Gabby Dizon, cofounder of Yield Guild Games, discusses his background in gaming, why he started Yield Guild Games, the performance of Axie Infinity, and more. Show topics:

  • how Gabby fell down the crypto rabbit hole
  • what inspired Gabby to co-found Yield Guild Games
  • what Yield Guild Games does
  • how blockchain games improve upon games in the traditional world
  • a real-life story of Yield Guild Games improving a player’s life
  • why it’s difficult for Yield Guild Games players to cash out earnings and how Yield Guild Games is trying to solve this issue via a partnership with XLD
  • why Gabby thinks the value of $SLP in Axie Infinity is dropping
  • what sort of game and tokenization mechanisms work best for blockchain games
  • why Gabby wants a new Ethereum token standard
  • what Gabby thinks makes an in-game NFT valuable
  • why Axie Infinity is popular in the Philippines and Venezuela 
  • where Yield Guild Games is attempting to expand next
  • how Yield Guild Games built out the tokenomics for YGG, the guild’s native token
  • what Gabby thinks about P2E games on chains outside of Ethereum
  • how Yield Guild Games is decentralizing 
  • how blockchain games are changing the nature of work 
  • what sort of jobs exist in the metaverse
  • why Gabby buys NFTs
  • Gabby’s crypto prediction for 2022

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Episode Notes

Gabby Dizon — cofounder at Yield Guild Games

Yield Guild Games

Miscellaneous

Unchained Episodes on Axie Infinity

Laura Shin:

Hi, everyone. Welcome to Unchained, your no-hype resource for all things crypto. I’m your host, Laura Shin, a journalist with over two decades of experience. I started covering crypto six years ago, and as a senior editor at Forbes, was the first mainstream media reporter to cover cryptocurrency full-time. This is the December 14, 2021 episode of Unchained.

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Today’s guest is Gabby Dizon, co-founder of Yield Guild Games. Welcome, Gabby.

Gabby Dizon:

Hey, Laura, thanks for having me.

Laura Shin:

Let’s start with your background. How did you get into games and crypto?

Gabby Dizon:

Wow. So, the background actually goes all the way back to the early ‘80s. On a business trip to America, my dad took home a Commodore VIC-20, and yes, I know that dates me, having a Commodore as my first computer. But yeah, I started playing games there, and my parents always wanted us to have personal computers, not, like, consoles, like, you know, a PlayStation or Xbox growing up, because they thought that there’s more educational value in having computers.

So, even though I was playing games most of the time, I learned how to program then, and then, yeah, took up, like, a computer-related course. And I really just love games, so when I graduated from school, I knew that I wanted to make games.

Laura Shin:

And then, how did you end up finding crypto?

Gabby Dizon:

So, I was making games, started a mobile games studio in 2014. So, we were making games for IOS and Android devices, but in 2017, we…it was actually through Ethereum that I got into crypto. Of course, heard about Bitcoin from my friends, and some of them had gotten into it early as, like, 2014, but the use case in the Philippines for Bitcoin had always been around remittances, which, honestly, just wasn’t that interesting to me, because I was a game-developer.

And what really got me, and was the concept of Smart contracts, or…when I first took a look at Ethereum, it was the concept of programmable money, and the concept of adding programmable money in games. There’s always been some form of money, points, resources in games that gamers are very used to, but the idea of having this kind of immutable money that people could take out of the context of a program or a game, and just give to other people without permission, just seemed really exciting.

So, we started taking a look at Smart contracts to see how we could use them in the context of a game, and how it could one day disrupt the game industry. And it was during this time that we were experimenting on this that CryptoKitties came out, in November 2017. They crashed the Ethereum network, if you remember that, and they popularized the notion of the non-fungible token, or the NFT.

And NFT was super-powerful, because unlike fungible tokens, now you had a unique asset on the blockchain that could represent something, and that something could be a game item, for example. And that was just really so incredibly exciting for me.

Laura Shin:

And so, then, how did you end up founding Yield Guild Games?

Gabby Dizon:

Okay, so, when we found NFT, so, I’ve been incredibly active in the space. We started making a game called Battle Racers on Decentraland, and then, I started becoming an NFT-collector. So, I collect NFTs from, you know, game items, crypto art. I have land, I have an art gallery in Decentraland, for example, and then, I started playing Axie Infinity in October 2018. So, became friends with the founders, Jiho and Psycheout, in the conference circuit.

