Moonshot Mafia #12 | Hash Global: When Games Meet Web3

Hash Global is an Asian-based investment institution focused on digital assets and blockchain ecosystems. Founded in 2018, the company is dedicated to investing in Chinese entrepreneurs who are working on early-stage blockchain projects combining Web2 and Web3 technologies around the globe.

Hash Global is also an early supporter of Moonshot Commons and has invested in numerous other top projects, including but not limited to RSS3, EthSign, Mask Network, SeeDao, imToken, Infinity Stone, Debank, Matrixport, Hashquark, and Meson Network.

In Moonshot Commons’ Fireside Chat #12, Henry Yang, Partner of Hash Global, led a discussion during the 2023 Web3 Festival in Hong Kong — a guide to the paradigm shift from Web2 to Web3 gaming.

Today, I am very pleased to host this roundtable discussion around “how Web2 games can transition into Web3.” We are very fortunate to have some of the most representative experts in the industry here today. Some are successful entrepreneurs in traditional Internet games, and some are project founders and community leaders who are active in Web3 gaming. Their arrival today will bring different perspectives and dimensions to the following discussions. First of all, please introduce yourselves briefly.

Hello everyone, I am Feng Wang. I am now back in the position of CEO at Linekong Interactive and also lead the subsequent development planning of Linekong Interactive, with more information to be disclosed in the future.

I have spent a lot of energy over the past year or two making an NFT marketplace called Element. It is an industry-leading project, ranking first on the BNB chain and fourth on Ethereum, with the potential to push forward further in the future.

A few years ago, I started a blockchain media business, CoinVoice. I also run a fund and built a consensus lab with a few partners in the past five years. I recently brought it back to Linekong Interactive, and it is now called LK Venture. I hope I can connect with friends in the industry through investment and cooperation in the future.

Hi everyone, I am Jade Zhang, the founder of HyperDragons. I have been in the gaming industry for 16 years. In the beginning, I worked on major projects such as Prince of Persia and Assassin’s Creed as a game engine engineer and graphics engineer.

I started my business in 2010 and was fortunate enough to catch the relatively golden period of mobile games, as my previous company was in traditional gaming. We have developed games in 85 countries and regions and have reached the No. 1 position in 61 of them. We have facilitated a lot of Chinese games into international markets, while also helping a lot of foreign games in entering the Asian and Chinese markets. I am a big believer in the open world, metaverse, AIGC, and Web3 technologies. Founded in 2017, Mixmarvel has been dedicated to integrating blockchain technology into large-scale games. We are looking forward to expediting the emergence of a metaverse world in the next 5–10 years.

From 2018 to 2020, Mixmarvel reached first place in the single-chain category and ranked among the top five across the entire whole network. However, after we have developed and launched dozens of games, we found that all blockchain games have three main problems: firstly, the lack of consumer users; secondly, the weak infrastructure; and lastly, the gap between these contents and traditional Web2 games in terms of quality. Therefore, Maxmarvel attempts to solve these problems from three dimensions.

First, we find good content through investing. Second, we help good content to be better integrated with the blockchain world through incubation. Third, we help these contents get a broader audience of consumer-level users through distribution.

Hi everyone, I’m Vera from ApeCoin DAO. I’ve been in the AI industry for six years. I’ve worked at Apple and Nvidia on self-driving technologies, and I’m also an entrepreneur with a programming background. We have about a billion dollars allocated to support the development of this community, and I am very honored to be here today.

“A Multi-Perspective Interpretation of the Industry Progression in the Web3 Gaming Circuit.”

In the past two years, we have been saying that Web3 is going towards mass adoption, and the areas most likely to see a massive application adoption are finance and gaming. Before I came here, I saw a very representative set of statistics on DappRadar: in the past quarter, 46% of on-chain economic activities came from gaming-related applications, and the Gaming dAPP has surpassed DeFi for five consecutive quarters as the most popular application area for active Web3 users.

I would like to ask our four guests, what kind of real market and user needs are reflected in Web3 games behind this phenomenon. What are the features of Web3 games that Web2 games do not have?

I strongly believe that Web3 gaming will be one of the most important use cases for Web3. There may be more in the future, but for now, it is between the virtual and the reality.

