as well, which is that the community of people in the Web3 space who came in, especially in the last few years, and have survived the bear market, are a special kind of breed, right? I mean, these are not just survivors. These are believers, right? So in some ways, when you think about this sort of trial by fire type of situation that's happened in the industry in the last 12 to 18 months come you come out stronger you you come up be sort of believing much more about it

because the cause is bigger than your your own right you're just you're still here why are you still here well because you believe it's because you think it's meaningful because it's important and then when the market is recovering as it has done for the last 30 days that belief is just super reinforced in terms of this conviction that you're seeing, which you can now feel throughout the ecosystem, right? It's not just happening in sort of Bitcoin and Ethereum. Every token is generally sort of showing confidence and showing strength. You know, GameFi projects are particularly sort of positively affected. And, you know, people are talking about it in very positive ways.

Plus some of the big industry events that people were concerned around, such as, you know, Bitcoin spot ETF, that seems to be pretty clear that it will come out. It's just a matter of, you know, when, not if. And that'll have an impact. And of course, the situation with Binance had a lot of unclarity before.

People knew something was happening. They didn't know what it was. They didn't know how serious it could be. And the settlement, I think, really settled a lot of things in the industry in terms of knowing that, well, okay, finance is going to be around. Things are going to sort of progress in a positive way. Mistakes may have been made, but we move on and customer funds are safe. No fraud took place, that kind of stuff. Right. So, so I think people, you know, just generally feel positive. And the other thing I generally feel as well, I don't know that a lot of people in this would agree with this, but I

think people maybe more in web three, who knows, you know, the resiliency of humanity or, you know, humans as a race comes from our sense of optimism, right wouldn't be making the kind of progress we have made as humans if we weren't naturally inclined to be optimistic. And so I think when we see these signals, we want to be optimistic. We want to be hopeful. We want to see progress and improvement. And when we get these signals and they come bit by bit, our confidence builds very quickly.

And that's actually what I think we're witnessing at this moment in time, which is really quite exciting and empowering to see. It's incredible how fast we forget the bad times, to your point. It's been years and years of pain. Then, you know, something doubles and all of a sudden we're back, baby. Right. We're so back. About Binance, I think you make a great point. I think one of the more nuanced views of what happened with Binance is that even if you do get the worst case scenario and something terrible happened and they are in trouble with platforms moving forward,

I think we now know that the roadmap for the United States is to give them a huge fine and continue on. And so I think that now when the biggest platform, we see exactly how they were treated, they were somewhat treated like Wall Street banks, by the way, you know, in the past when they've had bad activity, whatever you want to call it. So I think that there's just optimism

that even if another shoe drops at this point, it's not going to be that bad. We know if this is the worst that's going to happen, then nothing's going to tank the industry further like an FTX or all the things we saw last year. Yeah. And I think the other thing that at least we took as very positive is also the fact that from a narrative standpoint, the US isn't really out to kill crypto. Yeah.

Which, of course, you know, and while there may be different departments in the U.S. government that may have different perspectives, who knows, depending on the actions that we see. But broadly speaking, you know, if the U.S. actually wanted to really, really sort of, you know, kick crypto in the shin, then they would have done something very different. And they didn't. They had a chance. As you said, like Max, right? Yeah. It's not a monolith, right? Like you said, different politicians, different parties, different parts of those different parties, different regulators, you know, and not one of them has enough power to sort of enact the worst case scenario.

Exactly. So I think that's actually quite encouraging. And I think the market reflected that as well. So I want to talk about gaming since we just started talking about it. Obviously, I've sort of made the argument that once again, we were just too early last cycle. We had no real adoption from a AAA game that existed of a blockchain or crypto side. Fortnite and Call of Duty didn't add NFTs. And we also, to your point before, didn't see a AAA game come from native blockchain houses, right? You said you started investing them in 21, 22.

Of course, that takes three, four years and maybe hundreds of millions of dollars to build some of these games. Do you think that some of the most hyped gaming projects of the last cycle, I invested in Star Atlas and Alluvium and all these, do you think they did themselves a disservice by actually launching the token at the point that they did when the game itself wasn't ready? So first, I think generally, we're going with gaming,

before we even talk about AAA, is that we have to also look at the life cycles of where we are in terms of the gaming evolution and the adoption of gaming. And I think one of the challenges that the industry has had broadly is that when you look at the Venn diagram of people who are in Web3, and then you look at the people who are actually playing games, which is most of the world, it's like over 3 billion people, actually the intersection of them isn't actually quite as big as we hope it is, because the Web3 audiences is generally smaller. And so what's happened is that the expectation that Web3, let's call them

