Animoca Brands’ Yat Siu on gaming and the future of mass adoption

In this episode of Decentralize with Cointelegraph, join host Jonathan DeYoung in a captivating discussion with Animoca Brands’ co-founder, Yat Siu, as they explore how gaming is poised to drive mass adoption of blockchain technology. Siu shares insights on gaming’s social nature, the key to its power, and why gaming will lead the charge in mainstream adoption. Additionally, Siu shares valuable perspectives on the metaverse, emphasizing digital property ownership and community building.

Host on X: @maddopemadic
Guest on X: @ysiu @animocabrands

Cointelegraph’s Twitter: @Cointelegraph
Cointelegraph’s website: cointelegraph.com

Timestamps:
(00:00) - Introduction to the episode

(01:43) - The importance of conferences for networking, learning and evangelizing Web3

(05:19) - The current semi-bull market and anticipated timeline for mass adoption

(10:44) - The influence of political change and market dynamics on the future of Web3

(12:16) - Gaming’s influence on culture, digital ownership and virtual economies

(16:55) - Yat Siu’s views on memecoins

(18:46) - The perception that the metaverse is dead, the concept of an open metaverse

(24:17) - NFTs in different cultures, capitalism, and the response to NFTs in gaming communities

(31:11) - Emerging trends and developments in Web3

(36:32) - The importance of financial literacy and education in Web3

(39:09) - Criteria for investing in Web3 projects

(42:12) - Yat Siu on managing a multitude of ventures

The views, thoughts and opinions expressed in this podcast are its participants’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph. This podcast (and any related content) is for entertainment purposes only and does not constitute financial advice, nor should it be taken as such. Everyone must do their own research and make their own decisions. The podcast’s participants may or may not own any of the assets mentioned.

Transcript

[00:00:08] Jonathan DeYoung: Welcome to the Decentralize with Cointelegraph podcast. I’m Jonathan DeYoung, and you may recognize my voice because I’m the co-host of another Cointelegraph podcast, The Agenda. I was recently at the Consensus 2024 conference, and while there, I had the opportunity and privilege to interview Yat Siu, the founder and chairman of Animoca Brands. The company is quite the powerhouse within the crypto space, with dozens of products under its umbrella, perhaps most notably The Sandbox metaverse project. It is also a prolific investor, having invested in hundreds of companies and projects. Yat and I spoke about a number of things, from whether or not the metaverse has failed and why he thinks gaming is so critical for ushering in mass adoption, to the importance of teaching financial literacy in schools and why education is so important, yet so underlooked. Yat is always an inspiring speaker. So, I hope you find this interview as fascinating as I did. So, without further ado, here is my interview with Yat Siu, recorded live at Consensus in Austin. 

So, I am here live at Consensus 2024, and my guest for this episode is Yat Siu, who is the founder and chairman of Animoca Brands, which is basically responsible for everything you see in Web3.

[00:01:36] Yat Siu: I’m not sure about that, but thank you.

[00:01:38] Jonathan DeYoung: That’s what it feels like at least. 

[00:01:38] Yat Siu: Thank you so much. Thank you so much.

[00:01:39] Jonathan DeYoung: So, thank you so much for joining me.

[00:01:40] Yat Siu: Thank you for having me. It’s a real pleasure.

[00:01:42] Jonathan DeYoung: So, I mean, you’re here at Consensus. How has it been going? Are you enjoying the conference? Any fun takeaways?

[00:01:47] Yat Siu: No, it’s great. Conferences, for me, are a place where I get to connect with people. I get to share ideas. We exchange sort of things that you learn from it as well. I find every conference, no matter if it’s big or small, as a valuable experience because, you know, you connect with your community, you also connect with people from the industry, and you learn from that, and that’s valuable. The other thing also is the job of evangelizing Web3. We’re not done yet. I mean, we’re so not done yet, right? It’s like talking about the internet 30 years ago. That’s kind of where we are right now. And that means that every conference, every time you spend is, in my view, not time wasted. And Consensus is one of the preeminent Web3 conferences in the world. It’s always led the way before. And also, Consensus is coming to Hong Kong next year, which is also pretty amazing. And as a result, you know, we felt that we had to come here and support that as well and tell people about that because we want people to know that there are other places in the world that are very welcoming to Web3, such as Hong Kong, and that there’s opportunity beyond sort of, you know, the West.

[00:02:47] Jonathan DeYoung: So, how does it compare when you’re at a Web3-native conference like Consensus? What are you talking to people about versus like, what’s your pitch if you’re at a traditional tech conference, perhaps?

[00:02:57] Yat Siu: Well, it really kind of depends. But my general view on the, let’s call it tech conferences that are more broad, that are not sort of Web3, it’s more literally talking about sort of the values of Web3 and why it should be in this space. It feels a little bit more ABC, obviously, if you’re a crypto-native person, but it’s important for people to understand the deeper meaning behind what this digital property rights mean. What does it mean that we all can become owners in this network? And what does it mean that actually, the data that you’re generating in the Web2 paradigm is actually not data that you get to own and create value for? Right? So, that’s kind of more the direction because we still have to educate people. It’s kind of like you have to sort of make people understand what is the actual reality that you live in and sort of literally red-pill them, right? But with more crypto-native conferences, like a Consensus, Web3 conferences, I find that I often delve a little bit more into the philosophical, right? So, people have to understand some of the deeper meanings. And for me, it’s more about reinforcing the values of Web3. So, we talk a lot about the shared network. Well, what we mean by the shared network is that when you build in Web3, it’s not a zero-sum game. When you build successfully in Web3, you’re actually building a network that will grow every ecosystem.

