Web3 gaming deep dive: Why video games are embracing blockchain

Decentralize with Cointelegraph explores everything Web3 games with executives from five prominent gaming-related projects — Shrapnel, MetalCore, Ex Populus, Saga and HyperPlay — to learn why video games need blockchain, the promises of GameFi, and the challenges that come along the way.

Follow Cointelegraph on X (Twitter) at @Cointelegraph. Follow this episode's host, Jonathan DeYoung, on X at  @maddopemadic and on Instagram at @maddopemadic.

Cointelegraph’s website: cointelegraph.com

Timestamps:
(00:00) - Introduction to the episode
(02:06) - Introduction to Marc Mercuri, chief blockchain officer of Shrapnel
(03:06) - Integration of blockchain into gaming, benefits and potential of AAA games
(06:55) - Timeline and expectations for Web3 gaming adoption
(08:45) - Introduction to Toby Batton, founder and CEO of Web3 game studio Ex Populus
(11:38) - Blockchain technology and mainstream gaming adoption
(15:57) - Financial outlook and future of the Web3 gaming market
(18:31) - Introduction to Rebecca Liao, founder and CEO of Saga
(20:12) - Gaming as the potential killer app for Web3
(21:10) - Rebecca Liao’s background and experience as a woman in crypto and gaming
(24:57) - Asia’s approach to Web3 and its impact on gaming
(28:51) - Introduction to JacobC.eth, founder and CEO of HyperPlay
(32:34) - MetaMask integration in gaming
(34:50) - Future of Web3 gaming and the role of specialized platforms
(37:55) - Introduction to Matt Candler and Dan Nikolaides, CEO and CTO of Studio369 and MetalCore
(39:47) - General sentiment in the gaming industry about blockchain and Web3
(42:52) - Regulation, market conditions and technical challenges in developing Web3 games
(46:16) - Discussion on whether an AAA game will be the first successful blockchain game

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

[00:00:09] Jonathan DeYoung: Welcome to Decentralize with Cointelegraph. I'm Jonathan DeYoung, your host for this episode. I also co-host another Cointelegraph podcast called The Agenda. So, if you end up enjoying this episode, and I hope you will, you might also enjoy that show. 

Today, I'll be taking you along for a deep dive into blockchain-based gaming with the help of some of the biggest heavyweights in the Web3 gaming space. I grew up gaming and spent most of my adolescence crowded around the TV, playing PlayStation with my friends. It was a wonderful bonding experience, and to this day, those times remain some of my most cherished memories. With the increased proliferation of the internet, more powerful hardware, and the massive growth of the gaming industry, people from all around the world now get to share similar memories with their friends, uninhibited by national borders and boundaries. Web3 also connects people in similar ways, so the fact that these two industries have collided in such a strong way was all but inevitable. That all said, perhaps you can understand why my interest was piqued when I was heading to Consensus at the end of May, and I saw just how many gaming projects were going to be there. I figured, what better excuse is there to finally learn everything there is to know about Web3 gaming? So I took the time to interview executives from three different gaming-related projects while I was there, Shrapnel, Ex Populus, and Saga, and I followed up with two more, HyperPlay and MetalCore, after I returned home. I learned so much from these conversations, and I'm excited for you too as well. Just a minor disclaimer here: all of these interviews have been edited for length. 

So, let's kick things off with an interview I did with Marc Mercuri, who is the chief blockchain officer of Shrapnel, an upcoming self-described AAA-quality extraction shooter game. And if you, like me, don't know exactly what that means, Marc has all the answers you could need. 

[00:02:06] Jonathan DeYoung: So, I admittedly don't know a ton about this game. I think it's a shooter, correct?

[00:02:10] Marc Mercuri: Well, it is. It's a special type of shooter. It's called an extraction shooter. And so it's really interesting, really kind of designed for Web3. What that means is you can go into the match, and if you extract things out, you can sell them in the marketplace. So, right now, we have these things called fragments. And fragments can be used to craft skins and things like that. But when its released, in upcoming [inaudible], if you and I go in and you kill me, you can take my stuff, and you can sell my stuff. So it's a really intense and really interesting type of gameplay. The team is really like a top-notch AAA team. So they worked on Halo, Call of Duty, BioShock, and then I still geek out because I'm more on the Web3 side when you talk to folks and they built, oh, like, “When I was working on Plants vs. Zombies” or Star Wars or Harry Potter or Ghost of Tsushima and things like that. So they have like a ton of major title experience they're bringing to this. And so it looks and feels like a real AAA game. And my job is to work with them to make sure that it's a totally seamless experience under the covers.

[00:03:04] Jonathan DeYoung: So, big question, obviously, why blockchain?

[00:03:08] Marc Mercuri: You know, it's a great question, and I'll tell you that and also why it's great just for Web3 in general. And so, if you think about games, people have been buying digital assets forever. They've mined skins and other things like that. They've been buying digital currency forever, but they haven't actually owned it. That currency you bought was locked into that one place. You could spend it, the skins you could buy, you couldn't even trade those with other people. A lot of cases, like I have a son that was really big into Fortnite, but he couldn't get an account. He wasn't old enough yet, so he used my account, got a bunch of skins, and then when he was old enough, he got his own account, and I wanted to transfer them over. Like, no, it doesn't work that way. It's like, but I bought them. I spent a lot of money, but I didn't actually own them. So, the blockchain gives you ownership and agency with the things that you buy. And it's a revenue stream for games, which is fair and reasonable for them to go do. And some of the stuff that we're doing is because we have a platform underneath. We're making it available to other games, like those assets that you create. Because you can use user-generated content, you should be able to bring that to any game that you want as a creator, right? And so when you enable that as well with some of the creative things that are there. So it really is about like ownership and agency, like, hey, if you buy something, you should really own it.

