P2E, GameFi, Metaverse

Transcript

ladies and gentlemen about 40 minutes ago you had a choice to stay in this room or go to the one next door and i'm happy to tell you you picked the right room to stay in why is a wise man once said that theories divide us but stories unite us so let's get the theory out of the way really quick great thank you now we can relax and we can have a proper conversation so what excites me about game 5 and in fact the entire ecosystem that we're developing it's the canary in the coal mines if blockchain gaming works everything else is going to work and this is why

there's a big deal that's happening here and i think we're missing it in terms of all the choice of terms we talk about tokens and nfts and d5 and game five and it can be very difficult to keep track of what's actually going on so i'd like to share with you a vision of where we at sonota and if you go to playingfields.com just to follow us in this conversation you're welcome to this is where we believe the ecosystem is going to go to and the real potential of what's happening okay i'm such a nerd i think when i was eight years old uh what i wanted for christmas was a self-contained biome right so everyone wanted sea monkeys these are the little guys that you feed and they hatch into little shrimp and they swim around but sea monkeys have a problem you have

to keep feeding them and eventually they die and that's kind of the end of it a self-contained biome is when you add something like algae to the sea monkeys now the algae can take it as an input energy they can produce something that's sustainable the sea monkeys eat the algae and they produce nutrients that keep the algae going it creates a self-contained loop and i don't think we've seen a self-contained loop in the blockchain ecosystem right and i think the gaming sector is going to be that first self-contained loop which is very significant so let's build on that model for a little bit potentially if you just abstract away the details of what's going on what a minor is doing much like the algae is the miner is taking in as input energy

and compute power and what the miner produces is a coin okay and on the other side if you abstract the way the details of you know a game should be fun and games should be engaging and all that the economic process of a game is to take as input a coin and produce a game item while we play the game so you almost at this point have a closed loop for the first time but there's one very critical ingredient that's kind of missing so now let's switch away from thinking about the sort of application layer and start to think about the infrastructure layer that's the one thing i hear almost no speaker talk about is underneath the protocol layer of every coin there is a growing infrastructure layer

and this infrastructure layer has a lot of potential and value right so if you think about what gamers use to play games it's a gpu card right that's the graphics uh processing unit and if you think about what mining could be we could move proof-of-work mining to a more inclusive mining ecosystem that isn't based on asics and asic farms that three people have access to right we could move mining to gpu based mining because now a gamer when they are playing the game can be using the gpu game to play the game and in the evening or morning depending on when they're playing they can switch to mining a coin that they can then redeem to put back into the gaming

system and then what you have is a closed loop so we're getting close to that we're not quite there yet the the tech is sort of taking shape but why does why does having standardization in the infrastructure layer hardware we can depend on in a closed loop matter there are two trends that are are sort of uh worryingly global one is the silicon shortage there just isn't enough compute power to go around right companies more and more are trying to move storage uh from just in case to just in time so we've seen companies move to as a server storage they're using google cloud or amazon what if companies could move to

just-in-time computation what if there was a global distributed gpu network that could compute any problem and it was available for rent the second problem that we have globally is energy and energy is a weird thing most there's a misnomer we don't have enough energy actually i think america is oversupplied in energy i think they're nine percent too much energy right the problem is peak loads you know it's it's um at very very specific times in winter when suddenly the demand for energy spikes that's the problem right and we're we're building um infrastructure we're polluting the

environment we're doing a lot of damage to have energy just in case what we can do is we can ask miners at peak time to cycle down their mining rigs stop mining for that period and dump the energy that they would be consuming to mining and pipe that energy back into the grid sweden is already doing this right abu dhabi dubai are kind of cutting onto this and they are creating infrastructure to get miners to come and operate from them so when i hear announcements like new york wants to ban proof of work mining i don't think they get it right the gaming ecosystem has a second