So, despite that, there’s tribalism. You know, imagine hypothetically, if Solana was to be worth 10x what it is today. Well, yes, it’s great for people at Solana, but the entire Web3 ecosystem will grow as well because in Web3, you’re building on permissionless networks. Liquidity flows from left to right. People will do vampire attacks, people will build them this, and they’ll create other stuff because this permissionless network building it, so everyone wins. So, regardless of who wins more than others, more broadly, the space wins. That’s not a Web2 paradigm. And we have to sometimes keep reminding people that when you’re building in Web3, actually you’re building for everyone. And that’s something that is a value statement that sometimes we have to remind. And particularly in bear markets, it’s important for people to remind what you’re building for, for a better future. And then in bull markets, we have to tell people, hey, don’t forget what you’re building for, because sometimes you start forgetting and we’ll get greedy. And again, there’s nothing wrong with capitalism and making money, but you want to make sure that you don’t constantly fall into the same kind of excesses that these type of cycles end up happening, and so the job is never done, shall we say, right? It’s a constant evolution to try to explain people what we’re here because I actually truly believe that Web3 and blockchain will build a better future as long as we keep reminding people what we’re here for.

[00:05:18] Jonathan DeYoung: So, within Web3, bull market is back. Everybody is excited.

[00:05:23] Yat Siu: I always say it’s a semi-bull market, but which is good.

[00:05:25] Jonathan DeYoung: Yeah. The early stages, one might say, of bull market. We’ll see how long it lasts. We’ll see what form it takes. Outside of Web3, there seems to not be a whole lot of interest in crypto and blockchain at the moment. Retail hasn’t really jumped back into the bull market. Sorry. Into the whatever market this is. Retail doesn’t seem to be a huge part of it. So, if the dream of Web3 is back and alive within Web3, where do you think we are on the adoption curve? I might know the answer, but I’m curious your thoughts. How far away are we from the dream Web3 world future where there’s mass adoption, and everybody’s on-chain and whatever your version of?

[00:06:08] Yat Siu: So, when I talk about a dream Web3 future, I talk about a world where we’re all building on-chain in a decentralized manner, building for common purpose, like in the sense that we understand that we’re competing with each other, but we also understand that our effort and work in the network will benefit everyone else. That’s, by the way, informs our investment strategy, which is why we have over 500 investments in growing because, again, in the place where you can have a zero-sum outcome, you can take a bet on a single party. You have to basically help grow the space. And even if a business doesn’t succeed, actually, what happens is that the sort of fact that this business tried something still added value to the network, right? It’s like in an economy when people try the business, and it failed. Bad for the people who tried to make this business succeed, but great for the ecosystem broadly because it created employment for a moment. But there’s capital flows, or there’s ideas, these kind of values that continue and lessons learned, like all these things actually don’t aren’t lost, right? These are valuable lessons that we’ve taken beyond that, right? So, to me, that’s kind of a future where we have that broader understanding, which means we are more literate, we have more broader understanding of each other. That’s kind of, you know, like if I was to sort of talk about a dream future, but in terms of mass adoption, which is a little bit different, right? I think for mass adoption, I actually think we’ll see mass adoption in the next 12 to 18 months.

And the reason why I think that’s happening isn’t because, you know, Web3 is in everyone’s mind. It’s because the tools of distribution have become more available to us. So, when you think about what sort of really hampered the growth of Web3, it wasn’t just knowledge, it was the fact that the biggest distribution platforms, Apple, Facebook, Google, Steam, especially in Web3 gaming, have been against Web3, right? They’ve stopped the ability to distribute. So, if I want to download an app that had NFTs and would use them in a game, I can’t log in on the App Store. But how do I download my stuff today? Right? It wasn’t like the early days of the internet where we’re just going to a website. I normally get my applications from a central location that becomes your gatekeeper. And so, despite that, the Web3 industry continues to grow because people have found other ways to get there. I mean, that just demonstrates the strength and resilience that despite all the resistance from central platforms around adopting Web3, we are now still at a $2.5, $2.6 trillion market. I mean, that just says something, right? I mean, just for context, that’s roughly the size of Apple’s market cap. It’s two times the size of, you know, Facebook’s market cap. I mean, just again, something that really is led by only a small community of people has created such incredible value in the space, right?

So, imagine what would happen when you suddenly have 100 million or maybe even a billion people on these kind of networks. They would be, in my mind, completely unbeatable, right? So, but why would that happen? Well, because these distribution platforms have now emerged, for instance, Telegram and TON, right? We’re the biggest validator with some big backers and supporters. Why did we do that? Because we think that Telegram is a way in which we can create that mass adoption where the kak is low and where users can grow. So, if you look at, for instance, gaming, we have 1.7 million daily active users now in a Web3 game. That is an astounding number. And we think that number will reach millions more. Not just us, but other people that have sort of put sort of built on that. And you see early versions like what happened with Notcoin and TON. That’s sort of an early version of that. Again, they’re primitive in comparison to where it can go, but it demonstrates essentially what can happen when you have a user base of 800 million, essentially opening up freely to the Web3 audiences, which, you know, again, Apple, Facebook and Google have not been so supportive of, but they will be forced to do so when more people on board think of the political narratives here in America, for instance, right?

For a while, it was quite fashionable to be anti. And recently, when you look at some of the rulings, especially FIT21, the political winds completely changed. 

[00:09:40] Jonathan DeYoung: Almost overnight. 

[00:09:41] Yat Siu: Yeah, but it’s not overnight. See, it feels like it’s overnight. But success never is overnight, right? Whether it’s a business or whether it’s a political change or movement, what’s actually happened is the groundswell of movement of the electorate was like, wait a second, we need this. And so the turn that happened was like, wait, if I want to keep my job, I basically need to be thinking about the future of Web3 and crypto in a totally different way, right? So, that work is already happening. It’s an inevitability as I see it, right? And so, similarly to the sidewalk effect, even though externally it might not feel this way, it’s already happened. And so again, I would say this kind of mass adoption and just kind of inclusion is already beginning. And so as these sort of walls keep toppling down, it’s only a matter of time before Apple and Facebook and Google and Steam all say, you know what, I think we’re going to allow Web3 games, or we’ll allow NFTs to be used in this manner. And as a result, once those floodgates open, we’ll get even more mass adoption. So, I think we’ll hit a new critical mass within the next 12 to 18 months, led by Web3, gaming and education.

