On September 2, "N-POWER's First Odaily NFT Online Encryption Forum" was successfully held. This event invited a number of popular chain game projects, encrypted art trading platforms, new ecological public chains, well-known investment institutions, etc. to participate in the event to reveal the market investment trend and look forward to the prospects of NFT ecology(Click to watch the video)。
On September 2, "N-POWER's First Odaily NFT Online Encryption Forum" was successfully held. This event invited a number of popular chain game projects, encrypted art trading platforms, new ecological public chains, well-known investment institutions, etc. to participate in the event to reveal the market investment trend and look forward to the prospects of NFT ecology
(Click to watch the video)
The theme of the round table 3 forum is "NFT's Imagination and Investment Trends". Five industry guests were invited to discuss, namely: Robby Yung, CEO of Animoca Brands, Mia Deng, partner of Dragonfly Capital, James Wo, founder of DFG, and head of BlockTower Asia Steve Lee, partner of Ascensive, Ben Middleton, partner of Ascensive, and Sally Wang, Investment Director of Sino Global Capital as guest host.
When talking about the explosion of NFT this year, Ben said that there are many factors that have contributed to the rise of NFT, and the biggest factor may be the macro economy. Like the past eleven or twelve years, the market has been taking risks, but in the past 18 months, during the new crown epidemic, the government really started to launch a new monetary policy. Many people have more disposable income, and these funds have entered the investment field, and there are relatively stable and high-return assets in front of them, which is why the cryptocurrency market is getting better and better.
James Wo put forward two reasons: first, the infrastructure level of cryptocurrencies has improved a lot compared to a few years ago, and they are gradually becoming mature; second, the previous encryption market is difficult for retail investors to understand, such as options, futures, insurance, etc. etc., so the audience is very limited. The reason why NFT can attract a lot of traffic is because everyone plays games, which does not require multi-professional knowledge to become famous.
When talking about the investment methodology of NFT, Mia said: Investing in NFT is both science and art. Judgments need to be made from the underlying technical attributes, and it is also necessary to understand the development trends of the consumer market and popular culture. We strive to find teams that have both strengths. Taking game projects as an example, we have not only invested in projects in the native encryption community, but also focused on teams with traditional backgrounds. Now the industry is still in its early stages. What we need is to build a lot of infrastructure and open the entrance for creators to enter in batches. From an investment perspective, we must think about what can really win the mass market, just like the participation of ordinary people in the Philippines today. Like chain games.
The following is the transcript of the roundtable discussion, organized by Odaily:
Steve Lee believes that for investing in NFT projects, try to look at the background of the project team: if they started to get involved in this field in 2017 and 2018, that's good, because it means that they can deal with issues related to high volatility markets; Now that market conditions have changed, we hope that the opinions and direction of the entrepreneurial team will best be consistent with investors. In terms of the subdivision of the project, Steve Lee said that he would be interested in the NFT market, decentralized financial market, lending and other aspects.
Robby Yung：The following is the transcript of the roundtable discussion, organized by Odaily:
James Wo：Sally Wang (round table moderator): First of all, please introduce yourself briefly.
Ben Middleton：I am the CEO of Animoca Brands. We are headquartered in Hong Kong. We are a blockchain game developer, publisher, and investor.
Mia Deng：Now it’s DFG’s turn. Founded in 2015, we are an investment company with the main team located in Asia. So far, we have invested in more than 100 different projects through equity investment or holding project tokens.
Steve Lee：Ascensive Assets is a private investment firm focused on the digital asset industry. From an asset standpoint we look to invest in startups in the earliest rounds and possibly throughout the development stages. Funny, I was a professional poker player before joining the blockchain industry, thanks.
Dragonfly Capital is a global blockchain investment company with investments ranging from DeFi to CeFi, Layer2, and NFT.