From the perspective of blockchain, it is not only finance but also the fun of real users and the demand for real entertainment. It does not need the support of infrastructure in real life, so gaming is the scenario for Web3 to enter the life of the masses.

I observed that the existing Web3 gamers are more in pursuit of earning money, which is reasonable because everyone wants to earn money. I understand that not every game is suitable for Web3. A game is only a good fit for Web3 when the economic system is consistent with the overall goal of users to earn money. Otherwise, the game will be very confusing since it’s going against user behavior, and confusing games do not do well.

Why did I choose MMORPG? It was because many MMORPGs are making money. In traditional MMORPGs, the equipment and weapons are indeed more valuable and sell at high prices in the market, but now it is just mapped onto the NFT carrier, so users do not feel confused. The foremost important point is that the game’s core economic system or gameplay does not conflict with Web3 user behavior.

The second point, on the contrary, is that all people are human. We have always agreed that Web3 users prioritize earning money all the time rather than immersing themselves in games. If we provide a better gaming experience, especially in line with the needs of the user base, we can stimulate human nature. Human nature is not completely rational, but rather combined with self-fulfillment. Especially, I observed that Web3 users are adventurous people. People who like adventures should naturally like our games with strong interaction, strong uncertainty, and a strong sense of achievement, and that is the reason they choose MMORPG with such powerful 1 on 1 features and interactive games.

Source: CryptoTimes.

As someone who has been engaged in the production and distribution of the gaming industry myself, I have witnessed the shift from single-player games to online games and from computer games to browser games. I am the first generation who accompanied the development of games from the personal computer industry. When I played Contra as a child, my father would beat me up, and I could only play secretly in the next-door neighbor’s house. I didn’t expect my future personal career to have so many connections with games.

As someone who has observed and participated in gaming for many years, I have a unique feeling about it. I didn’t want to develop games five years ago because I got tired of doing it. I asked my former boss what we should do, and my boss said that it would be better to work on something related to the Internet or something more interesting to the general public.

Yet, looking back over the years, gaming had always taken up a very important part of my life. Today, when we see GameFi, many people ask questions like “What do you think of GameFi?” My first thought is that GameFi is misunderstood by a lot of people. They think the name is terrible — people may draw an equal mark between “GameFi” and “bad games” or “garbage.”

This problem is very serious because people think that games are hard to make, so they make an economic model to create a Fi. That’s why I’m afraid the name GameFi is not as good as Chain Game. I even think GameFi is stigmatized, not that no one makes good games — there are — but if you are working on GameFi, you must have no other options.

However, some people didn’t do well in making computer games but later made successful browser games. The same thing happened with people who made terrible browser games but great mobile games, and people who couldn’t do well in making single-player games and then yield in making agency game distribution. There are always people who succeed.

The business model of the industry is changing, so I think it should be called the crypto game. I especially hope that the industry will give it a proper name. We might as well mention the crypto game more. Because the move game is on mobile; the web game is on the Web. You call a thing GameFi, then the question arises: why should we use the word GameFi?

Source: bitcoin.com.

My understanding is that blockchain broke the old financial system, so some people built the BTC network. Some people built the Ethereum network, so the whole early infrastructure was for financial services.

As DeFi matured on a large scale, the opportunities are not as abundant in the market. Meanwhile, gaming is becoming very popular, so people immediately turned to GameFi.

I think its infrastructure is based on finance. After DeFi is established, people will inevitably call it GameFi. I think the name GameFi plays a misleading role, making people think that it only has a game’s skin.

I insist that we focus on one question: why do you want to do GameFi? Let me ask you one more question: What is the essence of GameFi in the work, and what does GameFi itself create? I think it’s hard to figure out the nature of the world, and a lot of people probably won’t understand what Bitcoin is until ten years from now. That is why there’s a misunderstanding today that GameFi is not a good game.

But my question is, what problems does GameFi solve?

I’d like to interpret it as combining gaming and entertainment with the new economy, which is crypto-economics. The new economy itself is already booming, so why don’t I want to combine good games and entertainment with the new economy? If the game can be combined with the mobile Internet, why can’t I combine it with virtual currency? I think the process of using the underlying logic based on the new economy (or crypto-economics) to build games is a very interesting idea. — This is the first one.

Secondly — What were the problems in the past? How did assets flow in the past?

