The Head of Tokenomics at Animoca Brands

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What's up, everybody? You're listening to the Hustle and Flowchart podcast with your boys, Mount Wolf and Joe Fear. Hey, welcome back to the Hustle and Flowchart podcast. Now, as you've probably realized, we're in a constant state of evolution right now. We're testing new release dates, new release times, recording podcasts live, doing shows without guests, and pretty much every experiment in between lately. And as of right now, we're already conducting at least one interview per week for our Blockchain conversation series. And the interview are actually really, really good. They're also very polished, well edited, and they get straight to the meat of the conversations. They're less meandering conversations and right to the point. And as our next little experiment for this podcast, we're actually going to start releasing those conversations on this show. Now, we are still planning to share the behind the scenes of what's happening at Hard Fork Gaming. The problem is we just don't always have new stuff to share as far as our marketing and the business model. The episodes are really going to start getting redundant as we'd be talking about the same stu every week. So starting today with this episode, we're going to start to share with you, the Hustlin Flowchart audience, these amazing conversations that we've been having about web3 blockchain, metaverse and the world of gaming. Now, before we get into today's interview, be sure to follow us over on YouTube. We're now putting out daily videos about games and exciting opportunities in the Web3 gaming space. So go to HustleandFlowchart TV and subscribe to the channel. Also, make sure you follow us on Twitter. I'm Mreflow. Joe's at Joe Fear and Buffalo was ryptobuffalo. All right, now let's dive in. In this episode, we're sharing the conversation that Joe and Buffalo had with Moseldin, the head of tokenomics at Animoca Brands. Now, if you're not familiar with Animoca Brands or what tokenomics are, you're about to get a masterclass. So I'm gonna go ahead and kick it over to Mo Jo and Crypto Buffalo.

My name is Mohammed Ezzuddin. I'm the tokenomics leader Animoca Brands, and I've been in crypto for five years now. So as head of tokenomics at Anamaka Brands, what my includes is jumping on different calls with stakeholders, downloading all of the different ideas and knowledge in their mind to then start to Devise an ecosystem, let's say, of what their ecosystem looks like and then from that we can derive what the tokenomics looks. Looks like. So a lot of it is ideating a research base and cause a lot.

Of cause breakdown like what the ecosystems are that you're dealing with. I'm curious because I'm sure they kind of span through animal kids projects.

Absolutely. So I mean from an ecosystem perspective, an ecosystem, it could be just an ecosystem around the game, which is something we're familiar with. We're also dealing with a number of social tokens and we've got projects that are outside the scope of what you'd think within, within web 3. So what. One of the projects we're working on right now is looking at bringing back the woolly mammoth using CRISPR technology, which you think, well actually what's that got to do with games so to speak and Web three? But actually there's a big overlap on that front. So it really does depend what falls on my desk.

Wait, so tokenomics relate to bringing back woolly mammoths from. With Chris Rich technology. This is wild man. Tell me more, tell me more, please.

Where does it fit in? I guess it's, it's the web3 element is what ties it all in. So there is a game being built around this and one aspect of the ecosystem is the game and the game is using as an education tool. So for if you're playing this game which is currently being built, it's then being able to use different DNA sequences to create animals based on similar genotypes. And this might change because the game still, is, still is in ideation phase at this point and then looking at the habitat and the ecosystem, at the actual ecosystem around that animal and it's, it's really using a gaming, gaming platform to educate the future generations on what that looks like.

The part also of not ruining the experience of the game and making it too about the return and the value and maybe like the money side of it. Right. In your mind, what's that balance, if any, when you're thinking of a tokenized plan for a game?

So I think we, we got a bit carried away with play to earn. I love the narrative, but fundamentally we play games for fun and then for the community around it. So it's sticking to that narrative. It's making sure that people are coming into the ecosystem because they want to play the game, that the game is actually fun. And again, Phantom Galaxies is testament to that, I think in the alpha we had over 100,000 users sign up and actually play the game during the alpha season. So I think that speaks testament to users actually wanting to play games and not caring if it's NFT web3 blockchain gaming.

Well said.

