NFTY #53: RecRoom's crypto opportunity

RecRoom is a tool for creatives disguised as a game for users

The NFTY News tracks the ever-evolving narrative of how the mainstream will enter crypto through user applications. In each edition I explore dApps, games, and the ecosystem affecting consumer crypto applications.


I've been playing a lot of Rec Room recently on the Oculus Quest. I've had my doubts when I first looked at the game, but there's something about this game that kept drawing me back in. I couldn't figure out what it is. After a week or so on the game, I started noticing how much of the game revolves around user-generated content.

Way more than other games.

The Rec Room team doesn't release much new content. Instead, they created a virtual playground for creators to create the content. Most of their own marketing content is spent around educating users on how to create rooms. Check out some of these rooms that have been built recently:

It’s been working out pretty well. They just raised a whopping $24M in funding from Sequoia and other big names.

RecRoom’s crypto opportunity

Against Gravity (The Rec Room team) doesn't plan to monetize aggressively through micropayments similar to Fortnite. Instead, they want creators to monetize their own user-generated content, which would open up some opportunities for Against Gravity. Because VR makes it easy to create virtual environments as opposed to other level creators (ie. Minecraft or Fortnite Game Creator) creatives are already likely to come tinker in RecRoom. Last week we saw Coil get implemented on Imgur, using Interledger Protocol (XRP) for micropayments to creators. Forte started a fund for games to do this earlier this year. It wouldn't surprise me if Against Gravity took a similar route.

By building a tool for creatives disguised as a game for players, platforms like Rec Room unlock an enormous amount of potential. Take Minecraft as an example. The game itself didn't have much content for players, but it was modular enough to have a creative community extend the life of the game infinitely and allow the game to sell even more copies. Communities were built from the creatives & evangelists.

Social networks are becoming games while games are becoming social networks… but both approaches require trust.

There's a clear trend emerging: platforms are giving creators the tools to create content for players. Platforms don't want to be rent-seeking because it saps the trust from the community. Just take a look at why Fortnite acquired Houseparty and started working on a social network app. Everyone jokes around that GenZ understands Vbucks way more than the traditional banking world, and RecRoom has the opportunity to create a Metaverse that ties trust together with creators & players alike.


Disclaimer: I work on helping create a world of infinite possibility at Dapper Labs. All opinions are my own and don’t represent the opinions of Dapper Labs.

NFTY #52: dApps, not apps

Should users of crypto-applications understand what they're using?

The NFTY News tracks the ever-evolving narrative of how the mainstream will enter crypto through user applications. In each edition I explore dApps and the ecosystem affecting consumer crypto applications.


It’s becoming increasingly clear over the past year that many in the community believe that all decentralized applications should look like regular applications of the web today. Many projects have been moving to full-stack user experience solutions (keys & gas natively-integrated into the user experience) in order to appeal to users outside of the crypto community. DLive and Voice immediately come to mind as examples.

While dApps like Dharma are positioned to do this, the majority of dApps should not seek to re-create their own full-stack user experience solutions. If they do, the majority of users will think they’re playing with money in a closed ecosystem as opposed to an open ecosystem. Additionally, the habit pattern of using a Chrome extension/mobile wallet is drastically different than a full-stack solution, and can hurt the wider ecosystem if dApps create user experience solutions for their own benefit.

Compound is a great example of creating an open ecosystem on Ethereum and embracing the fact that they are a dApp as opposed to an app. cDAI and cREP make these tokens distinguishable in third-party wallets, eliminating the confusion of how their balance is changing over time.

Each user has an opportunity cost of whether they should deploy capital in a specific contract or separate application since each contract is it’s own market. While creating a full-stack user experience to appear like an application may garner more users due to lack of friction, it will also create information asymmetry causing the investor to miss out on better investment opportunities, due to the psychological barrier of being closed a closed system.

Ironically, the biggest opportunity in the crypto space is creating an application where the user knows they have write access to a contract (the ability to create their own markets). Developers should be optimizing for cohesiveness with other players in the space rather than creating wasteland of decentralized counterparts to existing applications today.


Disclaimer: I work on helping create a world of infinite possibility at Dapper Labs. All opinions are my own and don’t represent the opinions of Dapper Labs.

NFTY #51: first touch point

What's the best first touch point for users into the realm of crypto?

