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Illuminati Round Table 🎙: GameFi 2.0

Illuminati Round Table 🎙: GameFi 2.0

GameFi 1.0 brought a rush of hype to Crypto but suffered from unsustainable business models. GameFi 2.0 aims to solve existing problems.

Call Notes:

Introducing Mewn Squad, the CEO of Superpower Squad

  • Superpower Squad is a Web 3 multiplayer online battle arena platform with numerous free-to-play games you can play on your own or with a team

  • They also have a P2E model dubbed “Win2Earn”, in which you must own an NFT to compete in the tournaments, and if you win, you earn! 

  • They aim to be part of the new generation of GameFi projects focused on evolving and combining GameFi 1.0 and free-to-play into a free-to-play world connected to the “Win2Earn” realm of tournaments

    • They aim to do this by reflecting on GameFi 1.0 and its successes in order to establish what the future needs to look like to turn GameFi into the behemoth it can be. 

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Issues with GameFi 1.0 

  • GameFi 1.0 focused on innovation of mechanics such as NFT gaming and game economies based around NFTs, the age of nodes like GALA, and the hyperinflationary model of P2E, which eventually ended up being botted for gain (40% of industry)

  • Games have short life cycles at the moment in crypto, especially ones with bad tokenomics structures, so they were doomed to inevitable failure 

  • Looking back at this, the team created Superpower Squad to avoid these mistakes

    • They didn't want anything highly inflationary to prevent the death spiral of the previous, so they aimed for a robust tokenomic structure that wasn't centered on the conventional play2earn model and anti-bot

    • This is where the inception of the “Win2Earn” model happened as not all games should be GameFi (not everything needs to be play2earn), so the team focused on experiences best suited for this and based the earning system on winning

  • Mewn believes for a GameFi game to succeed, you need a gambling mechanism, meaning everyone is giving up something to compete for a chance to win

    • For example, 100 players all put in $1, and the result is $500 in rewards for the winners

    • This emphasizes skill as the good players make a living, bad players will continue to try, and botters will lose money

    • Some measures from Web 2 gaming will still be in place for Web 3 gaming, such as skill-based matchmaking (being matched with players on your skill level for fairness)

  • Web 3 gaming is sparse as there needs to be more players, so they must target mobile gamers who feel GameFi is money hungry and useless 

    • Hence, projects need to appease mobile gamers and create games they enjoy in order to build loyalty and trust

    • These games must be frictionless in this sense; no web wallets, no gas, no slow monotonous processes; load in and play like Web 2 and be able to buy straight from the in-game app store 

Infrastructure to smooth the move from Web 2 to Web 3

  • Superpower Squad has multiple wallet providers integrated into the platform and a custodian wallet for games

  • Infrastructure for gaming checklist ~ M6 Labs 

    • Providing a marketplace for buying and selling in-game items 

    • Wallets that are easier to use 

    • Identity management

  • Mewn stated there had been a slowdown in investment from venture capitalists into GameFi

    • Flawed founders, bad launches, lack of understanding of Web 3 gaming, and wasted funding rounds are causing VCs to hold off heavily to protect their investors from the unstable market of GameFi startups

  • Mewn’s View from the perspective of a VC; would only invest in:

    • Any valuation of >$50 million is unjustified without active users and proven value 

    • Projects that are innovative and could bring in new users 

    • Projects that are solving problems of GameFi 1.0 in new ways 

    • Projects that have a combination of web2 and web3 gaming founders/executives to have an understanding of both sides 

    • People with a ‘cheat’ for going to market, a way to attract Web 2 players 

    • Next trend - see the game, play the game, like the game, invest in the game

  • 90% of investors haven't played the games they want to invest in

    • They just want the hype cycle, and they don't care or believe in the game, so this creates a shaky foundation as these investors are likely to make quick exits

    • This can be expected in the VC world, where investors are required to have a broad knowledge base of many industries

  • M6 labs ~ how do you decide ( continue from 24.30)

    • Play the game 

    • Look for the team and their experience - look for experience launching successful companies and success within the domain 

    • Look at the other investors to determine if it's a good one or not 

    • Tokenomics - good (sustainable) tokenomics model for the ecosystem and investing

      • Like Real Yield, good tokenomics = balance between user incentives and revenue attained recycling fees back into distribution

  • Where will GameFi go, and how well will it do in the bear market?

    • Mewn said he sees GameFi on track to be the most significant catalyst for Web 3 mass adoption compared to all other channels, and it’ll be the indication of the next bull run in crypto, even if it is just a GameFi 2.0 bull run 

    • It's only a matter of time before a GameFi 2.0 project cracks the code of how to bring Web 2 users to Web 3; everyone will copy this and spur a mass flood of new entrants into Web 3/GameFi 2.0

    • He believes the industry is close to identifying the correct mechanics to achieve this

      • Such as a free-to-play game connected to a play2earn match to allow the user to play the game for fun and progress into the play2earn side 

      • Also, removing friction is vital, as mentioned before. 

Web 2 AAA gaming studios moving to Web 3?

  • This could cause a boom, but Web 2 gaming studios have too much at stake with their already existing billion-dollar audiences and investors

  • As a result, the transition to smart contracts and dApps may be challenging for Web 2 development teams and hinder their ability to produce a good game

    • So it's best for the GameFi founders to do it first and Web 2 founders to come later

  • Question: How will the P2E/crypto games do on mobile with high in-app purchase fees? Recently, Google put 30% fees on NFT purchases

    • Mewn says that mobile crypto games will just have to pay the entry fee, that's the cost

    • Maybe there will be Web 3 app stores in the future, so this will be avoidable, but for now, you have to pay the fee. 

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