That makes so much sense and I've been hearing that a lot more is it might be just. It's more of a integration with the Web3 technology and the tokenomics as part of a really fun game. And there's a quote I found of you on I think it's from like a Twitter spaces but someone made a thread out of it so I'll just read the quote and I'm curious of how to. Yeah, I want to hear your thoughts elaborate on this potentially is you said every interaction is a potential transaction on chain. So what's your vision there and give us some ideas there.

I mean my vision and I guess it's easier when it comes from a place of or a game or a project where it's in an ideation phase or from scratch as opposed to something being pre existing that we have to tokenize. It's when we map out the ecosystem we try to look at every individual stakeholder and how these different stakeholders interact. It's fee based structure again that can be paywalls, it can be tax by making sure that money comes back into a treasury as opposed to us having like a burn mechanism or something like that.

So Mohammed, there is a group of people that don't know you that hate you and let me explain, you're tokenizing games and there is a battle right now between traditional gamers and blockchain gamers and there is so much anger from traditional gamers when they hear games are involved with NFTs or being tokenized in any way. Have you had any people come at you with bad energy? What's your thoughts on this kind of battle and the evolution of tokenized games? And how does that all feel being the head of tokenomics for tokenizing games?

I think it's. We saw this when free to play games became a thing. There was a lot of backlash, there was a lot of resistance and then naturally free to play games were accepted and they're not called free to play games anymore, they're just called games. And I feel this is exactly the same. I feel there's a bit more precedent in this instance for people to be hating on NFT based games because there have been some scams, there have been some rug pools in the space. So some of that hate is warranted and it just adds a bit more fuel to the fire. But I believe, I believe in time. When people are playing games for fun and they're not even realizing their playing a game, that the backend, the backend is blockchain based, is web3, there are NFTs, there are tokens in this game. Then they're taking that journey, they're learning through experience because it's a positive experience and it's being reinforced positively with the rewards that they're getting. Then people will see the value.

In your position in Animoca, have you seen the bigger game studios? Are they interested? Are they starting to implement some of this or are they just completely resistant?

I mean, I guess we've seen what Ubisoft did. We also saw the Square Enix. I think president or CEO came out at the beginning of the year saying that they're looking into blockchain tech as well. So definitely a lot of the bigger game studios are looking at it. I think the general narrative is no one wants to be the first or the second or the third, that they're a lot more risk averse. They want to see others try and fail and learn from their mistakes and just see the space grow.

Definitely.

So sustainability, we're seeing that in the play to earn space. It wasn't sustainable. When you're planning out a game or thinking about a game long term, how far out are you thinking when you're doing the tokenomics? And also how much do you have to stay flexible? Because let's be honest, this is all experiments still. None of this has been done 10 years ago. Right. This is all brand new. So sustainability within the token model for each game, how big is that to you guys when you plan this out?

It's massive. It's massive. So I think to my earlier point about the tooling in the space not being there yet, when we are designing ecosystems or trying to design them being open and also being non complete in that instance. So we're trying to build a very strong foundation to then move forward from. It doesn't make sense to build a complete ecosystem because some of the tooling you're using might be made redundant in 6 months to 12 months time. So we try to look at each different part of the ecosystem to be as independent as possible. So if worst case scenario something isn't being used or there's an upgrade to something you can just plug in and play, so to speak. The other aspect of why we haven't seen games work, the majority of users in the Web3 space are speculators. Speculators creators act differently to the intended Nature of them acting. So again, most of the people in the space want to make money. If it's a good fun game, then players will come in to play the game regardless of earning potential. And I think that has to be the aim now for the space.

Can you give us some examples of games right now, both that Animoca is a part of or games out there in the space that are doing it right or at least planning it right that you're seeing good signs of?

I think one game that has or the tokens been released is Phantom Galaxies. So Phantom Galaxies, we changed it up. Instead of, as opposed to doing a token sale, we did a planet sale, but with tokens attached to the planet and your earning rate on the tokens that there's a minimum amount and a maximum amount and that's based on actual gameplay. So if I'm someone who's just investing in this asset and I do absolutely no gaming with that planet or that asteroid in game, then I'm earning the minimum rate of tokens. But if I'm someone who's gaming every day, I've got my friends or I've got a guild and were playing with those planets, then I'm at the upper end of of the earning potential on that front.

