On this fascinating dialogue on The Silicon Goals, Kezheng Jia (KJ) and Joey Kong, two of the VC frontrunners within the Valley, share their worthwhile insights on the transformative potential of the Distributed Ledger Expertise (DLT) with host Sonia Ahuja, the CEO and founding father of Orbis86. The thought-provoking dialog that aired on Radio Zindagi, sheds gentle on the disruptive energy of blockchain know-how and decentralized finance (DeFi), particularly within the context of GameFi and SocialFi.
GameFi is the abbreviation of Gaming Finance, which refers back to the industrial gaming trade during which gamers earn cash. SocialFi is the abbreviation of Social Media Finance, which refers back to the creator financial system the place content material creators add their content material on social media platforms and earn money based mostly on the web consumption of their content material.
Kezheng (KJ) Jia is the co-founder of OnePiece Labs, a Silicon Valley-based Web3 incubator enterprise capitalist fund. The corporate is because of launch its third batch of incubators in August 2023. He was additionally the previous Web3 funding department lead of UpHonest Capital, a tech VC fund.
Joey Kong is the co-founder of Langrenus Fund, a Web2 and Web3 funding agency, and a former worker of OKX Ventures, the funding fund of the main cryptocurrency alternate OKX. He began out his profession as an funding supervisor at JP Morgan Chase, a New York-based monetary providers multinational firm.
Opinion on Decentralization of the Web
Decentralization is the soul of blockchain know-how. The necessity for a decentralized internet is one thing that everybody, together with KJ and Joey, agrees upon. It’s extra clear, provenant, and tamper-proof. Nonetheless, there are nonetheless sure techniques that won’t profit in any respect from decentralization and should even be at a loss.
KJ believes that decentralization isn’t the reply to all issues. He fastidiously analyzes this typically underlooked counter-opinion as to if all the things ought to be decentralized and unregulated— “There’s many good issues about blockchain and decentralization. However what native Web3 individuals say— decentralization all the best way; like nothing ought to be tracked, nothing ought to be regulated; we’re free individuals, free cash, free group.
I’m an enormous believer of decentralization however I nonetheless really feel there’s gonna be some stage of the regulation and a few stage of the centralization; like blended within the decentralization, similar to AI, self-driving automobiles. Like Coke Zero— you can’t drink Coke Zero each day, regardless that we love zero sugar Coke.
Conventional internet (has many) issues, say we can not switch our cash through the weekends, the financial institution is gonna cost us charges… That’s my cash and I don’t need to get charged to switch it… These issues get killed by blockchain, (so) some cash we must always get decentralized however some cash shouldn’t be decentralized.
If I have a look at the close to future, the subsequent three to 5 years, I’m positively gonna see an increasing number of decentralization come to our life, and never simply Web3; many Web2 apps with everyday-life use circumstances, work, finance… you’re gonna see extra. I assure that.”
KJ’s critique of decentralization to all the things is legitimate, for instance, Governments can not put their army information, categorised paperwork and different confidential data over a decentralized platform, the place it’s absolutely clear and traceable by anybody on the earth. This places the safety of a complete nation in danger. That type of data and information transactions should solely be centralized. Related could be the case of nuclear know-how, biogenetics, and some extra.
Nonetheless, the previous 20 years of Web2 have resulted in wealth and useful resource distribution inside the palms of only a few entities, with the formation of giant centralized conglomerates, attempting to dominate everybody. For instance, the inventory market— 70% of your complete inventory market internet value is definitely invested in simply the highest 5 company giants. There are a whole lot of firms that make up the inventory market, but your complete inventory market sits just about on the again of the 5 Large Behemoths proper now.
That type of energy and riches can really be an enormous menace to the sovereignty of people and communities. Web3 allows the distribution of energy amongst neighborhood members and helps bridge the hole in society. Not simply the gaps between the wealthy and the poor, but in addition different demographic gaps such because the gaps in gender, ethnicities, nations, and so on. Decentralization is a option to let everybody entry alternatives, data, and free commerce.
The Thrilling Way forward for GameFi and SocialFi
GameFi, which occurs to be one of many greatest use circumstances for NFTs and metaverse, is among the least talked about topics in DeFi. The gaming trade has greater than 3 Billion customers world wide. Web3 has an enormous potential to rework your complete gaming trade.
Apparently, Joey’s funding thesis is centered across the growth of the Web3 gaming market. When requested about his firm’s developments in GameFi fashions, he makes a noteworthy distinction between GameFi advert Web3 gaming— “We don’t need to name it simply GameFi as a result of GameFi is extra like simply P2E (play to earn), we wish to name it Web3 video games or crypto video games,”.
He provides, “Web2’s P2E video games aren’t that enjoyable when it comes to high quality, UI, UX… Web3 video games are constructed on chains… there are various gaming belongings that exist in NFTs which can be on-chain.”
The important thing distinction between GameFi and Web3 video games is that GameFi includes merely any sport from Web2 or Web3 that may be performed to earn cash as a reward. However Web3 video games are on-chain, and make use of extra immersive experiences like metaverse, using NFTs, and so on. Moreover, any cash that you just spend money on Web2 video games has no real-world worth in any respect. Web3 video games, alternatively, can permit using tokens, exchanging them, or shopping for digital collectibles, that can have worth even when the participant exits from the sport, or the sport itself will get shut down.
