In this episode of Naavik, host Alex Takei is joined Yat Siu, the founder of the Crypto & Blockchain titan Animoca Brands to discuss the Animoca origin story, how they found Crypto Kitties, their investment strategy, and more.
Read our notes below to learn more.
The Story of Animoca Brands
Animoca was founded as a mobile app developer.
The company began as an education app developer, but later expanded into gaming with the launch of Pretty Pet Salon and Stargirl.
In 2012, Apple de-platformed Animoca and they pivoted to creating their own platform, which eventually became Animoca Brands.
The company's focus is now on creating personalized content for children, with a focus on creating a more positive and inclusive digital experience for children.
How Does Animoca Brands deal with the Challenges of Copyright/IP
Digital property rights are currently seen as a contractual matter rather than having the same status as physical property rights
However, countries such as the UK and Hong Kong are currently reassessing the meaning of digital property rights.
An example of this is the issue of stolen crypto and whether the victim has a legal claim to it.
NFTs currently have no legal agreements in place regarding royalties or ownership.
Advocates for a licensed agreement structure that can be edited and used by others, similar to a Creative Commons license.
Marketplaces play an important role in enabling transactions and the potential for them to become liable if they do not honor royalties or enable transactions that are not in accordance with the creators' wishes.
Organization of Animoca Brands
There are many differences in the operations of the organization and fund.
While a fund must focus on returns on investments, the organization can take a longer-term view and focus on network effects.
In web3 space, ownership allows for the creation of partnerships and collaborations in a more seamless and frictionless manner, as opposed to the proprietary and custom partnerships in web2.
Can create partnerships and collaborations through the use of NFTs.
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Competition in Web3
Yat Siu believes that in the web three space, it is not possible to find a single winner due to the shared network effect.
Axie Infinity’s success helped lift the entire blockchain gaming industry.
Animoca Brands invests in guilds which may not necessarily have the best return, but serve an important purpose in onboarding customers and training people.
Yat Siu believes that investing in these guilds helps grow the entire ecosystem and disperses customers around different games.
How are Animoca Brands Innovating in Investing
It is important to evaluate the values and ethos in choosing investments in companies, particularly in the early stages of their development.
OpenSea and Axie Infinity, some of Animoca Brands’ investments were based on the projects’ values and belief in decentralization and the ecosystem.
It is important to have value alignment with the founders and their values as it can prevent problems down the road and make cooperation easier.
Typically doesn’t invest in DeFi protocols but may consider it if it enhances a particular area or entity.
Fashion and physical items industries of NFTs can benefit Animoca Brands’ portfolio and potentially lead the way for other companies to do the same.
Looking for ways to extend their audience through these investments.
Branding of Animoca Brands
Big brands play an important role in building network effects for NFTs and digital property rights.
By tapping into their audiences and adding to network effects, businesses can generate revenue.
True property rights are important as it allows for the decentralization of network effects construction.
Luxury brands and financial institutions can benefit from building on platforms like Sandbox, as it allows them to access ultra-high net worth individuals and share their customer base as a platform.
There is a potential for compounding network effects through collaboration and the importance of creating an ecosystem that supports NFT adoption.
Web3 Gaming Sentiment in Asia and America
The attitudes towards ownership in gaming differs between the East and West.
Gamers in the East prefer ownership, there is a fear of over-commercialization and financialization in the West.
The concept of pay-to-win is prevalent in Asian games, but not as accepted in the West.
User acquisition and app install costs can account for a large portion of a game's profits.
Blockchain can bring more transparency and fairness to the gaming industry, while also allowing for the creation of new business models.
Ethereum is expensive and this may make it difficult for some people to get involved in the ecosystem.
Ownership is an important part of the system as it allows for the creation of network effects and for the creation of services and programs within the Ethereum ecosystem.
Ownership is important for other things such as digital fashion as it can be a signal, symbol, or show of status.
People generally prefer to own rather than rent.
What Makes Someone a Good Crypto Investor
It is important for large corporations to invest in the ecosystem they are building and this approach can lead to growth.
Traditional corporate models do not encourage collaboration and can lead to negative outcomes for the industry as a whole.
A shared network effect is more beneficial and investing in the ecosystem even if it means taking a smaller profit can lead to long-term success.
Animoca Brands Invest in a way that is different from traditional venture capital firms and this approach has been successful for them.
Investing in a magnanimous way builds goodwill and a healthy ecosystem which is more beneficial for both the investors and the ecosystem.
Rather than focusing on backing one or two big winners can lead to better returns and a stronger reputation.
This approach is not common among venture capital firms, but if more of them adopted it, it would be beneficial for everyone involved.
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TODAY’S EDITION IS BROUGHT TO YOU BY TREZOR HARDWARE WALLET
Navigating the waters of crypto is risky; even the biggest CEXs & stable coins can have huge risks…
Act now, click the link below & become your own bank via self-custody.