Hello and welcome to Blockchain Gaming World episode 189. I'm your host John Jordan. Don't forget to check out my daily email, you can find that at gamestx.substack.com. Today's episode I'm very pleased to have Yat Siu, the founder and chairman at Animoca Brands. He's back a year on from his conversation that we had last year, which was actually one of the most thoughtful podcasts that I've done. I've certainly thought a lot about what we discussed then, which was mainly about meme coins, the value of meme coins, what they mean in UGC and what they mean in the broader world of crypto. We sort of pick up a little bit where we left off there, so we start off talking about meme coins and are they still a thing, obviously they are, have they developed in the last year, what do they mean for crypto going forward, what do they mean for this idea of digital ownership that Yat likes to talk about in community. Then we talk about a couple of other trends which I think are very important and which Animoca has been closely aligned with. So they invested quite heavily into the TON ecosystem last year, so the Telegram's blockchain, so we talk about whether that's still a big thing or whether that sort of burnt out in 2024. And we also talk about AI agents, I mean how could we not, but Yat has some interesting thoughts around that. And obviously AI agents could tie up a lot of different aspects of crypto and blockchain gaming together. So again a really deep conversation. It's one of those podcasts where you're trying to sort of parse everything Yat's saying at the time and trying to have an interesting response. I think it's one you have to listen to maybe a couple of times, but really good. Yat has a very deep structural thinking around what's going on in the world of blockchain and consumers and gaming. You'd expect that especially from the chairman of Animoca Brands. Also interesting just to note that we do touch on the fact that Animoca is not working so hard in games internally as it was a couple of years ago, so it's another interesting way of setting the scene for where games fit into the wider blockchain consumer ecosystem. So I hope you enjoy the conversation as much as I enjoyed having it. Don't forget to subscribe, got some really good guests coming up in the next couple of weeks so don't want you to miss out. But on with the show.
Hello everybody and welcome to the show. We are joined as we often are this time of the year by Animoca Brands chairman Yat Siu. How's it going Yat?
Very good, thank you for having me again. It seems to be a regular occurrence just to do it around the New Year.
Good, no it's a good, I found it a good starting point to set my aspirations for what you think the year is going to be and then think on those things. So I'm actually going to, I'm sure you've forgotten because you've done so many interviews since then, but when we spoke this time last year we sort of got into a bit of a thing about meme coins and it was philosophical and interesting and I thought about that a lot actually since then. So I thought I'd sort of go back to meme coins because they were obviously there have been a thing for as long as crypto pretty much. And I guess me being slightly sort of traditional despite being in blockchain all this time, I was sort of anti-meme coin, not anti-meme coin but sort of like what's the point of these meme coin things, they're just silly, you know whatever. And you were pointing out well this is, you know, we should be thinking about maybe these silly things because they have value and people have produced them and people can use them and all this sort of stuff. So we got a bunch of other stuff that I want to go into but meme coins I think a good sort of starting point. And I guess you know, meme coins I wouldn't say they were one of the big trends of last year really, well they certainly were, they kind of were in the second quarter they were really big then. Exactly. So do me and I guess generally when we're talking about stuff there's also what Animoca is doing as a sort of entity and a venture company as well. And I don't think you've done much in terms of meme coins yourself so I just kind of wonder how, you know, there's your personal view on, you think deeply about people owning digital assets and what that means for the world and how that in Animoca, so where are we with meme coins?
