Writer, Editor: VaporAviator (M), Jiahui (F)
Welcome to 🥔 {PotatoEng} ! In this episode, we invited Chris, cofounder and CEO of Mirrorworld, to talk about Web3 games and “traditional” mobile games. Our topics included: the original intention of Mirrorworld and its amazing iteration speed; ChatGPT and Blur, which “boom” recently; etc. Chris also shared his personal workflow management tips and tools.
In Q1 of 2023, Mirrorworld is aiming to launch a multi-chain mobile game development SDK. Check out their website for the latest updates! Also, if you’re going to ETHDenver, go catch up with Chris and watch the product demo live!
PS:
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The audio was recorded at the end of last year, please pay attention to the time stamps mentioned in the article ⚠️
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The full text is generated by ChatGPT based on the transcription draft (Potato’s productivity is liberated 👏🏻)
🥔 Potato Guests
Chris Zhu | Cofounder & CEO at Mirrorworld
CoHost | F. Ex-theatermaker; Building Web3 infra
CoHost | M. Experience designer, Strategist in Web3 & immersive tech
Note: All content does not constitute investment advice. Some of the content is a paraphrase and does not represent the position of Meta Potatoes
{ 1 } Personal journey of Chris, the original intention and team formation of Mirrorworld
Q: It’s nice to meet you. Could you please give us some background on yourself and tell us more about Mirrorworld?
Sure. My name is Chris, and I’m the co-founder and CEO of Mirrorworld. Before founding Mirrorworld, I had a diverse career path. I started in finance and worked in movie production for companies like LVMH, producing short films and working with fashion companies worldwide. Later, I worked for Deloitte and ByteDance, where I discovered the world of tech, specifically mobile internet and how to push forward in this field. I joined a Y Combinator-funded startup that was also backed by Makers Fund and Galaxy Interactive, and that’s where I discovered the beauty of web3 and artificial intelligence, which led to the creation of Mirrorworld.
Mirrorworld began as a web3 publishing platform for casual games, and we created a community early on that was passionate about web3 gaming, as well as the characters and the world view that we were building. We developed around 4 games in the last 12 months with a rapid iteration cycle. However, we realized that developing an application in web3, especially for mobile or cross-platform, is quite challenging. It requires setting up the backend repeatedly, which is painful for developers.
We decided to abstract the way we made services for our games internally, such as our marketplace, wallet, and login authentication, and turn them into service-oriented APIs. We took that page out of Amazon’s playbook and provided APIs for both internal teams and clients. That’s how Mirrorworld was born, and we’ve been powering thousands of developers since the launch of this project.
Q: Sounds great! Could you please share with us when you started working on Mirrorworld and how the founding team came together?
Certainly, we began our work on Mirrorworld in August of last year when we drafted the first document outlining the ideology of the project. We were driven by the surge of digital assets, specifically NFTs, gaining traction with mainstream audiences and wanted to quickly understand and build out a project to capitalize on this trend. Within 40 days of its inception, we were able to launch the project, with our first batch of NFTs selling on October 1st. We were able to generate over a million USD worth of NFT sales and grew a community of 15,000 members in the first month, which has since grown to over 130,000. Despite the success, I would advise against launching a project in China during the national holiday season, as we encountered a slight delay due to our engineers being on vacation. Our gaming and developer communities have also scaled significantly since the project began 14–15 months ago.
Our team at Mirrorworld was a small group within RCT.AI, a Y Combinator-backed company that incubated our project. Many of the founding members, including our CTO Jonas, who is of Ugandan descent and speaks multiple languages, and our Chief Product Officer Jialin, who was part of the core analytics team at RCT.AI. Our branding expert also joined us from RCT.AI, which allowed us to assemble a tight-knit community and core team.
Lastly, I would like to share that the name Mirrorworld came about due to our team’s affinity for content such as science fiction novels and animated films. We wanted to emphasize the ideology of decentralization and interoperability between different universes that NFTs provided, which we found appealing when entering the web3 space. With on-chain transactions recorded on the ledger, we could distinguish between different digital assets, allowing users to possess digital property rights. We envisioned that owning an asset in different universes was akin to going through different portals, and Mirrorworld reflected this mysterious and decentralized ideology, much like a portal to different universes.