[00:10:41] Jonathan DeYoung: That answers my next question, which was going to be, there’s all these, like, debates about what the killer apps going to be. Is it going to be gaming? Is it going to be NFTs? Is it going to be some music thing? Is it going to be AI solutions?

[00:10:54] Yat Siu: So, I mean, I think at the core of it, it’s going to be social. And why do we think it’s social is we think it’s very aligned with the ethos of blockchain. So, we think of tokens as essentially proxies of network effects, right? When you own a token, you don’t own equity in the traditional sense, but you own the applications of its utility or its potential, but you also own the network effects that happen from the financial utility, right? That the token is really powerful that way. It essentially has multiple states, if you will, in a way that, you know, normal type of instruments don’t have. But then what are network effects, right? And what is the power of that network effect? Well, they are actually ultimately social constructs. The power of an NFT project or the power of a blockchain comes from its community, which is social in nature, right? So, regardless of whether it’s a game or SocialFi or even a DeFi system, you know, it’s the social connections that come from that, that actually give it its strength and its longevity, which comes to the point about why do we think gaming was a mechanism to do that? Because, at root, games is a social network. So, a lot of people focusing and talking about, oh, look at, you know, I think what Farcast are doing is great. I think fintech is interesting. SocialFi is an interesting movement around that. But the primitives around how to make that stick and grow in comparison to Web2 ones isn’t as obvious yet, but we’ll get there, right? But what most people don’t realize is that when you look at Bartle’s model, 80% of gamers in the world, which is 3.4 billion people, play games for social reasons.

I mean, if you ask your children, why are you playing Roblox? One answer might be fun, but the answer is because my friends are playing, right? And it’s not because it’s the best-looking game, or because it’s the sort of best graphics, or because it’s got the best sort of game modes, it’s because their friends are there, right? So, again, it’s the social reasons we do so, but gamers already have a sense of digital ownership. They think they own their virtual items. They have a sort of quasi-educational in virtual currency. So, the point being is that we think the adoption curve is easier for a gamer to understand what it means to actually really fully onboard to M3 versus taking someone who has no awareness of it just yet. Which is why we think gaming will be the first wave. But after gaming, everything else will start falling in. Because, you know, the other thing that happens is that once you convert a Web2 user into Web3 user, he doesn’t just become a Web3 user; he becomes, in his nature, someone who becomes more financially literate. He starts to have an interest in investing. You know, think about all your friends that you know in Web3 when they have started creating some value in Web3; what have they done? They invest in no other tokens, or they buy other things. They become part of the ecosystem, and they help grow the space. That’s kind of one of the really sort of, I guess, magical things about Web3 where once you are in it, you tend to invest back into it, right? You don’t actually take out of it, which is so astounding.

[00:13:31] Jonathan DeYoung: When you mention like Roblox or Minecraft or these games. I think of young people. I think of people who started playing when they were children. Maybe they’re now in their early 20s and kind of grew up with this idea of the metaverse. I’m putting in quotation marks here. You can have a whole conversation of what is the metaverse? What does it mean? But, like you said, they’re kind of used to this quasi-virtual currency. So, do you think that as people, as the kind of age progression? I don’t know the correct terminology here, but as young people age and more people come into this world, that there’ll just be a natural shift toward…

[00:14:08] Yat Siu: It’s already happening.

[00:14:09] Jonathan DeYoung: I would agree, yeah.

[00:14:09] Yat Siu: And, you know, I’m a little older than probably most people in the space, right? As a child of the 70s, right? So, I experienced early days of gaming. And my first job was with Atari back in the 80s. And one of the funny things was back then that people used to say, yeah, gaming, you know, it’s for those nerds or those weird guys, right? And even though the Atari was a household gaming device, the time of attention we spent on gaming was literally like watching a TV show, like, okay, it’s gaming time. And I would go sit in front of our TV and plug in our console, and we’d have an hour of gaming, right? Yeah, that was gaming. Or we might go to, you know, play at the arcade, and we play there for 30 minutes, an hour or something, right? It was that kind of thing. Today, it’s lifestyle. You don’t go home and play for 30 minutes in an hour once a week. You’re like doing it every day because your friends are there every day, right? It’s kind of replaced some of the social elements of let’s hang out here. No, let’s go play a game together. And we play hours and hours of time in this because it’s our social value that goes. So, it’s a completely change. But of course, what happens is, is that those same people who played games in the 80s, they continue to play in the 90s, in 2000, and the same people who play games today are continuing to play games in the future, which is the reason why gaming grew as an audience, right?

Gaming didn’t cut off. It’s very different from, say, children products where, okay, once I age out of it, I stop doing it. But gaming hasn’t been this way. Gaming is also a digitally native culture that has influenced the physical world. I think people don’t really appreciate the role gaming played in allowing Bitcoin to grow because of the fact that now we have GPUs: If it wasn’t for gaming, you wouldn’t have this kind of GPUs that would power the type of networks that we see today. It wasn’t that people wanted fast compute for all these algorithms. Yes, it was important, but actually, what drew the demand in the private sector to build those GPUs was better graphics, so it can play better games, right? And gaming led to the sort of advent of us having curved screens. And, you know, what were people doing mostly about buying an iPhone back then? They were playing games, right? I mean, games was a thing that grew these these ecosystems. And so we think similarly about how gaming grew those ecosystems, we think it can do the same for Web3.

