22 Comments
User's avatar
GGGGGGGGG's avatar

Within a finite system, growth must eventually become insubstantial and frequently idiotic.

Expand full comment
Ben Z's avatar

Russell’s comments, while well intentioned, showed he never played, farmed or had any hands-on experience with blockchain gaming & AXS:

1) “Axie is a good/fun game” - No. It’s primitive, no gamer from the current $180Bn a yr gaming world will play it for long or have to pay to play.

2) No mention (ie no knowledge) that Philippine players are nearly all scholars (don’t know how scholarship works or it’s potential.)

3) Made it sound like players are playing to speculate on Axie NFTs like a Bored Ape profile pic. Fact: scholars 🧑‍🏫 play to earn SLPs most managers breed Axies to lend out for farming SLPs.

4) Failed to mentioned Axie’s greatest achievement is not it’s own success or failure but that it proved a concept - the appeal of owning your in-game assets & ability to earn $ inside a game.

Today there are 3.7bn gamers world wide spending $180bn per yr in old world games (it’s the world’s biggest entertainment industry, more than Movies & Nth American Sports combined).

Current pain point? Players spent all the time & money 💵, after months or years of grinding they only get a bit of fun, while the studios kept all the $$$.

Once players sees n experiences the magic of a game that’s comparable in quality to the hottest games now, but because it’s built on-chain, allows them to own their assets( weapons, potions, land,spaceships) and sell/lease/auction them on a mkt for real $ as they pleased, which game do u think they will play? Where do u think they will spend their gaming budget? (On-chain or off-chain? Old world or New World?)

That $180bn a year market will move from the centralized wall-gardened pockets of studios to the treasuries of on-chain game DAOs own by a community of token holders. (Players can now also be “equity owners”, with their incentives aligned, they will be the most avid evangelist for the game from launch, making it more popular & profitable for years to come.)

That’s the industry shattering opportunity.

2% of the world’s population knows blockchain well, within this 2%, about 5% knows this wave 🌊 of $$$ is coming via gaming. Russell is an established investor/researcher but not a gamer. I don’t blame him.

But now u all know. It starts in 2022 with the release of Illuvium.

Expand full comment
Russell Clark's avatar

Hi Ben Z - I totally agree the concept of owning the characters you develop makes a lot of sense, and I really like the idea of using Blockchain to align player and developers incentives.

All this sounds good - but Axie with 6bn market cap and developers sitting on 1.2bn gain strikes me as probably too much.

Also the main point is that you have a two separate things "the concept of aligning player and developer's incentives" which is GOOD.

Being unable to tell if the activity data is correct as the developer's obviously have an an incentive to overstate this, or to tweak the game to maximise activity - as with substack!

Just had a look at Illuvium - looks amazing... why would anyone bother with Axie once Illuvium launches?

Expand full comment
Ben Z's avatar

Hi Russell,

Appreciate your open-mindedness to my comment.

RE Axie: Yes, "sick root yields no mighty tree." Its token design is flawed from Day 1 (only 1 use & no incentive to slow constant dumping of SLPs from players - contrast that to DeFi Kingdom). It's struggling with Battle Version 2 release, too hard & long to revamp gameplay, so unless there's a small miracle, its glory days are over.

Are your familiar with Brock Pierce's back story? (he's proven it 15 years ago the play-to-earn model works. He had 300-400K workers in China farming virtual gold inside World of War Craft, sales easily toped $200mil. But the game was on Web2, so his business later got "Turned Off" by a self-serving centralised studio - Blizzard. But now we are in Web3, in genuine projects (investors can verify this), the biggest danger - a centralised tyrant- is gone.

PlayToEarn is in fact a more efficient way of arbitraging wage differentials between developed & developing countries. Let's contrast this to making cheap shoes....instead of setting up a factory in the Philippines & have to pay for the building, equipment, training, material, utilities, packaging, shipping, insurance, tariffs on & on, wait for months for the shoes to arrive across ocean then maybe u get paid....u now teach those same workers to produce a Digital Asset, inside a game! :D The product (value) arrives via the web at the speed of light, free. Other than the agreed $ split with the player, there is 0 Cost, 0 Friction. (not even a labour contract!)

How do I know all these? I spent a lot of time & effort studying & testing such a business - a guild - to make sure I know intimately how every moving part works in this new economy. Before players lost interest in Axie, my ROI was insane.... 20%-30% net cash flow return EVERY MONTH constantly. (it's so crazy there were nights I laughed myself awake, shaking my head in disbelief :D )

RE Illuvium: Yes, its about to change everything. We will look back in a few years & say "wow, that was the watershed moment for the global gaming industry." ILV is truly decentralised, transparent,100% profit goes to the token holders & most importantly, objectively beats any Web2 game of the same genre. (now add on the killer features of in game asset ownership & $ making ability for the players.......its a no brainer)

I think you are originally from Australia too? Well, in ~10 years the 3 Australian brothers who founded Illuvium, the Warwicks, their name will be familiar to every household down-under, just like the Packers.