[00:04:08] Jonathan DeYoung: I was going to ask about that because my assumption is that these games are, would naturally want to be competing against each other. So, what's the incentive for one person to get a game and an asset of one game and then be able to take it to another game? Wouldn't that just take users potentially away from your game into another game?

[00:04:29] Marc Mercuri: Well, there's two ways to look at that. One, just on the financial side, you have a license agreement. So you say that, hey, you can actually bring it into the game. And the user — this is where Web3 and blockchain becomes really different in a game. A gun is a gun is a gun. In Web3, that's my gun. And that gun has the history of where I've used it and what I've won with. And so it's my lucky guy. I won this tournament with this gun, and I may want to bring it to another game. Now, the thing is, the design of the graphics of the other game may not match. So, we've designed something in our platform that allows you to have variants, so you have a different look and feel through the other game. But it's still my gun, because people can be more passionate about that.

[00:05:01] Jonathan DeYoung: So you described Shrapnel as, self-described as a AAA game. You mentioned that the developers worked on these other AAA platforms or games that have done very well. Big game developers. It seems like everybody's waiting for the game that brings Web3 elements mainstream, blockchain mainstream. Some people position gaming as the potential catalyst for mass adoption. Do you think it will take a AAA game?

[00:05:33] Marc Mercuri: I mean, so for Shrapnel, I think a AAA game shows people that you can build one of the biggest titles out there and do it in Web3 in a way that's super accessible to the mainstream. And so if you look at these games historically, there's been like this first investing class that's there. When we started this out, we said we're going to solve a bunch of problems for Web3. We're going to build a platform that makes it easy for other people to go do this. And so I think we'll show a superset of how it can be done. We're building a set of primitives to make it really easy for people to work with, like users and wallets and items, so they don't have to get really deep into Web3 to put it into games. It could be a really wild sort of indie hit that comes out. That could be the thing. It could be a AAA title. I think our general feeling is that when we all win, we all win. And so we're just excited to help sort of do what we can to move the space.

[00:06:17] Jonathan DeYoung: Got you. How far away do you think we are from that game? I'm assuming you think it's your game. You hope it's going to be your game.

[00:06:24] Marc Mercuri: I think we'll be one of the games. I think Shrapnel is a great game, and it looks like a great game. Web3 is not necessarily… It's not a great Web3 game, it's a great game. But there are so many different genres of games that are out there. There are casual games. There's MOBAs. There's all sorts of things that are out there. And so I think someone's going to hit it really well, and then someone else will do it, and then it's just going to become well accepted. We saw the same thing with free-to-play and other dynamics in games where you need a couple of people to push the envelope, and then the floodgates open, and people embrace it.

[00:06:54] Jonathan DeYoung: You mentioned Shrapnel, that people were playing it without even realizing they were, and they wouldn't even necessarily realize they were playing a Web3 game because you’re trying to reduce the amount of friction. So, do you think that for Web3 games to succeed, people shouldn't even know that they're playing blockchain?

[00:07:15] Marc Mercuri: I think the game should meet the mediun. So, if I don't, if I just want to play this game, and it's great, I shouldn't even know anything about Web3. But if I believe in DeFi, and I want to bridge my assets in and out, and I want to get this skin and take it out and get a loan against it in a DeFi protocol, others should be able to do that, too. And so we really try to run right down the middle of the best of both worlds. We'll meet you where you are. We give you, like, a custodial wallet out of the box. And so it's just there if you have like a MetaMask wallet or other wallets you want to associate with your account, you can go do that, and we'll check to see if you have, like, NFTs that will unlock certain functionality in the game, like early access to things like that on different chains. Or if you're a member of a partner of ours, we're doing a collab with. If I get you into something extra in the game, like a skin drop, things like that. So we'll do all that. But, like, if you want to get like really deep in the weeds in Web3, there's a path for you to get there. And if you don't, you just want to play your game — and I think that's what a lot of us want to do is just bring this mainstream — and you got to make sure that you get the super-low-friction things for folks to get started.

[00:08:10] Jonathan DeYoung: So, for folks who want to try out Shrapnel, they can go to your website? Or how do they get involved with that?

[00:08:15] Marc Mercuri: You bet. So they can go to Shrapnel. We're in early access right now, but if you get an extraction, it's called an Extraction Pack, it'll give you early access to the game. And then the marketplace is there. So you can sort of take… Once you create an account, you can take a look around. You can get skins and other things for the game. You can also use our grid to create skin sticker insignias that are stickers in the game.

[00:08:33] Jonathan DeYoung: And are you personally on Twitter? Can people follow you anywhere?

[00:08:36] Marc Mercuri: You bet. I'm at @marcmercuri, @marcmercuri on Twitter and then at @playSHRAPNEL for the game.

[00:08:45] Jonathan DeYoung: I found Marc's Fortnite example to be a particularly powerful point that illustrates the potential of blockchain and how it dramatically changes the way we think about in-game items. Of course, to be able to transfer an asset from one game to another requires the game developers and publishers themselves to all work together. To me, this seems like a bit of a tricky thing to accomplish on a large scale, but it's inspiring to hear that, at least within Web3, it's on the roadmap. Next up, I spoke with Toby Batton, the founder and CEO of Ex Populus, a game development studio and the first original contributor to the gaming-centric blockchain Xai. So let's hear from Toby about why game studios should consider building on blockchains built specifically with gaming in mind. 

Maybe let's start off with, can you just give me the sort of background, high-level overview of what Ex Populus is and what you all are up to over there? 

[00:09:36] Toby Batton: Yeah, for sure. Thanks for having me, by the way. Ex Populus is best described as a Web3 game studio. We make games for PC and console. We're also the labs entity behind the blockchain Xai, which is spelled X-A-I. We currently have two games in production. One is called Final Form. It's a trading card game. And then we have another one called LAMOverse, which is very similar to like a Fortnite, where there’s skin economy. And being the labs entity behind Xai, we’re also the team that made the Sentry Nodes. The Sentry Nodes are basically the nodes that are used to support the blockchain, and we had like a big blowout sale of those nodes back in December.

