Charles Nurdin

Of strange coincidences

Last week, I read two very interesting facts in quick juxtaposition.

First, that, on the same day, two different billion-sized web3 funds had been raised. Joe McCann and other founders from a16z raised a 1 billion funds on Tuesday. And in the afternoon, Dragonfly Ventures raised its new fund of $700m — not a billion exactly but you can call it poetic licence.

On the very same day, Metamask proudly announced that it had passed the cap of 30m users (which is impressive, I don't deny it).

So there you have it: a billion for a million. An order of magnitude 1000 of difference. Quite the gap. The Terra – Luna distance one could say, if one was feeling cheeky.

All that: Defi, layer 1, layer 2, so many dApps you need other apps to keep them working together, more DAOs than human beings on Earth, the hundreds of talks about “the Metaverse” that look and sound like they were made in the 1990s and, of course, the billions, so many billions you can juggle with them. All that for a user base that is the size of a small size country, or one big city.

That's not to say web3 won't change the world. There are some theoretically very useful use cases : unified medical data, better local governance, unfalsifiable identity, even decentralized architecture, if it is proven than distributed ledger can be more efficient than a traditional one. Social gaming, and entertainment in general, is also one such case — and indeed what some posit this ever-elusive “Metaverse” will be (more on this below).

In any case, with so much money beeing thrown at a single piece of technology, it better become ubiquitous — and it will, if only by virtue of large numbers. World War II style : when you mobilize immense resources and the full might of the richest market on Earth, you usually end up achieving something.

But even if this future will come, we still need to get there. As a wise man once said, the future ain't what it used to be. So, the biggest challenge for web3 in the next few years is encapsulated in a single word: mass.

As per in military doctrine expression: build mass to attack. If it doesn't, it will run of a cliff in two to three years time, when the hype dies down and funding dries down.

Of skewed incentives

So why isn't there any actual mass user adoption of decentralized technologies? It has to do with the state of the art, legacy friction and with incentives, but mostly the latter.

Simply put: there are no reasons to tackle actual problems. First, because, so far, web3 is a rich man's game. YugaLabs is valued at $5B — and is already trying to raise at a higher valuation — but who buys BAYC? The happy few, the rich and famous. With this kind of margins, why on earth would you try to do anything else than NFT?

Even at the other end of the spectrum, with the gaming guilds set up in Vietnam, the margins on art and gaming tokens are excellent. It is simply impossible to compete with another business.

The second issue is legacy. Let's say that you want to bring all medical records, from a private doctor, an hospital, ... on the blockchain, something everyone agree would help a lot of patients receive improved care. You would need to integrate a multitude of legacy systems. So much friction, so much hassle: better to stick to native blockchain ecosystems. That is: Defi and collectibles (art, sports, gaming). Nothing else.

The last issue is the tech, and this one might get resolved. The gas fees, to be precise. High gas fees means lower margin, hence an incentive to go only for the “positional goods” as they are being called politely by economists. But, with Polygon and layer 2, it is finally changing.

The pressure of traction

Another strange fact about the web3 craze. Notice how we talk of web3, blockchain, DeFi. All those words describe the technology, not the use case. So with such focus on the tech, you would expect an R&D-minded market, similar to what happened during the self-driving or the AI wave. Long-term projects, with technical milestones conditioning funding.

Alas, the success of early web3 ventures has investors addicted to short-term returns. This leaves only two avenues for companies: either to focus on the flow (ie. building an IP business like Yugalabs) or on the pipes (infra and tooling). But no one has any incentives in changing the source. We're building magnificent aqueducs to syphon water from a stagnant marsh. We're two years in the market explosion, and yet the core use cases are desperately the same.

We need to talk

A word here about the Metaverse, because it illustrates so well how skewed the incentives are. The more eloquent description of the Metaverse I have ever read comes from Ledger, who posited it would be a “continuum of unreal-engine powered games with strong social communities” (quoting by memory).