I am part of Block Tower's investment team and head of Asia. I used to work in the United States, and I joined Block 3 years ago, focusing on secondary and private markets. Before joining Block Tower, I worked at Goldman Sachs for 9 years and worked in Singapore and Tokyo for 4 years. Before that, I have been in management and have been very active in the NFT industry.
Mia Deng：1. Factors contributing to the rise of NFT
Robby Yung：Sally Wang (host of the round table): Why is NFT so popular this year and can attract funds and attention? Why are encrypted art, P2E games, NFT avatars, and Metaverse frequently mentioned?
Steve Lee：I think we're going through a very interesting, exciting time right now. We have never encountered such a period of information wave, we do not need to travel or see our friends, we can carry out cross-global activities. So I think that's pushing a lot of people into the virtual space, and I think what we're really seeing now is a digital renaissance scene. Like Sally mentioned, what does it mean to be an artist? What does it mean to have a regular job? I think it's very, very exciting. Basically, I think this is an individual topic, and a lot of us in the crypto industry are always excited about how to play a role in crypto.
I think at least this process lays the groundwork for how we define NFTs. There are many different types of NFT, but it is very difficult to truly define NFT. Its bottom layer is just a technology. People will look at NFT from the perspective they are familiar with, actually NFT is a bit like a website, it can be anything, it depends on how you want to use it. From Animoca's point of view, obviously we are an entertainment company focused on games, so we wanted to see the application of NFT in games. For example, I think the future of NFTs and their potential is actually to provide utility to their owners, because we are providing digital ownership. Using NFT tools in the game will bring many benefits. If you have a legendary sword, on the one hand it is valuable in the game because you can use it in the game. On the other hand, the sword itself may also be Valuable as it is a rare collectible. So it can have value in many different ways, which I think is very important. When you think about it being a tokenized project and ultimately building a game economic model, I think I'll always throw my hand up and say you should think about utility first, because the more utility we give to NFTs, the more we It can unleash the potential of NFT.
Ben Middleton：I have been observing this industry since 17 or 18 years. Initially, everyone knew about this energetic concept, like 2017, when everyone was talking about ownership or games. But what really changed was in early 2018, when I started to see a lot of super smart people, such as MIT/Stanford computer science students, started talking about blockchain game projects. But the problem is, the design of blockchain games at that time looked too ugly or it was not fun, so if you grew up as a gamer, you would never play this kind of blockchain games at that time. We kind of missed the heart of the game, the fun part. Then 2019, everyone is talking about blockchain scaling solutions, sidechains, etc., so the focus is still on the technology, not the actual game. It is 2020 that makes people addicted to this kind of game. The prosperity of DeFi has boosted the NFT collectibles and NFT game industry, and people are excited to stop in this industry again, but collectibles are basically community-driven or transaction-driven. Yes, once the DeFi boom disappears, NFT will be vulnerable.
Then this year, we began to see that NFT projects have been established in games such as Axie infinity. Their team has been building a strong community since 2017. Now NFT products have appeared, which can be game props or It is a collection that meets a real need. For example, players from the Philippines or South America can use this game to earn money, which is actually a "play and earn" concept. Axie infinity is simple enough and fun enough that people haven't seen such a good game in the past 3 years. Everyone was focusing on technology before, but now I think we are at a stage where people are seeing that NFT can bring real meaning to the encryption ecosystem.
James Wo：I think there are many factors that have contributed to the rise of NFTs, the biggest one probably being macroeconomics. Like the past eleven or twelve years, the market has been taking risks, but in the past 18 months, during the new crown epidemic, the government really started to launch a new monetary policy. Many people have more disposable income, and these funds have entered the investment field, and there are relatively stable and high-return assets in front of them, which is why the cryptocurrency market is getting better and better.
For example, US regulators suspended AMC stock trading before, and then investment began to spread to digital currency, and then today's NFT. Retail investors realize that if they work together, they can have a very large impact on the market. Investors seem to think it has to do with fundamentals, like stock and crypto valuations, their investment decisions are more based on what other people think, I think we'll do well and everyone should stick to their own From an investment standpoint, those collectibles are really cute and cute, and they are placed there to represent the status of ownership of a symbol. You can put your encrypted avatar on social media, and people will know that you belong to a certain group.