[00:10:15] Jonathan DeYoung: So with Xai, why do games need a dedicated, gaming-focused blockchain? Why can’t you just build this on Ethereum like the Web3 games of yesteryear and just call it a day?

[00:10:29] Toby Batton: Really good question. It's basically, answering that question has been really the last three years, it's been a big journey for our company, and we started making these games, very ambitious projects, back in 2021. Both are still in development. They have AAA production quality, and one of the games, Final Form, is fully onchain. So what that means is literally every piece of logic is a smart contract that is deployed onchain. The reason that we did that is we wanted to create a game that was highly moddable. So basically, all the code is open source. The community can get involved, they can change the game, they can build a large modding community around what it is that we're doing. But you can imagine the cost of that. Running on a chain like Ethereum is very high, it's very slow, and it's just not a realistic experience for gamers to have. And we ultimately ended up working with Offchain Labs, which is the company behind Arbitrum, to build us our own chain dedicated for gaming, which we call Xai. Xai, It's super fast. It's a layer 3. We can provide a gasless experience, and all of the wallets are abstracted behind the scenes. So, as a player, you don't even know that a blockchain is there unless you're reading our documentation.

[00:11:43] Toby Batton: But the player experience is just like a traditional game. You don't have to have any of these weird, sort of obtuse interactions. If you're a gamer who is unfamiliar with blockchain technology, we feel that if blockchain technology is really going to hit the mainstream, it's number one going to be through gaming. Gaming obviously has a massive audience of billions of players around the world. The use case of blockchain technology fits so perfectly with games. I mean, games have economies. They have these massive open worlds today, and blockchain technology supports that so well by connecting players with other players around the world through exchanges, through the ability to trade with each other, through the ability to play with each other. But, you know, like I said, if you have to do all this kind of weird stuff to get those benefits, it creates friction and, it creates frustration. And there's a ton of people out there that I think could enjoy the benefits of blockchain technology in a game if they are basically stopped by this wallet experience, which is really obtuse and not something that I think most people are willing to do.

[00:12:47] Jonathan DeYoung: So I've heard for a while now that gaming is going to be what brings in mass adoption of crypto, blockchain, Web3, whatever you want to call it. Yet, to my knowledge — you're probably more aware than I am — that hasn't exactly happened yet. So what do you think it is that's been preventing that from being the case? Is it just blockchains haven't been ready yet? They're waiting for the right gaming-focused blockchain or the right game, or what's taking so long?

[00:13:15] Toby Batton: I think there's three things. I think the first thing is when you look at the big game companies, you know, like a Blizzard or a Riot Games, they have an enormous amount of enterprise value that they've created that they need to protect. There's obviously regulatory challenges if you go down the road of creating a blockchain game. And in addition to that, they have rabid fans in a community that have certain expectations. So, to see a really big game company go down the road and do something big with the blockchain, it's going to require a smaller company to make something huge first, and then the bigger companies will see what the playbook is, and they'll copy that playbook, or perhaps they'll acquire the smaller company and bring it in. So that's one challenge. The second challenge, again, is I think the friction that we have talked about, and getting rid of that friction is something that we're seeing happen right now. And then the final thing, I think, is we just need to see an awesome game. There are some games that have come out that aren't bad, but we haven't seen like a really big hit, like a Fortnite or like a World of Warcraft or something that's really genre-defining. I suspect that we have games right now that are in development and maybe even close to releasing that could become a game like that. And if they have this abstracted experience and it's an amazing game, I think you're going to see a flood of players come into that game and maybe not even realize at first that it's a blockchain game. The game is going to hook them, and they're going to build, you know, an entire ecosystem around it.

[00:14:37] Jonathan DeYoung: So in just reading and talking to people, it seems like a lot of people expect that game you were referencing that's going to come out to be a AAA-quality game. That's going to be what brings everybody into Web3 gaming. But you guys seem to focus on indie games. You have mobile games. Do you think that those two areas are sort of potential dark horses that could actually be what people are looking for? Like, every once in a while, you hear about a crazy indie game that blows up. It does incredible, incredible numbers that, even a AAA game can fail as well, it might not be able to do…

[00:15:17] Toby Batton: Yeah. I mean, we talk about this all the time. I do think the game that really pulls people into Web3 is going to be an indie game. You can look at hit games that have been indie games. Minecraft is probably the perfect example. It was made by one person. It was a solo dev game and ended up getting acquired by Microsoft for, I think, $1 or $2 billion, you know, maybe a decade ago. And there's plenty of other stories like that. So I think these smaller teams that have the ability to be really creative and take risks but also have great backgrounds and probably left a AAA gaming company to found their own studio. To me, that's the perfect team, and those are the teams that we try to emulate and try to work with ourselves.

[00:15:56] Jonathan DeYoung: Gotcha. What is the, if you have an idea, what is the kind of the financial state of the Web3 gaming market right now in terms of how healthy is it, how large is it? Are people excited about it, are people buying these games? What are the economies look like? What do you think will be in five, ten, 20, 80, however far future you want to go?

[00:16:17] Toby Batton: Right now the rocket ship is on the platform about to take off, and you can see like smoke roaring underneath it. I think there were two big events this year that have taken place in the crypto industry for gaming. The first was our Sentry Node sale really sort of marked the change from the bear market into, you know, what's probably going to be another big bull run. We saw the market change at the beginning of the year, and our Sentry Node sale was massive. We sold over $50 million of these nodes in a short amount of time. And then shortly after that, we saw the launch of Pixels on Ronin. And that was a massive success. We know now that the exchanges are looking for more game projects to list, and there's a lot of huge projects that have had a lot of hype that are about to release. So, even over the next 18 months, I think it's going to be a massive bull run. I think it's going to be super exciting, and I think that's going to drive a lot more adoption than any other crypto cycle because we see so many of these games adopting these strategies where everything is behind the scenes and obfuscated. So I think if there is another bear market that takes place eventually, I think it's going to have less impact because we're going to be drawing in a lot more of the traditional game industry.