It was very, very small scene back then, and I invited him to Manila to speak about Axie Infinity at a blockchain event that I organized, and in return, he gave me three Axies to start playing, and that was the start of me playing Axie Infinity. The community then was less than 500 people, and yeah, it was a great experience, and fast forward to 2020, I was still playing Axie Infinity. I was playing it a lot, actually, and what had happened was that this was during the start of the COVID lockdown, and a lot of people lost their jobs around the world, but particularly here in the Philippines.

And what happened was that people in the rural area of the Philippines started playing the game as a way to earn money, because they lost jobs. They were stuck at home during the lockdown, and they found Axie, and they started coming in, and this was the explosive growth that really led to us founding Yield Guild Games, or YGG, as a way to kind of give access to people around the world to the NFT assets that they can use and play, in order for them to get access to the crypto economy.

Laura Shin:

And so, tell us what Yield Guild Games does, and how it works.

Gabby Dizon:

Sure. So, YGG is a, what we call a play-to-earn gaming guild. The guild itself is set up in form of a DAO. So, it’s not a company. There’s no underlying equity, and it has a treasury wallet, and then, what we do is that we buy, or breed, or acquire NFTs in different games, starting with Axie, of course, but we’re in a lot of different games now. And then, what we do is that we lend out these NFT assets to our player community so that they can use them.

So, for example, if a player uses Axies from our guild, in what is known as the scholarship program, or a lending program, they get to play the game without having to pay the upfront cost of buying Axies. A good game in Axie Infinity might cost somewhere between maybe 800 to 1,000 dollars, which is just out of reach for a lot of people who are just starting out to play a game, especially in developing countries such as Philippines or Venezuela.

So, we democratized the access by lending them the assets, so that they can play the game, they can earn money, and we just do a revenue share. So, 70 percent of the SLP, or Smooth Love Potion, tokens earned by the player goes to them, 20 percent goes to their community manager, and ten percent goes to us, the guild.

Laura Shin:

And so, at the moment, how many scholars do you have, and how much have people earned via Yield Guild Games?

Gabby Dizon:

We have over 6,000 scholars now, and we’ve paid out more than 13 million dollars in SLP, and that’s just in the course of a year, and we’re really going to ramp this up aggressively in the next year.

Laura Shin:

So, let’s talk about, you know, you have this experience, obviously, in traditional games. What problems do you think blockchain-based games solve that exist in traditional video games?

Gabby Dizon:

Right. So, something that people haven’t really thought of when they play a game, because when you play a game, you’re thinking about, you know, you’re playing it for enjoyment. But in games that have virtual economies, you’re actually putting in a lot of time and effort building up your character, getting items, maybe getting land in the game, and with putting these assets on the blockchain and kind of, in a sense, imbuing them with a financial value, now the effort that you can have in those games is something that creates value that you can take out.

So, the game developer makes all of the money from the work that you’re doing inside this virtual economy, and what this does, by putting assets on chain, is that you can own that value for yourself, or you can trade it with others. And this is actually great for the game itself, because if I am putting in value in your game, and I am getting money or assets out of it, that means I’ll stay there longer, because I’m actually getting something for the effort that I’m putting in.

Laura Shin:

So, let’s talk a little bit about what this means for somebody who participates in Yield Guild Games. How do they start, and then, what is their kind of, like, life cycle in Yield Guild Games evolve as time goes on?

Gabby Dizon:

Yeah. So, there are many ways to participate. I guess, if you’re just coming in without any knowledge of blockchain, you’re probably coming in as a scholar, which means that you applied to our different community managers, one of them selects you, and then gives you access to assets such as Axies, and you start playing the game. But what we really like to do is to kind of have people really find what kind of creative jobs they like to do within the community.

So, people may start as a scholar, and then, they earn enough money after a few cycles to pay off their debt, pay off their bills, put food on the table, and then, their world opens up. They can start doing different things. For example, they can buy their own Axies and just play for themselves, and get a hundred percent of the SLP they produce. Or they can start breeding Axies to sell them for more money, or breed the Axies, or become a scholarship manager themselves, providing scholarships for other people who might want to play the game.

Some people become streamers, content-creators, or community helpers who are helping other people. So, that’s the lovely thing about it. There’s just so many ways for people to get involved.

Laura Shin:

And can you give any real-life examples of different players who have had their lives changed by participating in Yield Guild Games?

Gabby Dizon:

Wow, yeah, there are so many of those stories, you won’t even believe. So, one of our players, who goes by the name Young Yujiro on Twitter and Discord, he was a player who really did not grow up with much, and he became part of the early community. I tapped him as a freelance graphic designer, making Twitter banners for our YGG Twitter account, and he ended up receiving the Founders’ Coin. So, the Founders’ Coin was an NFT that we rewarded all of our early community members back in January.