It is indeed a smart hypothesis, because the two closest things to the concept of “Metaverse” I ever saw were Minecraft and Fortnite. Games where people spent time to play and also to interact with each others. I'd say EPIC Games is the biggest Metaverse company out there that no one talks about.

It's probably what Mark Zuckerberg had in mind when he shifted all of Facebook's resources to Meta, as he reaffirmed at the same time that the company's mission was to focus on young people.

But you know what those games had in common? They're fun. And beautiful. Minecraft sure has a simple look, but it's incredibly creative. It has to have such a simple structure to allow for total flexibility. Fortnite just looks georgeous with bright colors and creative maps.

Now, let's look at the “future of the Metaverse”. Isn't the Sandbox the poster boy for it? Well, it looks more like any DeFi platform to buy, stake, swap, collateralize etc. LAND tokens than anything else.

The reason is simple: there are no incentives for the company to do otherwise. Great, fully constructible open world could be built on the blockchain, it could make the user's experience even more interesting. But no. Since there is so much speculation on tokens, any game company has every incentive to act as an asset manager rather than as a game developer.

It's not that games are corrupted by money, but when there's only money and no game, it's a bit short.

A (strangely) not so heretical point of view

At this point, you might think I am a jaded soul who hates anything that is either new or fun. Certainly, a web3 skeptic, who will be buried by History.

But in this case, I am in good company. I read two interesting quotes recently that restored my faith in my own sanity (very much ungrounded belief if you ask me, but such is the mystery of Faith).

Talking at the Paris Blockchain Conference, Arthur Breitman, co-founder of Tezos, said : “There's a lot of hype, you'll see the interesting use cases when the hype dies down”.

And Sandeep Nailwal, cofounder of Polygon sang to the same tune in another interview. “We know who is the AWS of web3 [a little humblebrag has never hurt anybody, has it?] but he haven't yet seen the Snap or Meta of web3”.

Of the space elevator finally making its (fashionably late) appearance

In every good sci-fi work, there's a space elevator. That's how you recognize them. For instance, Foundation on Apple TV: they put the Star Bridge in it, so it's alright. Tviolkosky's short fictions? He was the first to describe a space elevator concept, even before Clarke, and he's the man without whom we wouldn't get rockets (seriously, check it out — he's the greatest underestimated genius of the modern age).

The idea behind the space elevator is that of a simple cable, or tether (if I find out that the USDT is named like that because of it, then I'll start buying it. I'm like that: dumb) between the Earth and the Moon.

The beauty of it is that it can enable travel through purely mechanical forces, with a weight / counterweight system, without having to deploy the extreme amount of energy rockets need to escape the Earth's gravity.

There are some thorny issues of how to create a structure so long and high so that it supports deformation — but it might be doable with carbon nanotubes (or not, it's a heated debate).

In any case, if we're ever to durably exploit the moon's ressources like Helium 3, which will be so critical once nuclear fusion reaches scale (it will, have some faith), a space elevator is the most elegant and energetically efficient solution.

Where am I going with this long-winded metaphore — that's really just a way to speak about my childhood hero Tviolkosky?

Look at the Moon. It has great ressources, could open up a wealth of possibilities, but because of the energy required to get there, only a few people can make it.

The Moon is web3 today.

All the efforts are currently focused on building a moon base, in complete autarcy. It's pouring billions upon billions on a 30 million user market, without looking to expand it.

It cannot succeed.

What is needed is to bridge the gap between the Earth and the Moon, to build this space elevator that will enable to use the ressources of web3 and bring them into the Earth's athmosphere.

So let's get to it (and by “us”, I mean “you”, dear reader, if you are an MD at a multi-billion VC fund. In which case, you probably have better things to do than to read those posts).

Of memories and musing

A few nights ago, I was discussing with a friend. We were lamenting about how P2E had corrupted the “true gamer” spirit and so on. A common complaint from people in the gaming world with a dangerous combination of artistic pretentions and fond childhood memories. We were also watching some streamers in the background.