[00:17:27] Jonathan DeYoung: And for people who are listening who may want to play these games, learn more about anything you're involved with, follow you, where can they do so?

[00:17:35] Toby Batton: Would say go to the website xai.games. And you can find my co-founder on Twitter. He's got a bigger Twitter persona than me. His name is Soby Life, so you can follow him and stay up to speed.

[00:17:48] Jonathan DeYoung: Like the soda? SoBe?

[00:17:50] Toby Batton: Yeah, that's why I made his thing. SoBe Life, yeah.

[00:17:53] Jonathan DeYoung: That's great. 

[00:17:56] Jonathan DeYoung: Toby shared a couple of thoughts that continuously came up as themes throughout most, if not all, of the conversations I had. The first is that Web3 games need to be frictionless as well as enjoyable for those who don't know anything about crypto and blockchain. Think about playing really any major video game today. You don't need to know how the tech works in the back end to enjoy it. The second is this idea that gaming has a real potential to be a true catalyst for bringing mass adoption. On this point, I would highly recommend you listen to Episode 25 of Decentralize, where I interviewed Yat Siu of Animoca Brands, and he made this very same case. 

Next, I spoke with Rebecca Liao, the founder and CEO of Saga, a scalable layer-1 blockchain custom-built for game developers who can easily spin up their own parallel dedicated layer 1s for their own games. Liao has a very interesting political and foreign policy background, so she also shares her take on some hot geopolitical topics surrounding Web3. 

[00:18:52] Jonathan DeYoung: Why don't you do the honors of telling me what Saga is, and telling our listeners what Saga is?

[00:18:57] Rebecca Liao: Absolutely. Thanks so much for having me. And so Saga is a layer 1 to launch layer 1s. And what that means is we are our own layer 1, but the whole purpose is to allow developers to get onto their own dedicated chain, which we call chainlets. And each of these is a layer 1 in its own right. So it has its own validator set, which is a twin of our mainnet and same security model. And so it's just super easy to deploy your own dedicated block space that's fully decentralized with that kind of architecture. Obviously, we were built for scale. We were built for performance because you can have as many L1s as you want supporting your application. We're also costless at the front end. So we thought about the user experience, and we know that gas fees are a huge pain, not just because of the amount, but because you have to interrupt your app experience in order to pay gas. So we don't charge gas to the end-user, and we allow the developer to monetize however they like. They can have their own token; they can have no token. They can create stablecoins, they can have the token of another ecosystem. Doesn't matter. And we are interoperability-first. You would imagine that if everything is its own chain, we have to have inneroperability locked down. So all the chains being together. So that's our product. And then, in terms of go to market, we have always been focused on gaming and entertainment. We feel that those are the applications that most badly need this kind of infrastructure.

[00:20:12] Jonathan DeYoung: So zooming out a bit and speaking more generally, a lot of people talk about how gaming could be the killer app that brings Web3 mainstream. Do you believe that, or is that overplayed?

[00:20:25] Rebecca Liao: I do think that's true. Now, is it the thing that has hit first? Obviously, no. I mean, we've seen that cryptocurrency as a product in its own right was the first to hit in Web3. We should all remember that. But when it comes to what sort of application, whether it's an exchange or some sort of, you know, DeFi yield product, is that what's going to really hit people first? So exchanges have been there to facilitate sort of introductions into crypto and to obviously be the lifeblood of crypto. I mean, crypto without exchange activity. But in terms of true mass adoption, so people are on their phones using crypto, or people are on their phones using crypto, not noticing their crypto. That is all to come, and that will come from gaming.

[00:21:08] Jonathan DeYoung: So I think one other thing that, from my perspective, makes you and Saga as well, and the fact that you lead Saga, unique and interesting, is that it's a woman-led organization. And gaming has sort of a reputation of being a bit of a boys club, as does crypto in general. So what has your experience been as a woman just in general in crypto and gaming? You know, is crypto and gaming the progressive spaces, truly accepting, no issues at all that people like to talk about, to proclaim it is? Or have you faced any challenges? And likewise, do you think that there are any advantages that you bring from sort of a, for better or for worse, an outsider perspective into gaming?

[00:21:54] Rebecca Liao: Absolutely. It's a great question. So I would say that let's take gaming first. Gaming is still very heavily male-dominated. But having said that, it is an older industry than crypto. And so it's been around for a lot longer. There is true mainstream adoption of games, digital games, and I think over time, the industry has had to grapple with a lot of the same issues as crypto. Honestly, whether it's sexual harassment, discrimination, latent misogyny, it's had to grapple with all of that, and it's still grappling with those issues. But having said that, because it's just had more time to work through them, and it also has that pressure now from mainstream society, you do see significant reforms there. I would say for crypto, it follows a very similar pattern in many ways. People are a lot smarter about how to go about this. So, part of it is just maturity. It's just maturity in the industry. But to answer your question directly, it is challenging to be a woman in this space. It is absolutely challenging, and it's challenging to be the only female leader of a chain. So I think, though, that women are feeding their own path in this space, which is what women do. Women are great survivors. At the end of the day, in any environment that they're put in. And I think it's very important for any woman who comes into this space to remember why it is exactly they chose to be here, what is their passion? And don't let anyone take your passion away from you, regardless of how rough the day is.

