As the most prominent gaming guild in Web 3, Yield Guild Games has invested in notable Web 3 games such as Axie Infinity. Their innovative scholarship model has enabled over 60,000 players to enter the realm of Web3 gaming.

 

During our discussion, we covered topics such as the top NFT games to watch in 2023, the progression of gaming guilds, applications of web3 reputation and Soulbound Tokens, strategies for investing in games, and the future prospects of play-and-earn games.

​

Gabby’s Crypto Origin Story 👶 (0:57 - 2:11)

• Began his career in game development 20 years ago

• Team developed the first game in the Phillippines in 2003

• Co-founded mobile games studio, Altitude Games, in 2014

• Heard about Bitcoin in 2012 - 2013 but did not see the potential around game development until discovering Ethereum and smart contracts

  • The idea of creating complex in-game economies on top of a blockchain ledger where users can truly own their in-game assets was very exciting

• Been full time in crypto since 2017-2018

​

YGG Background 🗃️ (2:18 - 6:12)

• YGG was started in 2020 when the team saw that COVID lockdowns were causing people to play blockchain games like Axie Infinity to make money because they were unable to work

• YGG began acquiring assets in Web3 games in 2021 (currently have around 60 assets from games)

• The guild model is community-driven

  • Began developing “sub-DAO” model to partner with various guilds around the world

  • Partners across Asia, Europe, and South America with plans to continue expanding

 

“Guild of Guilds” Model (4:29 - 5:27)

• YGG sub-DAOs are not only region-specific, but also game-specific

• Focused on games with strong communities

• Started with League of Kingdoms

  • Purchased 300 plots of land

  • Put the land in a sub-DAO multisig and minted a governance token around it

  • LOKA sub-DAO has now been around for over 2 years and is very active in governance

Asset Renting Model (5:44 - 6:12)

• Majority of economic gain from assets that are rented from YGG go to the player and the community managers, while YGG keeps 10%

Risks Associated with In-Game Rentals & NFT Rental Marketplaces ✳️ (6:18 - 7:55)

• Asset rental is only one way to broaden NFT access

  • It is the natural order of things for users to expand from renting NFTs to owning them

• The ultimate goal is engagement and user retention within games that users discovered through YGG

 

Evolution of Play-to-Earn Games 🏗️ (7:56 - 10:12)

• Axie Infinity and STEPN model showed us that you can effectively bootstrap a large userbase with a tokenized currency that can be earned in-game

  • We have also seen the negative effects of this (reflexivity, volatility, and dwindling network effects as a result of token price)

• The greatest misconception of P2E is that one must be earning tokens that are convertible to fiat

  • Whether or not users realize it, they are always earning something from playing a game : in-game assets, reputation, and sometimes tokens convertible to fiat

• We are now seeing that having token yields that are tradeable in secondary markets may not be good for economies in the long-term

  • Now seeing multiple different approaches from newer games: mix of soft currencies to currencies that can be tokenized

 

How Do New In-Game Token Models Effect Guilds? 🤕 (10:13 - 11:32)

• Will have a significant impact on guilds because many rely on cashflows from selling in-game yield to fund operations

• This business model will not be sustainable moving forward - but this is not a bad thing!

  • Token farming is not a long-term model

• YGG is built upon the idea of giving users access to different opportunities within virtual economies

  • Allowing users to bring different skills to various games

  • Want to see players within YGG continue to build the game economies that they participate in

 

$YGG Tokenomics 🪙 (11:35 - 14:15)

• $YGG grants access to token-gated content

  • Fungible tokens and NFT launches

• Currently building a reputation system before implementing a decentralized governance model

  • 1 token = 1 vote is broken and gives too much power to whales

  • Released Guild Badge (non-transferrable) in July 2021

  • Released Founders Coin, a free NFT for active community members, in January 2021 - mark of most engaged users

• Tokenomics is not a fixed concept and requires constant tweaks to fit the current market conditions

 

YGG Reward Vaults 🏦 (14:16 - 16:42)

• Experimenting with 2 ideas:

  • Move away from yield farming / liquidity provision as a way to earn tokens

  • Reward players with multiple assets for staking $YGG tokens

• Another goal was to migrate liquidity from Ethereum to Polygon

  • Polygon is a gamer’s network (many players cannot afford to pay ETH gas fees)

• First model: Stake $YGG - receive Crypto Unicorns and a token

  • Used to gauge community interest

  • Yield was not high but the experiment proved that there is demand for this idea

• Expect to see active quest systems as a means of players earning tokens

 

YGG Guild Advancement Program 📡 (16:44 - 20:38)

Overview (17:06 - 19:05)

• Always been fascinated by the idea of differentiating community contributions via a “leveling system”

• Currently building groundwork for reputation system

  • Initial SBT (YGG Guild Badge)

  • Start of Guild Advancement Program

• Embark on programs within games that allows users to make meaningful impacts within communities

  • 3 month timeframe - rewarded SBT achievement and $YGG tokens

• Recently ended $YGG yield farming

  • New model for earning tokens is through the Guild Advancement Program

 

Player Personas (19:06 - 20:38)

• Currently over 100 achievement badges awarded in the last season across all games within the program

  • Consisted of tasks that had to be completed within the 3 month season

• Most quest programs are built around mechanical tasks (Follow Twitter, join Discord, etc.) - does not retain users

  • Users are only awarded SBT achievements after the 3 month period

  • The achievement is meant to be a future acquisition marker or part of your Web3 reputation

