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Web Summit 2022: Takeaways from the First Wave of Web3 Games Amid a Crypto Winter
In this panel discussion, YGG co-founder Beryl Li shares some of her key takeaways from the first wave of web3 games that was led by Axie Infinity.
Web Summit is a yearly event that brings together over 70,000 people from companies that consistently redefine the tech industry. It boasts participants from over 160 countries and a rate of 42% women attendees. The 2022 Summit featured big names like CZ of Binance, Sebastien Borget of The Sandbox, and YGG co-founder Beryl Li.
Beryl joins a panel with Bozena Rezab, CEO and co-founder of GAMEE, Sarojini Mckenna, CEO and co-founder of Alien Worlds, and CoinDesk’s Zack Seward, to tackle how web3 games continue to grow despite uncertain market conditions and what builders and participants of the space should learn from the past few months.
The following is an excerpt from the panel discussion. Watch the full recording on the Web Summit mobile app.
Zack (12:42): So I want to stay on the onboarding question. Beryl, you probably have some interesting stuff to say about that. I'm very curious about your perspective — if you think onboarding to web3 is as frictionful as some people imagine it is, and what sort of success you've had in getting people to interact with these weird things called wallets and getting people to sign with their wallets. In terms of onboarding and education, is there anything that you are especially attuned to that has worked in the YGG context?
Beryl (13:13): I’ll tell you a story. Play-to-earn GameFi happened during the pandemic, and, a lot of people started downloading Axie because people lost their jobs in the Philippines. Again, it was in the pandemic and there were lockdowns, so they just started downloading the app. Then they figured, “Hey, if I play the game, I just need three in-game assets. I could compete in this game, and then I can earn in-game rewards.” It just spread like wildfire. With no marketing at all, this game called Axie started, being downloaded within communities. They did not know that these assets were NFTs, or non-fungible tokens, and that you need a MetaMask wallet.
I'd say that it was frictionless because they were able to get into crypto and web3 without realizing it, because they were just playing a game. They were just having fun. And then people grew to love the game. These are the same players that ended up learning how to use decentralized finance. They've learned how to earn money. These are guys that had no savings in the past, and then suddenly, they earn rewards, learn how to convert their funds into fiat currency. They've learned how to pay their debts, they were able to learn how to use yield farming in DeFi, and they were able to stream different applications online like using Compound, and all these complicated sites for yield farming. The players are able to do it just because of this game.
Zack (15:08): That's all well, good and fun in bull times. But as we are now in a crypto winter in the bear market, it's a bit of a different dynamic. I guess the question is, how do you create sustainable token economic models for these game-based ecosystems? We've seen Axie tweak some of its tokenomics in an effort to keep people happy and engaged. Do you have any thoughts on how to make these things last through bull and bear cycles?
Beryl (15:38): I think for any business model to be really sustainable, you need to make sure that you have future revenues. So I say that, Axie infinity, and a lot of play-to-earn games, were the first wave of the crypto cycle. And it's the same as cryptocurrencies in general, like Bitcoin. It's growing over time. Bitcoin’s price started with $300 and $1,000, went down, went up again, then it went to $7,000, to $20,000, then $60,000. And we're going to be seeing a lot of these cycles. I'd say that GameFi and play-to-earn just experienced its first cycle.
Yes, there have been issues with token economics, but I think this is what happened: They were unable to factor in the market speculators when they were building the token economics of this game economy. There's a lot to learn from, this first wave. And we've been seeing a number of games during this bear market who are really building. I can say that, in the context of YGG, because we acquire assets in a number of games — the number of games has shrunk. There's not a lot of deal flow, but then the quality of the deals that are coming in has improved a lot. When it comes to token economics, in theory, it works. In practice, it looks different. The only way to know and find out whether the second wave will work is if the second wave happens. Then we would see what the weaknesses are in the second wave of games that comes up. And that's where we can start improving based on what we see.
You can watch the full recording on the Web Summit mobile app.