[00:23:15] Rebecca Liao: So I think that's a very important thing to remember. And then the other thing I always tell women in this space is because we live online, so, so much of crypto is housed on Twitter, Discord, Telegram, etc. — social media, in other words — the industry, takes on many of the characteristics of those platforms. And so in the same way that people respond to outrage, that people respond to fake news, that people respond to, you know, all the social media like deficiencies that we're familiar with, so too goes for the crypto industry. And so I think keeping that in mind, people understand better how to manage it. But really, for women in particular, I tell them, you know, notice what's happening because you don't want to dull your perceptiveness about people or whatever situation you're in. So you should always notice when something weird or like, really messed up is happening, but don't let it affect you emotionally. I think that's the main thing. It's very important to not get tired or angry in this space because any energy that you waste on that is energy you're not using toward building. So yes, it is incredibly challenging to be in this space, but it's also an opportunity.

[00:24:18] Jonathan DeYoung: I think that's great advice. So, another interesting thing that you bring to the table is you have a foreign policy background. You worked in, I believe, two different administrations.

[00:24:28] Rebecca Liao: Two presidential campaigns. 

[00:24:30] Jonathan DeYougn: Oh campaigns. 

[00:24:31] Rebecca Liao: Yeah, two presidential campaigns. So first one for Hillary Clinton in 2016 and then second one for Joe Biden in 2020. 

[00:24:39] Jonathan DeYoung: Gotcha. You're also a lawyer. Another layer onto your background there. So and, you're considered somewhat of a foreign policy expert about China and Asia relations with the US and the West as well. So, with that all in mind, and having you here today: So, Asia seems to be taking more of a hands-off approach to Web3. The US tends to be taking a more hands-on, especially in their Gary Gensler approach to Web3. And a lot of people talk about how Asia is pulling ahead in terms of the Web3 race, so to speak, if I'm going to use those words. So do you think that the gaming industry itself is also a lot of U.S. presence, a lot of Asia presence, particularly Japan, right? I don't know enough about the numbers to know, like is Square Enix beating Rockstar. I don't know all that, but do you think that the the sort of Asian approach to more freedom for blockchain builders is going to give a leg up to Web3 gaming that could potentially help gaming overall, when Web3 gaming picks up, gain more Steam in Asia and lose some steam in the U.S.?

[00:25:51] Rebecca Liao: Well, I definitely… If you look at the top studios or the top publishers in gaming, period, most of the top ones are out of Asia, so they’re out of Japan, they're out of mainland China, they're out of Korea as well. Those are the powerhouses. And I would say that for the Web3 gaming audience, it is certainly very Asia-centric, not just because of the crypto Web3 component for all the challenges that you just stated, but also because that's where the gaming audience really is. And so we at Saga are no different, really. That's where we see most of our user base. And a lot of our game developers come on there as well or come from there. And a lot of our major partners in terms of the established studios, they are also from Asia. And so we have honestly turned a lot of our project that way to focus on that audience. But having said that, I think stateside, that has always been the angle that I have felt would be the most successful one to get crypto adopted here is the competition angle that you just mentioned.

[00:26:46] Rebecca Liao: I mean, you know, to loop in a little bit of foreign policy here, the term that we always use with respect to our relationship with China is strategic competition. And given that when China is getting a technological advantage in a particular area, obviously we want to pay close attention to that. I think the U.S. government is very dialed in in terms of anything AI-related, anything defense-related. But in terms of crypto, it's just never been seen as a national security issue. And part of my work the last few years, now that I'm off campaign work, is to make policymakers realize that it is a national security issue that cryptocurrency powers network states. It powers states that are not necessarily beholden to the organizing principle of the nation-state, and therefore, it's something that we should pay attention to. It's something that Asia deeply understands. But nevertheless, there is competition now. And I think many of the recent actions out of DC with respect to crypto, they are a lot friendlier toward this industry. They are starting to feel that pressure.

[00:27:45] Jonathan DeYoung: So where can people learn more about Saga?

[00:27:48] Rebecca Liao: Yeah. So, saga.xyz is our website. Pretty easy to remember, but we're living on Twitter most of the time, as are most crypto projects. And so, our handle is just @Sagaxyz__. You can find us on Telegram, Discord as well, but those are our main channels. And, yeah, I look forward to hearing from everyone.

[00:28:07] Jonathan DeYoung: Very nice. I'll add that Rebecca is wearing an A24 shirt. So I think that that should be reason enough to go check out the project.

[00:28:15] Rebecca Liao: Thank you. Huge admirer of what they do. And, yeah, for people really paying attention, it's a bit of a clue for the first game that we will publish. 

[00:28:24] Jonathan DeYoung: Ooh, interesting. Civil War, the game.

[00:28:25] Rebecca Liao: Civil War, the game. It's not far off. Yeah.

[00:28:30] Jonathan DeYoung: Rebecca's advice for women in both the gaming and blockchain industries is particularly important, as both industries have a bit of a reputation for being boys clubs. But if crypto is to ever reach that point of true mass adoption, well, women make up half of the world's population, so it's critical that they are genuinely involved and authentically represented every step along the way. 

Next up is my interview with JacobC.eth, the founder and CEO of the Web3-enabled game store HyperPlay. The project also has an integration with MetaMask that allows gamers to seamlessly use the same MetaMask wallet across multiple games. So we discussed what it actually looks like to integrate crypto wallets into games. 

[00:29:10] Jonathan DeYoung: Why don't you give me and the listeners kind of a high-level overview right off the bat? What is HyperPlay and why did you decide to launch it?