{ 2 } The technologies used by Mirrorworld and the reasoning behind the choice
Q: That’s fantastic. Perhaps we can dive a bit deeper into the technology behind this project?
Absolutely. As I mentioned earlier, the vision of Mirrorworld is to help developers create game-like worlds within it. We strive to simplify the development process as much as possible, freeing developers from the constraints of walled gardens like App Store and Google Play. Our tech stack focuses on three main challenges: onboarding, conversion, and geographic coverage.
When we refer to onboarding, we’re talking about creating single sign-up and authentication systems. Previously, in web3, users were only able to log in with their Metamask or other wallets. Now, we offer social authentication, allowing users to log in with Discord, Twitter, Facebook, and more. The current solutions in this space, such as Magic Link and web3auth, have less-than-optimal user experiences for mobile development and can be quite costly. Our goal is to democratize this technology and offer it for free.
The second issue we’re addressing is conversion. Many projects launch their NFTs or digital assets on centralized liquidity order books like Magic Eden or OpenSea, even if they use a decentralized protocol. However, we’re seeing a trend towards decentralized or self-branded marketplaces, especially in consumer applications like games. Setting up a marketplace can be quite challenging for individual developers, so we aim to make the process much easier.
The third challenge we’re tackling is geographic coverage. In the past, developers would have to email MoonPay and wait months for a response, or integrate a separate on-ramp solution. Now, we can provide wider coverage and lower rates by integrating not only with MoonPay, but also with local payment providers in Southeast Asia, such as SMEs of finance, who offer mobile payment solutions.
To address these three issues and improve the developer experience, we offer a full-stack mobile development platform with SDKs in Kotlin for Android, Unity, Javascript, and Rust. We’ll be deploying on iOS this week as well. Our solution doesn’t care where you’re developing, whether it’s for web or mobile, but we support mobile-first languages.
Q: Great. Considering the three issues you aim to solve in this space, I’m curious, were these issues only introduced when incorporating crypto components into the game, or are they issues that mobile gaming development faces in general?
I believe that these problems are also encountered by mobile gaming developers in traditional gaming spaces, and that crypto offers solutions to two key issues.
Firstly, as previously mentioned, utilizing a peer-to-peer transaction system addresses the issue of geographic coverage. This allows for easier onboarding of more users without the need for extensive banking infrastructure, and payments can be facilitated in some developing countries where traditional methods are not as efficient. Although this issue is less prevalent in developed countries like the United States.
Secondly, traditional gaming faces challenges with distribution channels and control. For instance, Apple charges a 30% fee on all digital assets sold through App Store, and Google charges approximately 15%. Three years ago, Epic, the developer of Fortnite, filed a lawsuit against Apple for their monopoly power on all digital assets sold through App Store. Apple lost the suit and has been appealing in the California court since then. This highlights the significant power that App Store holds as a distribution channel. However, many developers seek to bypass this paywall as 30% of any business margin can have a significant impact on the bottom line. By utilizing just 20% of the App Store fee, developers can expand their audience base with additional revenue, using it for ad campaigns, rewards, etc. This is especially simple with crypto as the organized community is a core feature of every crypto game, and each of those games can grow its audience base through original channels. Successful web2 games like Genshin Impact were able to maximize their Discord communities early on, and allowed direct downloads through their own official website.
We believe that we are entering a new era where the walled garden will be broken down. While this may sound idealistic, there are individuals pushing forward this effort, and we are seeing regulations in Europe and the US being developed behind the scenes. This makes us confident that mobile distribution is the present and the future, but crypto has yet to fully capitalize on it. We want to help push this forward with developers, as they are key players in making this change a reality.