[00:16:16] Jonathan DeYoung: Yeah, it kind of even like Mt. Gox was a Magic: The Gathering card website first, which is not like the gaming on a computer, but it’s still gaming.

[00:16:25] Yat Siu: And most people sort of ignore the fact that it’s the fun, frivolous things that we as humans do that lead to the path of innovation. When you even think about things like the keyboard that we use every day, which originally was maybe a typewriter, the inspiration for that came from the keyboard. That was a musical instrument, for instance, right? Like our innovation and inspiration come from whimsical things that then actually give us more value and utility. Because as humans, I think we’re generally cued to be creative and we’re fun, right? And we want to create fun things.

[00:16:54] Jonathan DeYoung: So then, do you think that memecoins are helping in this?

[00:16:58] Yat Siu: Sort of. I think… So, I mean, you know, so first of all, I’m not a big memecoin owner myself. I’m… This is certainly not financial advice, right? But memecoins is an expression of the times that we live in today, which is a combination of fun, frivolous, ridiculous, which is what we do when we think about fashion. I mean, if you had asked from a meme standpoint, you know, my parents’ generation that we would be worshipping basically superheroes in tights, she would have said, hey, that’s kind of wacky, what will you do there? Or that we will be spending tens of thousands of dollars on, like, used sneakers or like Pokemon cards or that kind of stuff, which are meme culture today, but at the time would have been impossible to perceive because that was not their culture. And meme culture, to me, in terms of memecoins is similar type of expression, but it also is an expression of the desperation. It’s also an expression of the kind of inequity that exists today. So, that’s why I say it’s a reflection of the times that we live in, right? When we look at NFTs as art, it’s kind of similar as well. When we look at the moment where there’s CryptoPunks or Bored Apes, for instance, their expressions and meanings of the moment of time that we live in today, in the same way, that we look at, you know, drawings and paintings from, I don’t know, Renaissance. It has no meaning to us where we live today. But they were expressions and records of our history of moment in time that were important to people at that moment in their history and their reflection of that.

[00:18:14] Jonathan DeYoung: Definitely, definitely. Let’s talk about the metaverse a little bit. Another thing that Animoca Brands is obviously heavily involved in. So, there’s kind of a sentiment in pop culture, I won’t say if it’s in crypto or not, but in pop mainstream culture that the metaverse is dead, that it was a joke, that it didn’t work. You know, people point to Meta, formerly Facebook, their metaverse and that it had low user counts and...

[00:18:40] Yat Siu: Pretty bad graphics and all that kind of stuff.

[00:18:41] Jonathan DeYoung: Yeah. Like no legs and whatever all the memes are.

[00:18:44] Yat Siu: That’s right, that’s right. Yes.

[00:18:45] Jonathan DeYoung: So, do you agree? Is the metaverse dead?

[00:18:47] Yat Siu: Well, the metaverse is not dead at all. But it depends on how you define the metaverse. And I think one of the reasons, and this was a surprise to me last year, I gave a talk at Ted around the what we call the open metaverse. And I was surprised because when we live in our own bubble, sometimes we forget how the rest of the world views it. And they really thought metaverse was Facebook. And the reason why is because Facebook did an incredible PR coup by renaming themselves to Meta. So, you know, if anything else, they became the definition of the metaverse, which meant its success and failure was also associated that way. So, when Facebook failed to execute the metaverse in their vision, which we always said wouldn’t work the way that they thought it would, but anyway, then the rest of the world was like, huh, see, that didn’t work. And so they associated with that. But they don’t actually understand our perspective, which is that we think the metaverse doesn’t begin with a virtual world. The metaverse begins with owning your digital property. Digital property rights is the foundation of the metaverse in the sense that we think of the metaverse, the open metaverse. In this case, it’s like building a nation, or the foundation of building a nation isn’t actually the fact that you can enter a space. It’s about your community and it’s about ownership in that space, right? If you don’t have ownership, you know, if you’re not a citizen of the place, then what do you have, right? You don’t have a way in which you connect. And just the metaverse is the same, but that ownership comes from beginning. Whether you own NFTs, virtual land in Sandbox or tokens, those are ways in which you bind the community into this nation, as it were.

[00:20:13] Yat Siu: And that, to us, is the beginning of that metaverse. And that part is thriving. We think Web3 is mostly an open metaverse where, you know, people are making jobs, creating opportunities, if they happen to be virtual in nature. But you know, how many people are making money in places like the Philippines playing Axie or Pixels, for instance, or how many people are onboarded, you know, because of virtual opportunities, whether it’s DeFi or whether it’s trading or whether it’s building in Web3, for instance. How many developers are building on Ethereum or on Solana or on Base, for instance, building new businesses? That’s entirely virtual in nature. There’s nothing physical except the people who exist that are on them, but the value comes entirely physical. So, I think to us that’s the open metaverse, and that’s a thriving space that already when you think about $2.5, $2.6 trillion in size. When you think about the DAOs, for instance, right? The value locked in DAOs is something like $34 billion right now, which is astounding when you think that this is value that is a community governed by, I think the stat was something like 10 million people in the world have the ability to influence $34 billion of value. That’s astounding. I can’t think of any other place in the world where there’s a corporation or even country that has that kind of mechanism. That, to me, is the open metaverse. And the fact that you experience it in VR potentially is just an interface. That’s just one way to experience it. But that’s not the metaverse. The metaverse starts with you being able to have ownership of that. Digital property rights, we think, is a foundation of that.

[00:21:39] Jonathan DeYoung: So, when I think of the idea of an open versus closed metaverse, I would think of Meta as being a closed metaverse, but with an open metaverse, I guess where my mind intuitively goes is I get an NFT or a token or something from one project, I can just seamlessly move it over to another one because it’s an open metaverse. And the gaming example, it might be I get a sword in one game, I could use it in another game.