Then came an idea – which whom the reader already is familiar, as modern convention dictates it figures in the title of this article, lest even less people than usual would read it. A random idea at first, but it got us thinking and obsessing about it. As Gore Vidal once said, the unfed mind devours itself (and that’s the only great thing he ever wrote – but this is a topic for another time), so we read, investigated, ended talking with quite a few streamers (who might or might not have been surprised to receive random DM at 3am). After a while, we felt it might not just be a late-night, soda-induced, form of delirium, but could be considered as having what passes as sense in our world – which isn’t much, really, but time and matter still tend to somehow constraint us probably you as well, dear reader, if it might be too presumptuous to say so. But enough frivolous digressions. Anymore and we’ll dangerously veer into Trisam Shady territory, and what ever came of it? Memorias de Las Cubras and I am a cat, maybe, but it was a more than a century ago. Enough is enough.

As the zen koan goes: Gaming really is not about gaming. It’s about watching other people play on Twitch (and Trovo, let’s be nice to the new kid, he’s cute). It’s about community – Fortnite is more social network than game – and, indeed, it is the favorite reference of people pitching the ever-elusive metaverse. This much is known.

However, web3 has focused on the playing element only so far – and has it even done so well at it? Well, as much as we like to complain about it, a game is never as engrossing as when money is involved. Pascal said as much in his Thoughts. And let’s be honest: gaming has always been like that. A libertarian dream and nightmare all rolled into one. Without japanese adult games, we wouldn’t have great narrative design sagas like Mass Effect (or so I’ve heard). Without bootlegged CDs, no CDProjekt and no The Witcher. Without Star Citizens – no, can’t thing of anything, sorry.

But in any case, the entire entertainment aspect has been left aside from the blockchain craze (there are counterexamples, we’ll get to it: but proportionally, it cannot be denied it does not hold its fair share of attention). Which all the more baffling, because unlike P2E which is somewhat forced on gaming mechanics (farming, it is farming), decentralization is at the heart of gaming communities. It does not supplement it perfectly: it seems as if it was made for it. As in a platonician myth, the pure form idea came first with Twitch and Discord, but its tangible, sensitive representation really is on the blockchain. Is it a coincidence that Discord, an app for gamers really (remember those days?) is now the nest of all blockchain communities?

Strong version

Like algebra theorems, this idea – which we’ll name the Fetaverse from now on for convenience’s sake, and not at all because of the edibles that were consumed during the writing of this post – has a strong version and weaker, local ones. Let’s start with the stronger one, as if we were in a Banach space of n-dimension and there was no tomorrow.

The strong version goes like this: a streaming platform structured as a DAO. The streamers channels would be sub-DAOs. The streamer would mint coin. Viewers would receive a certain category of token them based on channel involvement, as they do today, and with log-scale based on early viewership. They would also buy tokens in the same that they sub today. The tokens would have different categories and get different governance rights, etc. That way, followers would really own the channel and be involved in decisions (what to play, what are the rules, …)

This alone, can work. Some streamers have created their own token, often on the $RLY sub-chain. Fans can buy tokens for gaining access to some events, tournaments, and supporting their favorite streamer.

But, this is too one-sided. A perfect model would have to be two-sided. This is where advertisement comes in. Advertisers would need to pay in tokens, as it has been pioneered by Brave (we’ll be BAT fans forever, say what you will about it. When this writer dies, he’ll have one BAT put under his tongue to pay for Charon).

Beyond the advantage of a frictionless economy and of decentralized governance of the channels, which can then regroup in a multiple of sub-organizations as they see fit (as it happens informally today), this model has another major advantage vs. the current web2 one: It avoids stagnation.

Like all art markets, Twitch is a superstar economics. It’s nearly impossible for a new generation to make it. But tokens give an incentive to early followers. If the streamer you follow makes it big, you’ll be rewarded. That way, new talent has a chance to get its day under the sun. Established talents with valuable tokens can even fund new ones, fueling their own ouroborosian destructive creation – something out of a schumpetrian dream (It’s less dreadful that it sounds: Schumpeter once waged to be the best economist, horsemen and lover of all Austria, so least 1/3 of his dreams should be interesting).

