First Mover Asia: A Taipei Executive Believes GameFi Can Fix Gaming’s Creative Drought; Bitcoin, Ether Are Flat in Light Trading

Bitcoin, ether and most oer cryptocurrencies spent much of Monday in the red as more bad news flowed from Ukraine.

At one point bitcoin was trading at about $39,00, slightly up over the previous 24 hours. Ether was selling at just over $2,550, off slightly over the same period. Other major cryptos in the CoinDesk top 20 by market capitalization also fell, although Terra's luna and and Axie Infinity (AXS) were among the exceptions. 

Trading was light as investors seemed inclined to wait out events later in the week, including a decision by the U.S. central bank's Federal Open Market Committee (FOMC) on the first of what many observers believe will be several interest rate hikes this year to quash raging inflation.

"Cryptos across the board are in for a choppy period as investors await developments with Russia-Ukraine talks and if the Fed gives a clear path for interest rates that could possibly lead to a deeper bond market selloff," OANDA Americas Senior Market Analyst Edward Moya wrote in an email.

Analysts remain divided about whether crypto and equity markets are correlated assets, but the two have seemed to operate along similar wavelengths in recent weeks. The tech-heavy Nasdaq fell about 2% on Monday and the S&P 500 was off slightly.

Meanwhile, the Economic and Monetary Affairs committee of the European Parliament decided to exclude a proposed rule that could have banned proof-of-work systems such as bitcoin throughout the European Union, but the vote seemed to have little impact on crypto prices.

In Ukraine, Russia escalated its bombardment of the capital Kyiv as the Kremlin remained unmoved by calls from most of the international community to halt its unprovoked attack. 

Russian forces stopped a convoy of supplies for the besieged Black Sea port of Mariupol, which is facing food and other shortages. Ukrainian and Russian representatives are scheduled to meet again on Tuesday to discuss a ceasefire. 

Ukraine President Volodymyr Zelensky will address the U.S. Congress remotely in an effort to convince lawmakers to provide more military support.

Moya noted optimistically that cryptos had gotten a boost from Tesla CEO and crypto influencer Elon Musk, who tweeted that although owning quality stocks or a home was good during high inflationary times, he would not be selling bitcoin, ether or doge.

"Musk's tweet is a reminder that a lot of long-term hodlers are out there and that bitcoin will likely see strong support ahead of the bumpy path that lies ahead as the U.S. Federal Reserve starts raising interest rates," Moya wrote.

We hear a lot about GameFi as a path to prosperity for the developing world. This is a nice narrative for VCs wanting some ESG [environmental social, governance] points for helping the poor, but the data doesn’t hold up. 

Many of the players sponsored by gaming guilds in the Philippines make less collecting Axies than they would working at Jollibee's because their earnings are under the country’s minimum wage.

But let’s not get too cynical about this. We’re still early in the GameFi era. It has to be useful for something, right?

Gaming’s creativity problem has been well documented. The industry is a publicly traded, multibillion-dollar titan and sequels are a stalwart source of revenue. Shareholders need stable returns, and another sequel is the easiest way to accomplish this. 

With so much consolidation in the market, companies are hard-pressed to take a creative risk where the financial benefit is uncertain. This environment differs from the early days of console wars.

“The console wars were the most interesting time, because everyone’s trying to outperform each other and find creative ways to make interesting games that capture attention,” said See Wan Toong, the chief technology officer of Red Door Digital, a Taipei-based studio building out Web 3 games. 

“But now it seems to be consolidated and has become a more corporate, money-making thing rather than more creative. I think everyone’s trying to survive or trying to be very conservative in their approach.”

Toong’s gaming career started in Singapore, which he calls a gaming desert because of the lack of industry and development, but ended up in Taiwan after a brief stint in Europe because of Taipei’s balance of the low cost of living, artistic talent pool and geographic proximity to other hubs. Along the way, he spent time at EA and a few major regional studios.

As the console wars faded, the Massively Multiplayer Online game boom grew, and Toong sees parallels involving the MMOs, the mid-2000s and the rise of Web3 gaming (remember "South Park’s" Emmy-winning "Make Love not Warcraft"?).

MMOs – the development of one spurred his return toTaiwan from abroad – had an in-game economy and monthly subscriptions.

These were predictable sources of income that executives liked, but not tied to a predictable formula of, as he called it: “I have x amount of consoles, I have x amount of players and I have x amount of fans for my IP, so hence I’m going to make x amount of money.”

Previous Post Next Post