huge advantage and that is the way it works economically is kind of how we think about economics traditionally and and that's weird for crypto uh if you read catalinian guns and you kind of look at um um the problems with the cryptocurrency um it doesn't matter we won't name any specific cryptocurrency but if you think about what a contract is what a smart contract is it's an instrument it's instrumentally valuable right so i always think of a a glass a cup that holds water as an instrument whether i use my hands to drink water whether i use a cup i don't really care it's just a means to an end the water is the thing that's intrinsically valuable i have to have that right so when we're looking at gaming i think

what we're seeing for the first time is is people are producing digital assets that are intrinsically valuable right my game avatar my metaverse character my identity isn't fungible i can't just swap it for another identity i don't think that way right when you look at a sort of a what i would call a generation one cryptocurrency that that fuels a smart contract some people see that coin is instrumentally valuable it's debt settlement i use it in my contract to settle debt the other half of the ecosystem is saying it's not instrumentally valuable it's intrinsically valuable if i hold it it will go up in value but you can't have both

a coin cannot be both an instrument and intrinsically valuable that's a design conflict that'll never work but in games you're separating that out on the left you have the thing of value the game item and on the right you have the instrument that you use to settle the debt to pay for it and suddenly you've moved from something very bizarre to economics where it's this weird self-referencing loop and it's not quite sure what value type it is and it doesn't quite work to the first instance of a self-contained biome something that is self-sustaining that's creating value and if done right you don't expect to see the price just tank or fall over a cliff but stabilize and you expect to see positive growth because for the first time you've got something very

close to a gdp well i mean okay so gdp isn't a good measure of economic wealth of a country because 75 percent of it's speculative but you know it's that it's that idea that we're pushing for and so what i really want to say in closing um we're looking at this whole industry game fire the metaverse for what it is and we're missing the point of what it could become we're treating it as though it's a financial instrument and we need to start realizing that it's a financial ecosystem when we realize this and we capitalize the real value of an ecosystem not just an instrument and when we realize what we're doing i think we will move from billion and from millions of dollars to

billions of dollars and that's really it that's all i want to say if we have any questions if we have time i'd like to field them yes anybody has any questions we have plenty of time for a q a way further but can you elaborate a little bit on the vision of the ecosystem that you have in mind and how it will interact with the well existing not so cool ecosystem that's out there can you repeat the question andrew okay so to repeat the question um the gentleman in the front said he thought

he understood what zonata does but but now after this presentation he's getting a bigger vision for it how is what we're doing compatible or how does it relate to other ecosystems and what is it not all about i love that question because it gives me a legitimate that wasn't a plant i didn't ask him to ask that question but now i get to do a bit of a plug i like fred from cordano earlier who was here for that talk just raise their hands right so fred was really saying that you know we're we're far too um kind of traditional cryptocurrencies can be quite competitive it can be a lot like religion you're either in religion a or religion b but you can't be both maximalists and we really have to move away from that and we really have to start being more collaborative as an ecosystem

if we want to survive the pressures that we're facing from the outside world and really grow to what it's meant to be um zonati is trying to do something very very specific so so uh if i want to boil it down on a technical level um unix in 1971 kind of had this profound moment when they said when you look at any digital system you can think of it as nothing more than a collection of files right in this kind of world we have a weird world view my printer is nothing more than a driver file at the end of the network right so just just take your favorite or not so favorite uh social media giant meta you know when they deploy when they roll out um they don't construct

um themselves as just a set of applications so if you want smart contracts and application layer uh cordano is great ethereum's great there's there's a number of those out there and they're looking at just bringing application layer to blockchain we're looking at bringing files to blockchain we're looking to incarnate unix from a blockchain system which is really hard to do if you think about it so the first problem is that data doesn't behave like a token and you can't treat it like that right if i could spend a dollar fast enough if there was enough velocity one dollar could meet all our economic needs as a means of debt settlements i pay the barber he buys the coke the guy at the the coke merchant goes to the green