Local versions

Creating an entirely new streaming platform might be ambitious. As one of our math professors used to say, reality is just a n=3 hilbertian space, so you shouldn’t ask too much of it. But even weaker versions have potential, and could be used drive adoption of the bright, bleating future of the GOAT Fetaverse.

As Von Braun said when reminiscing his more exotic, continental works before building the Saturn rocket: if you don’t aim for the stars, how can you fall on London?

A first local version is as a platform to manage drops and tokenomics for streamers outside or on top of the Twitch ecosystem. Very few streamers have done it. It should come as no surprise. A lot has been done to make it simple for brands, labels and artists, but streamers have been left aside. There are also specific complexities to create tokens for streamers as they need to be linked to governance privileges, to tournaments, to events. Some streamers have done it on Rally.io, an ETH sub-chain that allows to mint “creator coins”, but even for the biggest ones, it remains a small-scale experiment. In 2021 Rally.io claimed 100k of weekly transactions for all its creators. This is encouraging but limited. Certainly, the streamers we talked to, including some with quite hefty communities, were enthused but felt the task was too daunting given where they started from.

Another local version is to keep the technical layer to deploy a streaming DAO, without the content creation part, to be integrated into platforms. The biggest closed ecosystems like EPIC game, and even the P2E giants like Animoca who really need to prove their game can be fun to play, certainly would like to add their own streaming services not to depend on a third party. In the ever-elusive metaverse, if it is indeed a continuum of unreal engine-powered social videogames, then those games would need their own entertainment DAO (which could go at this stage beyond streaming). Some competiting apps based on videogame content, such as Powdr.gg, could be natural clients.

From weak proof to strong proof

Even those weaker versions are actionable but, truly, in confidence between us, don’t you think the strong version has something? A dash, an elan, the fresh smell of a feta under the summer sun?

So let’s reject fatality and embark on an exercise that will remind you of college days: half-asleep demonstration. Or, to be precise, half-dreaming. A onirilogical demonstration if you will, where every step follows the next one, but only according the strange logic of dreams, when odds and feasibility bend to one’s unconscious will.

Let’s start with the P2E market. It is not an altogether glamorous place. Like the Yoshiwara quarters of old Edo, it is a floating world of juxtaposed despair and beauty, of dystopian farms and incredible innovation. But, most importantly, it is in dire need of entertainment – and thus where we start our journey. With a bit less than 3 million monthly active users at the time of writing, the biggest P2E game Axie Infinity, still is tiny compared to Fortnite and its 270m users. Even a non-persistent solo game like Elden Ring has 3 million MAU.

The user base is also a weakness. Vietnam and the Philippines are the two main installed bases for P2E games, precisely because the lower GPD per capita makes it possible for a guild economy to develop. But it also constraints opportunities for revenue per user. Compare it to the global gaming base, with a 40-40% US and China split (and 20% the rest of the world): it is a much richer pool. To expand beyond its core SEA markets, web3 gaming needs to raise entertainment value.

Hence, a streaming service tied to the game tokenomics is a welcome relief. It can bring in the ecosystem what it needs the most: a pinch of fun. Maybe starting signing up leading guilds in selected up-and-going games and, then, as projects to increase cross-token compatibility (e.g. Bangers) take off, achieving global P2E reach.

As the Fetaverse grows, so does web3 gaming. Web3 games cannot be only same old meme-based P2E. Three things will happen simultaneously to spread the blockchain as a foundation of the gaming ecosystem.

The P2E games of today will have to evolve to keep their users and enrich, or segment, their experience. Pure economics for some, but casual for others, with a large spectrum.