[00:29:18] JacobC.eth: Yeah. So, as you mentioned in the intro, I was a long-time member of the MetaMask team, and I had seen that gaming was actually accounting for as much as maybe about half of the users in our wallet had gaming use cases in their history, and so many people were coming from being onboarded into the decentralized web from a game, and then from there discovering DeFi and everything that blockchains and Web3 have to offer. And the audiences for these games were largely people who were in markets that have historically been locked out of. A traditional financial system. Places like the Philippines, Colombia, Nigeria, Vietnam and here they were not just playing games and having fun and, you know, in many ways, you know, earning NFTs and tokens through their gameplay. But they were then taking those and getting access to decentralized finance and leapfrogging the legacy financial system. And to me, that was a really powerful realization that this was a way where people all over the world were becoming owners of the protocols that they were using and becoming really empowered through that process. And then I also realized that the user experience around gaming and Web3 was still really bad. It was really primitive… Really you couldn't take your wallet into the games themselves. All the wallet activity was typically in a separate website outside of the game. A lot of games were forcing the user to create a new wallet for every game that they play. There wasn't really interoperability, and the whole promise of blockchains is supposed to be that your reputation, your assets, it's interoperable, yours, and you can carry it across all the games, across marketplaces, across communities, across reputation protocols.

[00:31:07] JacobC.eth: And it wasn't possible. And so I wanted to make it possible for the user to really carry their wallet into games. And I had heard from game developers that a lot of them were being de-platformed or censored and, frankly, having their businesses destroyed by monopolies like Valve's Steam or Apple's App Store, or even, to a lesser extent, the Google Play Store. And then even the more Web3-friendly or -tolerant app stores were still really heavily prohibiting these games from having in-game uses of the player's wallet. And so I realized the user experience problems weren't just that the tech wasn't good enough. It was also that these legacy monopolies, like Apple and Steam, were forcing game developers to build their user experiences in sub-par ways. And so I kind of came to the realization we needed to rebuild the game distribution stack from the ground up and in a Web3 native way. And so we built HyperPlay. We call it the game store from the future. It allows the player to carry their wallet into every game, to actually… We aggregate the whole Epic Game Store, so you can play a lot of traditional mainstream games, and you can play all the games that are in our store. We have over 80 Web3 games in our store, and we do everything we can to be the most developer-loyal game distribution platform to really help empower the developers and the players through that process.

[00:32:33] Jonathan DeYoung: Thank you for that. So, HyperPlay, as I understand it, and obviously correct me if I'm wrong here, and I'm sure my explanation is not going to be as good as the one that you're going to be able to give, but there are two elements of a MetaMask integration that happens with HyperPlay. One is what you mentioned. You can bring you can use your MetaMask wallet in multiple different games. And the second one is recently announced, which is that within MetaMask itself, if I understand it correctly, you can access the game store. So, sticking with the first point for a second, I saw this tweet, and you might have seen it as well. Kind of making fun of what a MetaMask integration in a game might look like, where every shot you take is onchain and you have to select. You have to click yes to approve a transaction to have it be stored onchain.

[00:33:21] JacobC.eth: I've seen it. The tweet you're talking about.

[00:33:22] Jonathan DeYoung: Okay. So, what does it actually mean to be able to use your MetaMask wallet in a game? Because I'm assuming it doesn't actually look like that.

[00:33:30] JacobC.eth: Correct. It does not. So there's a couple things that we do. And you're right. So the first thing is that any game you launch from inside of our app, your wallet is persisted to that game in an overlay. So, if people are familiar with Steam, whenever you launch a game in Steam, Steam is adding chat windows, notifications, achievements on top of the game as you're playing it. And we basically do the same where we persist your wallet into the game and so that the game can call a transaction request or a signature request. If you want to buy an NFT or you want to buy some asset or swap some asset, or do any of the things that we can do with smart contracts, we also support in our working with teams that use account abstraction wallets, which allow the user to fund an in-game wallet and have their transactions automatically approved, or have them happen in the background, up to the spending limits and thresholds that the user sets. The internet meme about MetaMask pop-ups happening in game, typically, most games just call the wallet when you are buying or selling an in-game asset. But for the games that do have the logic onchain, like Pirate Nation or DeFi Kingdoms or Dark Forest, those games use account abstraction wallets to auto-approve the player's transactions.

[00:34:49] Jonathan DeYoung: Do you think that there will always be a need for a sort of specialized Web3 game store or platform launcher like yourself? Or do you think there's going to be a future where Apple has no choice but to get on board with Web3 gaming and allow those sorts of games and their app store?

[00:35:09] JacobC.eth: So I have a controversial view on this, which is that the Web3 disruption is actually a much more significant disruption than many people realize because people like Apple and Valve don't have a reliable way to take fees from a smart contract. The smart contract is a permissionless smart contract. It doesn't route through their APIs, and a lot of them built their business models based on an assumption that they would extract these 30% transaction fees every time the user of any of the apps in their stores has a transaction, and that really harmed the developers, it pushed up costs for the users, and it's not sustainable in a Web3 future. So for us, we have a totally different business model. We don't take transaction fees from in-game transactions. Instead, we have optional features in our app, like token swaps on-ramping, bridging between networks, like those things are convenience features that are optional for the user. If the user wants to do them through our UI, we make it really easy, and we improve the user experience around it. We try to pass on cost savings and things like that to the user, and when we do that, that allows us to earn transaction fees from the user when the user wants to use our services. It's a much more ethical and consensual business model than what those Web2 stores have, and it's one that actually aligns our interests with the game developers because our goal is just to get as many users to these games as possible, get as many people adopting the platform as possible, and to solve whatever problems that the game developers have and to make the developers happy. And you won't find that with those legacy stores. Instead, those legacy stores are just all about bullying the game developers. And we wanted to rebuild this with a totally different business model.

[00:36:55] Jonathan DeYoung: So, HyperPlay is in the MetaMask landing page, if that's what you call it, so you can find it there. Is there somewhere else people can find the platform if they want to check some cool Web3 games out?