Apologies if I rattled on a bit too long. In my experience, on new evolving subjects, thoughtful exchange can be both stimulating & informative. Instead of long posts in public, u are welcome to drop me a line ben.zhang@koalafund.com.au After u do, as Administrator, feel free to delete this post if u deem fit.

Cheers

BZ

Expand full comment
Russell Clark's avatar

HI Ben - I don't mind long posts - sign of enthusiasm. But my personally style tends towards pithy! Good luck out there, Russell

Expand full comment
Harry's avatar

Hi Russell, I'm a long time fan of your work. Don't waste your time trying to analyze crypto. Your intellectual heft is wasted entering that topic. Your subscribers want that heft applied to all things world capital markets; macro, etc. Not a criticism, I just hope to hear your analysis on real topics and not wasted on crypto. Thanks for your original thinking in a herd thinking world.

Expand full comment
Russell Clark's avatar

I like looking at everything and was intrigued by the gaming connection with AXS. If I was the developers I.would take the money and run!

Expand full comment
Michael Fritzell's avatar

Thanks for the shout-out, Russell. Just looking from your free list, your growth has been very impressive, growing from 0 to 5,000 in just six months.

I still haven't reached the 5,000 level in a full-year of churning out quite a bit of content. While the quality of free subs can vary, in my experience the paid conversion rates tend to end up in a surprisingly narrow range of around 4-8% longer-term. Fwiw, I have around 260 paid (excluding free trials and comps) against 4,170 free, giving a conversion rate of 6.2%.

Edwin Dorsey can tell you tricks on how to get a higher conversion to paid. https://youtu.be/GmCffJgypv0. I'm happy to share any information as well.

Being on the leaderboard is important as more and more users switch to the app. The leaderboard is prominently featured on the discovery tab in the app.

Expand full comment
Russell Clark's avatar

I am not sure my numbers are comparable. I was publishing free research for 10 years at www.russellclarkim.com/marketviews which used to be republished by zerohedge.... it was good publicity - but now substack gives me a.chance of clawing some of that advertising revenue back!

Expand full comment
Grant B's avatar

Volume, volume, volume! ...then monetize, somehow

Expand full comment
Russell Clark's avatar

Yup! But I must say Axie Infinity strikes me as in the monetise phase!

Expand full comment
Utopiates's avatar

Hi Russell, you mentioned Nomuro re crypto reports , can you send a link please .

Love your work.

Rob R

Expand full comment
Russell Clark's avatar

https://t.co/qhL6JNnALq not Nomura - Messari . Interesting

Expand full comment
A Walking Gentleman's avatar

My humble take would be that P2E is a fledging industry/model so its hard to find direct comparables with scale. The recent Ronin chain hack at $600m won't help with any rapid adoption in the near term.

Regarding the Philippines, I would accept the premise that P2E would be attractive for countries with lower wages / weaker career opportunities, but understand your skepticism.

Expand full comment
Russell Clark's avatar

Its possible to earn a secondary currnecy in Axies doing missions etc - that generates incomes for players. I think this is part of the appeal. But the biggest appeal of the game is seeing your Axie appreciate in value... which is very different to other games..

Expand full comment
A Walking Gentleman's avatar

You mean the Smooth Love Potion token?

Expand full comment
Russell Clark's avatar

Yes... do you play Axie?

Expand full comment
A Walking Gentleman's avatar

Nope, just wanted to put that in a sentence. I did a lot of research on Axie in early 2021 but didn't invest (perhaps channeling the Grant Williams voice in my head). We have kids with similar interests so I understand the hook.

Expand full comment
Harkster's avatar

On the topic of substack ranking, I've spoken to publishers who have compared stats with other publishers and their findings don't tie up with their respective positions on any leaderboards. Whether there are just delays to updates or other unknown inputs to the algorithm, it's hard to say.

Expand full comment
Russell Clark's avatar

It is hard to say... i think maybe they update data with a.delay...

Expand full comment
User's avatar
Comment deleted
Apr 7, 2022
Comment deleted
Expand full comment
Russell Clark's avatar

Interesting. That would make more sense - but some of the substacks seemed to have limited reader interaction and still.ranked above me...

Expand full comment
User's avatar
Comment deleted
Apr 7, 2022
Comment deleted
Expand full comment
Russell Clark's avatar

I thought you needed SLP and AXS to breed? I have to admit I would need to play it to do full due diligence. I certainly think a crypto hedge fund should play it and get to the bottom of it...

Expand full comment