Yat Siu & Justin Waldron: The Future of Crypto Gaming at KBW2025

So, I'll quickly start. Yeah, chairman and co-founder of Animoca Brands. I think we're most known as being an investor in the space. We have over 160 gaming portfolios over the 600 companies in the mix. And when it comes to the gaming side, I think we have two main things we focus on, which you can talk about me a little later. One, we do think next year is going to be really big for blockchain gaming. Ask me why later, right? But the second point is that we actually think the opportunity from an investor standpoint is very much in the liquid markets right now relative to, of course, we are investing in a lot of young startups as well. However, the market we feel is a little bit depressed and we think there's a lot of strong quality projects out there where the tokens are currently live, right? Versus four years ago where the market was still emerging, right? So, we think that's an area that we're focused on in sort of investing in projects that are actually live out there, investing in the tokens, supporting them, driving because most of the on-chain activity of growth actually comes from blockchain gaming. And the other area we're focused on is digital identity, right? Digital identity is a way to create better reputation scores for people who are playing games but also other things because in blockchain gaming and finance is kind of tied to each other. So meaning if you have a very strong gaming credit score maybe that means you can also have a good finance score on the other side, they kind of tie to each other, which is sort of in the vein of web 3 amongst other things. And the other area of course that ties into is using that as a venue to develop more financial literacy which we think is important to bring web 3 adoption especially in gaming as well.

I mean, AI is everywhere. And to me, if I was to use a parallel, it's kind of like, you know, how people talked about sort of crypto and blockchain as a bubble back four years ago or five years ago or six years ago, and now it's kind of just everywhere, right? Like for instance, people talk about how, oh, NFTs are dead, but NFT sales in terms of a monthly basis is about a half a billion plus a month. So, if you're in the space, you know it's happening, but if you're outside of the space, you might think it's gone. And to me, that's kind of AI is the same as we use AI everywhere and it's becoming so ubiquitous that maybe people don't even think about the tools you're using and the products you're using are all AI developed whether it's in gaming or in other areas. So I think it's more like is there a hype? Maybe a little bit, but it's true as in it's something fundamental to everything we do. Like if you're a company that's not using AI, you become irrelevant. Kind of like if you're a company that wasn't using the internet years ago, you're irrelevant as well, right? In terms of gaming, of course, the most obvious use case is production and so on. But the things that we're most excited on, one is sort of agentic AI inside games, NPCs. You've been talking about that for a while, but cost was prohibitive. As cost comes down, I think sort of AI inside gaming can really sort of develop new forms of gameplay. And the other one of course that being involved in the creator economy is using AI tools to create games, right? So, Vibe Coding is really getting to a point where it's very, very advanced in develop. And when you think about what are the two biggest game platforms in the world in all gaming, sort of trad gaming, if you will, Roblox and Minecraft, and what is the key ingredient to them, it's UGC, right? It's user-generated gaming. And what has been the roadblock is how do I make games better and more powerful as an amateur, right? And so, the tools were done in a way where it's easy. Like in Minecraft, I just build blocks and Roblox have simple tools and now I can basically just ask an AI to basically just help me code more sophisticated games. So pretty excited about that.

So, no, that's a great question. First, I think when you talk about sort of business innovations, you prefer, you know, we talked about sort of the premium business model that basically Zynga popularized around the west. The next form of basically the business model really comes around how to manage treasury management of the tokens that you have in your ecosystem. So when you build a token ecosystem, it's not specifically, and I think this is where the challenge we had with previous, let's call it web 2 to web 3 attempts, shall we say, right? You know, the classic web 2.5 thing, which to me felt more like web 2.1 or web 2.2 too really, which is that they basically translated the gaming business models of premium into just web 3 but not actually taking advantage of what web 3 was really able to offer meaning that skins were NFTs and basically virtual currency were tokens but they sold in the same way and effectively sort of did actually something that was quite damaging to the community because they ended up diluting the ecosystem because they were assets but traditional gaming developers don't think of their production as an asset, they think of themselves as content producers. They're making movies and entertainment. They think of something that is not sort of supposed to be lasting in the same way, but so the result, they made mistakes in that process. When you have a treasury, you can actually do things like treasury management. You can engage in the market for instance. You can work with market makers to get a fee out of the transaction fees for instance. You know four or five years ago we didn't have sophisticated purpose markets. Now we do. So if you have a treasury, you can actually sort of be in the market and you can create yield from that. And when you generate yield from that, you then actually can sustain the game development and actually make more money perhaps that way than necessarily selling your tokens down as it were. The other thing of course is that not only is it not adversarial, what happens is that it becomes aligned and that's the whole thing about web 3. You want to try to align yourself with the community. How do you do that is if you get more energy into the token, more attention, more users to use it, then actually you get more liquidity. When you get more liquidity, that's when things like market making more fees. When you make more fees, then you get more revenue, right? But the challenge is that people who make games don't necessarily have the financial experience to operate like a hedge fund, right? And so this is where sometimes where companies like us come in and we try to help in that area but you can work with others and that's something that we discovered over the years as to how to create a sustainable business model in the web 3 gaming space and tokenization which if we continue to do what we did 5 years ago we wouldn't be able to generate sort of hundreds of millions of dollars of revenue a year if we did that right and so it's kind of part of the exploration and I'm not saying we figured it out I think everyone's still looking sort of new directions and I'm very excited also what is happening on-chain, you know, with Hyperliquid with sort of dex purpose markets there's more that can be done. The parallel to me is like if you look at for instance someone like Sony everyone knows Sony for the electronics and for Sony PlayStation and for all the games they produce but most people don't know that Sony finance is actually responsible for most of their profits, right? And what happens in blockchain is often the finance component accelerates ahead, right? And so you need to have that capability so if you don't have financial literacy or experience in this then it's very hard for you to compete in web 3 broadly and that's true for web 3 gaming as well.