Web3 people, would all play games is not true in the sense that also that Web2 gamers would just simply move over to play Web3 games is also not true, right? There has to be sort of a mix and there is a Venn diagram where you meet them in the middle. That is small. And so there is different type of game elements that we have to design and play to onboard people from Web3 to Web3. And to make the engagement of people in Web3 participate in this gaming environment, which actually I think happens a lot through the NFT and the tokens before the game is launched. Or that is actually the gameplay of those particular users. Meaning that there's a metagame layer that happens in tokenized games, in Web3 games, that doesn't really exist in traditional games, but the metagame is something that already happens in traditional game design. So for instance, when you play your popular games, whether it be Fortnite, or for instance,

Clash Royale, for instance, or even games like Candy Crush. The gameplay itself obviously may be fun and entertaining, but actually where you spend the money, where you actually engage in the activity of your planning is the metagame. Like you wait for the chest to open, for instance, or you sort of go and scroll through the items and you sort of strategize around building your deck, for instance, or what weapons you choose and that kind of thing. That's the metagame inside traditional games. And that metagame now has found an extension in web3 games and that happens to be through the token and through the ownership of these nfts and we've seen some of that play out in the type of projects where nfts are launched first or tokens are launched first and then

there's a metagame that happens in those environments even before the game is launched so i don't for instance think that star atlas or Illuvium or other sort of game projects launching tokens ahead of time is necessarily an issue, provided that they cater towards the audiences in that manner, for instance. I think the problem that's happened is that many of those game studios didn't consider that the issuance of the token is more akin to an IOU than an actual sort of raising of capital as it were. And raising of capital is still a kind of IOU, but it's a different kind of IOU, right? It's an IOU to an investor, whereas raising a token is really sort of an IOU to your customer, right? Who becomes an owner. And, you know,

when you sell someone an NFT, but the NFT doesn't yet have its promised utility, then actually that is still an IOU. It doesn't change that, right? And I think, you know, when you look at, for instance, Kickstarter style games or games that have consistently fundraised, like I think, you know, like Starship, I think Star Citizen, for instance, right?

I mean, that's a game in the in the webtoon world that essentially has crowdfunded I think close to the tune of 400 million dollars and the game still hasn't launched after you know like like after 10 years or something like that right so it but the community loves it and they love the experience of what's being built even if the game itself isn't playable in the full extent, because that was expected and that's something that they want and that's okay, right? So again, I think the token in and of itself can be a product in that vein, but I think sometimes that element is often misunderstood and not really fully integrated into that setup. The other thing is when you talk about mass onboarding, kind of like what we saw in the early days of mobile gaming, is that mass onboarding

from a certain set of gamers isn't actually necessarily happening from AAA. AAA is very important because the top gamers would enjoy it and it shows the quality by where it is. But it's actually casual gaming that brings people into the because you can see what it's like.

Farmville, Candy Crush, Angry Birds, right? I mean, these are the gaming environments that actually onboarded the masses. And so certain projects, for instance, like Gamey, which are sort of, you know, running games inside the Telegram ecosystem, for instance, are the kind of games that can help onboard people for them to understand, you know, what it means to have a game that's Web3, for instance.

Oh, he has a wallet. What does that do? Oh, I can actually maybe sort of get an NFT. Why would I have an NFT? Oh, I can trade that. Or how can I use it, for instance? That's actually what casual games have been doing very well from the transitioning of mobile games. And once those gamers who, you know, never thought mobile games could be fun or interesting, if you remember, the hardcore gamers were like, mobile games? I'll never touch that.

That's not a real game, right? Two years later, two years later in the airport. Exactly, right? Playing Call of Duty or big strategy games or Fortnite on mobile, of all things, for instance, right? But also because now a huge new crowd of people who have never sort of really played games before have now experienced, I guess, the wonders of gameplay, but they would never do this if they played Call of Duty or Fortnite as their first game. They would do that because they enjoyed Angry Birds

or Candy Crush or Farmville. And they go, okay, actually, that's kind of fun. And maybe Farmville and Candy Crush are not the top games today. That's okay. They did their job. They're fun and popular, but they onboarded basically billions of people into gaming, which then moved on from there to other types of games because they basically went from level one to level two to level three. And I think we're still at the level one stage of blockchain games, because meaning that people still need to understand

sort of what it means to have true digital sort of asset ownership inside gaming items, what it means to have tokens that are actually usable outside of your gaming ecosystem, and to have a sense of financial literacy that is necessary in Web2 games, but is actually quite important in Web3 games. Was Axie Infinity sort of our first iteration of exactly what you're describing? Because I think a lot of people were surprised at the

traction that it got, considering it wasn't the most fun game in the world. I think it proved the economic side, which is that if you can make more money playing this game, even if it's not fun and just sitting there and doing it over and over and over again, then you can cleaning a house or whatever else people in the Philippines were doing that paid them less, that they proved the economic model on one side, but also proved that one of these just very simple, engaging games could really go somewhat viral. Yes, and I think the Axie Infinity was an example of showing the way. It's not the end goal. It's just the beginning of what we can see. And now on the Ronin chain, which is basically where Axie is operating from, the chain that they're using, there's another game called Pixels, which is also part of the Animoca portfolio, that actually has now over a hundred thousand dau uh which also sort of emerged because of the fact that the axi users that are basically playing axi and have experienced axia