New concepts will also emerge. Why isn’t there a Pokemon Go with pokemons as contextual NFT, uniquely based on the location, the nature of the terrain, the number of people around? What on earth is Niantic doing? It can be incredibly entertaining and have in-game tokenomics.

A personal anecdote: I was in Japan at the time of that wonderful summer and saw first hand the pokenomics (as I called it to the visible annoyment of, really, anyone I talked to) when, even in the most remote of villages, old couples way past the retirement age bought rations to make pokemon appear and drive people to their food stands. Perfect integration of real-world and tokenomics: 2016 was web4 before web3. (on an unrelated note, I applied back in the days to an econ PhD on the back of pokenomics analytics, a strange and not altogether sane move that was soundly rejected by the admission committee. Nowdays, though, well let’s just say no one can trace a RON transfer to the wallet of the Dean).

Thirdly, good old “web2 games”, as we call 95% of the gaming market, will integrate the blockchain in mechanics, ecosystem and architecture. Not all at the same rate, not for the same purposes, not on the same chains, but it will happen. If only because, in many cases, the form precedes the function. In-game economics are very much based on users’ wallets. Simply, it happens in a centralized architecture and not a decentralized one, which limits potentialities.

So now, let’s say the blockchain is like stores and in-game transactions today. It just supports the gaming experience and no one bothers to constantly refers to it by name. Then at this time, streaming giants will start to move to it as well, if only to finally bring together the two worlds. When you think about it, it makes no sense that the Twitch economy is a closed loop and that the economy of the game being played on Twitch also is a closed loop. Followers should be able to spend channel points in the game to bring in-channel emote and skins to the game – and this is just scratching the surface.

Then, as we bring our oniric demonstration to the close, three things could happen.

1) Maybe, like Thanos, the Fetaverse will just be inevitable. Just here, so big it’s the decentralized architecture for all entertainment in and of itself. It is this ever-elusive metaverse – it was just mispelled all the time. Why not, it’s a dream after all. It would be quite nice, and such things have indeed happened in history. Look no further than Twitch: it took the wind out of YouTube’ sail to the point YouTube has completely given up on gaming content. And it started happening before the Amazon’s acquisition and extreme funding.

2) Maybe, slightly more realistically, the market leader and its parent company, the richest on Earth (which is not even an overstatement), will ultimately realize it and turn to the good, old, Fetaverse, that emerged from the depths of the sulfurous early P2E games unscathed (only morally maybe, so really, just a flesh wound). It will turn to this brave warrior and bring it into the fold, using the technology, the exprience, the user base, to create something new, making all the goats happy.

3) But, an even more realistic option is that decentralized streaming will be built with the Fetaverse and another big competitor with no legacy, bringing their strenghts together. Remember what happened with Netflix. It was a monopol, so far ahead of everyone, it had even entered the cultural lexicon. And in just three years, major content producers brought all their might to compete – and they did (at the time of this writing – is the Netflix stock even still listed? Shouldn’t someone stop the bloodbath?). I can’t understand why, perchence, out of pure randomness, EPIC hasn’t built its own streaming platform – or tiktok-like clips, or whatever other form of creative entertainment streaming morphs into. With no legacy, they could chose the blockchain as a building block and bring the Fetaverse into the mainstream.

Where we part ways

So was it all a fever dream? At least it wasn’t boring to write. Maybe tedious to read, I concede, but if you already made it to this very sentence, dear reader, the human brain commitment fallacy should have persuaded you that it was worth it, if only as a clinical case.

In any case, I’d love to hear your thoughts about it, whether you are a streamer, a gamer, a curious person with an inquisitive mind and discerning taste as every single one of our readers is, someone with more money than sense or the reverse, a greek sheperd, a goat, a bored soul, a sore boole (don’t be so binary), or just someone who really, really hate this cheap trick of long enumerations.

A literary introduction

In his novel Kim, Kipling describes the Great Game that Western powers are playing, vying for dominance in the steps of Central Asia, through means of secrecy, espionage, and occult alliances. No one knows for sure what is happening, and everything is cloaked in a veil of mystery. But the Great Game can also easily become a zero-sum game. Kipling himself admitted as much: “When everyone is dead the Great Game is finished. Not before”.

