Late night musing: Of Twitch, DAO and the Fetaverse

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, an ETH sub-chain that allows to mint “creator coins”, but even for the biggest ones, it remains a small-scale experiment. In 2021 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, 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.