are now going sort of to other games and so you can see that effect beginning to evolve and grow from that i think the thing that was fascinating when axi is that you know it demonstrated that you can sort of create and improve and teach a form of financial literacy through essentially a token and and sort of crypto integration to people who have you know no financial literacy in the traditional sense may haven't even gone to university. So I think that's really sort of exciting and interesting. And it also showed that sort of, you know, I think one of the criticisms that people say, well, the game wasn't particularly fun. But you know, when you look at some of the popular games in mobile, things like, you know, like the tapping games, right, or what they call idle games. Actually, you know, these are very popular and fun games,

and you play them endlessly without value. Yeah. And the other, I think, story to your point, not only about the financial education, is that people were willing to jump through these massive UX, UI challenges, figure out how to open a MetaMask wallet, bridge to Ronin, do all these things that are complicated, even for someone who's crypto native, because they really wanted to play and they really wanted the opportunity to make money. So because I think one of the big arguments that I've made as well is that the UX and UI is just not ready for the mainstream, right? It's not as easy as Web2. You can't just come sign in, start playing. You got to do all these things in

advance. But people did it when there was incentive to do it. Correct. And also they were willing to sort of go around the App Store or in this case, the Google Play Store. So they were side loading it because at the time it wasn't allowed to have the Axie game basically installed through Google Play. But I would say that in order to sort of really grow the ecosystem in the space, I think from a game design and a tutorial standpoint, game companies can do a better job in teaching people around what it means to have a wallet, for instance.

And I think, you know, game designers are, you know, among some of the best storytellers in the world from an interactive sense. And so if you can actually somehow find a way to tell the story about maybe not MetaMask, but some wallet that's, you know, actually self-custody and still sort of, you know, not as complex as what we have right now with MetaMask, but some of it that's actually self-custody and still not as complex as what we have right now with MetaMask in terms of saving your key phrases and all that kind of stuff

and being able to use it and trade with the assets and understanding it. And I think we can do that inside games because today when you play a game, any new game you've never played before, you go through a tutorial and you learn a new skill every time you play these tutorials. And today we know about first person shooters or we know about RPG rules and we know about WASD and like whatever these things are. These are things that were taught to us that were not skills that we had before and now have become common. I think we can do the same also in Web3 games and sort of create these new narratives and sort of engage them through the craft of storytelling.

Right, so we started this conversation sort of joking about how the metaverse is not in fact dead. I think a lot of these narratives, NFTs, metaverse, we can even say DeFi, but we'll save that for another conversation. But all of these things that had their cycle, right? The NFT summer, the metaverse fall, whatever they were, seem to be have forgotten for dead. But in fact,

I think the real use cases once again are being built this cycle. So of all of those things or individually, which ones are you guys really heavily investing in right now and really excited that you think can come to fruition, you know, in the next year or two, as opposed to the five or 10 year time horizon. So we've done over 140 investments in the space and we're also building in our own sort of areas as well. So there's a lot coming out. I would say it's, you know, one of the things also we don't want to look at specifically in saying here's that one or two or three, it's a little bit like picking our favorite child.

Put them in buckets for sure. Put them in buckets. I don't want to get you in trouble with the project you're invested in either. But also I think games are one of those things where sometimes they become breakout successes in areas you just simply wouldn't

expect them from because they become hits. Remember Flappy Bird, for instance, right? It's like, what was that? And it just emerged from everyone. And that's the powerful thing about games, that they become viral because people love to play them. And there's a mechanic that people might seem sort of whimsical or fun or even ridiculous.

And it just sort of takes off, right? And we've seen that phenomenon happen time and time again. But in general, I would say, you know, there's a couple areas that I think are quite exciting in the shorter term, shall we say, things that are already about to come out or are out in betas. The first one that we do really like is gaming because gaming is basically hypercasual. They have, I think, something like 40, 50, 60 games, already have over I think 220,000 to 250,000 daily active users, is one of the top

gaming, sort of, if not the number one gaming application on Telegram. And as you may have heard, Animoca Brands has become one of the largest, if not the largest validator on Ton, most recently, because we also think that Telegram as an ecosystem is going to be one of the sort of major drivers for mass adoption in terms of, you know, Web3 adoption through, you know, things like Tom Wallet, for instance. So I think that's sort of one narrative that we really like, the hyper-casual side of things. But then also we're really excited on the sort of AAA-ish type of area. So Phantom Galaxies is a title that has been in, I guess, an alpha stage for quite a while and now