Q: From my perspective, I was curious about how Apple controls the percentage they receive from the sale of gaming items on their App Store. The issue is rooted in hardware because control over the mobile device is necessary rather than just controlling the software built on it. If mobile gaming is indeed the future, then the hardware gate must also be controlled.
That’s an excellent point to consider. Crypto companies have taken various approaches.
Public chains such as Solana have invested in mobile hardware, creating a flagship product such as the Saga phone that will be launched next year. This phone utilizes Solana Mobile Stack (SMS), which will serve as an example for original equipment manufacturers (OEM) to show how their phones can integrate a crypto-native software stack. With this integration, high net-worth customers can tap into web3. For Solana, the number of phone shipments is not as important as the software’s adoption by mobile providers since it’s open source.
Another approach to consider is the Android platform, which accounts for 70% of the mobile industry outside of Apple’s control. Even if one foregoes the App Store channel, there’s still a considerable market share to capture. The revenue per user on Android may not be as high, but there’s an overlap with two user groups that have a need for peer-to-peer payment systems: mobile gaming users and crypto users. These two groups also require microtransactions in mobile games and have needs for payment systems in developing countries.
Considering the complexity of this issue, one can choose to forego App Store and circulate the distribution channel among other applications and mobile providers that are adopting crypto as a backend. Eventually, App Store will take notice of the change in the industry. We are optimistic that changes will occur, but for now, we can focus on the vast market share that exists, given that there were very few users in web3 gaming last year, indicating a lot of room to grow.
Q: You mentioned that the second issue you’re facing is conversion. I was wondering, is it the conversion rate of each game or the conversion rate of the whole marketplace? Is it that Mirrorworld provides one marketplace for every game, or it provides SDKs/templates for each game to build its own marketplaces?
That’s a great comparison. The latter is true. We want to provide a template for every game to have its own marketplace. If they want to tap into the liquidity of platforms like Magic Eden or OpenSea (for those who don’t know, they’re like Amazon for NFTs because you’re selling NFTs on a centralized platform), they can do that. we think that’s actually the beauty of web3. You can use our marketplace templates but still be discoverable or indexable on platforms like Magic Eden or OpenSea, because you can tap into their public APIs.
So think about the backend. We’re using the Magic Eden API, and then we give game developers the UI components and templates of Mirrorworld. It’s almost like Shopify using Stripe as its payment backend, but everyone can have their individual website. And we think that’s going to be more and more important because demand for digital assets should not be generated based on speculation or investor interest, which is how most of the traders on Blur, Magic Eden and OpenSea behave. If you think about Blur’s takeover of OpenSea (for those who don’t know, Blur is a trading expertise NFT marketplace that took over the industry by storm and gained a lot of market share), they created a very good experience for those who are speculating on asset growth. However, we see that the percentage of audiences for platforms like OpenSea is significantly skewed toward speculators, investors, and traders.
And what that means for games is that these people have no loyalty. They’ll sell your assets if they gain enough money from it. And we don’t want that for our individual applications, whether it is games, SocialFi, ticketing, or loyalty point systems. So in order to generate demand that is stable and sustainable, you want your app to be used first and then the digital assets to be purchased through the app, instead of the other way around, where you purchase assets first and then you use the app just for the economic incentives that it offers. And we believe that will be the status quo in the future as well.
{ 3 } Mirrorworld’s learning in product iteration and community building
Q: That makes a lot of sense, and I was just curious, what is your biggest learning regarding the product that you have been iterating on in Mirrorworld over the past quarter, given your high iteration speed?
That’s a really interesting question because if you look at our product a quarter ago, it didn’t exist. We had four casual games on the market and we discovered that there was an inbound interest for something that we were providing, but we were still in the development phase. It wasn’t until two to three months ago that we relaunched our product SDK and started gaining traction. We saw initial demand growing significantly, but the churn rate (ps: the rate at which customers stop doing business with a company over a given period of time) of developers who were signing up was very significant in the first month because our documentation, dashboard, and onboarding experience were terrible, and that’s something I care about a lot. So we took a month or so to revamp the entire dashboard and onboarding experience, but it wasn’t enough because you need more customer feedback as well. By the second month, on October 1st, we relaunched our SDK on Reddit, Hacker News, and all of these channels, and we were able to decrease the churn rate by 75%. Now these developers can actually onboard, and we are actually hoping to relaunch our stack again in the next two months because we’ll have significant product rollouts happening in the next quarter (2023 Q1, happening).