And if you own a Founders’ Coin, you’ll constantly get amazing, like, freebies, NFT airdrops, special things, for life. So, it turns out that that’s coveted highly by our members, and the value of that Founders’ Coin just kept on increasing. At one point, this free airdrop, and we minted 300 of them, it was worth 30 ETH each. He was in a financial rut because he had a death in the family, and he had to sell his Founders’ Coin for half an ETH, but that enabled him to kind of pay for burial of his family member, pay down some debt, and put himself in better financial footing.

And by kind of participating in the different events of the guild, he was able to build up his financial life, where he’s able to buy a house and car. And there’s just so many of these different stories from people who come from very modest backgrounds, who decide to show up and participate in the network, and have their lives vastly improved as a result.

Laura Shin:

And so, people are earning, you know, as you mentioned, things like Smooth Love Potion in Axie Infinity. How easy is it for them to cash out, especially if they are, you know, in these more developing countries?

Gabby Dizon:

Yeah. So, cashing out is not super-easy. I think the easiest way to do that is via the crypto exchanges that support tokens like SLP. So, for example, Binance listed game tokens like SLP, so it’s relatively easier to cash out, but now we’re actually working with partners to make it easy for you to use the tokens that you earned, and use it to pay for real-world financial services. Like, we have a partner that comes in where you can use the SLP you earned and pay for your phone bill, for example, and that’s just incredibly amazing to see.

Laura Shin:

Is that, the partner XLD, or…?

Gabby Dizon:

Yes…

Laura Shin:

I saw…

Gabby Dizon:

…that is.

Laura Shin:

Yeah, and can you talk a little bit more about, like, how are they making that work?

Gabby Dizon:

Yeah. So, the magic there is where kind of crypto meets fintech, and in fintech, you can apply for different kinds of licenses, which are kind of, vary by country to country, but if you have the proper licenses, it is just similar as making, like, a bills payment for your bank. So, they kind of abstract the way the exchange from SLP to Philippine pesos or US dollars, and then just use that to pay for the bill on your behalf. And when it works, it’s just amazing, where you think of yourself as playing a game.

You’re earning tokens, and then I’m using that token to pay for phone bill, or get airtime load. That’s, I think, where crypto has a real use case that helps people in the real world.

Laura Shin:

And which countries are they in right now, or in general, like, you know, which countries do you have these services to make it easy for people to cash out?

Gabby Dizon:

So, it’s in beta right now. So, it’s in the Philippines, but we’re going to roll it out to over a hundred countries.

Laura Shin:

Okay. So, I’m sure you’re aware, and I know, you know, here we are, just talking about this one game, Axie Infinity, but obviously, it’s kind of the main one, or has the most traction. But as I’m sure you’re aware, the value of SLP has been dropping. Earlier this year, it was, like, 35 cents, and now it’s closer to 5 cents. Why do you think that has happened? Let’s start there. Why do you think that’s happened?

Gabby Dizon:

Sure. So, SLP is different from other tokens, in that it’s an infinite supply reward token. So, it’s not a capped token. It’s meant for people to earn value in-game, and then when you breed Axies, you burn SLP. So, that’s how the tokenomics work. It’s important for a game like Axie to have some sort of reward token that has inflation, so that new people can come in and start earning value. Unfortunately, when Axie started really growing, like, mid-this year, when everything start exploding, I think speculation on the exchanges got ahead of where the price was of SLP, or the good range was.

So, it went to, like, really high levels, where, for example, at 30 cents, people were earning, for example, like, over maybe 2,000 dollars a month playing the game. And it was probably unsustainable, because it was driven by speculation, and what you want for a game reward token is to be driven more by internal, like, game economy rather than kind of external forces. So, I guess that’s one thing that all game designers have to think about, is that, how do you mitigate the volatile nature of cryptocurrency, because people can and will speculate on your token, and that might end up hurting the game economy that you have in the long run.                                                                                                                                                                                                                           

Laura Shin:

And are there any thoughts on how to prevent that from happening, because, I mean, you’re right. If these tokens are basically trading on these markets that are open 24/7, 365, then I could imagine it might be difficult.

Gabby Dizon:

Yeah, it’s kind of a tough game design question, and I think this is where the kind of game economy designers come in, where you have to design economy mechanics where you limit the volatility of token, whether tokens are redeemable, and the developer fixed them at a certain capped price, or maybe you’re giving out some form of a stablecoin, or something that has kind of low inflation rate. So, there is several ways to do this, but it also depends a lot on the context of the game.