This kind of brings me to my next question. Because we saw Play to Earn, Axie got a lot of mainstream attention. Guilds are like kind of formed and you have all these people that love blockchain games, but there's not a lot to play right now. What is your feeling with the Play to Earn kind of experiment going on and where do you see that going with blockchain games and the timeline we're on?

So I think what Axie did was amazing, even though there were flaws because it created a new concept. I mean, essentially Play to Earn was penned in via Axie. But what people didn't take into account as part of the reasons for Axie's success is that this was at the height of lockdown. Covid played the big part into that where a lot of your laborers in the Philippines and surrounding countries just they had no work. And the way Axie spread was via communities. One person would discover Axie and they would let the rest of their community know about Axie. And that's what we got, a massive user base. But also it coincided with the beginning of a bull run. So it was compounded on on that front. But we look at Axie now and, and it's again, it's still going strong. But Covid isn't there anymore. So a lot of the initial playbase that were playing have gone back to work and part of that reason is you cannot sustain the payouts that were being paid.

What have you learned or kind of taken from this time and seeing what projects are shifting completely? What have you taken with tokenomics and are you shifting kind of like how you're designing these projects and games?

So I think I'm going to reference board APE here because what you could they, they gave us a different proof of concept that you can build a community around an NFT first prior to a token and then drop a token. But what, what the proof of concept was is NFTs continue to engage the community. They did that by the serum drops, by the kennel drops, then the apecoin drops and then the other side drops as well. So the community was, was fully engaged and then you release the token. And even with the token having minimum U on day one, I mean it was the different staking pools that were available and then very quickly was integration with OpenSea. The token price held up and it held up because of the belief within the ecosystem or people who were priced out of buying an ape regardless of what type of ape it was. So maybe looking at more stable assets or starting with an NFT ecosystem and an in game currency first and then once that game's hit a critical mass again, critical mass yet to be defined or varies from one ecosystem to another, then introducing a fungible token as opposed to starting with the fungible token first.

Where do you feel we're at in this stage of gaming? Are we so early that it's really like let the AAA big guys or do you see an individual right now that could come into this space with the right mindset and have success?

Yeah, I think, yeah, it's, it's definitely open season. It's the AAA games take longer to build. So again I'll reference Phantom Galaxies that, that's been in progress for, for over a year. What we have invested in other AAA studios who are building but we don't expect those games to be released for at least another two to three years because it takes time to build AAA games and that just means in the meantime what else can, can be out there can, can we have like a clash royale killer or a battle royale type game and there are games that we have internally that, that are building those, those style of games and they don't take anywhere near as long. But what we really should be aiming for is your, is your more conventional gamer, your, your web 2 gamers don't package it as a web 3 project. Don't package it as a blockchain game. Package it as a standard game that they want to come in and play and then once they're in then take them on their journey into web3.

Animoca. I know you guys are doing a whole, I mean you're investing in a ton of titles and a lot of these right now are existing on mobile and bringing them over to blockchain. Bingi Bananas is one of them that I know has been around forever and that just got tokenized. And what are some other projects that Animoca is working on? Maybe any alpha or things that we should kind of be aware of and put it on our radar.

So. Spoken about Benju. So we've got maybe as opposed to single games, we've got a number of game studios who are making hyper casual games. One of these game studios is Vikrant. They've got IP rights like who Wants to Be a Millionaire, Deal or no Deal, Amongst others we've invested in Defy which is a move to earn game with a twist. Defy is based around this massive corporation that are taking over the world and we're fighting back against this corporation and then we have to hack into them and it's all about scanning the zone you're in and then moving to different parts within that zone and solving problems, solving mathematical based problems. It gets more difficult over time based on the. If you're in the same geolocation over and over again, it becomes more difficult to get tokens from that location. So that's. That incentivizes you to go to new places and play the game. Defy is a super interesting one. There was another one here, Fan Controlled Football. Wow. Fan Controlled football is an amazing project. So these guys have built their own football. They have, they built their own league and then fans can vote on the different plays that are happening. But then if you vote for the right play, you're then rewarded and there's a lot more to that ecosystem. They're moving into basketball next so that, that's a massive one. But this is again this is more like the in real life aspect and I guess something we haven't spoken about is human interaction and the need for us to have physical interactions with one another. Not necessarily mean we meet each other, we start touching each other on the face and arms but more so just being around, being around other humans.