For our team, it’s a constant iteration process, and we learn something by talking to our customers probably every week or so. We have biweekly cycles where we focus on smaller versions and quarterly cycles where we focus on bigger versions, and that has been realized in the past quarter as well.
To add to that, one of the biggest takeaways we came up with was that documentation is the product. We’ve always known the importance of documentation, but it wasn’t until about two months ago that we started looking at the naming standards of APIs, the API review guides, etc. when we are releasing them, and whether we can use something like an API backward-compatible system to manage all of the dependencies, just like how Palantir manages their API schema. All of these were things that I had absolutely no idea about, and we’re constantly learning.
Q: Cool. That’s why you have such a high iteration speed compared to some of the other companies. You mentioned that your platform is mainly for individual game developers. So I’m wondering, for now, is there any individual gaming developer already adopting your platform, and how is it going?
Thank you for that question. I was dying to speak about traction already. For the last 2–3 months, we’ve seen growth to around 400 developer signups, and 200 of them are already using our product SDK or API calls and building projects with us. Amongst those, they vary in size. There are gaming studios of 15 to 20 people, individual application developers, and people new to Web3. We’re focusing on independent developers and indie game studios for the first quarter after we rolled out because we want as much feedback as possible. Starting next quarter (2023 Q1), we will be allowing more BD, one-on-one pitching scenarios, and go-to-market (GTM) is going to be our big focus for the next quarter as well.
Q: Speaking of GTM, I noticed that you’ve run some campaigns to gain traction, such as using Product Hunt to launch your smart SDK. I’m curious about the outcome of that launch and how you came up with the idea. I know that smaller projects often use Product Hunt as one of their sales channels or as part of a bootstrapping strategy, so I’d love to hear your thoughts on it.
Our philosophy is that there is no one individual channel that is going to be the killer channel for us because we don’t know what will work best. So when we relaunched on October 1st, we decided to use every single channel we could think of, including Reddit and Hacker News. We knew there was a conversion funnel because our stack was alternative L1 Chain (like Solana)-ready but not EVM-compatible at the time. However, we wanted as much exposure as possible within the space, so we launched through every channel that we could think of. Product Hunt turned out to be very effective for us. We grew to 2,400 uploads in just a couple of weeks, and we were one of the top 5 products for the week, the day, and the entire period of our launch. We gained a lot of recognition for it.
As for end conversion, I think the funnel differs from product to product, so I can’t say whether your product is suitable for a Product Hunt launch. However, it worked well for us, especially in terms of the number of impressions and exposure we received.
Q: So what do you think was the right thing to do in terms of engaging your community? Is your community mainly growing in Discord, or are there any other channels that you use as well?
We have two different communities. In the early days, when we were targeting our products more toward consumers, we had Twitter and Discord growing for our Mirrorworld consumer gaming side. We were able to grow these channels to 130k, with 80k on Twitter and 50k on Discord. We were also able to increase activity in these channels. In terms of managing the Discord community, I think it’s all about the onboarding process, welcome messages, making it fun, and constantly having active videos throughout the users’ Discord lifetime. We also have a developer community that is steadily growing.
To be honest, I don’t think there was one specific thing that we did to gain significant growth. It’s always been steady and iterative. However, we constantly review the data and evaluate every decision we make. This is what we do well, and it allows us to keep iterating and growing.
{ 4 } The lean startup: learning from the filmmaking industry and internet giants
Q: Regarding your previous experience in the filmmaking industry and web2 internet companies, could you share some insights into the mindset you brought from these industries to your current work?
