With Korean Blockchain week wrapped up and Token2049 just about underway, why not take the connecting conference flight to the equidistant location of Austin, TX for Permissionless?

I’ll tell you why: the entire three-day conference only has 3 web3 gaming panels, and one of them is on M2E (Move2Earn, remember that?). I get bullish on web3 gaming every time I hop on crypto Twitter, but witnessing this lineup truly made me feel like it’s more over than the Jets’ season after Aaron Rogers went down on the first drive of the game.

Seeing that three panels would be a relatively light load for Tom and me, we decided to watch from locations significantly closer to Token2049 and give a brief summary and our takes on them over the next two days. Yes, we just made it even easier for ourselves, but the Sweatcoin keynote is titled “Is move2earn dead?” and I’m fairly confident I can answer that without seeing the keynote.

Crypto Gaming: Beyond the Buzz

Speakers: Michael Aderson (Co-Founder, Framework Ventures), Vance Spencer (Co-Founder, Framework Ventures), moderated by Jason Yanowitz (Co-Founder, Blockworks)

Context

Framework Ventures is one of the early venture firms to enter DeFi, with over $1B in AUM distributed across other early areas of blockchain tech like web3 gaming and social. Back in April 2022, Framework launched a $400M fund committed to using half of the funds for blockchain gaming investments.

At the time of the fund announcement, Framework had 14 publicly recorded investments in Web3 games, including Illuvium, Jungle, Stardust, Mighty Action Heroes, and Polemos. Since then, Framework has not publicly invested in any web3 gaming companies, according to funding data from Messari.

Summary

Has your thesis changed since you launched your fund 12-18 months ago?

• Holding onto the original thesis and its more clear who’s going to come out on top.

• It takes $100-$150 million to produce, not including other expenses, to make a good game.

• First mover advantage for those building in the last bull market (ex. Illuvium, Parallel) by creating a selection bias for those playing early.

• We’ll see 3-5 ‘winners’ emerge by Q1 next year that will be well financed, full launched games.

• fun-to-play games will make games fun and incentives and ownership will drive players.

• Web3 Social, like Friend Tech, is experiencing clones from success. DeFi experienced the same thing after a few achieved product market fit, and web3 gaming will likely follow in the same pattern.

What will the next generation of gaming look like and how will AI fit into it?

• Going to be difficult to build something fun right now and in the next couple years we’ll see infrastructure improvements to support it.

• Invested in AI arena which allows you to train AI to play games, which proves that AI-focused gaming models can be a part of the next generation.

• Bots are everywhere in consumer software. Elon said that pre-acquisition Twitter was probably 60-70% bots. Will probably see bots leveraged to support communities, like in the case of the unibot tax.

Takeaways from Korea Blockchain Week

• There’s no domestic tech industry outside of the US. If someone’s going to make something important in Korea, it’s going to be onchain.

• Korea is more involved in the gaming space and we’ll likely see 50-100 Korean-based games by next year.

• Immutable X is the challenger they’re going to need to go up against.

Will DeFi, NFTs, and gaming grow apart or closer together?

• Everything will coincide as they’re built on the same tech.

• DeFi still has the potential to go 10-100x. Gaming/social has a 60/70% odds of being huge.

What will be the catalyst for web3 gaming?

• 3-4 games with enough of an audience response from a financial perspective. You’ve got gamers, builders, etc. What draws people in is the asset class itself.

• We need the same experience as DeFi Summer (hot ball of money), the incentives model to make it work, and a lot of other factors.

Takes

Framework’s thesis

Friend Tech, web3 social, and DeFi seemed to be bigger focuses here—which was incredibly disheartening when they started off saying how their thesis on gaming remains unchanged. I know it was part of the culture track, but I still couldn’t help but feel disappointed about the lack of gaming conversations in a panel with “crypto gaming” in the title.

Illuvium and Parallel were only mentioned by name at the beginning, and the only other game mentioned was AI Arena, which Framework invested in back in October 2021 (NRN airdrop soon?).

Vance also mentioned how DeFi still has the potential to go 10-100x, while web3 gaming and social have a 60-70% chance of being huge. It’s hard to compare multiples to percentages, but it doesn’t feel like they’re still on the same thesis that drove them to allocate 50% of their fund into gaming back in 2022.

ownership v. no ownership

I don’t think gamers care - yet. They will play whatever game is fun and what their favorite streamers and friends are hopping into. Ownership only comes into play once people understand why ownership is important. As well as gaming being a great onboarding platform for users to the wild west we call cryptocurrency and blockchain, it could be an application where they can learn the value props of blockchain technology, including ownership.

It may not even be that gamers don’t care—they may just be dissuaded from touching anything related to blockchain, crypto, or NFTs. Alongside education being beneficial for users’ understanding of what sovereignty truly means, it also allows crypto to build its credibility again.

We’re also going to have an example that puts this to the test: Wreck League. Wreck League is offering a web2, F2P version that will allow mech NFT owners and creators to manufacture in-game mechs they can sell as in-game purchases. The Yuga x Animoca game seems like an effort to show people why ownership is important, and its existence suggests that ‘every single person’ isn’t going to go for the one with ownership.

fun games onchain

This quote would’ve done numbers on a Space—lots of 💯s in the chat. The ‘make fun games’ narrative definitely drives engagement, but hearing VCs/game leads/ecosystem heads say it makes me cringe a bit, which was unfortunate since it took up 30% of the conversation time. We get it: games need to be fun.

The one that I sort of got behind was Michael’s quote that there’s “no universal law that says you can’t build a fun crypto game. We just need more shots on goal.” Yes, it starts in the same fun way as the other quotes, but there is some truth about needing more opportunities to make that game. There are about 900 web3 games live or in development right now, about 1% of the total games on Steam. I’m sure 98% of the games on Steam aren’t great either, so let’s keep shooting on web3.

Conclusion

There’s a ton of takes we could have went after, but we limited it to a few that jumped out at us the most. For example, Vance was business operations at Netflix’s first office in Asia, was just at Korea Blockchain Week, and had almost nothing to say about gaming in Asia.

Since this was two co-founders, everything felt locked in agreement and didn’t leave much room to explore deeper topics. We know that Immutable X is the top gaming blockchain that comes to mind, which is valid, but no deeper dive into why it’s ‘sucking the oxygen’ out of the room for Beam, Oasys, Polygon, WEMIX, or any other gaming competitor.

I know they’re the co-founders and might not be the people at Framework investing in games, but I really wish they could’ve shared more information from the people that do, or are at least are trying to, invest in web3 games.

Apparently people only go to conferences for the events, so who cares I guess. But it just really didn’t feel like they knew a ton about gaming, haven’t played a game, and don’t plan on investing in games in the future.

Michael and/or Vance: If you’re reading this, here’s Tom’s LinkedIn profile. We only want to help.