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Culture Shock: Web3's Impact on Digital Property Rights


Episode 8 - The Open Metaverse Podcast

In this episode, Animoca Brands' co-founder and executive chairman Yat Siu discusses the potential impact of Web3 on culture and economics.


NFTs are seen as a way to store and represent culture, and the decentralization and tokenization of economies through blockchain technology are seen as a way to provide more equitable and meaningful stakeholder relationships. Yat Siu also shares his views on the importance of digital ownership, gaming NFTs, and DAOs as a way to democratize decision-making, and educate people about the values of democracy.

Web3 Vision 🔮 (1:54 - 9:08)

  • Web3 (metaverse, blockchains, etc.) is analogous to the construction of new economies

  • Tokenization allows for various cultures to be transformed into tangible economic units

  • Internet allowed people from all over the world to come together around their common interests and create new identities - independent from their physical identities

    • Web3, as a whole, is an even further extension of this idea

  • “Culture” is a large part of our lives - it formulates much of how we form our identities (how we view ourselves, the clothes we wear, the cars we drive, the food we eat, etc.)

    • “The human experience without culture is not an experience at all”

  • NFTs are a store of culture

  • People are skeptical of this idea because “it does not trade well” - but that’s not the purpose

  • People form part of their identity around - it is more than just valuable in terms of money

“We engage with culture first and non-fungible tokens represent the store of digital culture”

Is Culture a “Network Effect”? 🫂 (9:10 - 15:48)

  • Although it is not directly measurable, it is arguably the most powerful network effect

  • In the traditional sense, nations have “hard” power (military, monetary influence, trade, etc.) and “soft” power (media, literature, etc.) which lead to different ideologies being formed by citizens of that nation and by the rest of the world

    • A country may censor different forms of entertainment to halt the spread of certain ideas, if it does not agree with the ideas that they want to put forward

    • The internet was able to spread cultural ideas to everyone who was willing to listen, regardless of your nationality and location

  • Ideas are the source of revolutions and change

    • Revolutionary ideas change how we view the world - they are a “moment of culture, not a moment of money”

  • NFTs and blockchain allow people to develop culture in a quasi-mathematical way, which can translate to monetary value

    • Fundamentally, consumers choose one brand over another due to the culture that each brand promotes

    • Blockchain allows for the immediate verification of users interests (through past transactions) and creates an easy way to value culture (through NFTs and previous sales)

  • Originally, NFTs were dominated by traders

    • Traders are necessary for liquidity, price discovery,

    • More recently, most NFTs from a collection are held by users, rather than actively traded - which signifies that most people are holding on to their culture

What Will Crypto Look Like in 2030? ⏳ (15:48 - 24:40)

  • One of the big visions is to “deliver digital property rights” - everyone should own equity in what they help to build

    • Without the data provided by their users, there would be no [insert large tech company] (Facebook, Google, even Tesla)

    • It is time to step away from the idea of: users should surrender all “derivative effects” as a sort of payment for being able to use the platform

    • A goal is to provide Universal Basic Equity, which differs from Universal Basic Income because equity is something you earn - users will be compensated for the quality of data they provide to platforms

  • Ultimately, blockchain and tokenization allows for truly meaningful stakeholder relationships with shared network effects between platforms and their users

    • “Why doesn’t every Uber driver earn shares of Uber?” - it’s a great model for owners and investors, but is unsustainable because it is purely extractive in nature

    • First, platforms must be profitable and comfortable enough for them to start diving into deeper levels where they can ask these questions of how to become more sustainable

      (similar to how emerging countries are not focused on ESG initiatives over growing their economies and creating better quality of life for their citizens)

Importance of Digital Ownership and Gaming NFTs 🧠 (24:50 - 34:46)

  • Animoca got involved in NFTs through Crypto Kitties

    • They had recently acquired a company that shared its office with the developers of CryptoKitties (Axiom Zen) (before Dapper Labs)