So first of all, optimistic about meme coins generally. There are a few things obviously that we have to look at but just to sort of maybe correct that statement, we're actually fairly involved in certain aspects of meme coins. Like for instance, you know, we invested in companies that are basically building games on meme coins, like with the Shiba Inu ecosystem. You know, I look at meme coins really as a distribution network as well. It's kind of like the new kind of app store. When you think about what is a token, it's a representation of a network effect. They represent community network effects and if you are able to attract the attention of large meme communities then you have a product. That's an example. The other one of course which was a very big launch at the end of last year was Pudgy Penguins and we're investors in basically Igloo and involved in the launch of Pudgy Penguins which was actually, you know, it's a, I would say it's perhaps the meme coin that has the sort of best utility amongst meme coins as it were. And by the way that to me is really interesting because it may start off as a meme coin or memetic in nature but then later on part of its narrative becomes its utility, right? You know, and when you look at NFT collections launching tokens actually they are meme coins. Or now of course what's happening, meme coins themselves in order to deepen the network effects of their communities they're actually launching NFTs of their own. So you see this classic cycle that's happening because they're all cultural in nature. So I think that's happening there. And so why I'm bullish about broadly meme coins as well is because meme coins to me are kind of narrative indicators of what is actually popular. Meme coins is an open market, Polymarket without being Polymarket. Polymarket you're placing a specific bet on something but actually meme coins are launched and its price action and popularity gives you an idea of what that sentiment might be in a certain environment. Like for instance, a real example, you know, my daughter was talking to me about Chill Guy and you know I'm not really on TikTok so I had no idea what Chill Guy is normally. But I said yeah I heard about Chill Guy but why did I hear about Chill Guy? Because of the meme coin, not because I hang out in TikTok, right? And it's kind of not that different from back in our day, how do we get our news? We read a magazine and we look in a newspaper, we say oh look at this, so I hear about a sort of cultural phenomenon in the newspaper and suddenly you know, but maybe the kids would have seen it on MTV. How do you know that? So again it's kind of these things that draw together and brings communities together. Now AI agents actually are memetic in nature as well. And just to be clear, you know, like I think this thing about Homo narrans, right, which is we are narrative storytelling creatures. We're the kind of people that sort of, you know, as a community we live on stories. Like you could argue that money is a story, you know, democracy is a story, right? Politics is a story of some sort. And we then find a common consensus. And what is a meme? A meme is actually one that we agree with each other. The memetic nature is that you agree and I agree that this is cool and if a million people agree then it becomes a more popular meme as opposed to maybe just people, you know, like 10 or 20 people for example, right? And so these are constructs. And so to me they're indicators of what the world is looking for. Clearly there is a gambling aspect, a speculative aspect that ties into this, well we shouldn't forget that, right? But the energy that goes into that can only really happen when the community agrees that this is the meme worth pushing. Which is why you have things like political memes or silly cat memes as well that go into it. Or orchestrated memes which to me, for instance, Pudgy Penguins is an example of a very well orchestrated meme that is entering meme territory but wouldn't be normally classified as a meme in terms of the way that it was launched. And I want to close with that statement, you know, like Murad and all these guys are saying oh you know fair launch and whatever. Let's be very clear about one thing, even these so-called fair launches on Solana are not fair launches because snipers are out there basically just being on that insider side, basically sniping the market. And so therefore you have to be mindful how you launch. It's not as easy as just launch a token, right? And also, you know, what the community may or may not expect. I mean you can say it's just a meme so don't expect anything but of course, you know, if it doesn't go in the hands of the community but it goes in the hands of snipers basically just taking everything then you destroy the construct and actually you harm the reputation of whatever meme that you're trying to put out. And that's really a fancy way of saying that, you know, VCs have very much value in the space because VCs I guess to some extent like ourselves we are willing to lock ourselves up. We're willing to say look 3 years down the road, 2 years down the road, you know, once the ecosystem is built up we will then have some releases and we'll do something and you'll know what we're doing as opposed to the so-called fair launch that actually just goes into the hands of people that actually just really wanting to dump on you, right? So there's this thing. And so that's the part that makes me a bit more negative on memes, not because memes are not powerful and important but because it's being abused on one cycle. Like memes are great but you have the abuse that happens and this is not VCs abusing it because they're not doing sniping, right? It's the snipers that are doing it but they're trying to stoke this narrative around oh VCs are bad. But actually, you know, and by the way, you know, VCs can be bad too. I'm not saying that it's not true necessarily. All I'm saying is that it's not as black and white as they make it out to be and it will draw away that attention of meme coins because people aren't really succeeding in this way or building communities in this way because essentially you have this sniping action. So just be mindful of that. That said, I think I'm bullish about meme coins especially creating more utility as platforms, as distribution and as icons of Web3 culture.