That’s really interesting. Filmmaking has always been my passion, and it has taught me that there is a lot of pre-planning involved in the industry. The better your planning and preparation, the better the production. Everything from storyboards to budgeting and controlling decisions before shooting begins. As a director or producer, you have to balance decisions to rationalize the shooting process. For instance, determining how many takes you need before it’s too much, all while keeping an eye on the time and budget.
On the other hand, web2 companies have taught me that you might not always have all the knowledge you need to make a decision. When entering a new industry, you can plan as much as you want, but the speed at which things move requires constantly making new choices and decisions.
Regarding ByteDance, one thing they do very well is their objective planning sessions.They use OKRs on a bi-monthly basis for a company of that scale, enabling them to move relatively fast while maintaining effective communication. From top-down management to bottom-up, everyone speaks with clarity about their decisions and the context behind them. This type of communication is effective in any organization, whether decentralized or centralized.
So ByteDance has taught me a lot about management and organization building. Even though our company is still small with less than 20 people, we need to consider the organizational culture, performance review, goal setting, and other practices of a larger company, before growing into a global unicorn. It’s essential to be prepared beforehand.
{ 5 } From low-code/no-code to discussing ChatGPT
Q: Right now, your target audience seems to be gaming developers who have knowledge of coding. I’m curious, have you considered creating toolkits or solutions for people who may not be as familiar with coding but still want to develop mobile games?
We’ve actually had a lot of conversations about no-code and low-code, especially during my time at Lark or Feishu, which is a product of ByteDance. My background is in finance and entertainment, and my technical knowledge is about as much as the average person on the street. However, I do have a good understanding of the conceptual aspects of architecture. That being said, I think no-code or low-code is a bit of a stretch. If someone discovers they want to create a game or application, there is a lot of incentive and resources available to them to learn the fundamentals of coding. With indexing, search engines, and tools like ChatGPT, learning can be significantly accelerated. Rather than completely skipping the step of coding, I believe it’s better to provide easy-to-use solutions that save people’s time and increase their efficiency and conversion rates. The portal into the digital realm is binary, meaning that you must understand how binary code works to construct the digital space. While natural language can be used to describe the vision, there will still be a necessity for coding components.
{ 6 } Mirrorworld’s business model, competitive landscape, and bear-market strategy
Q: We haven’t talked about how Mirrorworld makes money. What’s the business model, and why did you choose it for this product?
I want to give a shout-out to one of my favorite entrepreneurs, Patrick Collison, who is the founder of Stripe. Stripe’s slogan/notion from day one has been to increase the GDP of the internet and grow the digital realm’s pie. We think about it similarly, where our collective interests as a company should be aligned with developers’ and web3 builders’ interests. Charging them for things that don’t generate revenue doesn’t make sense to us. For example, if we charge them 10 cents per monthly active user, but these users don’t generate revenue, then our pricing model is a little shaky. We take revenue shares from everything they generate GMV from, for example, for marketplaces, we do a 3% take rate based on volume. We also give discounts and rebates. For wallets, we take from the withdrawal fees, and for gateway or on-ramp, we also do that. We make money whenever our customers make money, and there are no upfront setup costs for anything we do.
Q: Previously, you mentioned that your product comprises several key components, including the wallet as an onboarding process, storefront, and on-ramp solutions. I was curious whether you choose to develop these components internally or collaborate with third parties specializing in these fields.
It’s a case-by-case situation. If existing products are priced unreasonably or don’t provide the functionalities we need, we develop the components ourselves. However, web3 protocols are composable, so we’re happy to integrate other protocols and offer white-label solutions. We can also offer our white-label solutions to our enterprise customers. Ultimately, it’s about the product and user experience, rather than owning the entire solution or collaborating with others. We’re open to discussing collaborations.
For security concerns, we have patented and code-audited the wallet architecture, and it comes down to which part of the stack we have the most confidence in and which is central to our business operation. For tools like analytics SDKs, we leverage external parties, and we also use RPC providers as underlying solutions. Alchemy is one of our closest friends and one of the biggest RPC providers across the space, and they’re helping us with dapp store launches, guides, and plug-ins for Solana. They’re essential to our business but not central to the security of our customer assets, so we can compose and leverage their services.