[00:22:05] Yat Siu: That’s one example of interoperable, but I would say my view is that this world already exists, not maybe the way that you describe. That’s something that will be developed because of the permissionless nature, but the fact that we’re building in permissionless networks means that, actually, everything in Web3 is already building in a shared network. And so I gave this early example where, you know, Solana was up a lot. Well, guess what? The entire ecosystem grows, and everyone benefits because liquidity is shared across the space. People can move from one place to another. So, even if we don’t have the interoperability in the way where we say, oh, I can’t use my sword in ten different games, yet it’s up to the game company to incorporate it, sure. But anyway, they could do so if they wanted to, but you can move liquidity around. So, whereas, if, for instance, Fortnite became even ten times bigger than it is today, who cares? Nobody except Fortnite cares. The gaming industry doesn’t become bigger from the developers, or the indie developers or the studios, because Fortnite becomes the biggest game on earth. In fact, quite the opposite happens when Fortnite becomes even bigger. It sucks the energy out of the rest of the gaming ecosystem because it gets all of their attention because there’s no way for other game developers or other studios to partake in the growth of what these games are doing.

But in Web3, it’s all open, where there’s vampire attacks and things like OpenSea or DeFi or Uniswap, or whether it’s basically, you know, TVL, that you’re moving from one system to the other. And this goes down to our principle thinking around sort of what are tokens in itself. And as they’re representations of the network effects, what is it that you own? The most valuable thing is the construction of these network effects, right? Data creates these network effects. And you now have an ability to own this network effect. And so network effects become bigger when they have the ability to proliferate, which means that the more permissionless, the more open they are, the more network effects constructed. And so one of the reasons why I think NFTs, which are growing but haven’t reached the same potential as fungible tokens, is the permissionless interoperability aspect of NFTs isn’t as established once NFTs start to be able to be bridged across different chains and work across different utility apps in a more complex manner, then I think you’ll see more value constructed from them because their network effects will increase as well, right? And so, to me, network effects are basically what’s valuable. And the more network effects you have in an ecosystem, the more valuable they become, just by virtue of its power.

[00:24:17] Jonathan DeYoung: Has the pushback against NFTs in sort of pop culture, mainstream culture, affected the way that you think about, market, plan for the future of NFTs? Like, are you on the digital collectible, quote-unquote, train?

[00:24:33] Yat Siu: No, not right now. Not at all. I mean, we call them NFTs, and we’re proud to call them NFTs. So, but just to clarify this, we don’t care if someone wants to say digital collectibles or wants to call them something else so they can onboard them. Totally cool with that. It’s everyone has a strategy, and we don’t pretend to say that we have the sort of silver bullet answer to this because we’re all still trying to sort of figure it out. But I think the difference is that in Asia, we don’t have that problem, right? Because in Asia, people aren’t looking at NFTs in a negative way. And I’ll get to that in terms of, you know, our viewpoint on this one. But really, when you think about sort of… It’s like with music, when people talk about MP3 back in the early days, that’s a definition that helped onboard the first crowd. And then afterward, when it became mainstream, the term MP3 went away, and now we don’t even talk about it. And that’s cool. But we’re still at this point where we need to explain people what it is for this first core number of users. And that’s to me is important because if I don’t understand why I have digital property and I don’t understand the construct of an NFT, then the whole meaning about being in Web3 is lost on me because I need to understand that I can trade it. I understand the first wave of early adopters are always the ones who pioneer and lead, and if they don’t understand the groundwork of it, then how can you build? It’s kind of like building a nation with people who don’t know the basics of nation-building or, you know, engineering without having the basics of engineering, right? We don’t understand, like you don’t want layman building bridges, right? It’ll be terrible, right? So, to me, the term NFT, which, of course, from a mass consumer standpoint, nonfungible token.

[00:26:00] Jonathan DeYoung: What does it mean? 

[00:26:01] Yat Siu: What does it mean, right? But again, for people in the industry, they need to understand that because it’s still in this builder phase. So, I wouldn’t shy away from it. I’m very sort of proud of what it’s an NFT, and that’s what it means. But why is it been so broadly, much more popular in Asia versus U.S.? And I think it has a lot to do with the perspectives on capitalism. So, when you think about sort of why gamers reject NFTs in America, not broadly, but a big number of them don’t like them… One, they’re a little bit scared about over finance application. Sure, because games has been relatively cheap entertainment. And then when people look at a Bored Ape, and they say, wait, do I have to spend $50,000 to play a game? I can’t afford that. Am I losing something that actually would love to play? Now, of course, that’s not true, but that’s kind of one fear. But the second thing is just think about what capitalism has done to a place like America. And by the way, I’m a pro-capitalist, so I just think it’s sort of been skewed in the wrong way for many young people who play games; capitalism hasn’t been good to them. And in fact, this generation is worse off than their parents’ generation.

So, when you think from that construct, you say, wait, you’re going to take the same quote-unquote shitty world environment that’s the physical world, and bring it into the gaming world where I actually don’t have this, where I actually feel like I can be in this sort of, you know, more meritocratic environment where money doesn’t play the kind of role that it does in the physical world. Do you really want to sort of bring this kind of world in? And that’s a reaction. And even though they can’t express it this way, this sort of anti-capitalist view, it’s felt this way. That’s why when people talk about NFTs in gaming, you notice they’re not very logical. It’s very emotional. You know, they start to sort of become red in the face, and they start being really angry about it because it’s the same feeling they have around the injustice around capitalism. In Asia, though, capitalism has looked very positively. People, my generation, my parents’ generation, grew up in region of Asia where we had no property rights. I mean, the GDP of South Korea was lower than North Korea in the 80s. So, in living memory, we had nothing. And even though there is inequity, we appreciate that capitalism, property rights and the opportunity of that is way better than what we haven’t seen.