Yeah, yeah, there's some good framing there. I guess Pudgy Penguins as a meme coin I guess was interesting. I don't think they would consider themselves a meme coin. I'm not seeing that they, I mean obviously, oh no they do, I mean they're basically, yeah, they're saying you know we're going to be Doge and we're bigger than Bonk. I mean that's already kind of saying that we're basically going to be out there being the biggest meme coin. And I think there was one point where Pudgy Penguins was the biggest meme coin on Solana and fighting for that position. But I guess what's interesting there is you say, you know, the Pudgy Penguins came from sort of a failed or failing NFT collection and that then sort of became real life sort of, I mean much credit to Luca and his team basically.
Absolutely incredible. And it's also the reason we backed them because, you know, there was an energy and a drive there that was necessary. And it actually gives a lot of hope for other NFT projects. Clearly after Pudgy Penguins, you know, all the other NFT collections started to go like oh what's happening here. Whether they will succeed as well or not is a different question but it certainly brought energy into the space particularly with NFTs.
Yeah, yeah. And I guess it does make more sense. One of the weird things I thought, well obviously the Pudgy Penguins and there's Igloo, their sort of holding company. But as well as that, if you're saying that's a meme coin, which I didn't pick up, they're obviously launching their own blockchain called Abstract. So there's a sort of a secondary thing. So I guess some meme coins are sort of, there's a purity around them. So Doge is obviously famously some bloke who hated crypto created a meme coin that became the biggest meme coin because he basically dumped his keys so all it could be was taken up by the community I guess. Something like Pudgy Penguins it's slightly more nuanced because there's all these different elements going on. They got obviously games, various games based on Pudgy Penguins also coming out. So I guess they're not a pure meme coin because a pure meme coin exists for its own sake rather than having any, but you do, I mean I guess I would challenge that thought a little bit because it may start off as that, I mean in some ways, you know, but then actually the community picks it up and when it's owned by the community which is what happens with meme coins, they shape it in their own form and create a culture around it. Whether the culture, you know, whether the culture is them or the culture takes them, it depends on the strength of each community but that's actually what happens, right? And so when people are launching games on like say Doge or Shiba or Pudgy Penguins, are we actually talking about the fact that the game is creating utility and therefore that makes the meme community, no it's just actually just an added utility. I mean we could probably argue that the birth of Bitcoin had a meme nature toward it in terms of essentially as a revolt to the financial system, right? It's a meaning behind it, right? And now people do all sorts of things on Bitcoin or Ethereum for instance as well. You know, today you're not looking at just its sort of messaging at start. Now you're joining Ethereum because this guy's building a DeFi protocol or this guy's doing something cool or someone else told you about it unrelated to the team or unrelated to its original nature. It's completely changed from what it was since birth. And so I think that's the evolution. And by the way I think that's why certain meme coins will succeed in the long term. And the reason why is that when you have certain type of utility embedded, the utility becomes the narrative of the meme itself, right? In other words, hey, you know, like we're talking about AI meme coins, what is that? What it really is, it's a meme coin that has an AI narrative. That's all it really means, right? And so if you want to evolve yourself as a starting meme coin then you have to be relevant like fashion. So that means whether this is an AI or whether this is games or whether this is whatever cycle, you have to, the community picks it up and it's up to the community to say we're going to go there, right? Just being a meme for meme's sake can work for some but won't work for most. And I think also if you think about, you know, I think I may have said this on your show, you know, we think the institutional era of crypto has come. So if you're an institution buying into essentially tokens you want to look at something that you can put a plan around and that's going to be hard if it's just a meme coin. But I fully expect in the future there will be things like meme coin ETFs or there will be for instance listed companies that might be buying meme coins, right? That's going to happen. And it's going to be easier to do that when you have a narrative to go with it, right? So memes to me are just narratives that we follow and agree with and so the utility adds to the narrative, it may not necessarily be the narrative itself.