if you look at the gameplay of where it's come it's actually very high quality it's basically like Starship sort of you know turns mecha battle game but you can play it right now and and that's sort of interesting and they just sort of came out on both the Steam and Epic sort of store so you can basically download and try that out it's a demonstration that you know web3 games can sort of be on par visually and gameplay like as into the top games um you know rec league is an example of something that's pretty cool it's you know the web 2 version isn't out yet but the business model is interesting owners of the nfts in rec league are able to basically generate a revenue share on their items when people buy the skins in the Web 2 version of the game, for instance. So again, these are the kind of new

designs and models of how people are experimenting around integrating Web 2 and Web 3. Of course, Sandbox, you know, still going through seasonal sort of alphas, but, you know, next year, hopefully it will be able to launch the full version, which I think, again, is really exciting. You've got big brands developing on it. There's investments on sort of, you know, the various lands. There's, you know, hundreds and hundreds of unique experiences that people can now have on sort of the sandbox metaverse.

And when this is sort of launched fully, it could kind of have like a Roblox slash Minecraft type effect, for instance, right? So, I mean, these are some of the sort of projects within the stable of Animoca brands that, you know, are more short-term, but you have a lot of great other games that are sort of, you know, coming out. You know, we recently announced investment in Farcana, right? You know, we're very supportive of, you know, of what's happening with, you know, obviously Pixels, which were involved in Axie Infinities and having new seasons. So, yeah, I mean, here I go, right?

I could just rattle them all down. Yeah, and then everything else. You did say there's over a hundred of them, right? We've got a movie in the background for anybody who's watching. Talk about the sandbox, right? So I think one of the best examples of the absolute FOMO and insanity of the last cycle was, you know, Snoop Dogg buys a mansion or buys a plot of land and it's $2 million to buy a shack

next to Snoop Dogg. I literally have never since checked the value of land. I have to imagine that it's dramatically depressed, much like everything else in crypto. So I don't think that's unique to them. But do you see a time when land in the metaverse, for example, becomes as valuable as what people were paying for it at the top of the last cycle? Can that bounce back? So first, I think the value is denominated generally in the value of sand, right? So I think we need to look at it from the perspective, not only in terms of, I think, dollar terms. I think we need to look at it from the perspective of sort of relative sand terms, because sand is essentially the currency of sandbox. But relative to where sand was in terms of its value, in terms of quantum, I think we will

find that there will be a return of that based on the fact that we think generally more people will be going into the metaverse because it's just where the growth path is happening. We're seeing the numbers in terms of the end users. So I think we'll see, broadly speaking, from a cycle standpoint, you have these quasi boom-bust cycles. And right now, if you were to tell me what's the alternative to Sandbox in the Web3 metaverse,

truth be told, I don't think there's very many that can actually compete in terms of what Sandbox is offering. Yeah, Mana was the other name, I guess, at the time that, you know, we're... I mean, Decentraland is slightly different, and it's also not Voxel-based, right? Right. And I think the, you know, the other thing is major financial institutions and other type of groups have developed in Sandbox, for instance. So from a launch standpoint, I think we'll see some pretty amazing things. But I think the growth of the utility and the growth of the networks are the ones that are going to help deliver value to the ownership of what you have. And I think it comes down to network effects.

How many more network effects are we able to build inside this? And what we expect is that the ownership of land is going to give you network effects above and beyond inside sandbox itself. Kind of like what you see, for instance, in things like sort of, you know, the Bored Apes as an example. Today, when you have a Bored Ape, or even a Mochaverse NFT, for instance, you're not only using it as a PFP, or as a sort of avatar, as it were, it becomes a membership pass for different activities or becomes an access pass with products and goods and services because you are now a qualified member, a user.

And that actually means that owning one of those NFTs gives you hundreds more network effects that are outside of the ecosystem. And I think ownership of land in Sandbox is developing into a similar situation. Initially, the network effects are built from within the Sandbox, but now ownership of land or ownership of land next to Snoop, for instance, is going to give utility, I think,

in other ways that are sort of going to be unexpected and fun. And so as we see often in these markets, kind of like back in the early days with the dot-com bust, you have a run-up that seems hyped and a little bit sort of ahead of, running ahead of where it is. Then it's coming down.

But fundamentally, when you think about how value accrues in the metaverse, how data value accrues and how network effects build, provided that, of course, Sandbox is remaining in its pole position that is right now, that they will then ultimately not just retain its value, but actually increase in its value because the utility and the demand will increase. That's, of course, prefaced on the fact that we think Web3 is going to grow, which is certainly our premise. Yeah. I mean, I think we all have some PTSD from the last cycle, so it escapes my memory exactly what they are. But to your point about accruing value outside of the metaverse itself,

we had some of the biggest brands in the world start to establish a presence inside the sandbox, right? I don't remember if it was Gucci or LVMH. Now, again, it's escaping my mind as those were daily stories, but they're all there, right? They wouldn't be doing that if they only cared about that value

remaining within that specific platform. No, no, no. And I think the one thing to consider is that the average, I mean, this is a stat we looked at. I'm not sure what the most recent stat is, but when we looked at it not too long ago, the average landowner in the sandbox had a value of between half a million to a million US dollars

in their public wallets. So now knowing that, you can like, okay, hold on a second. It suddenly starts to make sense for an LVMH or Gucci or an HSBC or Standard Chartered to start opening a presence in the sandbox. Not even because you want to build the best gaming experience, but because you want to be close

to your potential customers. Each one of these are customers or wealth clients. Exactly, right? I mean, if you, in the physical world, if you had a way in which you could reach every Lamborghini owner or every person who lived in Bel Air, what's that worth to you, right?