The NFTY News tracks the ever-evolving narrative of how the mainstream will enter crypto through user applications. In each edition I explore non-fungible tokens, dApps, and the ecosystem affecting consumer crypto applications.


I’ve had a few friends outside of crypto recently ask what the best crypto-user applications are to try out. They weren’t really interested in using bitcoin for payments, but really much more interested in learning about new ways to earn crypto after learning about things like Coinbase Earn.

Most of them are gamers, so I thought I could point them in the direction of CryptoKitties and other blockchain games. After all, 25% of CryptoKitties users during the beta were completely new to crypto. If I could teach my friends about digital scarcity & cryptonetworks through games, maybe I could get them exploring the rabbit hole further.

The other path I could suggest was open finance - being able to earn and instantly put the assets to use and compound earnings.

I ran a poll on Twitter to see what people the general public thought to assert my assumptions:

I decided to start with games first, so I set them up on Dapper (so they wouldn’t have to worry about gas) gave them each $20 USD of ETH to start playing and breeding. And then I told them to start earning and try to double their money.

Turns out, none of them were able to figure out how to double their money playing CryptoKitties, but one of them found OpenSea and figured out how to flip NFTs on the marketplace.

If my original goal was to educate through blockchain games, I failed. But then I tried the second option. I gave them $20 USD of ETH on MetaMask and told them to earn only using a few applications (dydx, Set, Dharma). I consider these three to largely be the best to explain open finance.

The powerful loop that my friends discovered: you can now earn crypto and either a) lend it out and watch it grow overtime or b) turn it into ETH and leverage. Most of them have traded in the past but have never actually used crypto-native applications. Token Sets from Set Protocol blew their mind because they could just pick whatever strategy they believed in without having to worry about price volatility.

They were hooked. They didn’t have any interest in trading on exchanges, but wanted to learn as much as possible about open finance.

Overall, my friends preferred using Dapper over MetaMask because of account login/password, but as a first touch point they preferred open finance over blockchain games, even though they were big gamers.

Conclusion

My reaching conclusion is that open finance is a better first touch-point for new users into crypto in understanding how it works holistically. I think this has to largely do with Kyle Samani’s thesis of Ethereum becoming unbundled. If Ethereum is an unsolved puzzle, then open finance is creating the puzzle pieces to make the unknown picture come to life. The puzzle pieces are starting to fit together using open finance.

Other use cases like blockchain games are still creating their own puzzle pieces, but not making them fit together. The lack of metadata standards and lack of business opportunity on interoperability swung the decentralized pendulum to centralized layer-two scaling solutions, making crypto games look no less similar than what games looked like in 2005.

Blockchain games, however, are a better first touch-point for new developers into the realm of crypto because they can plug into an existing user base.

But that’s for next week.


Disclaimer: I work on helping create a world of infinite possibility at Dapper Labs. All opinions are my own and don’t represent the opinions of Dapper Labs.

NFTY #50: physical scarcity

Driving FOMO from a centralized server

The NFTY News tracks the ever-evolving narrative of how the mainstream will enter crypto through user applications. In each edition I explore non-fungible tokens, dApps, and the ecosystem affecting consumer crypto applications.


Last week, Nike released Travis Scott x Air Jordan 1s on their SNKRs app but an uproar ensued when consumers had trouble processing their payment. 100Thieves, an esports team, also released their newest streetwear and it was sold out in five minutes. This isn’t anything new - the same thing happens with event tickets. Brokers use bots to buy up tickets and sell them on a premium on secondary markets.

As craiglist continues to become unbundled, consumers are buying as much as the supply as possible just to re-sell on a secondary market. The trend of drastically limiting physical supply and driving FOMO with conspicuous consumption is only increasing as software becomes infinitely abundant. Suppliers and content creators are looking elsewhere to enforce scarcity.

The playbook is always the same:

  1. Content creator announces a time for limited supply product to be released

  2. Consumers rush to purchase the product at a fixed cost, often causing servers to break down

  3. Consumers often feel frustrated with the content creator or purchase on a secondary market

Blockchains offer a new mechanism for distributing physical goods by turning them into redeemable tokens. Over the course of New York Blockchain Week, there’s been three different typer of experiments that played out.

  1. Price Curve Distribution Experiments

There’s been one interesting interesting experiment on Ethereum reinventing the model: Unisocks.