We found that some people tend to sell accounts by taking their work to the trading market, and even formed business models for doing this. Nonetheless, when we look back, if most of your game’s data and assets are fee-based, then the essence of it is to embed this fee model into the economic system. World of Warcraft, for example, has a mall inside. Therefore, you’re not doing GameFi to have a so-called “cheat” economic system, but rather the game was originally equipped with an economic system.

The question is: how do we ensure the liquidity of our work after we define it as a new asset class, a Non-fungible token, and give it the characteristics of a game?

Therefore I think that the second problem is that GameFi solves the liquidity of the assets in the game. Don’t think that this is simple. The hard part is, how did you solve the liquidity originally? How did you solve the cross-border problem in the past? I’m afraid the customs authorities would give you some trouble. If you make virtual products, how do World of Warcraft and Honor of Kings handle liquidity? I expect the game industry to break the so-called national barriers, the geographical barriers, and the traditional centralized data network barriers, and establish a new system with a wide consensus and mobility.

I also think that in the model of combining games and the new economy, developers need to be clear about what kind of experiences they should create and what the reward for that experience should be. The flow of props, assets, money, these so-called non-fungible tokens, and the new works facilitated by them is the proposition that needs to be addressed in the Crypto gaming era. If you take this established mission to develop a game, what would be the reason for not wanting or not making a good game? Why would you want to make a scam money market, an empty shell, and leave?

Source: Stormgain.

The first two spoke very comprehensively, so it’s a little difficult for me to elaborate on it.

I’ll answer the host’s question from two aspects. From the perspective of UX regression, we firmly believe that Web3 can help the traditional gaming industry to have a growth similar to that of PC to mobile, both in terms of user numbers and market scale. In fact, as early as 2010, when I started my business, mobile gaming was also a regression in experience, as picture qualities and various experiences on such a small screen were worse than those on the console.

However, we see that the overall wisdom of industry practitioners had brought the mobile gaming industry to an unprecedented height over the past ten years. The three tops of Linekong Interactive at that time were the benchmark for how large games could be better experienced on mobile terminals, and this was also the turning point. From card games to fighting games, then to the spurt of MOBA games, we can see that there is still space for the imagination of this terminal.

We think the whole industry is now in the state of Web2.5. In Web 1.0, games like Crypto Kitties combined NFT and gameplay in a simple way. They then created a new business model like Play-to-Earn through a union like YGG.

At this stage, we think that the most representative thing is the emergence of large MMOs like Metacene, which starts to realize a more complex economic cycle and gives players a completely different game experience through digital assets.

Going further, it would be very scary if our ultimate goal is to be put into the virtual world, and the assets and rights in the virtual world are all centrally controlled.

In the future, if our work and lives are all in the virtual world, and the ownership of my assets is not mine, it is unacceptable for me as a player. Therefore, we believe that blockchain enables a better metaverse in the future and will build an economic system, including a new cooperation mechanism between people. This is the result of the joint efforts of the whole blockchain industry, including the practitioners of AIGC, in the next 5–10 years.

The three guests made very good points, and I couldn’t agree more. As a player, I also want to own it. After I own it, I also want to build on it, so it fulfills some of my needs.

From one point of view, blockchain needs gaming. From another point of view, why would gaming need Web3, and why would gaming need blockchain technology? I’ll give you an example now — Yuga Labs, also a BAYC-affiliated company. In the process of creating the game, they built up an IP different from the way we initially built the IP. They let the community create this IP, and in the process of this IP, they created something very interesting.

The community itself, in addition to serving some social needs other than the social function, is also equivalent to a marketing company. It helped the company to build its PR and created a series of global legislation. In fact, Yuga Labs does not have a marketing company to do these things, nor does it have a business team to do them. From this perspective, it can save money for the game development team in the early stage and give a better reference for growing the team in the future.

From a financing point of view, the fact that the team can raise money directly through the IP without the need to get the first funding from VCs shows that the community and the IP are capable of reaching a $4 billion valuation standard in a year and a half. This kind of speed is incredible for the traditional world, and it shows that in addition to the fact that Web3 needs gaming, gaming needs Web3 even more.

“A View of the Economic System Constructed for Web3 Games.”