One of the advantages that the game developer has is that they almost kind of act like a central bank, where they can change the utility of the token itself. So, for example, this week, Sky Mavis, the developers of Axie, they upped the breeding cost in SLP tokens and dropped it in AXS tokens, which means that it now costs a lot more SLP to breed new Axies. And that means that there’ll be a higher price support as more SLP gets burned, when new Axies are created.

Laura Shin:

So, just in general, for Yield Guild Games, as you’re adding games, I’m sure there’s a way that you evaluate game economies. How do you do that, and are there any particular game mechanisms that you think just outright do not work well in general for game economies?

Gabby Dizon:

Yeah. Yeah, absolutely. So, we have a four-man team that just does nothing but look at games that might be a good fit for Yield Guild to invest in. So, first of all, we look at games that have some form of kind of play-to-earn tokenomics, meaning that I play the game, I earn some form of reward, because that is how our players earn something from it. Second is that the guild structure lending is very important for us.

So, I want, as a guild, to be able to buy, for example, a million dollars’ worth of assets in a game, whether it’s, like, heroes, or land, items, armor, and be able to lend them out to players without having to trust them to return it back to us. So, that kind of trustless lending is really important, and right now, it’s being done more in an application level, rather than from a kind of wallet level. But if their kind of lending or asset-delegation is possible, then it’s easier for us to come in and invest heavily.

And it’s not just us, it’ll be, like, other guilds that have pooled their money to buy assets for their player base. So, we like to talk to developers as early as possible, and kind of work with them through, like, what is important about a guild model, how can we invest assets, and have our players play them? What kind of rewards are our players earning, and where’s the money coming from? What’s the utility of, for example, a token that is being rewarded which gives it value if other people want to buy it? So, this is examples of the things that we take a look at.

Laura Shin:

And you talked about how one of the features that you need is to be able to trustlessly lend out these assets. So, how does that work? How do you lend them out and not worry about people either losing the private keys, and then being like, sorry, or, you know, lying about that?

Gabby Dizon:

Yeah. So, there’s a short-term and long-term solution to this. Short-term, and what is happening now, is that the assets are on the wallets that the guilds own, and then we create accounts in games like Axie Infinity. And then, we give other players account-level access, which means they can log in with a user name and password, but they don’t have access to the private key. So, they can access the assets, but they can’t run away with them.

Long-term, what we’d like to see is an extension of the ERC-721 Standard, where you can have delegation mechanics right now. There’s no mechanics in the ERC-21 Standard for me to put, for example, an NFT in your wallet, and have certain conditions to take it back. And I think that is incredibly important, because if we enable that, then you can enable things like land-rental contracts, allowing people to build on land, and then be able to take it back when certain conditions are met. If you enable this from a Smart-contract level, then it just becomes so much more powerful.

Laura Shin:

Yeah. Yeah. I could see how that could unlock a whole new set of different business models. So, one other thing I’m curious about is, so, obviously, you know, we have these different types of games, and I’m sure some games are more popular than others, which affects the asset prices. But in general, like, what would you say tends to make a game asset valuable? Is it something that makes you more powerful in the game, or is it something that’s simply rare, like a profile pic, or, like, what factors are giving value to these different assets?

Gabby Dizon:

Right. There are several factors that affect value. Scarcity’s definitely one of them. Aesthetics is another one, something that looks good, that is scarce may be desired more by other people. In games, particularly, utility actually trumps all of them, but utility is very important, because if you play with things from an in game environment rather than, for example, like, collectibles that just rely on traits.

Utility’s really important, because it works within kind of a greater ecosystem, and what a virtual world or game economy does. So, this is where really experienced game developers can come in, because they are designing assets with utility. For example, if I have land in the game, what can I build on top of it? Can I rent it out to someone? Can someone come in and farm on my land, and then, can we do an automated rev share?

So, these are things that are being explored in games right now, and yeah, it’s just really interesting to see what experiments people are coming up with, because these kind of blockchain games are still very new, and I would say that, yeah, we’re still very much in the experimentation phase of what’s possible.

Laura Shin:

Yes, I’m quite certain of that. So, Axie Infinity is known for being popular in the Philippines, and I know that it’s already started to spread to some other countries, but in general, you know, and I’m sure Yield Guild Games is interested in doing this in general, how do you plan to spread more of these different play-to-earn games to other countries or economies?

Gabby Dizon:

Yeah, so, we’re leaning very heavily in the community model. So, what we’ve done was that we rely on community managers who have knowledge of the game, and to go out and recruit people in the local community. So, for Web3 to be really felt by billions of users, it has to be hyper-local. And so, that’s what we do. We find and recruit community managers in different countries around the world.