There was a brief moment where Facebook allowed targeting ads by wealth. They got rid of it eventually, but there was a brief moment. My wife was an STDO expert and worked with a ton of brands, had her own company. And the best she ever did was that brief moment when Facebook allowed you basically to target people as specifically buy wealth, because to your point, you could literally just find the exact customer you were looking for in

one place. Yes. And that's the power of Web3 because now that's open. And that's signaled because you own an NFT or you own a land in sandbox or you can see what you have in your wallet. And that's the thing that the platforms like Facebook actually don't like because they make money

from the fact that they obscure them. Well, it's not just walled garden. It's the fact that they want you to basically waste your advertising dollars. They don't want efficiency because efficiency means that you basically spend less with them. So it's much better that you're inefficient, that you don't quite know who the customer is, that you kind of

make it complicated and hard to sort of target. And then you have to hire all these people who can sort of make sort of some kind of sense out of this sort of, I guess, artificial mess that they've created so that you can sort of spend your bullets in the wrong way. And in Web3, you can simply by owning these NFTs or targeting the people who have these NFTs, actually, you can go directly to those customers and say, I've got a deal for you. So that sort of changes this whole sort of paradigm and flips the whole

targeting upside down. So they established these presence in the sandbox during the last cycle, these large brands. Have they continued to build throughout the bear market? Do they still believe in it? Yes, they have. And every time a new season comes out, I think there might be a new season coming out for sandbox very soon again, you can see the progress of these developments. So they actually want to keep launching it, but you can't launch them until the season is open, which means they're only open kind of like a theme park at certain periods of time, partially to sort of do the load testing and still go through the alpha

and beta phases. But yeah, they're still developing in a pretty big way. That's incredible to hear. We always hear sort of the meme that the best things are built during the bear market because nobody's concerned with price and nobody's worried. You just forget that it's happening. And then all of a sudden, it magically appears when prices go up, everything's there that you needed this whole time. That's right. Yeah. Which is really incredible. Then for you, building the Mochaverse, which I would like to talk about more specifically how that's differentiated from something like Sandbox, which you guys are obviously heavily involved in. You still decided to build your own metaverse, but what does the

vision of the metaverse down the road look like to you? I think a lot of people originally thought it was Ready Player One or WALL-E, you know, where you're completely immersed. That's your whole life. You plug in there to get completely immersed. That's your whole life. You plug in there to get out of the misery of your other life. Is it a game or is it also maybe something that's more like an AR augmented reality where it's something that becomes a part of your everyday world? You're wearing your Ray-Bans and you look at an advertisement and it's more interactive than it would have been. And it's simply just something that enhances your environment? So first, I think things like AR and VR

are additional interfaces into what we call the open metaverse. But they aren't the metaverse in and of itself. The metaverse for us starts with digital property rights, as in the things that you can own, because that's your digital identity. If you rent it, which is kind of what we're doing today in platforms like Instagram, whether it's your ID, your handle, or even when you play games like Roblox, you're renting assets, you're renting presence. They're not yours. And so from our perspective,

they're not real. So that's kind of where we draw the line between how we define the metamers, which is maybe more universal in Web3, but for people outside of the space, they may not understand or appreciate that. So I just wanted to make sure we clarify that point. When we talk about sort of the experiential layer, the thing that we look at when we talk about sort of gaming is that gaming is one of the elements that is critical to the experience of the metaverse, but isn't the metaverse in and of itself just because you can play a game. It's one of the many things you can do in the metaverse. And we also think that the metaverse is kind of multidimensional in experience, as in there's not going to be one metaverse that you play. In fact, there's going to be thousands and thousands of them in the same way that we experience in the physical world, you know, different cities and different countries and different cultures, because they actually represent different things to us.