There are two reasons in my understanding.
The first reason is that the infrastructure of the encryption industry is gradually maturing. The CryptoKitties project was very popular for a few years, but at the time it made the Ethereum mainnet very congested. At present, although Ethereum has not completely transferred from PoW to PoS, you can use a layer-2 solution like Polygon, or some other protocols that are already available to users, such as Solana, BSC, or users can use it in the future Polkadot. So from the infrastructure level, the network situation has improved a lot compared to a few years ago. Moreover, NFT trading platforms like OpenSea and SuperRare have also appeared on these protocol layers, which is why NFT has been so popular during this period. It's like if there is no Uniswap, DeFi may not be as successful; without OpenSea, NFT will not be as successful as it is today. So the increasingly mature infrastructure is one of the reasons for the success of NFT.
The second reason is that I think DeFi is difficult for retail investors to understand. Just like in the traditional financial field, these complex types of transactions are too difficult for retail investors to use. By analogy, DeFi is difficult for retail investors. Say the same. Uniswap's Swap function is relatively easy to use, so they can understand it. But once they add contracts, futures, etc., it will be more difficult for them to understand. The target users of these complex types of transactions are very limited, basically institutional investors or retail investors. But for NFT, everyone will play games, so compared to DeFi, NFT has a much larger audience.
James Wo：2. About the investment methodology of NFT
Sally Wang (round table host): Let’s talk about investment methodology. What kind of projects are you looking for? Are there any new trends that caught your attention?
Of course, I am more than happy to share it with you. First of all, in traditional industries, it is difficult for people to carry out entrepreneurial activities. For example, like games, people need famous IPs, a lot of traffic, and so on. But in the cryptocurrency world, if you have a good idea that can attract players to play the game you design, then you can achieve a lot of success. So I think the barriers to starting a new project on the NFT track are much lower than in other traditional industries.
The focus of our research on an NFT project is their team and the work they do, whether they have enough enthusiasm for the project itself, rather than how many IPs the team holds or how many connections they have with the world of traditional industries connection, I don't think we pay that much attention to that. What we're really looking at is the project and how well the team is doing within the crypto space, which is the first thing I'd say.
Mia Deng：The second point is from an investment point of view. We have indeed participated in investing in some projects in the encryption field. Although we may focus on a few of them, we have indeed participated in the investment in the NFT track. , such as Big Time Studio, Efinity and other projects. This industry is still in the process of establishing the underlying architecture to make the entire foundation more solid. Some of these powerful projects, such as Flow and Enjin, have built many projects on top of them, which is really great.
Ben Middleton：I believe that there will be more opportunities for terminal applications in the future. Although we have participated in many infrastructure investments before, I think that in the next stage, there will be more investment opportunities for application applications. Basically, here are my two takeaways on the subject.
I think the NFT I invested in definitely needs more skill points or DNA. We are used to receiving information and making judgments from the media, but investing in NFTs is both science and art. It is not only necessary to make judgments from the underlying technical attributes, but also to understand the development trends of the consumer market and popular culture. We are committed to finding teams with both advantages. Taking game projects as an example, we have invested in projects in the native encryption community and also focus on teams with traditional backgrounds. Now the industry is still in its early stages. What we need is to build a lot of infrastructure and open the entrance for creators to enter in batches, because these projects have the opportunity to build an industrial chain that can drive the next billion people. From an investment point of view, we have to think about what can really win the mass market, just like how ordinary people in the Philippines participate in blockchain games today.
We are a hedge fund and cannot disclose how many positions we have invested in the secondary market. When I start to pay attention to NFT investment, we will decompose it from six dimensions, the first is the "four C's".