Q: Is there any companies doing similar things to yours in the space?
In terms of competitors, because we’re a full-stack platform rather than a single vertical solution, there are many indirect competitors in the space. For example, on authentication, there are companies like web3auth and Magic Link, and on wallets, there are providers like Sequence, who package based on web3auth. Stardust also offers asset management and NFT minting infrastructure. But we offer a different value proposition (all-in-one full-stack) to our clients who want to adopt more of a backend of crypto, rather than limiting themselves to only NFT minting and burning with no transactions. There are pros and cons to how we design our products, but we believe it’s for the best.
Q: Do you have a specific strategy that you use during a bear market, especially when no one is getting funding?
I actually love the bear market. I think there’s a lot of noises in the bull market. And if you’re not very well-prepared and don’t know exactly where you’re going, the bull market can be very distracting to founders and teams. There’s so much noise coming in, and you’re only seeing the latest product. The people who thrive in the bull market are the ones who’ve been building for the last 2–3 years. That’s why I think the bear market allows us to look at some of the best products. People are more collaborative and open about their products, and we get to learn from the best in the world, whether it’s in web2 or web3. I think this is the same across the globe. Instead of a lot of selling, you’re really just absorbing knowledge. My strategy in the bear market is to connect with people. I’m both introverted and extroverted, so I do a lot of the talking online, and I try to spend around 1–2 hours every day just connecting with different projects, and then another 2 hours or so looking at the newest products that I find and deep diving into what they do. There are a lot of exciting things coming up in this phase, so I try to save time for those kinds of tasks as well.
{ 7 } Chris’s personal sharing on workflow management and productivity tools
Q: I was curious, not as part of this podcast episode, what does your personal working schedule look like? How do you allocate your time between research, meeting people, and working on product iteration?
I think my role is relatively hands-off in terms of management style, but I review things and ask a lot of questions. If there are issues that the team hasn’t really thought through, then I challenge those. And I’m really direct when it comes to communication. We want our team to communicate directly, concisely, and deliberately. Those are the 3 principles of communication that we have.
As for how I allocate my day, it really differs from day to day. But I usually do time blocks on a 90-minute basis. So when I do have free time, aside from all of the meetings and administrative work that I have to do (such as sending money), I try to block off time for these types of large chunks of experiencing and thinking about products, freely. And I usually have a couple of important things I have to get through each day, which are documented the night before or very early in the morning. So I have maybe 4–5 key items that have to get done that day, and the rest is free time that I block off on a 90-minute basis, as that allows for a more even flow.
Q: Do you use any tools to help you with your work?
There are a couple of tools that I can mention. One is mem.ai, which I use for note-taking and scheduling. It’s a new product with a great tagging system and browser experience. I also recently transitioned my team’s task management to Linear, a product management tool similar to Asana but with a lighter interface and a focus on cycle visualization. It was created by one of the founding designers at Airbnb and Coinbase, and the well-designed logo wall gives me a sense of joy. For internal thinking, I use Flomo, an atomic notes-taking app made by an Asian founder, it has a very light experience on both WeChat and the web. In addition to those tools, I use Calendly and Lark for my usual work schedule.
Q: Why did you specifically mention Calendly and Lark?
For me, everything starts with Calendly because I have a terrible memory of rough errands. If I don’t have the Calendly invites fixed on my schedule, I’ll likely forget about a meeting. That’s why I use time blocks and Calendly. Lark has a good integration with Google calendar, which offers a pretty seamless experience for our team in terms of chat, documents, and circulation.
{ 8 } Changes brought by the blockchain technology to the game industry; Opportunities in sub-verticals of crypto gaming
Q: From a historical and evolutionary point of view, beyond the integration of NFTs, what changes do you think the blockchain-based infrastructure of crypto gaming brings to traditional gaming?
There are a few important points that I believe will impact how we evaluate traditional gaming.