Thank you for your wonderful sharing. You have mentioned many advantages of blockchain gaming, one of which is that you can build the economic cycle of blockchain gaming around tokens and NFT. However, for many traditional players, having NFT and Token makes the economic system of Web3 games seem aggressive, destroying the playability of the game. This is one of the things that traditional Web2 players criticize about Web3. What do you think, Mr. Wang Feng and Jade?

The host’s question is that NFT accounts for a very important part of GameFi, and there is a conflict between game operations in the long run when developing and distributing GameFi. I will talk about my view.

First, gaming accounts for a large portion of the application of Web3. If you look at the application of Web3, in addition to transactions and broad financials related to the expansion of transactions, in general, the current hot topic is the so-called DID. Last year we ran the digital identity for a year, and we see that it has a vision.

We see socializing, whether based on the transformation of traditional Web2 socializing to Web3 socializing, or the Web3 protocol layer of social, all put forward a vision. Everyone thinks that gaming plays a very important role in Web3, whether it is made into a computer game, or the PC side of the 3A masterpiece. The rendering ability is strong, the computing power is stronger, and each producer has a different perspective.

Instead, I think the NFT is positive for GameFi, which accounts for more and more of Web3. It should be praised first, rather than saying what conflicts it has created since it came out — why? I will talk about one more issue. A guest just now talked about why Bored Apes set off such a big wave. First of all, it was because of the IP, narrative, growth, and community of the work, and then extrapolated to the future of the game, so today I certainly can’t take the old road of Bored Apes and copy what they did.

Source: Cointelegraph.

The main problem today lies in whether you can build a new game, even in the initial beta version. Sometimes it takes two years of internal testing to be able to put the company’s internal testing down. Companies usually need 40–50 graphic designers, 20–30 engineers, and a lot of stories, plots, and documentation. A team with 100 people in today’s company is not large anymore.

In 2009, we had a team of hundreds of people working on a game. A game at that time can cost 70–80 million in development costs. Of course, if it is successful and earns back in the second month, that’s okay. But if in the second month, or the third month, you still haven’t made it, the investors’ money will be wasted.

Surviving in the gaming industry is extremely difficult. In the long testing of online games in the past, have you ever thought about what mediator can solve a carrier? What can be the link between users and your product?

My dad beat me up when I played Contra back in the years. When I watch my son play Minecraft, I am filled with joy inside, and I feel that the next generation will thrive. That’s how we perceive the new world.

The point I’m trying to make is that an MMO is a very long process from early close beta to open beta. If you can tether players with NFT, that would be great.

To be honest, even if your plot, the primary experience of the story is completely ready, and you have made a CG, it’s still difficult to make it work. I talked to our R&D team about CG production, and they said that nowadays, most of them have to outsource at a cost of about 800,000 Yuan.

Those computer-game companies and those online-game companies have not been worrying about the owner’s money at all to build a CG for 800,000 yuan. A good CG may even cost 2 million. Countless outsourcing companies and game companies are scamming the owner’s money. If you have 20 or 30 houses under your big company, and each producer controls the right to purchase, they should be very pleased.

When games release beta, they would be very happy if there is an NFT connection. So I tell them all the time that to make Web3 games, they need to release the NFT first. You have made so much effort to tell the story of the MMO, they have reconstructed a whole new world by themselves. They are talking about it, saying that it will come out in two years, so why not take out the pieces first?

Source: fiverr.

All Web3 games should first be prepared. Release NFT first, which will serve as a connection, and what is this connection? It is the fan economy — after the game comes out, those players will fall in love with it.

To use a Web3 game’s prepositional part of the connection well, the problem is not making it balanced — it is too easy to do. Why don’t you release the CG story in fragments when you release a version of the CG?

Yuga Labs is making something that tricks you into thinking that they are so great. Do you know that there is a distance like the Himalayans between tricking people into making a CG and finally making a game? If they can play it so well, and you still do not use the same trick as a game producer, that would be really stupid.

Gaming companies should issue NFTs. This is the core that can solve the balance issue very well, but everyone always finds it very difficult.

I told a former colleague in the morning that when people are facing important choices, the biggest failure is not that you think you’re in trouble, it’s not that you’ve failed. In fact, the biggest failure in your life is that you didn’t do anything. Most people didn’t do anything, so I call on those who are making GameFi release NFT first.