Whereas in America, people, you know, never really experienced communism, don’t actually know, fully understand the term socialism despite the fact that Marx has become a popular topic in schools. Everyone’s talking about that as well because Marxist diagnosis, his assessment of the situation of capitalism was correct, but his diagnosis and the solution around it is terrible. But people look at that and say, hey, this guy was right about some of the problems, so we need to look at that. And I think Web3 can help solve that, but they don’t understand that. And so, as a result, they’ll rail against this. And this, to me, is one of the key things. Like the same people who don’t like crypto broadly are the same. People who don’t like NFTs are the same people who don’t like Wall Street bankers. They’re in that category. And you can see how that has sort of also created this political divide, right? If you look at America, there is definitely a political divide in terms of trying to address electorate voters between the two party lines of pro-capitalist and not-so-pro-capitalist, right?

[00:29:03] Jonathan DeYoung: So, you mentioned earlier that one of the other things we think might be a catalyst for mass adoption is the education piece of it. So, given what you just said about America, at least the negative perspective of crypto, blockchain and NFTs, how does the education component come in? How do you educate people that there are actually benefits to this technology?

[00:29:25] Yat Siu: Well, I think the very important thing is, and this is why, you know, when sometimes people describe Web3 as the internet of value, right? And if you can demonstrate that your time is valuable online and that it can generate true returns for you, it will change you. At the end of the day, people may say, oh, you know what? I don’t like capitalism, but the moment you start making money, people go, wait a second. Actually, I kind of like that. And it’s not to say that people do it for monies. That’s the other thing. People do it for social ends. What do people aspire? They aspire respect. They aspire love. They aspire attention. And the point is that, especially in a capitalist environment, money has become a proxy for that. But when you make money, you have respect, or at least you assume you have it. When you have money, you can buy things to give you something, and then you reach to a certain point in life where maybe you make enough money, and then you buy status items to reflect that, whether it’s a Rolex or it’s a nice car, or whether it’s a house you live in or where you send your kids to a certain school.

[00:30:19] Yat Siu: Like these are all social status signals that you put out, and the way to get there most of the time has been money. And so when you do this in one form or the other, then actually that creates this element where you go, oh, wait a second, I could do this in crypto. Actually, let me learn about this; let me understand it. What’s really interesting also is, is that many of the more marginalized groups in society, whether it’s minorities, whether it’s societies in places like Philippines and the villages, for instance, they’ve been the greatest beneficiaries of Web3. They’ve been growing in that space, and they see that market opportunity. And once they’re in there, they’re hooked. They understand what needs to happen there. And often the establishment and the incumbents who are like, oh, well, it works for me. They tend to be the ones who tend not to like this because it actually disrupts their current sort of structure and setup. So, it’s a little bit classist as well at times.

[00:31:08] Jonathan DeYoung: Yeah. All makes sense to me. I guess, as somebody with like your pulse.,, I mean, you said you have 500 investments or something. And growing Animoca Brands, I don’t know how many IPs you’re involved with, properties. What are some of the exciting things you’re seeing in Web3 that maybe people aren’t paying attention to. Like DePINs, RWAs, AI, they’re having their moment right now, but anything kind of lurking under the surface?

[00:31:34] Yat Siu: Yeah. So, I mean, for me, the reason why RWAs, and by the way, I think fine art, tokenization and that kind of stuff is all very interesting and reaches a certain audience. All of them matter, by the way, because they all address narratives that explain it to other audiences like Web3 is going to affect the entire world. So, whether it’s DePIN for things like access, whether it’s RWAs for fine real estate or like, you know, cultural assets, whether it’s even gaming, for instance, or NFTs, right? They all address different audiences; let’s call them different tribes. And then all you need is some of that portion of them to say, oh yeah, that’s interesting. And then they come in. So, I come in all of them. And which is why we invest so broadly, because we think every one of these projects are doing their job in bringing people into Web3, right? That’s the point here, right? Because again, I go back to this point of the shared network. The more people join the space, actually, we all win. This isn’t the case where we need to focus everyone on one project because actually, only that one project can succeed. That doesn’t work this way in Web3, we think, right? So, there’s definitely that element, but our focus has been primarily on digitally native products, partially because it’s much easier to prove provenance, right?

The whole Oracle issue for us is problematic because then there’s a central trust that has to say, oh, you do own this real estate. That’s kind of something that we found a little bit more difficult. Again, it’s possible, but it’s just not an area for us. And the second thing for us is that we think most of our time is digital anyway. Like if you think about what you do every day, how much time you spend in front of the screen, and how much time you spend on social and playing games, it’s probably, in many cases, especially amongst youth, more hours than you spend in sort of, let’s call it doing non-virtual stuff. Well, then it’s easier for us to spend and focus attention on that. As I said, there’s 3.4 billion people playing games, but there are 6 billion people online today, right? So, if we work on the sort of digitally native stuff first, let’s get the billions of those online. We think it’s an easier onboarding than focusing on sort of physical markets. But we do think they’re important, right? So, it’s all about attention. Where can we get the most impact on attention. So, for instance, we focus on gaming. So, one of our key projects is Mocaverse, right? Mocaverse, we think of it as a kind of decentralized team where we have something like 1.7, 1.8 million users on that platform that are basically helping activate people to play Web3 games, to engage in the communities.

And, you know, with our NFT collection as well. And that’s a way in which we help sort of broadly share the value of these network effects, right? So, that’s kind of one example. The other ecosystem that we really are bullish on is TON. But again, I had shared this earlier. And the reason why I think TON is underrated, particularly in America, is because people don’t use Telegram here. I mean, in the crypto world, they do. And again, it’s not to say that there isn’t a Telegram audience. It is. There is one here. It’s just not as mainstream as WhatsApp. So, when people say, oh, but I use WhatsApp, why do I need to use Telegram? They forget, or they ignore the fact that there’s 800 million users and growing in an ecosystem that actually is open to Web3, but Facebook Messages don’t open. Whatsapp is not open. You know, like those networks don’t have ways in which you seamlessly integrate a wallet. But Telegram is with TON. And so again, that’s, to me, an ecosystem that’s growing. And so all the apps like gaming, for instance, that are building on Telegram, those are the ones that are growing, and, you know, to the millions of users in a way that we hadn’t seen before in Web3.