First, a lot of limitations in traditional gaming are created artificially by the distribution channels themselves, such as App Store or payment providers. For instance, App Store only allows purchases of items that cost less than $100 per batch, but with peer-to-peer transactions in crypto gaming, you can easily sell items for much higher amounts. This creates a better experience for the higher revenue users, who are often the most passionate advocates for a particular game, and this increased loyalty can lead to better feedback and community organization.
Second, there’s the concept of free-to-mint, which involves a shift from primary revenue structures to secondary revenue structures. While most projects make more revenue from primary sales, the top 20% largest projects generate 70% of their revenue from secondary transactions. This means that if you focus on incentivizing secondary transactions and building a strong community, you can achieve more longevity and growth than you might with traditional gaming, where circulation systems are rarely designed intentionally.
Another factor to consider is distribution channel fees. By eliminating the 30% channel fees and investing in user acquisition and ad campaigns, you can potentially grow more rapidly and create a more viral word-of-mouth component because users own a part of the token. However, it’s crucial to balance this growth with sustainability, as we saw with StepN in their early days.
Finally, there’s the concept of fully on-chain gaming, which is almost like an e-sport for developers. For example, Paradigm’s experiment 0xMonaco allowed developers to race to complete their code the fastest. It’s unclear how big this space will become, but it represents a paradigm shift in gaming.
These are just a few points to consider, but there are undoubtedly more.
Q: Looking at the big picture, do you see any other opportunities in the crypto gaming industry that are worth exploring? We talked about P12, which aims to create a web3 version of Steam, and Carv, which is awarding SBT-based badges to gamers. So, based on your industry overview, are there any other promising opportunities or problems that need to be addressed but can’t be solved in the traditional gaming or web2 space?
When it comes to this issue, I think it’s all about progression. I believe we need to prioritize creating applications that will bring people into the space, followed by tools to help those applications grow. This is similar to how League of Legends and CS:GO had tracking and ranking tools that eventually became distribution channels for the games. Valve from Steam was also initially a forum but eventually became a marketplace due to its traffic. Therefore, we need to focus on developing applications first, followed by new tools and distribution channels. Distribution channels can be a part of the kit, but applications should be the priority. To achieve this, we are working on making it easier for developers to create apps and focusing on mobile, the distribution channel with the most volume.
In terms of user identity and its potential opportunities, I think it’s an opportunity that can be explored after there are a lot of good applications in the space. Xbox teams can create an on-chain identity for gaming milestones that players have achieved. Players want to see their achievements and milestones in the games they play across their lifespans. This can be achieved through SBTs, but it will only be popular when the games themselves are popular. It’s all about progression and prioritization.
Q: I have a feeling that many of the large gaming or traditional gaming companies don’t really want to adopt the web3 technology. Is that just my bias, or is it a real thing?
I think there are definitely risk preferences at play. I don’t see it as an absolute belief or disbelief in web3. It’s more like, what are the products we have in our pipeline that can adapt to a web3 audience, and what benefits can be derived from that? For instance, a mobile gaming provider with multiple titles may turn to web3 if some of their games are lagging behind in revenue and experiencing a slowdown in user base. Web3 could bring new life to those older games and attract users with higher revenue potential. So there are incentives for them to do so.
Some companies have more idealistic reasons and believe in a decentralized future, but they might not turn their biggest title, which already generates millions in annual recurring revenue (ARR), into a web3 title. Instead, they may experiment on a smaller scale with a secret title or experimental product. This seems to be the case with many gaming conglomerates across the US and Asia. In Asia, some companies have faster iteration speeds and more products, but are they well-thought-out? I’m not sure.
I believe we’ll see a blend of both approaches in the future. Even if some gaming providers don’t go full steam ahead with web3, they might adopt it as a payment system. So we’ll definitely see a mix of those options. Stay tuned for that.