Okay, I guess I always go back to you can't be a meme coin if you got a road map. So I guess that's sort of, maybe we sort of split the difference there. So yeah, so it's not a road map but it's people doing stuff and then a network effect emerges from it and you go oh what's this. I have to say, so a small outcome of my thinking from our last discussion about memes actually was when it came to the 5th, the 1st of November, I was like well I should have a little wager on what's going on in America. And I kind of thought what should I do and obviously Polymarket was sort of baked in and then, you know, I don't really want to buy Tesla because, you know, Tesla's through the roof. So I did buy a very modest amount of Doge because I kind of thought that that's going to be the leverage if Trump wins, that's going to be the leverage of Elon's sort of power in the industry. So that worked quite well. So and I would sort of see back to your ETF, I would sort of see almost a Doge ETF to me makes much more sense than a, I don't know, a Ripple ETF or I think a Litecoin one's just been in, I mean that seems, you know, Doge is I think the purest, the biggest meme coin so it has that sort of purity. Anyway I don't want to get too bogged down in meme coins, we got other stuff I want to get your opinion on. So another big thing that you guys as a company and you personally were quite quick on to, again I was not so quick, slow on this one, was Telegram as a distribution method. You've spoken about meme coins as a distribution method but Telegram and the TON blockchain. So you sort of in the sort of Q1, Q2 last year you were actively doing stuff with TON and I think you sort of explained why you think that's the case. I wonder again with the trend, how do you see that one playing out? To me I found that one sort of came in really hard for a few months and then I struggled to see strong sort of outcomes from it. That may be because I'm too impatient, that they may be coming, but how do you see that? Someone you're becoming more crypto.
Yeah, it's like what's happening this week, not enough anyway. So I mean I guess the first thing I would say is, you know, when we got into Telegram really which was like in '23, right, it was the vision around basically how do we tap into that audience. And actually I would say that vision has proven out and has continues to help companies today in terms of getting distribution and reach, right? You know, whether this is like the Hamster Kombat or whether this is the Notcoin and so on, right? You know, it did literally bring tens of millions of users into the ecosystem. Now of course, you know, you have the Sybil attacks as well. And so what you see and this is where some of the weaknesses of TON came about, but that's actually where blockchain comes as a solution. Because now with blockchain you can now look at the wallet and you can start to determine okay so were you a net extractor, are you a real user, what have you done with it. And eventually I see the evolution of airdrops which is basically a form of marketing really as just evolving. And at the end of the day Telegram is still the most powerful distribution platform. The issue of course is it's harder to determine the quality of the user but again because they're building on chain you can get better and better and better at it, right? So for instance Hamster Kombat which was really a hyper-casual gaming platform on Telegram that reaches a lot of users now has a very sizable advertising business because they're actually now able to reach to the actual users that they know are actual real quality users because they're using the game. And in some ways the game becomes a proof of humanity and proof of action for you to then determine whether I should pay advertising. And so it becomes more efficient to advertise on Hamster Kombat for a Telegram user than necessarily just doing a mass airdrop on TON by itself. And actually that's what happens, right? Like if you've got a blockchain we'll build and compose new products and services on top and it'll evolve from them. So I'm very bullish on that. And you know, we shouldn't forget that one thing that dampened really, and again this is narrative, dampened really TON was what happened to Pavel, right? When he got arrested.
Well that's what, yeah, I mean the drop actually happened because of that and then there was a cycling around and he has actually, he's still as far as I know is still in France, unable to leave, right? And so I actually think there is a little bit of concern, there's a little bit of a heavy air that's sitting around.