    • Co-founder of Fuel Powered (the company acquired by Animoca) went on to become a co-founder of Dapper Labs

    • This led Animoca to become publishers for CryptoKitties and shareholders of Dapper Labs

    • CryptoKitties felt much more culture-focused than many other projects at the time (similar to how users associate an identity with their in-game characters)

    • This was the birth of the idea that NFTs and gaming should be the future

  • Invested in and began working with companies such as OpenSea, The Sandbox, Axie Infinity, WAX, Polygon (now have over 300 investments)

    • Gamers already have a relationship around ownership of their in-game items

    • Everyone thinks they own their in-game items until they realize that they don’t (something happens with their account, terms of service change, etc.)

  • Realized that if it was possible for users to regain ownership of their in-game items, it would be possible for all forms of content

    • There will be all sorts of new services that emerge around digital ownership - many that we have not even imagined yet

    • For example, in 2017, we would have never imagined NFTfi (lending, borrowing, AMMs, etc.)

  • Gaming is the only category, at scale, that is digitally native

    • All other categories are connected to the real-world

    • Digital items begin as entirely virtual but if they gain enough traction, they influence the physical world

    • Gaming has a history of bringing virtual things with impact in the physical world

    • Gaming is now a larger industry than film and music combined

Main Blockers to Web3 Adoption 🚫 (34:47 - 38:26)

  • Many people are so married to the network effects of a country or a company that leaving seems too expensive despite the cost of staying there

    • Things have to get really, really bad before someone will leave everything they know / have for a new start

    • Leaving your network effects is a big sacrifice but there is always a cost too great

  • For users to migrate to Web3, the cost of staying must be greater than the cost to migrate

    • We have difficulty leaving social media companies because we are attached to it, we have influence there

    • Fortunately, there are no digital borders - the cost of leaving is not as large as real life

Views on NFT Royalties 🤔 (38:27 - 54:04)

  • It is ultimately up to the NFT marketplaces to decide whether or not they are going to enforce royalty fees

  • Royalties are so important because:

1. Royalties are the engine that keep the independent creative culture movement going

  • Without royalty fees, we will fall back into centralization

  • Value distribution allows for power distribution

  • To have a truly decentralized network, the value / money must also be appropriately distributed

  • Once you have absolute power, you no longer engage in actions that serve the majority - therefore, the power must be distributed

2. Royalties give the ability for projects to provide a low barrier to entry (low mint price) while simultaneously adding long-term value to the network

  • Low mint price means the NFT project does not immediately price people out

  • Royalty fees allow for creators to earn revenue, which can lead to further growth of a project

    • Without royalty fees, you would not have Mutant Apes, Cool Cats, etc. - any continuation of a blue-chip project

  • Investments should be made with a long-term mindset and with the realization that not all investments will win, but all will at least grow the overall talent pool within an industry

  • Originally, NFT royalties were more of a “gentleman’s agreement”, rather than an enforced policy

  • Now, NFT marketplaces use zero royalty fees as a mechanism to bring the market to their platform under the guise of lower prices for a popular collection (at the expense of the creator)

    • Zero royalties should be the choice of the creator, not the NFT marketplace

NFT License (51:00 - 54:04)

  • If a platform violates the royalty fee requirement on a collection, the creator can force the platform to take down the collection from their marketplace or to enforce the royalty fees on the collection

  • “Royalties lost” (royalty payments avoided by traders on NFT collections by using platforms that do not enforce royalty fees) has grown to 18,000 ETH

  • Meant to function as a terms of service that projects can advertise to the NFT marketplaces, as a way to hold platforms accountable and level the playing field

Views on Soulbound Tokens 🪙 (54:05 - 58:05)

  • New innovation that allows for on-chain verification of work and achievement, which leads to enhancement of personal reputation, similar to the physical world

  • One thing to be mindful of is the way that we exist with multiple identities

    • We are already living multiple identities : each of us have our own nationality, ethnicity, etc.; have different interests and are members of different groups; and all have different “personas” / engage in different behaviors based on the people we are with and the relationships we have with them