So, now, we’re in Indonesia, we’re in Thailand, we’re in Brazil, we’re in Venezuela, we’re in Colombia, and we find the community managers that…we start with Axie, that know Axie, want to play it, and know how to work with community. And then, we give them access to our platform and assets, and they go out and find the users, train them…we give them access to a wallet…train them how to play the game, teach them how to use crypto, how to keep your private keys, how to not get scammed in a community environment.

So, you have a very localized setting on how you are learning in your crypto journey. So, we do a lot of these innovations and content in the Philippines, where we’re creating guides, manuals, almost like a guild operations playbook. And then, we kind of franchise it out to the rest of the managers and SubDAOs and guilds that we work with across the world. So, we’re primarily expanding now across the rest of Southeast Asia, India, Latin America.

We invested in a guild in Brazil. We invested in a guild that helps students, specifically, graduate via…and afford their tuition via play-to-earn.

Laura Shin:

Wow, wait, which country is that in?

Gabby Dizon:

They’re in Southeast Asia as well. So, the guild is called AcadArena, and they’re focusing on bringing students to Web3 via play-to-earn.

Laura Shin:

Wow. It’s super-interesting, and so, out of those economies, or countries, which ones are you finding there’s kind of more uptake?

Gabby Dizon:

So, the thing about this is that the more volatile a country’s currency is, I think the better play-to-earn does. So, we’ve done extremely well in Venezuela, because their currency is very unstable. And from what we’ve heard from our scholars there, people might be earning somewhere between 1 to 50 dollars a month. So, the monthly income is a lot lower even than in the Philippines, but they have a crypto exchange, which means that we can go in there and give people Axies, they can start earning SLP, and then turn the SLP into their local currency. And ironically, I think SLP’s even less volatile than their local currency.

Laura Shin:

Yeah, and in terms of cashing out, like, I know that you have built that infrastructure in the Philippines, but is that either being built in Venezuela, or has it already been built?

Gabby Dizon:

Well, it depends on country to country, but we always look for partners that are able to help us facilitate a kind of crypto to fiat swaps. So, mainly those are exchanges, but it might be wallets, it might be some of these neo-banks. So, we always look for those kinds of partnerships in the countries we operate in.

Laura Shin:

So, something else that Yield Guild Games did recently was introduce the YGG token this past summer. How does that work, and what effect have you seen it have on your community?

Gabby Dizon:

Sure. So, YGG itself is a membership, governance, and ownership token. So, let’s tackle all those three. Membership in that if you own YGG tokens, you have access to different things that only members of the protocol have. So, it starts very simply, like, with other people. There’s token-gated Discord channels where there’s things that are only available to our players. Then, you’re able to do, to get, like, exclusive NFTs as well.

So, we have, for example, a guild badge that you can mint from our web site that is free to mint. You just need to pay for gas, and that gives you access to certain things within the guild. So, that’s the idea for the guild itself, is that your participation in the guild gives you greater access to things that are not available to people who are not as participative.

So, we have the founders go in, we have token-gated Discord, we have the guild badge, the NFT sword and shield, and we’ll be integrating this across the different games and protocols that we work with, where you might need to have, for example, a certain NFT, maybe a YGG sword, for example, to be able to enter a certain part of a game. And then, for governance, we’re working towards a progressive decentralization model, which means that slowly we’ll kind of open up more and more parts of YGG towards governance.

So, right now, we have SubDAOs, which are like DAOs under YGG that represent, you know, a certain number of assets in the game. For example, we have a YGGLOK SubDAO which contains our land assets in the game League of Kingdoms. It has its own token, and now there’s governance. There’s a snapshot page against it, and the players themselves are voting on how to kind of direct our assets or our guild in the game. What are they going to do with a yield?

When are they going to play the game? How is the leadership set up? So, we’re letting the players do that, and we’re going to do this for another game, Splinterlands, as well. Yeah, and ownership, just think of owning a token of YGG as having a slice of all of the activities we do, from the assets that we have to the activities that we’re doing, e-sports, tournaments, the fees that are being accrued from gameplay.

Laura Shin:

And just one question I wanted to ask about, when you were talking about how you could have a YGG sword that gives you access to, you know, a certain part of a game, I mean, since you’re not creating the games themselves, would it be that in conjunction with the game developers that you develop kind of a special part of the game just for people with those special YGG assets, or whatever?