And we can navigate from point to point. And really what people are fighting for is attention, but attention doesn't always work when you're trying to address the same thing for hundreds of millions of users. This just doesn't work, right? Like one of the reasons why both Minecraft and Roblox, actually Roblox is number one, Minecraft is number two, most popular game in the world ahead of Fortnite, ahead of Call of Duty, ahead of PUBG and those things is because they're created by the end users

in custom experiences, right? You buy a Minecraft license, not because you want to play just Minecraft, but because you want to enter the world of Forge or Mineplex or all the other gaming experiences. You buy a Minecraft license not because you want to play just Minecraft, but because you want to enter the world of Forge or Mineplex or all the other gaming experiences. You're not playing Roblox because the graphics are insanely good. You're playing Roblox because you're actually wanting to enjoy all the other games that have been built and all the other communities that are in there. So what you're really doing is you're immersing yourselves in different cultures and the diversity

of those different cultures is why it's attractive. And I think the metaverse, the open metaverse is built in much the same way, but, you know, through ownership. So that means we can have the sandbox and we can have the central line

and we can have pixels and we can have X infinity and we should be able to navigate and travel and we should be able to interoperate with our assets and move them around as we see fit. And what we also expect is that other metaverses, kind of what you see with the sandbox, will then integrate them

inside the game with an experience. So if you have a board ape, you actually can use a board ape in the sandbox and it basically shows up in a voxel style. And, you know, this will happen in sort of other gaming universes as well, because it becomes something that is transportable and becomes sort of, you know, your identity layer as it works. So I think that's how we think of the metaverse. And we also think it's important to have this type of diversity because people need to have choice and they want to have that. And in Web3, the economics, the unit economics,

work to have smaller metaverses. Like you can have a game with tens of thousands of users and it would still be sustainable. Yeah, it's not going to be a billion-dollar enterprise, but it works. You can't have that in Web 2.0. If you have a game with 10,000 users, it will die because there's no revenue for that. But in Web 3.0, a game with tens of thousands of users is still good enough because unit economics are large enough to sustain as it is in the real world, because the economic sort of model is more akin to a small city or small town as opposed to a closed economy as it is in Web2. With that vision of what it will look like in the future, how much does interoperability

between blockchains play into that? Because it's still pretty clunky to be able to, if they build something on Solana and another one you love is on Ethereum, it's still pretty clunky to move that board ape from one to the other. It is clunky right now. Yeah, it has been clunky. But companies like Layer Zero, which is also part of the Anamoka's portfolio, are basically bridging those gaps. And we're at this level of, from a technological standpoint, the infrastructure around interoperability and bridging basically assets across and swapping them across is obviously not super elegant at the moment, but people are working on it.

Really smart people are trying to make that work. And typically with technology, it's not a matter of sort of if, but when, and we think the same will happen there. And we're kind of early anyway. The need to have interoperable assets right now isn't as critical as it will be in the future, because we're still so early on sort of that growth curve that, you know, the sort of people are going to be more focused around sort of the experiences that are being built within their own units. But when you look at, for instance, what happened to the NFT projects, like the Board Ifs or the Cool Cats or even Mochaverse,

for instance, right, you can see how these have become sort of gateways for other experiences. So I want to make use of my Bored Ape in, you know, Reckley, but I can also use it in sandbox and I can also use it maybe in pixels. And I can do that type of stuff now because of the fact that, you know, I own the assets and I don't need to seek permission. That's the point. You know, I don't need to seek permission from the actual creator of it. I just need permission from the owner of it.

And the owners are like, that's cool because now I have more use cases for my NFT. So go ahead and do whatever you want with it because I would enjoy that and I get value from that. So I think that's kind of how that area will continue to grow and develop. Right. And you obviously think the future of the sandbox

is very bright as one of these and all the metaverses in general. So why build your own? What differentiates Mochaverse from what already exists and where you guys are already deploying capital and resources? layer and a governance layer for everything that Animoca has invested in and put out. So I'll give you an example. If you own Animoca versus NFT right now, it gives you governance rights over a portion of our tokens, for instance, like Apecoin. And you can participate in the Apecoin sort of DAO governance through essentially the ownership of NFTs, which gives you a pretty powerful voice. It's almost like a super PAC, if you will, in political terms, without actually having to own a coin, because by owning the Mochaverse NFT, you can vote on those things. And we've been doing this for a while,

and it's actually been a really interesting model and also an interesting model of decentralization. So you can see that Mochaverse on one level is kind of like a DAO of DAOs because we have so many projects that are sort of turning into DAOs or are DAOs. And we want to hand over that governance to basically our community, which actually helps us as well because they help run and sort of keep those communities and those ecosystems accountable, which is kind of hard to do if you have to do everything ourselves, especially because we have something like 450 portfolios, right?

So it's kind of tough to do that. And you'll notice, for instance, that we've not just, you know, we own the sandbox, but we've also invested in sort of dozens and dozens of other metaverses in the early days, and including in projects like OtherDeep. And, you know, in the beginning, I was like, isn't that a competitor? And I think that misses the point. Because in Web3, it's about building in the shared network, right? It's not about zero-sum outcomes. Meaning that if sandbox is really successful, that isn't just to the benefit of Sandbox.