[00:37:06] JacobC.eth: Yeah, so hyperplay.xyz is our website. You can also find us on X, which is @HyperPlayGaming. Join our Discord! We'd love to talk to you. We'd love to learn from you. If you have a game that you're building, we'd love to help you. If you're looking to play some games, come join our community. We have all kinds of community game nights and giveaways and really cool things that are part of the platform, and we're working to have some really great questing features where you can earn a range of different things by competing in various different games.

[00:37:38] Jonathan DeYoung: In our conversation, Jacob raised an interesting point that challenged my preconceived notions, which is this idea that the traditional game stores are simply not set up to benefit the developer and that there is an opportunity for Web3 to offer a more egalitarian approach to how games are distributed. Finally, I spoke with Matt Candler and Dan Nikolaides, who are the CEO and CTO respectively, of MetalCore. Or, more technically, they are the CEO and CTO of Studio369, which is developing MetalCore. They had some really interesting insights to share about the unique challenges of building a Web3 game that they hope will be enjoyed by everyone, from crypto fanatics to even its biggest haters. 

[00:38:19] Jonathan DeYoung: So, to kick things off, could you just give me, my listeners kind of sort of a high level overview? What is MetalCore? What is Studio369? What is the gameplay of MetalCore, and where does the blockchain come into all of it?

[00:38:33] Dan Nikolaides: Yeah, sure. So, we are a studio of kind of veteran Web2 traditional game developers. We've been working in traditional Web2 games for over 20 years in some cases, and this is kind of our first foray into developing a Web3 game. So, you know, our history goes back to Midway Games and Disney and Warner Brothers and, you know, working on games like Mortal Kombat and Gears of War and helping Epic develop Unreal Engine. And so we have been very comfortable in the past developing games, you know, especially hardcore multiplayer shooters. And we were thinking we had some pretty good ideas for a large-scale mech multiplayer shooter based on a VR game that we did called World of Mechs, which we shipped for the Oculus Quest 2, which was kind of a fun little 4V4 competitive mech shooter. And we kind of had the idea, why don't we take that and scale it up and make it a big hardcore PC game at the same time? The kind of interest in Web3, this was in like late 2020 or early 2021, and the kind of interest in Web3 was starting to accelerate. And the idea of, like, maybe we can do hardcore, you know, Web3 games, more kind of core gamer focused Web3 games, intersected with that plan. And so that's where MetalCore came from.

[00:39:45] Jonathan DeYoung: Very nice. Thank you for all that. So assuming that you're still in contact with, or you still have friends that are in working in the traditional gaming space, you haven't pissed them all off by moving into Web3, what is sort of the general sentiment among people in the gaming industry about blockchain and Web3? I know that among fans of gaming, among gamers, it seems to be a bit divided, with some gamers kind of really disliking any sort of added financialization element being put into games that were not there before or that maybe they didn't realize were there before, or whatever the case may be. What do people in the gaming industry think about people like you two breaking off into the weird and wild world of blockchain and crypto?

[00:40:30] Matt Candler: Well, we just had a meeting at GamesBeat in LA, where I met with a lot of my kind of old friends and collaborators, and a lot of them look at Web3 with this kind of curious, a little bit of speculation and a little bit of skepticism as to what's really going on. And I walked them through kind of how it's not that really far away from a free-to-play game design. You’re still are delivering a quality game, you’re still are watching how you retain your users, you're still looking at your funnel and all the metrics that you would in free-to-play. You're just using a different form of monetization, and it's really not that big of a deal. I think gamers are already accustomed to using it. If they played a World of Warcraft game and used a token to buy their monthly subscription, that's the same mechanism that Web3 employs. You're using a token to buy stuff in game, and it's really not that far. There's been some previous attempts that were focused too much on monetization, and I think that really gave it kind of a bad type of vibe. But you're starting to see really quality games coming to market that are giving players a really good game experience and giving them a little bit of extra stuff in terms of the ability to monetize their time allocation. So that's really the benefit of Web3 and, ultimately, why I think Web3 will win.

[00:41:49] Jonathan DeYoung: So how do you balance marketing for a game like this when you want to? I'm assuming, correct me if I'm wrong, you want to have people who are involved in crypto be interested in playing this game, and you want to have people who perhaps have zero knowledge or understanding of crypto still want to play this game. So, how do you balance those two things in terms of how you market the game and how you develop the game?

[00:42:13] Matt Candler: That's a fantastic question. What we are seeing is there's a different level of adoption in various territories around the world. So, it's been, one of the biggest challenges is identifying the different kinds of user behaviors and user bases in our marketing efforts. And where we're approaching, some people are very familiar and receptive to Web3 and want to jump right in. Other kinds of players are skeptical, and it just takes a kind of a different approach. I don't know if we have all the answers, but we just keep trying different approaches and making sure that the value proposition is clearly defined for each kind of player base. What's in it for me? Kind of, you know. That's very easy to understand and for people to pick up and get into the game.

[00:42:52] Jonathan DeYoung: So what are some of the complexities and added technical challenges that go into developing a game that interacts with a blockchain versus maybe some of the more traditional games that you have developed in your past before you crossed over to the dark side?

[00:43:08] Matt Candler: I'll… this is really more Dan stuff, but I will say I've been making games since 1995 and have been doing… The first game I worked on was MechWarrior 2. This challenge of making games for Web3 with the blockchain is the hardest challenge that I've had in my career, so to do it properly and do it right.