Gabby Dizon:

Yeah, yeah. So, that’s the magic of composability in crypto, which is very hard to do otherwise, where I can have a game asset, or an NFT that I minted, then it has utility in a game that someone else developed. So, for these games, the draw for that is if they enable that functionality within their game, they get our users, our player community, who would be interested in going to their game to check it out, and this is the kind of composability that is actually very hard to do outside of crypto, because it needs a lot of meetings, handshakes, access to each other’s private databases, and crypto just enables this composability wonderfully.

Laura Shin:

It’s so cool. It reminds me of those, like, pick-a-path books, you know, that you used to read, well, at least I used to read as a kid, because…

Gabby Dizon:

Choose Your Own Adventure.

Laura Shin:

…yeah. Yeah, because basically, what it would be like is, so, the author writes the book, and then they have their own, you know, different Choose Your Adventure endings. But then, you, the reader, could basically be like, hey, I have an idea for another ending, and basically kind of propose that, and that’s kind of, it sort of, you know, reminds me of that. Am I right in thinking that it’s kind of, something like that?

Gabby Dizon:

Yeah, it’s an act of co-creation and letting players have their own stories. And what that does, it gives them a greater sense of ownership in the game that they’re playing and the assets that they’re owning, and also with, like, the guild-specific assets that are in the game. So, yeah, people just love it when there’s kind of content in a game that’s just for them.

Laura Shin:

Yeah, so, okay, I think it’s super-fun. I’m not even that into games, but I would want to do that. All right, so, we’re going to talk a little bit more about the YGG token, but first, a quick word from the sponsors who make the show possible.

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Back to my conversation with Gabby. So, you know, as you talked about, you distributed this YGG token earlier this year. How did you think about how to allocate that supply? I know that there’s a lot that goes into, you know, forming, like, kind of a good economy and stuff like that, and obviously, with all these…what’s the word…debates in crypto about things like fair launch coins versus VC coins, I’m sure there’s a lot of opinions about how much different entities get. So, how did you guys think about that?                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

Gabby Dizon:

Well, yeah, there’s definitely more than one way to do tokenomics, and for us, we developed our tokenomics very closely with the Delphi Digital team. You’ve had Yan on your show, and he designed both the AXS token for Axie Infinity and the YGG token for Yield Guild Games. So, one of the things we did, actually, was that we set aside 45 percent of the total supply of the token for player rewards, for play-to-earn rewards, so that our engaged player community can earn the tokens over a long period of time without needing to buy into it.

So, you’re seeing a trend in DAOs now that value contribution over merely buying into a token, or financial speculation, and this is something that we really want to emphasize, people can have greater ownership of the guild with actions that are good for the guild itself. So, whether you’re a community moderator, you come up with a show, or you’re a top e-sports player within the guild, you have the opportunity to earn ownership in YGG itself without having to pay for it with money.                                                                                                                                                 

Laura Shin:

Yeah, well, I know that there is this, like, mining program. So, how does that work, exactly?

Gabby Dizon:

Yeah. So, we call it a community mining program, and it just means that there’s a lot of different initiatives that allow you to earn the token, and we, like, the team, we set up initiatives where if you were in the e-sports team, you may receive a stipend in YGG tokens. If you win the tournament, you may be able to earn more. If you are a community helper, then you may be able to get tokens this way. So, yeah, so, we just try to identify the points that, where people are really giving value to the community, and we want to reward that.

Laura Shin:

And so, I mean, so, Yield Guild Games is also, of course, investing in its own tokens. And so, when the value of the treasury goes up, is there any direct correlation to the value of the YGG token, or are they just kind of separate, or how does that part work?

Gabby Dizon:

I guess in the same way that you might view a balance sheet and kind of make up your mind about what a company may be valued. The correlation is not a hundred percent direct. Like, it’s not, I would say, done from, you know, an algorithmic perspective. What we do is that we publish very publicly all of the assets that we own. We try to do that every quarter. It is like, here we have 35,000 Axies, we have this many pieces of land.

Here are the tokens that we’re holding, and here’s how much they’re worth. By the way, here’s all of the wallets for all of our different assets. And it just gives people a very clear idea of what we do, what assets we hold, and they can make their minds on how on how much that is worth, right? Like, we’re not going to tell them that a token is worth a specific amount of money, because that’s not what the token represents for us. It’s about, like, really being an owner and participant in the guild.

But yeah, we just publish this information as publicly as possible, so that people can kind of derive their own assumptions on how much the guild treasury itself is worth.