Because the assets are interoperable, because your assets are liquid, because you can move them around, the rest of the ecosystem gets to benefit as well. When Axie Infinity became the sensation that it was in 21, all the sort of value didn't sit inside Axie. It started to spread across the entire gaming ecosystem. And GameFi had its moment. And how many hundreds of guilds sprung up because of that? And how many

game companies actually were able to ride the wave of actual revenue growth because of the fact that Axie Infinity became the fastest game for a billion dollars in revenue in the history of games, for instance, right? So I think, you know, the whole point is that when you build in an open network, actually you benefit from being open. And so when we're building in this manner, it almost doesn't matter if it's Sandbox or one of our portfolio companies or even companies outside. If one of them succeeds, everyone basically benefits from the growth of that halo effect. We see that a little bit today, right? For instance, when GameFi tokens in the last 30 days started to rally,

it wasn't one token, right? Everything else started to be equal. Yeah, we see that in crypto always. Exactly, exactly. And so I think that's the spirit of it. And so that's why it's not about one versus the other. Actually, one helps the other. That's kind of the spirit of it. And I think the other thing about Mochaverse that we found

is this is where we have Mocha ID, which is our sort of digital decentralized identity layer. Our DID is a way basically to sort of unify sort of our users in one network, but in a decentralized mannerTs and we do, for instance, KYC on them, those wallets are often sold off to someone else to get on those whitelists. It's very common, right? But with a sold-out NFT that is actually your identity, you can't really do that. It also means that we no longer have to re-KYC that identity

time and time again because we know who that is, which means anyone who uses that identity layer can save money, for instance. And also because we're accruing experience points, even though I don't know who that person necessarily is, you know, and there's zero knowledge proof, which basically means I don't have access to all of the data, but I can sort of know, for instance, what kind of gamer he is, if that's revealed, or what his interest is, or how valid he is, or how many sort of, you know, how much experience points he has, because how much he's contributed.

I can now target that customer in a certain manner and offer value, shared value across each other. And that to us is really important to sort of create that new identity trust layer into Web3 so we can help onboard more games more seamlessly into that. And many of the games that we're launching can benefit from that user profile because otherwise every game that launches

has to build a new customer index, as it were. But because it's decentralized, the ownership belongs to the end user and it's up to the end user whether they want to use it or not rather than a platform like a Steam or an App Store, for instance, which is why we're doing it as a DID. And also it helps, we're also thinking of it as the beginning of a kind of quasi,

I wouldn't say it's not social-fi, but essentially a social network that helps unify sort of all of our portfolio companies and the end users in the portfolio companies into a common framework where we can then share the benefits of the network effect. Because we have so many companies that can collaborate with each other, but it's really, really difficult, especially when we're going from 450 to 500, 600, 700 portfolio companies.

How can we do that efficiently? Well, if you actually have a sort of social network that is validated through something like Mochaverse, then actually, you know, you can work with each other knowing that you're real and we can allow people who are outside of the animal ecosystem to join it by basically being a part of Mochaverse, right? Which is the other thing. We want other people to participate in the network and not only because we invest in you, but because you might actually want to participate by owning a Mochaverse, then you can be part of the network as well. So that's kind of really the vision. So it's not really a metaverse kind of like sandbox. It's additive to other people's metaverses. You talked about the idea kind of that a rising tide lifts all boats, right? You see one of these coins go and then everything sort of follows in the narrative. You get this groundswell. But is that groundswell enough to carry this to mainstream adoption or does something have to break through? Do you need the killer game, the killer app, that one thing that goes wildly viral to carry them all up?

Oh, I think it's going to be a combination of all this, but I think it's the one sort of viral game or viral activity that's actually going to really capture people's imagination. And I think in the earlier days when talk space like the Philippines, that's what Axie Infinity did, for instance, for people in the Philippines. And today, by the way, in the Philippines, you know, they have a very pro-crypto stance. The SEC regulator is actually sort of trying to promote this. It's a political agenda because it's built so much opportunity in places like the Philippines. Right. So I think we need some more of these moments, but on a more global scale. I think the one thing that's very different in the mass adoption

challenge from Web 2 to Web 3 is around financial literacy. So the Web 3 user is actually quite financially literate. I don't mean to say that he's necessarily a successful investor, but they understand risk and investment and money. And by the way, that doesn't mean that they're necessarily a professional investor. So they're good at it, but they at least have a comprehension that it exists. They have a comprehension, they have an aptitude and interest in it. They understand kind of what they're doing in a certain way, right? And they're comfortable with it, right? But the majority of the world isn't that.

