SuperLayer Sundays: Migrating to Web3 versus starting on Web3, and "the Latecomer Problem"

In this Twitter Space, Gabby Dizon discusses issues surrounding Web3 and NFT games with Elena Silenok of Clothia.com, Amy Wu of FTX, and NFT artist, pplpleasr.

SuperLayer is a team of crypto-passionate individuals who’ve built companies from the ground up. Every Sunday, they organize a Twitter Space where they discuss Web3 and crypto topics with other enthusiasts. 

This episode was hosted by Elena Silenok, the founder and CEO of Clothia.com. She was joined by speakers Gabby Dizon, co-founder of Yield Guild Games (YGG), Alex Paley, co-founder of Faraway and Mini Royale: Nation, Emily Yang, co-founder of PleasrDAO, and Amy Wu, Head of Ventures and Gaming at FTX. They were also joined by Mahesh Vellanki, Managing Partner of SuperLayer, and Alex Yao, Community Lead for SuperLayer.

The speakers shared their outlook on the standpoint of existing studios transitioning to Web3 versus studios starting on the platform of Web3. They also shared their solutions for the problems most NFT games face — the latecomer problem. 

The following is an excerpt from the discussion. Listen to the full Twitter Space here. 

Web3 Games & Culture with @gabusch @amytongwu @pplpleasr1 @yieldguild

Elena (56:07): We're also helping incubate some projects, thinking a lot about tokenomics and thinking a lot about how to best design different interactions within the projects and within the community for the social tokens. So it's definitely a big question that's arising for a lot of projects that are launching today. 

I had a conversation with Alex earlier and we talked about projects that are getting built as a regular game and then getting Web3 economics, tokens, and NFTs added afterwards, versus games that are being designed from the ground up as a purely Web3 experience. You know, kind of like the platform that pplpleasr is building, which is an NFT and staking-first platform. So it's really interesting to me what you guys think about existing games and existing studios adding on Web3 mechanics versus a game or a studio that's starting as a Web3 experience from the ground up.

Alex (57:16): I mean, designing a game with a closed economy like a free-to-play or premium game is completely different from designing a Web3 open economy where players can transact amongst each other. They can govern how the game evolves over time. It's just such a different beast that if you were to go take an existing game with an existing game economy and then try to retrofit a fungible token economy into that game. It would just be so, so difficult. 

I think if you have a purely cosmetic economy, retrofitting NFTs into that economy is easier. But then, obviously, everybody has seen the Ubisoft debacle, right, where that came off as a cash grab to players and honestly just not necessary. So I think a lot of studios now, after seeing some of these recent debacles happen, are being very careful about taking existing games and trying to retrofit any sort of Web3 economy into them.

Gabby (58:31): Yeah, the way that economies are designed is really very different with a Web3 first. For example, most free-to-play games have some form of in-app purchase economy where the developer is basically selling virtual goods to the players, and that's a direct sale model where your developers earn everything minus the cut of the App Store. With a lot of the Web3 games, you're allowing the players to be participants in the community, who own a lot of the assets, and then trade with each other.

The business model is also very different because as much as possible, you don't want to be selling things directly to your community base. You want your players to be creating things of value and then trading with each other, and then you can just take a small cut of it so it's looking more like a marketplace business model, which has a much lower take rate. But then you're giving away most of the value to their community. They'll be more loyal and stick around a lot longer, and this also enables a lot of the creator communities around the game to also participate in the upside around the game as well.

Elena (59:51): I think another question is, sometimes in the crypto community and in the Web3 community, we feel like we have to be early and there are all sorts of FOMO that you have to be on the mint list. You have to be super early in the game to get the special NFTs. How do you guys think about the latecomer problem both in terms of people who are joining? Like YGG, let's say, later on — both in terms of people who didn't find out about the game when the game first launched and missed the first season, missed the first drop. How are you thinking about this and how are you working out the ways to incentivize the community to still join even if they're not super early?

Emily (1:00:39): Oh my God, I wanted to chime in on this just because I feel like the NFT space is just so over-saturated and that's honestly a big problem that's being caused right now. It's just with all the PFP projects out there and everybody sort of has forgotten about the utility, and I think it's also because so many of these projects drop first, and then the utility is like somewhere on the road maps like TBD.

“Oh, if I don't mint first, then I can't flip it later, and then I'm basically just giving away all my money to these projects,” right? I feel like it's a hard problem to tackle, but I think we should take it back to see how free-to-play gaming has done it, which I think is really important. Because I think content should always come first, and so if your content is good, that's like the best and easiest way to bootstrap people. It's not about false promises, and I feel like right now, the current state of our industry is a lot of people cashing in on clout. 

There's a lot of initial primary sales and the same with something like what I'm doing — we're making it free for anybody to watch all the way, always, until a pinpoint where there's a vote. So let's say we're already on Episode 5 and I wanted to tell the community, don't come in, like, mint this, it doesn't matter if you're not on the whitelist or you didn't do it on Episode 1 or whatever before you even put money into it — I feel like that's something that's not perpetuated enough in our space. 

And yeah, it's just really frustrating to see when people are making good content, but the space’s mindset is so backwards right now. I'm curious to hear what other people are thinking about this, but, you know, I sort of like how free-to-play gaming has done it. First, it’s free, like on your phone, and then if you like the game, it's because you're into the content and you want to be engaged. Then you make, later, in-app purchases or whatever. And so that's a similar model that we're adopting with what I'm doing right now.

Alex (1:03:16): I think the hardest part about making a Web3 game is the fact that people have the same expectations for a Web3 game that they would have for a PFP project, where I think a lot of the time games you see release the genesis collection. The first-ever will always be the best and the most rare, and I think that's just like a game-breaking type of thing because then obviously we weren't around for the first-ever genesis drop — then every subsequent thing you ever will get from the game is just not going to be as valuable. 

This is a famous problem, and it's called the latecomer problem or the latecomer disadvantage. It's basically present in every single MMO. Like when you know people have been playing that MMO for five years, but they still want new players to join. So I think we just need to start educating that NFT games are different from PFPs. 

We need to solve this just the way that we would solve it in MMO game design, which is having some sort of reset in a lot of these things, like releasing new content or new end game content. And to help sync a bunch of currency, you'd inflate the economy a little bit so that people can make it through the beginning stages of the game faster and meet the end game.

But yeah, I think a lot of this is just educating people that game NFTs are a lot different than PFPs, and the first collection shouldn't always be the most valuable. I mean, that's one of the reasons that for Mini Royale, we broke this down into seasons so that every season there's a little bit of a reset. It's not a total economy reset, but we're resetting Clan XP, we're resetting a lot of these things so that people feel like, “Hey, even if I join in Season 10, I can still be a meaningful contributor to the game and to my clan.”

You can listen to the full discussion here.

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Check out Gabby, Elena, Alex, Emily, Amy, Mahesh and Alex’s Twitter to know more about their projects.

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