Laura Shin:

And so, we did talk earlier about how, when you’re choosing which games to invest in, that, you know, you’re looking at the kind of game economy or the tokenomics within that game. But obviously, we have all these different games that are sprouting up on different chains as well. Do you guys evaluate the chains? Like, does it seem like there are certain chains that are just going to be better for gaming, or in general for the ownership economy, as opposed to other chains?

Gabby Dizon:

Sure. So, every chain makes certain tradeoffs, right, and Ethereum has maximum security and programmability, and that may be fine for, for example, artwork which is more static, or collectibles that are high-value, and you want to secure them on a chain. But it doesn’t work for games, because a lot of the time, you need high throughput. So, game assets have mostly been moving to different chains such as maybe a Polygon, or an Immutable, or a BSC, or a Solana.

We don’t take sides when it comes to chains. As long as games work there, we will go there, and we’ve bought assets in all of these different chains. I would say that the tooling side is not as built out when you leave Ethereum. So, for example, we want to have a multisig in every different chain to hold our assets, and it’s not just possible in all of them yet. So, the developer ecosystem has to be really strong for us to kind of have things like governance, multisigs, hardware wireless support in the ecosystem outside of Ethereum.

Laura Shin:

So, at the moment, do you have any particular theories on which chains you think might emerge as particularly good for gaming, or do you feel like right now it’s just equal opportunity, and you’re open to whatever?

Gabby Dizon:

Yeah, it’s so incredibly early. I mean, you’ve seen some take the lead, such as, for example, a Polygon or a Solana, but I really wouldn’t count anything out at the moment.

Laura Shin:

So, as you mentioned, Yield Guild Games is now a DAO, or you’re transitioning to becoming a DAO. At the moment, I don’t know how decentralized you would say you are, so maybe you could answer that, but then on top of that, what lessons do you feel you’ve learned so far in terms of, you know, trying to go from more centralized to decentralized?

Gabby Dizon:

We think about this a lot, and I think there’s a lot of people in crypto that believe in decentralization for decentralization’s sake. And for us, we have a mission which is, like, in my head, it’s a ten to 20-year mission that we want to build. And of course, the community really matters, and the community’s input is something that we look for, but we want to decentralize around the economic aspect first, meaning that we want to give as much ownership as possible to our player community.

If we have game assets, we want them to decide how and when that will be played, what’ll do with the yield. In terms of the product vision, it’s something that, I guess, the team is still kind of holding internally, and it’s something that will be decentralized slower over time. But we want to really decentralize the economic aspect first, because it’s what brings freedom to people.

And then, as people get freedom, then they have the ability to make longer-term decisions, especially as we kind of imbue the community with the values that we want to bring over a long period of time, values such as, you know, helping others, us being here for more than the money, being able to help people have a better life because of access to crypto and play-to-earn. This is something that I think is a more long-term journey for us.

Laura Shin:

Yeah. Yeah. Well, I think for a lot of these different entities that are trying to decentralize, it’s definitely a process. So, we have talked a little bit about traditional video games. We are seeing that some of them are now getting into NFTs. You probably saw that news about, is it Ubisoft, I don’t know how to pronounce…

Gabby Dizon:

It is Ubisoft. That’s right.

Laura Shin:

…okay. So, they are now creating an NFT platform. I did notice that they’re saying that their NFTs will only be cosmetic items that have no impact on gameplay, and I wondered if you, you know, what you thought about that choice. Like, why do you think they might’ve done that, and do you think that’s a smart move, or does it not really matter?

Gabby Dizon:

Well, first of all, Ubisoft is actually one, had been looking at blockchain for a long time. I co-founded the Blockchain Game Alliance with different people in the crypto and gaming industry, and Nicholas of Ubisoft was one of the founding board members. So, he’s been looking at this for a very long time. The biggest challenge, if you’re an established company, is that you risk upsetting your current player base, or your user base, over something that you might do that may be innovative.

And you’re seeing this happen a lot with NFTs, where, for example, Adobe is introducing a way to mint NFTs, and then there’s a lot of backlash, or DeviantArt was going to add support for NFTs, got a lot of backlash. And there’s just a lot of backlash in general in crypto and NFTs among, I would say, kind of the general consumer market, and the way to do this, if you’re a forward-thinking company like Ubisoft, is to kind of very lightly touch it in the products that you have first, and get your existing customer base to get used to it before you do more of the kind of, I guess, stuff that has more utility.

So, I think this is the track that they’re taking. They chose Dezos as the chain, which is a proof-of-stake chain, and it shows that they’re very conscious of the environmental concerns that people have on crypto and proof-of-work chains in general. So, I think it’s a very measured move for them. I know that they’re capable of doing a lot more, but there’s also the notion of bringing your user base with you on this journey.