And it used to be that the people who were these kind of investors tended to coalesce around Wall Street, which was also kind of the small elite club. And the rest of the world, which is generally labor focused, wasn't investing. Yes, they had a bank account. But you know, that was the extent of their financial inclusion, access, but not necessarily knowing what to do with it. Because, you know, when you actually go into a bank, they don't say, here's how we can teach you financial literacy. It's more like, here's a product we want you to buy. We'll charge you insane fees and you don't know nothing. You don't need to know anything. Just give us some money. We'll take care of everything for you, right? And I think this is the problem. We have done a really bad job as a society to

sort of onboard people into financial systems because it wasn't in the interest of the financial players to do that because they wanted people to give them the money to do it rather than they doing it themselves. And in Web3, quite a few people actually do that themselves and have an understanding because frankly, there's no advisors, there's no JP Morgans of Web3, right? And actually, I think people have sort of learned the ropes and built their own sort of wealth and opportunity that way. So onboarding from Web2 to Web3, I think Web3 gaming is one of the most powerful ways of doing it.

Because not just because of tutorials, but because through a kind of play money, as it were, you can start to teach financial literacy at a young age, but also for older people who play it, such that they then end up becoming comfortable or at least more adept at sort of what to do with these type of, you know, I guess, tokens and NFTs and digital property that you have. And I think that is where the adoption has been struggling because, you know, we've

onboarded millions of Web2 users into Web3 with other games that we've launched, but they weren't really Web3 gamers. They were Web2 gamers that had a wallet. That's not really Web3. And so the idea that you're adopting a user and you have just user numbers isn't enough. I need to be actually doing something with my digital assets. I need to understand its value or at least do something about it. And that's basically the part that I think we can do better.

And that's what's needed. And I think we're getting better at it. And the trigger of the game, the tutorial, the storytelling, and also education, we're doing stuff like with Open Campus, are ways in which we're trying to sort of educate the space around sort of more financial literacy and, you know, basically more adoption into Web3 because you understand why you need to do it. So I could talk to you about this stuff for hours. It gets me insanely pumped, but I'm also cognizant of the fact it's almost 2 a.m. where you are. But I do want to ask you one more question because you made me so bullish. But was there any point in this

cycle or any of the previous cycles where you said, damn it, maybe I was wrong. Maybe this isn't going to work, right? Because I think your average investor in crypto or Web3 had those moments where they said, this is all dead, right? I know your answer, but was there any point at which your conviction wasn't all shaken about any of it? No, it wasn't shaken. I mean, you can see it from the fact that we continue to invest, even when the FTX sort of, you know, situation happened, which was really pretty, pretty, pretty, pretty low point. We continue to invest in companies, but we continue to sort of, you know, I think, you know, I don't know what the status at this moment, but I think we're one of the

top investors in terms of quantum of deals, you know, in 2023 in Web3, for instance. You know, I mean, you know, we've done stuff in AI as well, but we've never stopped investing in Web3. We actually think AI and Web3 are quite integrated, for instance, and quite sort of codependent. So, so, so no. And I think part of it comes from not the fact that not so much that we have a, we're not your typical investors, right? Because we don't invest as a fund. We invest mostly out of our balance sheet. So we take a very long view on this one. And there's just a general conviction that owning your digital property and having digital

property rights is just such a better future. So it doesn't almost even matter whether we're right or wrong. We just have to make it work, right? It's like die by the sword type of thing. So even if the situation looks dire, we still have to make it work because isn't it just a much better outcome for everyone involved? And so that's also one of the reasons why you see us being so prolific in sort of media channels and talking and being at events, you know, whether it's us or Sandbox or, you know, other people in the group, because we also want to evangelize, right?

Bringing and sort of helping to mass onboard people into Web3 isn't just one product or an application. It's about telling the story. It's about evangelizing and telling the story in a manner that people who are not from Web3 understand. And I think that's the part that we can do better as an industry. Because when we start talking about NFTs and tokens, people get lost, right? So we have to explain to them why it matters and this idea that we can be stakeholders in the ecosystems that we help build. The fact that we can have ownership in the things that we help build. The fact that we can have ownership in the things that we help construct

in the virtual world. That's the kind of thing that people go, oh, actually, I don't own this, or maybe that is important. And that was the crux of my TED Talk, which was something that was reaching out to all sorts of people who know nothing about Web3, was I didn't talk about tokens or crypto or that kind of stuff because I felt that they were going to get lost in that narrative. The moment they hear the word, their eyes glaze over and they just forget, right?

So we have to communicate with them in a manner that they appreciate and understand. And I think this is something that we can do better as an industry overall. Well, I'm glad we have people like you who have to make it work. My dusty old portfolio thanks you, and I'm sure plenty of other people thank you for sticking by it throughout the depths of the bear cycle and the lows of FTX. As you said, it really was a pretty dire time, and it's nice to at least see some optimism back in the market. But I'm glad that you've maintained that optimism throughout. Yeah, I'm glad we finally got to do this. I've been trying to do it for a long time. I've always loved the conversations on spaces. So thank you so much for staying up late to

have this talk with us. Of course. My pleasure. Thank you so much for having me.