So, you’ve got Pixels. Also, one of our portfolios doing really well at like a million users. But then you have gaming on TON, which is more casual games. That is literally, in terms of daily active users, already doubled in a much shorter period of time, and we think we’ll even grow. So, for instance, if you’re looking to build a Web3 game or Web3 application and you want scaling growth, you have to look at Telegram. You have to look at TON for the time being, which again is not known as much but will be. So some examples of… And then the other one, of course, that we think is really critical is a little bit more long-tail is education. So, what we’re doing with Open Campus, TinyTap and EDU, those are big focus areas for us because we think that’s another group of people. What do we do? Most of the time, we’re trying to learn stuff. And gaming is a $250 billion space. But education is a $5 trillion space, right? And if we can actually really sort of create more equity and value in education, which is ripe for this sort of disruption with Web3, we’ll just think about the student loan market, right? I mean, it’s a massive market, that is…

[00:35:42] Jonathan DeYoung: I’m in that market.

[00:35:43] Yat Siu: Right. Yeah. But that market has many problems, and it’s also a market that doesn’t really serve its community in the manner that it perhaps should for many other reasons. Again, I think Web3, blockchain accreditation systems, how people can contribute to this one is very fascinating. So again, those are areas which we think are going to create a lot of change. And education is a big part of that. And so part of the education isn’t just enabling people in the education space to join Web3 through things like Open Campus to see how they have value. But it’s also educating them about Web3, which comes with financial literacy. So, think of a future where, let’s say if a billion people are truly onboarded into Web3, actually what happens is you have a billion people that are financially educated now and that are more literate and that have an investing mindset that will create much more equity in the world, we think, than what we have today.

[00:36:31] Jonathan DeYoung: Do you think that schools then should they be like Web3 education courses? Public schools?

[00:36:37] Yat Siu: Well, I actually think that some of the most initial courses that you need to have at school is financial literacy.

[00:36:41] Jonathan DeYoung: Yeah. Let’s start there.

[00:36:42] Yat Siu: I guess you need you need to start with financial literacy. You need to understand about property rights and what it means to have ownership. And it’s interesting because in America, the whole value of owning your property is really a very constitutional aspect, but it isn’t truly taught at schools. And I think this is an interesting paradigm because actually, I think America is one of the best places to do it. Like, to me, blockchain is about as American as it gets, right? Whereas, for instance, in Europe, we don’t tend to talk about money. We’re like, oh, money. Let’s not talk about that because it seems kind of rude and sort of whatever. Whereas in Asia we talk about money all the time. I mean, you know, again, I’m not in that market. So, it’s, I’m happily married, but I have heard that it’s very common, for instance, where when you’re in the dating scene, like in, I think it’s in maybe it’s in Korea or in, like parts of Asia, where it’s very common to ask, well, what’s your job? And frankly, sometimes they’re very direct, and they say, well, how much money do you make? Because and, on one hand, one culture might say, well, that’s kind of rude, right? But the other culture is like, I’m being pragmatic. It doesn’t mean I can’t love you. I just want to know whether it’s worth my effort because I need something like this, right? And again, different cultures view this and respect. And in Asia. It’s okay to do that. In Asia, Ii’s okay for game companies to sell assets and products in a game that give you advantage.

But in America, it’s not okay. But in America, you can buy skins to make you look good. But if you actually sold an asset that made your bullet shoot faster, gamers, you would just, that game company would get killed, right? Be like, oh my goodness, that’s terrible, right? So again, game designers, I would say, and game companies are designing the games a much more socialist ways in the U.S., whereas in Asia, again, it’s much more pro-capitalist. And it’s okay to spend money because it’s, that’s how life works, right? So again, those are different perspectives. And that’s, I think, where the adoption needs to change. But again, because we don’t teach about money because we don’t teach about financial literacy, which is such an important part of our economic system and about our life, I think we’re doing a great disservice. And those who know about money have a significant advantage but those who don’t. And that, to me, creates these class problems we have right now with a world that knows about money, which is the capital class, which is the one percentile, and the rest of the world that does nothing about it, which is the labor class that basically feels taken advantage of, and rightly so, because they don’t understand the value of money. So, I think we need to teach money. And, you know, from that, we then can go into financial literacy, which then goes into actually digital property and Web3.

[00:39:09] Jonathan DeYoung: Speaking of money… So, as an investor, I’m sure you’ve talked about this before, but how do you decide, like are there criteria that you’re looking for when you decide what project to invest in or to bring into your fold?

[00:39:22] Yat Siu: Yeah. Well, I mean, first of all, we have multiple teams doing investments. We invest out of balance sheet mostly, but we also have a ventures team. And then also we see that a lot of LPs. So, as I said, 500-plus investments are from our directed portfolio. But you know, our indirect portfolio is probably much bigger than that because we’re just invested in all these different sort of funds that help grow the space and then might help build an ecosystem. So, we really want to sort of help further that space. But really, what we look for is for founders. I mean, this is usual stuff: good founders, good background, technical expertise, all that kind of stuff. Everyone looks for the same stuff. So, let me focus on the things that might be different that we look for. So, we look for founders that are mission-aligned. In this value proposition that, we think about Web3, meaning we want founders that believe in a shared network. We don’t want founders that believe heavily in a zero-sum outcome because we think that’s a negative outcome. We want founders to believe in decentralization. We want founders who understand how to create more inclusion with community because we think that’s how value is distributed, how networks grow and how you grow ownership. You know, our mission is to broadly proliferate digital property rights.