He then provides the instance of the Ethereum founder Vitalik Buterin, about how he got here up with the thought of the Ethereum blockchain— “One of many causes he (Vitalik Buterin) began the Ethereum Basis was that he wasn’t proud of a (centralized) sport he performed; and the (digital) belongings he had (purchased on-line for in-game functions), didn’t belong to him. So when the sport led to a manner, or they simply determined to alter the video games… he misplaced the belongings that ought to (quite) belong to him.”
Explaining how the corporate plans on getting extra infrastructure being constructed round GameFi and SocialFi initiatives, he says, “So these are different circumstances that decentralization can assist— you possibly can shield your in-game belongings and they’d at all times belong to you want the opposite (crypto) belongings. That could possibly be an actual game-changer.
I personally know many gaming studios which can be embracing their arms to crypto and blockchain. They’re engaged on a few of the video games that most likely launch both subsequent yr or the yr after. We’ve acquired some early allocation from Neo and Ontology (blockchain firms). These are the Layer-1s… then there are the Transfer language ones… Though I absolutely respect these (Transfer language-based platforms), proper now all people’s speaking concerning the EVMs (Ethereum Digital Machine-based gaming platforms). I’m an enormous Ether man myself.
(However) for the interface, I believe the entire crypto and blockchain, and this decentralized tradition is but to be absolutely developed; we’ve solely been doing this for like 10 years, after Bitcoin and Satoshi. Though synthetic intelligence has existed because the Sixties, the GPT (Generative Pre-trained Transformer), which is among the creator functions, (is a really latest know-how). With iPhone Second (Apple’s AI-based pro-camera utility), we might like to see some extra creator functions in crypto and blockchain sooner or later…”
KJ speaks about his new funding right into a Web3 SocialFi mission and explains how Web3 has the potential to rework the content material creation expertise for creators in addition to the shoppers— “SocialFi and GameFi, I see, are just about the identical factor. They each present two sturdy advantages to the neighborhood— possession, and incentives. Irrespective of whether or not you’re a creator, gamer, or a person, you personal the data, your digital belongings, your credentials…
Then the incentives, (when it comes to) tokenomics are wonderful for the creators. The followers and players even have methods to earn tokens. The sport publishers also can earn tokens. So that they positively construct a really profitable and environment friendly economics to make all people joyful.”
He provides one other large advantage of Web3 social media— “For instance, my telephone quantity is 1234, and I’m utilizing AT&T (a telecom service supplier). However the subsequent day I really feel Verizon (one other telecom service supplier) has a greater plan I need to go together with, do I’ve to cancel my quantity and lose all of the contacts of my buddies? I imply 20 years in the past, possibly 15 years in the past you had to do this however now you don’t should. You may simply carry the quantity to the subsequent service supplier.
This is rather like (the scenario with Web3) SocialFi and GameFi. Say, I’ve all my data, and all of the followers on Twitter, and right this moment I all of the sudden determine I don’t need to use Twitter, I need to use Twitch or Discord. So I can instantly switch all my belongings, data, connections, and so on. from Twitter to Discord, (which implies that) you personal the account. (Equally with) GameFi additionally, you possibly can carry all of your NFTs, and so on. from one platform to the opposite platform, play a special sport… So that is wonderful.”
He then goes on to offer the instance of Bluesky, which is the Web3 model of Twitter, created by the founding father of Twitter itself– Jack Dorsey. He additionally cites the instance of one other latest headlining growth which is the ERC 6551 token protocol. It’s a proposal to improve the Ethereum mainnet to allow dynamic motion of the NFTs.
In accordance with him, “It’s gonna completely disrupt the Web2 gaming trade, token trade, NFT trade, all the things… as a result of finally, my NFT isn’t just like a cute image I can placed on my profile, and so on.; it’s really a pockets. You may get all the things linked to an NFT.”
With SocialFi, a complete financial system is created, referred to as the creator financial system. It’s constructed on the again of the introduction of social media platforms, which had been meant to be only a enjoyable manner for individuals to attach. However then it resulted within the creation of a wholly new financial section.
Nonetheless, even with these Web2 platforms, there have been a whole lot of circumstances of creators not getting their due. For instance, the latest case of Twitch when it forbade the creators from taking any sponsored adverts exterior of the Twitch platform. Albeit the creators make some huge cash from direct promotions all of which fits to them. On this case, the creators had been capable of struggle again.
However there have additionally been circumstances when platforms like Twitch, YouTube, Fb, Twitter, and so on. outright shut down the accounts of creators and influencers. Those that are unable to struggle again or get their earlier accounts again, should restart their journey from zero; some are even utterly banned from the platform endlessly.
SocialFi decentralization may, due to this fact, be a sport changer for this whole financial system. Notably, the creator financial system is anticipated to develop at an annual compounded progress charge of 30 to 100% a yr. By 2030, it will be a multi-billion greenback trade.
Disclaimer: The article is a transcription of the interview performed by RJ Soniya Ahuja. No assertion or remark within the article is a direct or oblique portrayal of the author’s views or opinions. The interview doesn’t intend to advertise, demote or demean any group or neighborhood. It additionally doesn’t intend to offer the readers any monetary or funding recommendation.