Both aspects could aptly describe the role of NFT in gaming today. Venerable, institutional players have announced with great fanfare some NFT projects – with Ubisoft the latest among them – although no one, including the developers themselves, knows exactly what lies behind them. And, at the same time, American VC funds shower inordinate amount of money on obscure games developed in South-East Asia, relying on sketchy economics, which sometimes look like a debt-fueled pyramid-scheme (latest development: VC fund a16z poured 152$ millions in pay-to-earn Axie). But not all forces are riding this wave. Playstores are not accepting most NFT games (such is the case of Axie) and Steam, the global store, has issued a blanket ban.

In those new, wild territories, great powers are thus fighting, but what is the prize? Is it really creating sustainable value? Because, at the end, this web of intrigue between Russia and England served little purpose. The English Raj, already internally fragile, had little means to project any durable influence in central Asia. And Russia, gripped with the modernization imperative, had little energy to waste expanding in central Asia. The European conflagration of the first war world war happened entirely in the West, not in the margins of Mongolia. The new exotic NFT theater captures the imagination of the public in a similar fashion than Kipling’s writing in Victorian times, but will it hold any durable importance?

To answer this question, we must consider that there is not a single use case of NFT in gaming. There are, in fact, four markedly different usages. Some of them seem doomed to failure, as they offer little more value than themselves, locked in an autotelic trap. Others, subordinate to a positive player experience, could be durably embedded in gaming, although they would seldom constitute a game in and of themselves.

P(l)ay-to-earn, or autotelic traps

The most exciting properties for investors those days are pay-to-earn games. Axie is the paroxysmic example. The game is played with a team of creatures. Each creature is, in fact, a blockchain-certified, unique item, which will be imbued with singular properties based on its defeat or victory record. Such creatures can then easily be traded on global exchanges (we are leaving here the complex creature breeding program, which will nonetheless fascinate those among our readers who enjoy horse breeding and follow with passion the latest service of Morning Glory).

Play-to-earn would be more aptly described as pay-to-play. Because, in order to constitute his original team, the player must buy it upfront, which would cost around $200 according to the latest estimates.

Now, this begs the question: Why is anyone playing this game? Certainly not for enjoyment. $200 is a steep upfront cost to play a hara simulator. The profile of those games’ main players, nearly entirely located in developing countries such as Vietnam or the Philippines, most of them having secured loans to cover the upfront cost, helps understand the primary motivation: speculation. In a way, the players are, in fact, mining a cryptocurrency, the NFT tokens. If more and more players join the game, or if more and more people think those NFT are going to become valuable, then their value will increase.

But, because no one plans to join the game for the game’ sake, this cycle is what Aristotle would describe as “autotelic”, i.e. that has no other goals than itself. Is it a pyramid scheme? Some voices in civil society have brought this critic forward. It is, in any case, primarily speculative.

Tokenomics

The large, reputable, staid international studios and distributors have stayed away from the more sulfurous pay-to-earn games. Instead, they attempt to use NFT in a much more innocuous, unimaginative even, manner. Ubisoft has, for instance, announced that unique in-game items would be NFT tokens. And that such items could be exchanged in in-game stores.

This, in effect, does not change in any way the nature of videogames. In-game purchase and micro-transactions are a stapple of most games’ business models. Secondary markets are, however, usually rare. Auction houses had indeed been implemented a decade ago but had encountered limited traction – one can remember how an auction house was underpinning the Diablo III business model, before provoking a fans’ outcry.

Now, NFT would facilitate this new model, and enable the release of limited items. It could even create unique items due to in-game activity: i.e. we could imagine a weapon that was used in the first successful raid of a major dungeon to fetch a higher value in the secondary market than its vanilla equivalent. This last point, however, would only make sense in games where players have some intense emotional, narrative investment, which are few and far between.