[00:40:22] Yat Siu: And how do we do that? Well, we’ll do that by being more inclusive. How do you do that? By building more communities that believe in sharing value. So, that’s a core principle for us. So, if you don’t believe in that principle or if we think that you might say the talk, but you don’t actually do it, or for instance, you know, you’re thinking very centralized, or you’re thinking about how you hoard most value, which might be good as a shareholder of that business, but we think it’s bad for the construction of Web3. Then we wouldn’t, for instance, invest in you, not because you couldn’t be a good project, but you just generally aren’t value right, as an example. So, and, also we want to invest in in companies that we think do the right thing. So, or at least at that at the given moment in time. So, there’s projects that might be very successful, but we chose not to invest in them because we felt that they weren’t doing the right thing. So, for those reasons, you know, there are certain projects that might have been good at economic investments, but we chose not to because that’s the other thing. Since most of our business is done out of balance sheet, of course, the return profile is important, but it’s not as important to look at returns only because we’re looking at the broad growth of the ecosystem.

So, which means it allows us to invest in companies that might amplify the ecosystem but not in and of itself not provide the biggest return. So, for instance, guilds and marketplaces, a good example. We supported many guilds. We supported many marketplaces. So, we’re in OpenSea, but we’re also in managing Eden, for instance, and we’re also in Nuqtah. And like all these other sort of NFT marketplaces, because we know that even if there’s not a market for all of them, they will grow the NFT space broadly then, and they will expand the space, and they will, like an economy does. At the end of the day, they may not succeed, but they will have onboarded maybe millions of new people in the space, you know, in the mid to long term, and the whole space benefits. But of course, that means we have to be broadly invested so that we can benefit from that space as well, right? So, that’s the way that we look at it, right? So, sharing the core values of principles of Web3 is really important for us. We only invest in Web3, generally speaking.

[00:42:12] Jonathan DeYoung: So, one final question for you. With like hundreds and hundreds of different businesses, products, projects, how do you manage all this in your brain? Do you like…

[00:42:23] Yat Siu: I don’t do anything myself. I mean, first of all, you know, Animoca Brands is something like 8,900 people around the world. Of course, many of them are builders. We have at headquarters close to 200 people, a solid financial team, you know, investment teams. We have an IC committee that meets every week. You know, a strong excom. Like generally speaking, we’ve grown a lot from where we were today. You know, it’s impossible for me to do this myself, right? So, I credit the team. And, you know, the other thing we’re now doing with Mocaverse is we’re beginning to decentralize that, right? So, you know, one of the future visions I have is that, you know, we may not make an investment decision based on what our community says, but they might prioritize who we should look at first because it’s not actually just about investing only it’s about actually attention. It’s like, well, who’s going to tell us which companies we should invest in? We have so many projects coming in at us that, you know, sometimes it’s almost difficult to look for a project because so many projects are coming to us and saying we’d like to invest. And sometimes, the best projects are the ones that aren’t actually even looking for you.

[00:43:22] Jonathan DeYoung: It’s like looking through my Gmail inbox and pitches and then being overwhelmed, not having time to go find my own.

[00:43:29] Yat Siu: Exactly, exactly. And, you know, while we’ve been very fortunate, the point to be is, is that, how do we do that? And with Mocaverse, for instance, in the future, we envision a future where our community can come to us and say, you know what? You should look at this project. We’ll vote, and the community will then give us that, right? And that also means that with Mocaverse, for instance, with DAO governance, like what we do with Apecoin, they can actually start creating more value for the ecosystems, like, for instance, what walkover system for Pixels. Or one-third of the users came from Mocaverse and they became customers, and they grew the network, and they expanded it, for instance, right? So, we, but of course, in exchange, you know, through airdrop mechanisms, we shared our value to those community members. So, you could think of Mocaverse as an example of like our own workforce, but that workforce is rewarded through token airdrops, helping these projects that we’ve invested in. So, each of these hundreds of investments we’ve made actually then get amplified by the tokenholders, who then end up actually getting benefits because they create value, right? So, you can kind of see this sort of relationship that we can start building with the community that empowers us because there is no way that we would be able to maintain thousands of portfolio companies. You know, with, what do we hire thousands of people? That just simply doesn’t make sense.

But we can do it if we give value and share that value with our community. That’s the vision that we see. That’s part of the ethos of a shared network. You know, that’s why we think Animoca Brands is going to have thousands and thousands of portfolio companies. I mean, imagine what Apple’s ecosystem would look like if Apple took 10% of their cash, which is $16 billion, by the way. That’s 10% of their cash. And created an App Store ecosystem fund. What do you think would happen? First of all, I think that funds will be, the portfolio value would be bigger than the cash because actually, what would happen is they would own stakes in companies that would be hugely successful because of the App Store. But the second thing I think that would happen is that you would have a healthy, happy ecosystem. Indie game developers would actually have a hope; they would get funding, and everyone would be happy to pay their 30% because it’s part of the economic flow, right? But instead, they don’t do that, and they extract from the ecosystem. And again, this is Web3, right? I think this is what’s so powerful. And that’s the vision and future we want to build. Every person who starts creating value in Web3, they reinvest it back into Web3. And that’s the ethos, and that’s how we want to build Animoca Brands. That’s why we’re investing in the space the way that we do.

[00:45:40] Jonathan DeYoung: Well, yeah. Thank you so much for joining me. It’s been a pleasure chatting with you.

[00:45:43] Yat Siu: Thank you for having me. It’s been a real pleasure.

[00:45:45] Jonathan DeYoung: You’ve been listening to Decentralize with Cointelegraph, and I’ve been your host for today’s episode, Jonathan DeYoung. If you enjoyed this conversation, we’d love it if you give us a five-star rating and leave us a review. 

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