If you say that I can just release it first and someone will sell it for me, that’s a lie. In fact, they may not even have found investors, and the company probably doesn’t even have an engineer. CG is the only outsourcing that the company pays for, just like Yuga Labs, but Yuga Labs was a success at first and then became a lie. If you lie first, then people don’t know if you’ll actually do it. My intuition is that more than 50% of the people who are telling you this now are not doing it at all, and they will run away in three months.

Assuming that I sell it on my platform, I will be scolded to death. Does HKSE dare to have junk assets? Balancing making a good game and long-term game-making is the real problem; do not simply say that as long as the NFT is released, it is good.

After the Honor of Kings came out, the company is not as invested to earn money by “digging a big pit” (meaning “setting a trap” in Chinese). Why are you trying to dig such a big pit? Because if the pit is small, you can’t make money. The Honor of Kings allows users to sell skins for heroes, making a combination of heroes. Therefore, they have to implement high-pay penetration. Some people utilize high pay penetration, and some people use hardcore and high-yield strategies. This is a matter of economics.

There are many issues we can explore in the future.

I would like to answer this question from two dimensions. A good token design must follow the design experience and design thinking of the game.

First of all, I would like to respond to what Mr. Tan said before. Not all games are suitable for Web3. MMO and SLG are ok, but there are some single-player buy-out games that may not be so suitable at this stage.

So why is MMO particularly a great fit?

If we played MMO games as kids, we all have these kinds of memories: I need to trade props with others, set up a stall, sell some props, and maybe even go to a remote corner and throw the gold coins on the ground to be picked up by a dark shadow when someone inside the trumpet says to collect coins

Blockchain, as an infrastructure for building financial technology, provides a better experience than the original Internet in terms of account theft and asset trading, including the openness and transparency of rules, etc.

Source: beincrypto.

The gaming industry is now being reconstructed in terms of content production and distribution, and blockchain will accelerate this deconstruction and reconstruction.

For example, NetEase’s “Onmyoji” has recently used a lot of interactive marketing, IP-based operation, and offline activities to combine and so on, which we can see is similar to the promotion of Boring Apes.

People are also focusing more on the community. Early cooperation with the community can make games known to a wider audience before the game is launched.

Now NFT provides better means, including DAO governance and the infrastructure provided by a blockchain, and interactive marketing, including a more efficient early community. This is the big trend, not to say to transform the game into a Web3 game, but the development of the gaming industry. At this stage, new technologies are needed to amplify its characteristics.

“Thoughts on building an environment and user-friendly atmosphere for the Web3 gaming community.”

Feng Wang mentioned a point that was memorable to me. He said that games release NFT to build a connection between users, and also between users and project owners. We know that user community and user autonomy are very important in Web3 gaming. We are very fortunate to have Vera here today, and I believe she has a lot of advice and experience about ApeCoin’s governance to share with the project owners here.

Mr. Wang Feng has just talked about governance, and he also said tricking is actually called “storytelling”. People who can tell stories can usually get big money.

I had an experience in Silicon Valley. Since I was interested in business despite having an engineering background, I said I wanted to do BD (Business Development) when I was working at Apple. They said no and that I should just focus on engineering.

I then said that I wanted to work in self-driving. Since the self-driving companies are small, with only a few of us, maybe I can do BD. No, they still rejected me based on my education and work experience. After I got a job at Nvidia, I went to them again and said I want to do BD. They said no again, and said I had no experience. It is very difficult to do job transitions in big companies.

Source: ApeCoin.

However, within a DAO, there is an opportunity to do that.

Our DAO is a decentralized organization. In addition to “decentralization” being a very important part, our autonomy is also very important.

Being “self-governing” allows our user community to participate in various functions of the ecosystem according to their interests. If you want to do marketing, you can try to do that. We will incentivize our users to do what they want to do through rewards.

Of course, there are obvious problems with DAO, and people say that DAOs are not very efficient. Many people actually consider centralization and decentralization issues when making decisions. Many problems can actually be solved by both decentralized and less decentralized means.

There is a big challenge in the governance of DAOs, and in the process of doing so, there are many users who need to communicate with the community to make changes in a timely manner.

Going back to what I was trying to say, maybe in the past you were constrained in industries that were not very relevant to your past experience, but in a DAO you can try what you want to do. At the same time, we, at ApeCoin DAO, want to encourage the community to embrace different possibilities and realize all kinds of things that can be achieved.

@ Moonshot Commons