Yes, the resilience to me has proven that, you know, TON didn't go down to one, right? So that's really good, right? So that's resilience. But I think if he does get out and it's settled or whatever it is, I actually think it's going to have a huge impact. It's kind of like, you know, why wouldn't it? I mean if Trump and Elon have an impact on Doge then why wouldn't Pavel have an impact on TON, right? Sounds like it should make sense, right? And really what it is is investor sentiment and confidence, right? And so the confidence part is something that people sit back and who are the ones that need this confidence? Well retail a little bit but actually it's also institutions, right? If you're an institutional investor and you're buying a token you have to justify it and then you say hey, you know, oh you're buying TON, hey wait hold on isn't the founder of TON stuck in France, what's going on here, right? Like these are things that, you know, if you're a fund manager you have to answer for it. And if it happens not to work out what's the downside? The downside is pretty big, right? If, you know, from a job security standpoint. So these are factors that come into it. So I do think that his release will have an impact narratively but the utility of TON is undisputed at this point and I think will continue to do so. And what I love about it is that it doesn't insist that you use TON exclusively, no. Like you can build on TON and you can leverage the audience but you can build your own blockchain or you can build a separate game. And the smart guys are actually really leveraging those viral network effects, those viral effects and growing the network strength and then building really cool stuff. So I think that it's a really positive net contributor to Web3.
Yeah, I think the, I mean TON as a token I think has performed sort of as, first of all much better than people would have expected considering its co-founder has been locked up in France for six months whatever. I guess yeah what's interesting is that now we are seeing some people launch sort of fairly sophisticated games rather than just the tap to earn stuff. I think that will got blown away. Yeah, yeah. And but they're connecting to other blockchains. So now you see I think Ronin people are connecting to Ronin, people connecting to Immutable, that sort of stuff. That's more interesting. But I guess some of those, you know, I guess particularly Hamster Kombat was the one that was announcing massive massive numbers and I think that sort of froth has blown off. So I guess we see whether Telegram as that sort of app network, how, you know, again it comes back to distribution which is the biggest issue in Web3 still. So that's useful. I guess what it plugs into we wait and see.
So the way I also think about it is that I think Telegram, although it's much bigger than that, but Telegram is a good illustration of the future of app chains. Yeah. Okay. Because for instance when you think about an app chain of course Telegram being, you know, of course much more than that, TON being much more than that, but really the reason you use TON is to leverage Telegram. So it's got an app chain like narrative. You wouldn't use TON if it wasn't for Telegram. And so what really TON does is it opens up its community construct but also I feel what it does also is essentially ensure that Telegram will survive forever because people will build new constructs and layers on top of it and have a vested interest in the success. I mean that's a perfect way in which your community gets to own the network much better than holding shares in Telegram but actually by owning essentially TON tokens, right? And I see this happening with games as well, right? So there's all this debate before about oh do we use this chain that chain for the game whatever and they will use that as maybe a settlement layer, okay? But actually I think the app chain element of, you know, particularly the medium to successful games launching their own chains to leverage network effects that then basically end up relying on the maybe the security of, you know, basically L1s, that to me actually is the next evolution because it allows people to compose and add towards these ecosystems, games included. So very very excited about where that's going and I think we'll see a lot more chains launching. By the way these chains launching don't necessarily need to have their own token. I mean Base doesn't have a token, right? But it allows people to compose and build on top of it and that to me is kind of heralding the future of the API economy as it were. Like API economy was the way that we used to think about that but actually doing essentially a chain is essentially a quasi API opening and it allows this kind of composability where then your community can be with the meta wherever it needs to be, right? So because that's the thing, right? I think what we can see with blockchain is that, you know, are you doing a meme or are you doing an AI agent or are you doing a DEX or what is it? Like how can one company possibly navigate all of this? And I think that's the struggle that centralized game launchers have had because they're like oh well do we now do more this or do we do more now that or how do we design our token because you can't possibly react to the speed of the market by yourself. But if you open the tools to the community which is what essentially an app chain does then actually you create that. Of course you give up much more control of where the game is going. And I think this is what's so powerful about what happened with Ronin because, you know, now you tap into the Axie community and then another community like Pixels joins it and then now everyone is sort of partaking in this not only because of one or two games but just because you want to tap into the audience. And as you know of course if you look at classic Bartle's model most people play games at the end of the day for social reasons and that's where they stick, right? So they might even, you know, in the classic Web2 gaming world you might say oh they came because of the fun because they wanted to level up or wanted to have this and then they stayed for social. Well in Web3 they came for the money but then they stayed for the social as well, right? So we see that impact happening as well and it shows that longevity that you see, you know, how everyone used to write off Axie Infinity and look it's here.