The first is "Commercial"
The second is "Community"
The third is "Cooperation"
The fourth is "Competition" (Competition)
Steve Lee：The first one is business. It is very simple. It is whether an NFT project can make money. In fact, this is very important. Then there is community drive, we are just investors in community engines or similar tracks, and I have contacted all these people in the community. In August 2017, in a small cafe in Singapore, I met the founder Ji Hao; back in Hong Kong in 2019, I met Gabby from YGG, so since then I know how they are in the community built in. Although they have had a very difficult time in 2019 and 2020. But one of the things they've been doing is building the community, which basically increases the round size. So we didn’t think too much about it. They have established a community foundation for several years. This is actually very different from all the projects born in the NFT boom last year. The community is actually the most critical component. The third part is competition, I lived in Japan and Korea for a long time, I played games when I was little, and the only thing I wanted to do was compete with something, whether it was a computer or someone else. So, for some specific projects, competition is very important in terms of reaching users, and it is also a component that projects need to stick to or keep. The fourth is cooperation. The beauty of blockchain is actually compatibility, which means that you can cooperate with other projects at the technical level or community level or many different angles. So I think in the case of YGG, for example, they basically allow users to build their own teams to get benefits, and then they will carry out some basic cooperation within their own sub-communities, not just the initial community. So basically this makes any collaboration in the blockchain industry possible within this game. These are the "four C's" that I study very carefully.
The last two dimensions, on the one hand, I think an important element missing in this field is that we need a more global IP combined with the blockchain, which is actually the highlight of 1 and 2 I mentioned earlier - We need a more mainstream distribution channel. For example, back in 2018, the investment might not have been very focused on the community at that time, but two weeks ago, we should have paid a lot of attention to the community. So one of the keys to attracting our bets is whether the project has built a community or has similar activities. They need to have a strong distribution channel. On the other hand, the founders have traditional game building experience or they do have the opportunity to create a global IP in the traditional game field. These two things are also two important factors in judging whether an NFT game project has potential.
Robby Yung：For investing in NFT projects, try to look at the background of the project team: if they started to get involved in this field in 2017, 2018, that's good, because it means that they can deal with problems related to the high volatility market; If there are changes, we hope that the opinions and direction of the entrepreneurial team will best be consistent with those of investors.
Sally Wang：In terms of the subdivision of the project, I will be interested in the NFT market, decentralized financial market, lending and other aspects. Some projects, although simple or even stupid to the outside world, can be very powerful within the community. The potential of NFT is that it can be integrated with DeFi. If NFTs can be used to earn interest, utilize NFTs as addable utility tools for sub-games, or otherwise increase decentralized finance functionality, then (NFTs and DeFi) will be very attractive when combined with each other.
I think there's a lot of exciting things going on in this area. Because we are still in the very early stages of this cycle. There are already a handful of NFT projects that have achieved massive, financial success, which is great for the industry because it attracts capital and smart people. But for me, what's really exciting is the people and things around NFTs, like they have open assets, and there are so many analogies in the physical world, services available in the physical world that we can apply to In NFT. To give a few examples, the most straightforward one is that I now see real estate developers in the Midwest of the United States, which means that people actually play the same role in the NFT economy as real estate developers in the real world. In the virtual world, there is also metaphorical virtual real estate. People can also invest in real estate, develop it, increase the value of the property, and hope that its value will continue to grow. I think it's fascinating to me because of the ability to create a new business on top of another business. Let me give you another example, one of our earliest blockchain games was F1 Delta Time, which is a racing game based on Formula 1. And now we see that because there are a group of players who own F1 cars and NFT cars, other companies start to cater to these cars and launch corresponding services, because once you become a car owner, you need other services. So when you think about the analogy of the physical world, once you buy a car, you need services such as gas stations, service stations, insurance, etc., which all come after you buy the car, you need market parts, auto accessories. Because NFTs are open, these are very similar. We're at a point where other companies can create businesses that serve NFTs that our community has already bought, and I think that's really exciting. That's when you start to see innovation, like you know YGG, there would be no YGG without Axie Infinity. But that's not the end of the story, because they're creating a model that essentially supports a product like Axie Infinity and helps create a virtuous circle. I think we will see more interoperability between projects, not just our NFT into your project, but we can create a service for your project and let your project decide which services need to be provided business.