grocer it's about velocity it's not about necessarily creating new currency but data doesn't behave like that you have to create data 100 000 times a day and you have to delete it the rest of the time so how you store these things treat them and and get them to behave is is a very very difficult problem if you really want to bring files into a blockchain environment that's completely non-trivial but if you can do that i can take a jpeg and i can use it as an economic quantity so if you just think about how you do nfts at the moment you might use ipfs to do the data management and you might use ethereum to do the data rights so i'll use a theorem to buy and sell

but i'll store an ipfs and that's a problem because who's auditing that what's happening on ipfs is what was promised on ethereum right and that's why you get drug pools right so so we're bringing the data management and the data rights together into a single entry once you have that so that's all sort of technical sort of low level once you have that you can start building and and we must be very careful just to remember the difference between a marketplace and a market and i don't want to use markets in a very strict economic sense right um a market is a group of people that have a common objective you can have a political market a social market a legal market right they want to play collaboratively with one another and markets fail when a rational actor

makes a rational decision that benefits him but it doesn't benefit the group so think about the famous example is a four-way intersection it's late we're all coming home from work and we know if we all just wait our turn and it's annoying and we don't block the intersection we're all going to get home on time but a rational actor says you know what i'm next in queue and i just can't help the group and that's market failure right and so what bitcoin and what ethereum and what blockchains do is they use a very clever pricing mechanism to prevent market failure within the markets right so that's the markets the marketplaces are more mundane they're where you go to shop they were you got to buy stuff right so we're interested in building markets

out of data and getting these markets to interact with one another so gaming for us is very very important game items price efficiently why because of competition what makes markets behave rationally and what makes prices evolve efficiently is strong competition right and a way to securitize an asset gaming gives you both uniquely nfc art does not give you those guarantee nft music does not give you that guarantee nft gaming does so in principle i can go to a bank and i can get a fiat loan against the game item because it's securitized and it's priced efficiently right in practice

the banks say you know the problem is games are great but they have to trust the application layer and maybe you've at the application layer you've written some bad code you don't even know it a banker doesn't know the quality of your ability to code so our argument is don't put your economics into the application layer push it down into the blockchain layer because in the blockchain layer it has standardization it has securitization it has cyber security right and that's why sort of standardizing things like erc20s is so important because traditional finance can interact with crypto and so what we're going to see in game 5 i predict within the next five years we're going to start seeing mutual funds and hedge funds and derivatives being built out of game

items uniquely so and that's going to be the catalyst to bringing traditional finance and traditional financial thinking into the crypto space and that's going to get us from 1.3 trillion assets under management today to the full cost of 40 to 100 trillion and then you start building the stock markets and aggregators indexes that's why it is so so important so yes it's cool to take soccer where we are there's some promising games um but we in order to realize that vision it's it's not a given the tech isn't built for purpose you have to kind of massage it to get there so that's our first vertical there's a couple of others we're looking to get into the music industry because they have a real world hurt in collecting revenue and paying artists um so that's something else that

we look at but we also want to expand the idea of fungible data assets right and so something that we're very keen to look at is how do people that contribute to open source projects gets remunerated and that kind of shows tangibility of what you can do when you can have files and coins into act atomically without custody at layer one the other thing i just want to say is we hear a lot this isn't um i have to choose us carefully what banks do and the value they extract and what banks should do and the value they could extract are two wildly different things um i don't think blockchain is the enemy of a bank at all i really really don't i think bankers and lawyers the old the old kind of

there was a kind of a um a feeling in the early days of crypto to kind of like stick it to the man and we don't need intermediaries right well i mean who of you understand the consequence of a good contract and a bad contract i don't have that wisdom so lawyers should be writing smart contracts because they understand historical law and they understand these constructions and so it's it's really at an age now where we have to become a little bit more mature we have to realize the traditional world has is is the output of 6 000 years of human compiled thinking into very distilled format it doesn't come from a vacuum they're very good reasons why these things exist but bankers and lawyers need to understand that there's a very good reason why blockchain exists

and we need to start bringing these universes together thank you andrew so much um and kudos to you for skipping those slides you are the first one that has ever done it and i think you got people's attention thank you so much thank you guys