[00:43:25] Dan Nikolaides: Yeah, I mean, technically, there's a number of challenges, right? I would say that the technical challenges aren't even the most difficult ones. There are a lot of blockchain, like a lot of layer 2s. You know, we're working with zkEVM, Immutable, zkEVM, which kind of, and especially like companies like Immutable who are developing a layer 2, which is relatively low gas fee, plus a really good game-focused API layer that lets traditional game developers like us interact with it as if it was essentially a back-end layer. It eliminates a lot of that technical concern. I mean, obviously, we still have to be aware of the idea of, like, you know, every transaction has a cost and what can you modify and what's immutable. And, you know, how do we host these assets in the way that, you know, they can be interacted in a decentralized way, right? All of those are not particularly challenging. But I would say the most challenging aspect of developing a Web3 game is honestly the go-to-market. Getting a Web3 game out into market and then figuring out what the right path is. It feels a little bit like the Wild West. It's kind of like early days of, you know, right now, like mobile games and free-to-play games, monetization is pretty well studied, pretty well known. I think everyone kind of understands what you need to do to make a free-to-play or mobile game successful. Web3 is still a little bit not that well understood, especially from a hardcore games perspective. Maybe it's better understood for certain types of DApps, but not for games, in my opinion. Especially not hardcore games. So, you know, figuring out who to partner with, how to structure tokenomics, how to structure our token utility, make sure that the economy works, and then figure out like what the right offering in the market is for everything. I think it’s much harder working with exchanges, working with figuring out all the technical aspect of really the financial side of everything is much more difficult than the technical aspect, as it were in my opinion.

[00:45:08] Jonathan DeYoung: Yeah, and you don't have to speak on this because I'm sure it's quite complicated, and your lawyer is not on this call, but I imagine that regulation as well and just kind of the gray, the sort of unclear regulation and how it can vary all around the world, has got to be an added complexity as well.

[00:45:24] Dan Nikolaides: Yeah, and for sure. And we're very cognizant of that. And the problem with that is that small changes are kind of small, different expectations in what regulation will come or actual regulation changes has like such a knock-on effect, such as kind of like a domino or butterfly effect on our go-to-market plan, that any little change ends up, especially for games, right? We build an entire economy, an entire game design around this plan, and then when some little aspect of the route go-to-market strategy changes, it can have huge impacts on our delivery schedule, on what we're making, our overall design. There's so many kind of intricate, interconnected pieces that, for sure, things like regulation and just market conditions, like even not even regulation, but just market conditions, like when is it right to launch, is a huge factor in figuring this.

[00:46:13] Jonathan DeYoung: So the last question I have for you, too, is that there's sort of this idea that the first widely successful blockchain game to go mainstream is going to be a AAA game. I've heard this from various places over the years, as long as I've been hearing about Web3 gaming. Do you guys agree with this idea, and do you think that developing a AAA game gives some sort of edge that could help push it to be more successful than perhaps if you were making a platformer that happened to have blockchain elements? Or are you two just fans of the AAA style, big budget, awesome graphics, crazy gameplay, and so that's why you chose to kind of pursue this AAA style of game?

[00:47:00] Dan Nikolaides: We're not really AAA in that regard, right? We're closer to AA, and I think that without having this kind of big Titanic that we're trying to steer behind us, right, of a huge established IP or an enormous budget, where, like the bookmakers don't want to take any risks, you know, we're a lot more flexible to do things like Web3. I don't think that you're going to see an actual AAA game, like we're not AAA, right? Like Halo is AAA. So I don't think you're going to see a game like Halo try to do Web3 until games like us, which are more like AA or AAA-light, are in the market and are starting to become more accepted, and by the time they do, they'll have already kind of given up first mover advantage. So, I don't actually think that a AAA game is going to be the first mainstream, successful game. I think what it's going to take is a bunch of games like us and Shrapnel and others who are a little bit lower budget than AAA, a little bit more like AA, but are really good, high-quality games made by the veterans that feel just as good as the AAA games. And maybe just like in a lower production, you know, budget and those need to just exist in the market long enough for the narrative of, you know, Web3 games suck to go away. And there needs to be just enough of these games that make it and that are successful and continue to demonstrate that quality games can come out of Web3 devs. And I think that's what we'll really get over the hump of mainstream.

[00:48:17] Jonathan DeYoung: So I need your game to come out before GTA 6 so that I can get my crypto in GTA 6.

[00:48:23] Matt Candler: Yeah, that sounds like a good plan.

[00:48:26] Jonathan DeYoung: And I guess one last question would be for those who are interested in the game, can they play it? I know you're in closed beta. Do you have to apply for it? Is there social media? How can people get involved and follow what's going on?

[00:48:37] Matt Candler: You can go to metalcore.gg and enter an email address and get a beta key.

[00:48:42] Jonathan DeYoung: Alright, there you go.

[00:48:43] Matt Candler: Simple as that. It's a downloadable off of Epic Games Store, so it's a traditional flow. And jump in, create an account and start playing.

[00:48:50] Jonathan DeYoung: Okay, so what are the takeaways from all these interviews? The first is that I definitely need to get a PC so that I can actually play the games when they come out. But in all seriousness, I'm pretty excited about the future of Web3 gaming. The people I spoke with come from all different walks of life, some from politics, others from tech, others from major traditional gaming companies, but all intentionally wandered into the Wild West of Web3 because they believe in the power of gaming and the potential of blockchain to upend the existing norms. And let's be honest, the idea of being able to truly own an item from a video game is exciting. I've seen the crazy, complex ecosystems that are built up around games like Roblox, Counter-Strike, World of Warcraft, Second Life, Eve Online, and so many others. Second Life alone has seen literally billions of dollars worth of transactions. The amount of money that flows around these games is quite absurd, but the players don't really own anything, and if a game shuts down, then that's basically it. And so this is where I see the real potential of bringing Web3 into the gaming world. After all, who doesn't want to be able to pass their Sims house down to their grandkids one day? 

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. Follow Cointelegraph on X at @Cointelegraph to stay up to date and make sure you never miss the latest podcast release. You can also follow me at @maddopemadic. That's M-A-D-D-O-P-E-M-A-D-I-C. And if you liked my voice, you can hear more of me by following The Agenda podcast on your favorite streaming platforms or at Cointelegraph.com/podcasts, where you can also check out the entire lineup of Cointelegraph’s exciting podcast productions.

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