I think utility is an important part of NFT. Like you said, NFT also needs use cases, and at the same time you need to have criteria for evaluating projects. But from my point of view, I think it's hard to judge. So that's why we need a global capital. Sino Global pays more attention to the infrastructure, because in the long run we absolutely believe that the technology layer has the potential to scale up and reach the masses. All of these can be built on top of many things, such as a good game or a trading platform/marketplace. This, in turn, can drive NFT adoption on a large scale.
3. Discussion on new gameplay such as NFT financialization
Sally Wang (host of the round table): Moving on to the next question, there are now some combinations of NFT and DeFi, as well as new forms such as GameFi, which have attracted a lot of people’s attention. So what are your thoughts and opinions on how these things happened? Like what exactly is actively leading us forward.
On this issue, I also have some thoughts of my own:
First of all, after the emergence of NFT, it is indeed very interesting and loved by many people. As more and more people own their own NFT, we can see the difference between NFT and ordinary tokens, that is, ordinary tokens may be easier to buy at will , and NFT is a complete single product. When you buy a whole piece of NFT artwork and actually own it, it is easier to add value. From the perspective of cash and capital liquidity, NFT has brought a transformation to the industry.
Steve Lee：Another thing I've learned is something that's happening in the Chinese community. Everyone likes to buy PUNK very much, and found a way to buy high-priced PUNK in a fragmented way, owning a part of PUNK and endowing it with liquidity. This phenomenon is becoming more and more powerful in the community.
The third is that with so many amazing NFT projects built on different chains, it feels like there is a lack of connection, like a lack of a bridge between each other. Steve seems to be listening, sharing and taking notes, maybe you can share some of your views and insights with us first?
You are sharp lol. Our answer is divided into two angles: one is what kind of project you are excited about; the other is what kind of project you are looking for.
First of all, I am a supporter of Polygon and also an investor. Looking at Polygon from an outsider's perspective, you may think it is very simple and rudimentary, but if you are a member of the community, you can realize that the community is actually super powerful . We (as a part of the community) are really going to open up this huge channel so that the potential of NFT can actually be integrated with DeFi.
At present, if you own NFT, you can use these NFTs on some game platforms and earn interest. At the same time, these games have made some small sub-games. You can use this NFT to add practical tools. They also added decentralized finance. Function. People began to want to collect this collection, and their interest is growing. When the power of the community and NFT are combined, it will have a huge appeal. So I'm really excited about that ideology. In the future, NFT mortgage loans will account for a large part of the market.
Robby Yung：Also, the point I want to make is that I think NFT custody is going to become a very important business. Because in our company, NFT custody is an important business component that institutional investors pay attention to. We've done years of due diligence on all the different custody solutions, which is actually similar to how we invest in some other commercial entities, and it's fair to say that some NFT projects are of very high quality; Some platform should be found to manage this non-functional trust portfolio. So I think that in this regard, there should be some projects to start trying and exploring.
One more thing, I think the combination of metaverse and NFT may also be a very innovative point, although it is not sure whether it will come soon, but I believe that many creators can use NFT in the metaverse to create their own economy Model, combine DeFi, and amplify the brand. Whatever it is, this should open up a huge field.
What the host just said about leasing and loans is very interesting. Actually, these things already exist. For example, Nifty5, you can apply for a five-year loan. If you play our F1 Delta Time car, here's the coolest thing in my opinion: they started the service without our participation, which means they decided to accept our assets as collateral. Being able to do mortgages on top of existing assets is pretty cool for our community and maybe even the industry.