What is a major tip that you recommend? An investor or someone that wants to get into a project when they're looking at the tokenomics of a project, what are some big tips you recommend?

So I guess it depends what view you're taking it from. So from, from an investment view as, as I'm if I'm looking to invest in a project, you want to see longer lockups, you want to see less amount of tokens being sold. Also making sure that the value proposition is there. Like is there actual utility in a token? I know utility is a crazy buzzword that's used around the space for everything. What's the utility? What's the utility? But I genuinely believe that there doesn't need to be day one utility, but there has to be utility being grown over time. I then think from, from a player's point of view is looking at how has this project raised funds? Have they raised funds by selling a ridiculous amount or have they been very strategic in their, in their funding and they've not sold a lot. A lot more of the tokens are being given out to the communities through an ecosystem rewards.

That's all very good stuff. And to follow up real quick on that, can you think of any major red flags? If you saw a project, you look at their white paper and you're like oh no, that's this is not going to work anymore. Or can you think of any red flags right now that projects should probably try to avoid because they just don't seem to be sustainable?

Yeah, if, if they're, if they've got a specific percentage for staking rewards but they're not mentioning what the staking is for, that's a red flag for me because that's just the way to incentivize early users to come in to lock up tokens. But, but all you're doing is you're over rewarding early users and that that becomes increased, increased cell pressure moving forward. If they clear, if they've clearly defined what staking is for then then that's fine. Another big red flag is, is a team percentage. If a team is taking more than 15, 16 of the token supply, massive red flag. Also with in on the investment side, if they're selling a lot of tokens to raise, I mean in the past we've seen 50, 60%.

Tokens being sold with this makes no sense. What's actually left for the community, what's left for liquidity, what's left for anything else in the ecosystem? If the team is getting their tokens after a very short period of time, massive red flag. You want the team to be locked in for minimum two to three years Again, I'll repeat that again, minimum two to three, then investors again being locked in for minimum two to three years because that gives enough time for the game and the ecosystem to grow and develop.

Yeah, for me, I guess the only last thing I would love to see because you're definitely on the pulse in gaming right now. You're working as head of tokenomics for Animoca. They're making so many big moves. Is there any trends right now in the bear market you're starting to see anything new you're starting to see that hasn't really maybe been built yet, but you're starting to see people make moves on it. For example, esports. I'm starting to see a lot of esports moving into the blockchain to start building guilds that have esports teams that compete. I'm curious if Animoca or if yourself have seen any of that starting to be built out over there or any other trends that we may have not have mentioned.

So there's, in terms of esports, there's been different projects on platforms that the entire C sports team with like bracket management software, for example, you come in and you play and all of your rewards are paid out instantly, etc. Etc. So there are things being built specifically for esports. For me, we know again I think in the space that there's a lot happening in gaming but there's other verticals where there's a lot happening as well which will aid in mainstream adoption, mainly music fashion, that side of things. And also sports that there's a lot of top sports teams or leagues regardless of what sport that is. Again, mainly from my end, soccer, but this is across a lot of other types of sports. They're all looking into crypto. We've even seen all Socios and Chili's, the fan tokens that have been released. And a lot of the top end football clubs are deeply looking at crypto and @web3 and how they can use leverage that to further involve their communities.

And that's where that's Animoca Brands, right? As a in a nutshell it's the open metaverse and it's all the property rights of these digital assets. Where should we go find you? I know you're on Twitter. Animuka Shout out where?

Yes, so my Twitter handle, it's Moezz14. So that's my Twitter handle Moezz14. You can find me there or Mohammed Ezzuddin on LinkedIn.

Sam.