    • It would be virtually impossible to create one soulbound token to encompass all of our on-chain identity

    • Privacy is still the most important part of the equation

  • There must be a trustless and safe system that can tie our physical identity to our on-chain identity - SBTs are an interesting approach to this

Views on DAOs & Governance 🗳️ (58:05 - 1:06:46)

  • DAOs are the future of organizations and will be larger than companies

  • Involved in ApeCoin DAO, which manages over $1 billion treasury

  • Largest drawback of DAOs is that it is difficult to gain consensus and agree on a direction

  • The other side of the argument is that if you create a product that has been generated from an initial consensus by the community:

    • The community has already bought into the idea - the team does not need to sell the idea to the community members

    • Every member has a stake in the outcome of decisions - leading to a stronger sense of community and accountability for all decisions made

  • DAOs represent a new medium to educate people about the values of democracy

    • People rarely experience democracy in their daily lives (work, school, and family lives are rarely democratic), which leads to the true value of democracy becoming a foreign concept

    • DAOs allow for the democratization of decisions related to digital ownership

      • Anyone can make a proposal to a DAO, be elected to a council, etc.

  • DAOs will reinvigorate the democratic process

    • There will be thousands of DAOs - many of which will not work

    • These DAOs will allow for experimentation that is not possible in a traditional democratic system

    • DAOs today represent approximately $12 billion in collective treasuries (roughly the size of a small country’s federal reserve)

    • DAO treasuries will continue to grow and as they grow, so will their meaning and importance

“Ultimately, we need to engage this way where we have to understand the politics of our world. We can’t just say: ‘this is not for me’ and step out because if we totally step out, we are removing ourselves and being unaccountable for our role in society.”

  • Voting is a duty - it allows us to ensure that our society is run in a way that protects our interests

    • Do not think that your one vote is meaningless - it is not

Rapid Fire Round 💨 (1:06:47 - 1:16:26)

Top 5 NFT collections that you own / are excited about? (1:06:56 - 1:08:21)

  • Bored Apes, Mocaverse, Cool Cats, Sandbox, and Torque Squad

Last Google search? (1:08:22 - 1:08:57)

  • Economic statistics of countries to compare DAOs to nations (for an upcoming TED Talk)

Biggest pet peeve in crypto? (1:09:00 - 1:13:34)

  • “Wen Lambo?”

    • Sometimes funny but also portrays crypto as “fast money”, but crypto is much more than that

    • Creates a sense of distaste that people also have around brash capitalism

      • It is distasteful to show off and flaunt your wealth (whether you have earned it or not) when so many people around you are struggling

  • Ultra-libertarian perspective of early users

    • There is a small group of people who were smart and early to crypto, but are not ready to give back to the community and industry because they think all of it is theirs

    • “At the end of the day, even their good fortune that they have obtained actually was built on the shoulders of others.”

    • Anyone who truly cares should be giving back and investing in a sustainable, long-term future

What are you currently most curious about in Web3? (1:13:35 - 1:16:26)

  • “Blockchain as political systems”

    • People have a visceral reaction toward the embedded political views of blockchain - free markets, capitalism, liberal perspective, etc.

    • Blockchain represents a sort of digital capitalism, which may invoke the same feelings that people have toward Wall Street

    • Without capitalism, you do not have entrepreneurship and the incentive for innovation

    • Web3 provides more direct, better incentives that are capitalistic in nature

    • Shareholder capitalism has taken the world in one way but Web3 has the potential to reform this current system

“Many people lack a general understanding, even the politics and social constructs of which they live in today. They just take it for granted. They just exist in it but they don’t think about it. If you take a step back and ask yourself, ‘how does the ownership of my property actually work? What’s the underlying mechanism?’. At the end of the day, it’s not because you live physically, it’s because there is a legal system and a country and a government that protects your ownership of your property.”

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