In terms of leasing, there are many financial services that can be put on it, because decentralized finance already exists, the NFT community can make full use of these services, and you can easily enable decentralized financial functions. From a technical standpoint, we’ve seen a lot of this happen, not only because it’s technically easy to implement, but because early blockchain games are quick for many players to adapt to. I find many of these applications attractive.
But I think one of the important things to think about in terms of rentals from a traditional game development standpoint is that we want to broaden and drive NFT adoption and adoption as broadly as possible -- we want a massive audience.
What does a mass audience look like to me? That is, after your game is released, you can complete 10 million downloads in the first month. If you don't achieve that goal, maybe you should stop, because the game may not achieve the goal you hoped. In a blockchain game, maybe there are only ten downloads on the first day, but you won't be too frustrated, and you may feel that everything is going well and you can continue to do it.
Ben Middleton：The reality is that blockchain games have a much smaller audience, as do NFT leases. But the reason these things are going to happen in the end is because of the accessibility: In NFT games, we actually have the potential for players to come in and buy NFTs in the game, because they are collectors. As an example, people buy certain F1 Delta Time cars because they're big fans of Formula 1 and they want to own a piece of merchandise, even though they might not be interested in playing games and racing and spending time in them. For those who really enjoy playing the game, it's probably a shame that there's no chance to see those cool cars race around the track, instead being kept in garage collections.
I think it's exciting for the gaming community in an economy where rental services allow these assets to be used in games, it's like track days in the real world, you probably can't afford one Lamborghini, but rent one for $100 and go for a few laps. This enables the widest possible audience to experience.
I may be consistent with some of the ideas mentioned by Steve, and at the same time Robby mentioned interoperability, which I think is very important and will be a key component for the entire industry going forward.
Steve Lee：In the traditional business world, it's hard to get more people involved in a new game. It is very important for the industry to allow players to switch between different games and increase fun, because developers definitely want to retain user bases.
Ben Middleton：Another thing is to coordinate interests. If you can coordinate the interests of those who own assets and those who want to use their assets, it will open up a very wide field of space. Players who are rewarded need to know that they are being treated fairly, and players who use backdoors (cheats) will be punished. As a game developer, you need to find cool ways to solve these real problems, so that people in the game can exchange goods and compete with each other.
Mia Deng：I would like to add some comments, NFT projects like YGG are the first real typical cases. I'm not a DAO expert, Ben may be more expert in this area. Many people are looking forward to the organic combination of NFT games and DAO. I think you can think of NFT gaming communities as very early forms of decentralized autonomous organizations, right?
This kind of organic organization coming together and enjoying the coordinated parts of the game, that's the revolution, right?
I really like the point of view you just discussed. From my point of view, pricing is the most important thing in financial services, and this is still a problem that needs to be solved urgently.
James Wo：Because the current NFT assets still lack a professional agreement network or some way to be truly underwritten. We have invested in a protocol that, like a DAO, can be effectively organized to allow experts and DAO community members to jointly determine the value of NFTs.
Steve Lee：I think it's also very interesting.
The previous guests have said very well, and I don't have much to add. I think services such as DeFi and CeFi are still in their early stages, so it is only a matter of time before using NFT to connect DeFi and CeFi together. According to the current development path of NFT, there is still huge potential in the future. As Robby just mentioned, NFT is still in a very early stage of development. I just checked, and the combined market cap of all the top 20 NFT projects right now is only $25 billion. It can be said that the current market size is still very small. So I think that when the market size of NFT increases in the future, some investment processes that combine CeFi, DeFi and NFT will become smoother. This is something that will definitely happen in the future. The above is what I want to add.Finally, I would like to say to every listener who is trying to seriously build a new NFT project, I really hope that everyone will focus on making their project a little different from previous NFT projects, using their own unique advantages or background or experience, to provide It's also easier to get funding because I don't want to hear clichés. Thank you all, learned a lot from each of you today.