NFT, thus, would facilitate the establishment of secondary exchange, establishing a unique certificate of authenticity for in-game items. But is suitable for the producers? Informal secondary exchanges exist for most online games. It is an open secret that, for any competitive game, one can buy another’s player account. NFT would facilitate it and make it official. This is not, however, necessarily a good move.

Such transactions would indeed stand outside of the game’s ecosystem and would thus be worth nothing for the company. Of course, an internal exchange could be created, but then one hardly sees the benefit of NFT. If it is entirely managed in a closed-shop manner, the need for third-party authentication is limited.

NFT could serve to facilitate from a technical standpoint some game’s economics, it could even help set up internal or secondary exchanges, but none of those applications are groundbreaking in nature. They still need actual, engaging games to exist.

The magic of collectibles

So far, our depiction of the situation has been fairly bleak, more akin to a Caspar Friedrich’s painting than a postal card. And yet, there is one particular type of game that, in its essence, is well-suited to NFT. That was, in fact, very much a physical NFT game before the times.

What are, indeed, trading cards games, such as Magic: The Gathering and all its epigones (including the Pokemon cards of our youth)? Cards are issued, each with a certain rarity. The rarest cards have better properties and thus fetch a high value on the secondary market. For instance, a Black Lotus card (one of the rarest and more powerful one in Magic) is currently selling for $13 000. Like Moliere’s Bourgeois Gentilhomme, we were using NFT without even knowing it!

It is therefore a good news that, far from being a thing of the past, those games have experienced a recent surge in popularity. One needs just to look at the enduring success of Hearthstone to realize it. And, in the NFT world, the burgeoning success of Sorare, a fantasy football collectible game, is another testament of the natural fitness of such applications.

However, NFT are not everything. Certainly, enabling secondary markets – with the eternal question of whether to control the transactions in-game (and get a commission) or to stand aside from trading – would help bring a new dimension to the game and would help ride the NFT craze. But, even in such cases, it is the game itself that will, first and foremost, be the arbiter of success.

Magic: The Gathering was not popular because of trading. It became popular because of its creative drawings, its well-balanced game mechanics, the producer’s involvement in community building, etc. And this, in effect, created the conditions for a trading market to exist. The same goes with NFT.

Pokenomics

A final use case of NFT is one that has not yet been tried, at least not to any large scale. It is the fusion of reality and NFT, in a manner reminiscent of what Pokemon Go, of 2016 summer fame, had achieved.

In effect, a game could create unique items based on environmental conditions. For instance, one could imagine, in this Pokemon Go example, that the creatures, instead of being all identical, would be imbued with unique properties based on the nature of the terrain where they appear (in the middle of a busy street or in the countryside, close to a famous monument or landscape, …) One could even imagine unique combinations, such as the Axie breeding program we described earlier, based on physical contacts between players (i.e. requiring a Bluetooth connection to breed two creatures).

However, as seductive as environmental NFT is, we should keep in mind that Alternate Reality has been the cemetery of many games. In effect, aside from Pokemon Go, no game has been truly successful in that regard. It probably takes a beautiful, carefree summer, something that is getting ever rarer in our dark times.

Neither Great Game nor game of chance

“If you can keep your head when all about you / are losing theirs and blaming it on you / […] you’ll be a Man, my son”. This advice from Kipling is an apt word of caution amid the NFT craze in gaming.

Certainly, fortunes can be made creating a play-to-earn game, getting the right influencers to make the token’s value rise, marketing it to VC funds, raising a few hundred millions – and, one assume, spending it all in lavish, decadent parties in a tropical island (at least, this is what this writer would do). But NFT itself is not the primary mechanic in gaming. It can enhance the player’s experience – although it could just as easily ruin it by making it overly mercantile or destroying the fairness’ balance – but not replace it. It is an adjuvant, not a primary material; a pinch of spice, not the main course; an exciting Victorian novel, not the geopolitics of the time.