 

Applications of YGG & Web3 Reputation Layer 🗣️ (20:40 - 23:43)

• Web2 allowed for “cookies”, which changed internet advertising forever

  • Tech companies were able to collect data and sell data to advertising companies who targeted you based on your data

  • This allowed these tech companies to become titans of industry

  • This model is not available in Web3 - we center governance around amount of tokens held in wallet (unsustainable)

• The goal is to build a reputation / achievement layer

  • A well-designed achievement system allows you to differentiate between members of your DAO / guild

  • Give access / rewards to members based on achievements

  • Reputation is just as, maybe more, important than liquidity, in the long-term

• A reputation layer unlocks a truly user-owned Web3

 

YGG Ecosystem Development 🛠️ (23:44 - 25:13)

• Many people think of guilds as entities that buy NFTs and tokens to try and sell them at a profit

  • Assets are important because they grant communities access to games

• Assets are a means to allow users to participate in games

  • Players should be rewarded for their contributions and reputations

  • Players with the highest reputations should be given the best offers

• Majority of development relating to the recent token sale is going towards product development

  • Expanding SBT / reputation and targeted quest system around their achievements and backgrounds

 

YGG Quests vs. Competitors 🥊 (25:14 - 27:10)

• Wants SBT mints to be public goods and the highest liquidity of verifiable and meaningful credentials

  • Issuing SBT credentials and importing credentials from games and DAOs (as long as they are meaningful credentials)

• Value comes from insights that can be built on top of SBTs

• Web3 allows for guilds which players can belong to and participate in multiple games

  • Keep players engaged longer

  • Match high value players with games

 

YGG Investment Framework 💸 (27:12 - 29:53)

• Strong asset acquisition team who looks at games to see if YGG can participate

• Most important factors are tokenomics and community (and if the game is fun) - differentiates Web3 games from traditional games

  • Focused on how players earn assets, token emissions, token allocations, etc.

  • Looks at community - multiplayer system, open / competitive guild system - want games to incorporate or be open to guild vs. guild battles (saves games from content draughts)

  • Want games to have models that continuously entertain players without having to constantly push out new content

 

Advice to Entrepreneurs 🗨️ (29:54 - 34:56)

​

Open-Economy Games (30:14 - 31:31)

• When you tokenize an asset, you must understand that you are giving the player permission to leave your economy

• When you give a player a tokenized asset, you must present them with a compelling reason to put those tokens back into your economy (more than just staking rewards) - otherwise they will just sell the tokens as soon as they are rewarded

 

Network Effects (31:32 - 34:56)

• How can you compound different network effects into your game?

  • Any NFT collection, token, DAO, guild, etc. represents an existing network that you can tap into

  • If you can successfully compound multiple existing networks, the end result will be much more powerful

  • For example, Axie Infinity did this with DeFi ($SLP) & integration with Maker DAO vaults

• The hard part about crypto is that these network effects leave as quickly as they come

  • Yes you can attract network effects, but how can you keep them?

• The lesson that game designers can learn from Axie Infinity is: figure out how to keep that network effect within your community once you have achieved it (reputation plays a large part in this)

 

Which Game Genres Are Best Suited for Web3? ♣️ (34:58 - 38:13)

• Blockchains are a way to create a gamified economy

  • Puts economic assets on a programmable ledger

  • Game design and mechanism design are very similar in crypto

• MMORPG are the most suitable games to be transferred to blockchain - win/loss games are not well-suited

  • These games feature complex economies and multiple different actors

    • Axie succeeded because there were many different roles within the economy - on top of a relatively simple card-based game

• You are essentially building a “meta-economic” layer around gameplay

 

Impact of AI on Gaming 🤖 (38:14 - 41:03)

• AI allows for the drastic reduction in cost of producing content

  • Large AAA games take 5 years to make, over 1000 employees, different, specialized studios (concept art, 3D modeling, animation) - the bar set for this content is extremely high

  • AI will allow for repetitive routines to be reproduced at a low cost

  • Creative people will be able to create content without having to hire 1000+ people or raising $10, $20, or $50 million to produce a game

• Most of the AI generated content will be rubbish, but there will be small amounts of good content that people can cheaply experiment on

• The energy and cost saved from content creation will likely be used to create new ideas and concepts within the economic layer of games

  • For example, a top eSports team or player will encapsulate their skill / traits into an NFT that people can buy and play as them

 

Web3 Grand Theft Auto? 🚔 (41:04 - 42:42)

• Would expect to see a new game studio with ex-Rockstar employees to create a Web3-native version of GTA

• These large game companies have massive fanbases, which makes them risk-averse to anything their fanbase may not like

  • Large pushback from mainstream gaming audience towards NFTs

• Cleanest way for developers to do something new and innovative, that may not be a part of your large companies existing business model, is to transition to Web3 and create games here

 

Rapid Fire Round 💨 (42:43 - 44:21)

Favorite Web3 games for 2023? (42:53 - 43:13)

• My Pet Hooligan, Legions & Legends, and Mighty Action Heroes

Web2 games that you spend the most time on? (43:14 - 43:28)

• MARVEL SNAP

Last Google search? (43:30 - 44:07)

• Attempting to use Bing ChatGPT search engine with his son

Favorite meme? (44:08 - 44:21)

• “All your base are belong to us.” - if you remember that, you are officially internet old

​

​