The price of a token that can be redeemed for a pair of socks started around $12 and are tied to a price curve. Only 500 pairs of socks will ever exist. Users can buy a token and sell it back at any time, before the tokens even exist.

This is not only a clever way to crowdfund physical goods, but it also represents a large opportunity for influencers to have optimal price discovery.

  1. Luxurious Digital Fashion Experiments

One of the other interesting experiments during New York Blockchain Week was the auctioning of Iridescence, a digital fashion collectible. The digital clothing itself was sold at $9,500. The major piece of this event was that this is the first time we’re saying a token representing the blending of physical reality & digital utility. The clothing can be displayed on the owner on Instagram for one photo, while simultaneously being used and programmable in digital realities by third-party developers (because it is an NFT).

I suspect that you’ll start to see more experiments being done with digital luxurious goods. Interoperability & Scarcity are positively correlated - if something is more scarce, it will be used and carefully programmed in ways more than one, similar to many physically scarce resources today.

  1. Experiments with new ways to auction goods using cryptoeconomic mechanisms

Last week the Weird-eth.auction took place. It experimented with a new way to auction a unique item.

Here’s how it worked:

1) users bid on 1 ETH, starting the bid at .001 ETH.

2) If a user bid, the time would extend by 6 hours.

3) The second highest bidder will lose the amount they bid, but all those who bid but did not win would be refunded.

Overall, the experiment didn’t seem to take off, but it’s a showcase of what’s possible with new models to auction items. I’d love to see some element of FOMO3D added to this model - the minimum bid should increase with some fees being paid out to those who bid before. I wonder how a model like this would play out with physical goods.

We should keep an eye on new distribution mechanisms as physical consumer goods and media starts to leverage blockchain.


Disclaimer: I work on helping create a world of infinite possibility at Dapper Labs. All opinions are my own and don’t represent the opinions of Dapper Labs.

NFTY #49: mini-DAOs 👹

Sustaining the development of open ecosystems through guild banks

The NFTY News tracks the ever-evolving narrative of how the mainstream will enter crypto through user applications. In each edition I explore non-fungible tokens, dApps, and the ecosystem affecting consumer crypto applications.


It’s been a big week for MolochDAO, the community-run bank to fund projects on Ethereum.

While the UI has been greatly improved over these past few months, I’m skeptical on two specific issues:

  • Will members of the MolochDAO be able to agree on what problems should be tackled? If the scope of proposals are too wide, members of the guild might either be biased on one particular problem or even not have the knowledge on voting on a particular proposal.

  • The MolochDAO requires 100 ETH to enter as member. Will this system run into plutocracy? Should requirements be more dependent on if they have demonstrated use of the protocol or ecosystem?

I’ve been thinking about how these problems get solved, and the answer might be to have forks of Moloch with more specific use-cases of funding for open ecosystems. However, the problem with more granular DAOs is determining if the ecosystems are even worth governing. Some ecosystems already have governance built in (like MakerDAO) but suffer from a lack of voter turnout.

An ecosystem is worth governing depending on if community has started to build & demonstrate a demand for tools to support that ecosystem. Developers who wish to apply for grant funding from these proposals would also need to demonstrate skin-in-the-game before applying for a grant.

Here are some ecosystems within a protocol that I believe would benefit with a forked Moloch, along with some of its potential uses:

  1. Prediction Markets (eg. Augur) - projects determine which tools are needed for prediction markets, use a prediction market to determine which members should get voted in/kicked. Market maker fee is fed back into the DAO.

  2. Blockchain games with an ecosystem (eg. KittyVerse from CryptoKitties) - the hardcore players could govern which second-layer of games are funded and determine if it’s an appropriate use of IP so that the ecosystem is sustained. Players must own an NFT from a contract with a specific property in addition to be voted in.

  3. Standards (eg. 1155) - projects building on new standards should deploy capital in which further increase the adoption of the standard. More projects receiving funding means more ways contracts are used across a protocol.

Granularity of cryptonetworks is something I’m particularly interested in. I’ve wrote about mini-dApps (third or fourth layer) and the unbundling of relayers in previous issues. Interested in talking more about granularity and how it affects adoption of crypto? DM me on Twitter @flynnjamm.


Disclaimer: I work on helping create a world of infinite possibility at Dapper Labs. All opinions are my own and don’t represent the opinions of Dapper Labs.

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