{ . } Extended discussion: the positioning of Asian/Chinese founders in the crypto industry; The impact of the FTX collapse
Q: I have a side question: what is the Chinese or Asian founder’s position in this whole crypto world? There are a lot of discussions around that, especially after the token2049 conference. I was wondering what you think are the advantages or disadvantages of Chinese founders and how they can organically incorporate themselves into this world, or if they can be a very unique vertical in the crypto field.
I never think about it from a nationality or geographic perspective. I’m Canadian, and I’ve always had this issue of maintaining my identity as an “Asian” founder. Am I more fitting to the North American or the Western ideal of more individualistic cultures?
The biggest problem with a lot of so-called Asian or Chinese founders is that their interaction with the western hemisphere is very limited. The problem with being a vertical based on geography is that you don’t really reach out to a lot of the founders, let’s say, in Silicon Valley, or to a lot of these builders that are pushing forward the technology. By interacting with some of the hackathons and incubation studios, you realize that there are a lot of new experiments going on in the space, and by being in a vertical with existing web2 founders, you can potentially be left behind.
Because we were a little bit lagging behind when it came to adoption, a lot of us actually came into the space last year. There are people that have been building for 6–7 years in the Bitcoin community, and in the Ethereum community. Solana was launched 3 years ago as well. So these founders were there earlier than us. When it comes down to talking to people who have gone into the space majorly across the last 2 years and the others who have been building for 5 or 6 years, which one is more advantageous? The answer is pretty obvious to me.
But I do get FOMO because it’s easier to communicate when I go to Singapore. However, if you go to Singapore and attend token2049, you realize that there aren’t that many new founders and new projects. That’s just a fact of the demographics there. It’s either old money, DeFi protocols that have already raised a couple of rounds, or projects that were given capital last year. That’s not where the bootstrapped founders that create great products are. In my opinion, there might be a couple, but the concentration of them is definitely not as high as it is in an accelerator like DeFi Alliance, where you can find 2–3 person teams creating some of the coolest projects you can think of. You should make friends with those guys.
Q: Like AllianceDAO, Encode Club, and a lot of these incubators.
For sure.
Q: And what impact do you think the FTX incident has on the entire crypto industry? I know some people who were already suspicious about crypto as a tend not to believe in the whole industry. Additionally, there were rumors that Binance may also face a series of lawsuits or investigations from the US government. Given that centralized exchanges, or exchanges in general, are a major component of the crypto market, I would love to hear your personal thoughts on this.
I haven’t been in the space long enough to have gone through multiple cycles and fully understand what it’s like. However, from my understanding, a lot of it comes down to macro environments. It all started when interest rates were raised and inflation was ultra-high, especially in the United States. This led to a series of domino effects, which instigated how companies were dealing with their fundraising environments. Obviously, FTX is a bad actor in this space and has ruined the lives of millions of people. But, in my opinion, it may ultimately be for the better because, in the gray area where regulations are not clearly defined, the number of bad actors will outweigh the number of good actors. I believe it’s very normal to have these types of players when it comes to total volume creation or destruction. If it weren’t for FTX or SBF, it would just be another entity that would cause the same destruction.
I think events like these may have a positive impact to push for a more reasonable conversation with regulators. Although it’s not an ideal time to have that conversation, as we have less leverage, it’s still good to propel a regulated industry. We have to be able to live with how to pay taxes and how to live legally in certain geographic areas.
In addition, for my personal project, it was fortunate that we were able to experience a full cycle in the last six months. From June, it’s been six months and we have experienced five different insolvencies and two large scams. However, we were also able to survive and have enough safe runway to continue building what we believe in. I believe this is reflective of many projects in this space, where once you understand the fundamentals and value proposition of crypto, it doesn’t really matter what the macro environment is. If 2% of the entire US stock market transactions can be denominated with crypto, that’s $100 trillion versus $2 trillion. Currently, we’re only at less than $1 trillion. Even if it’s just a 2% penetration rate, we’re looking at a 100% increase. I believe it could be upwards of 10% or even more if we consider the liquidity and speed of money transactions. Then maybe we can go up to $5 trillion or $10 trillion. One day, it could be the size that is close to the entire US stock market, and we just believe in that.
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