Laura Shin:

And when you talked about the backlash, was it due to environmental concerns?

Gabby Dizon:

Well, a lot of it at the surface looks like environmental concerns. I think people are generally, or generally don’t like things that they don’t understand, that are new. We saw this with new technology, free-to-play games, even people thinking internet was a fad 20 years ago. It’s just a natural cycle of things, where if you introduce a concept that is kind of hard to understand, and you’ve seen this, Laura, in crypt, right, from your entire journey.

I think this is just an extension of it, where if you don’t understand it, it’s easier to hate it than to really kind of try to wrap your head around it. But once you do, then you go out, like, you go down the rabbit hole pretty deep.

Laura Shin:

Yeah. Well, at least you and I did. So, for a centralized company like that, I just wondered how you thought, you know, the fact that NFTs enable you to take ownership of your game assets, how do you think that will affect those platforms? Because, you know, I guess what it would likely mean is, then, it gives their users more ability to kind of leave those platforms, or you tell me. I don’t know, that’s just what I was thinking. So, how do you think this will affect centralized video game platforms?

Gabby Dizon:

So, I think this’ll go towards the greater trend of going back to open versus closed platforms. The web start with very open standards, and in the last 15 years, we’ve seen closed platforms like a Facebook, or a Google, but also in video game ecosystems. They all work within their own ecosystem, and there’s no such thing as kind of, like, items from a game jumping to another game.

So, I think you need to have a very different mindset in designing these open worlds, where you have assets that can jump from game to game. But the reason that all of these big game companies are paying attention now is actually because of Axie Infinity, because coming out of seemingly nowhere, Axie has jumped to a multi-billion-dollar valuation. I think their token is doing 20 to 30 billion FDV, and it’s making, like, 20, 30 million dollars on their marketplace every single day.

And ultimately, that’s what gets these big companies to pay attention, is that, like, yeah, Axie is now one of the largest games in the world, and they’re doing it with a new model that has not been possible, and these companies never figured out before.

Laura Shin:

So, something that you have talked about in other interviews is that earlier, before you found crypto, when you were trying to create your own gaming studio in the Philippines, that you felt that creating your own intellectual property in the Philippines was difficult. Can you talk a little bit more about why that was at that time, and how you think crypto could potentially change that?

Gabby Dizon:

Yeah. One of the things that really frustrated me was that there are certain industry norms of, you know, if you come from a certain place, like maybe Hollywood, you’re the ones that are creating the value or the IP. And if you come from a certain place like, for example, the Philippines, you’re kind of the back office, or the execution office where just the work gets sent out, too, by the people who are creating the ideas, and you just get to do them.

And that had been incredibly frustrating for me, because I didn’t just want to make games that other people thought of. I wanted to make my own game IP. So, that’s actually what led to me cofounding the game studio Altitude Games in 2014. And the amazing thing about crypto is that it just democratizes access to markets around the world. So, you see this, for example, in crypto art, where you might not even know where an artist is because they are anonymous.

They might just look like a frog on the internet, but their work is amazing, and they get a lot of value. People pay, like, tens of thousands, or hundreds of thousands, or even millions of dollars for art, for an artist they’ve never known. Pak, who is probably one of the bestselling living artists in the world just sold his last collection for, I think, over 90 million dollars. They don’t even know where he or she is from, and I think that’s just incredibly democratizing, and this is one of the things that I love the most about crypto.

Laura Shin:

Yeah, so, I actually want you to elaborate on that a little bit, because, so, as, you know, you said, people often talk about how this technology could democratize finance. But I’m sure you’re aware that there are a lot of critics that say that actually, crypto shows that it’s just making already-wealthy people richer. So, I was curious, yeah, to just hear more. I’m just wondering, do you think that this playing field is being leveled in a global way, or is it just, like, within each local kind of geographical area, or, how do you…?

Gabby Dizon:

I absolutely do think that crypto is leveling the playing field all across the world, and I think that people who are kind of criticizing it, that the rich are getting richer, are just looking at, like, the top level news, and not really looking into communities of lives being changed, because I can offer up stories or personal connections of artists who are now self-sovereign, meaning that they can do whatever they want because of the art they’ve sold in crypto, because they now know how to manage their own money.

Or people in our player community who are basically gamers, ordinary people whose lives were saved, and they’re able to build better lives for themselves. So, this kind of participation, to have ownership in a network is, for anyone across the world, where you don’t even have to divulge your real name or what country you’re from, it’s just amazing. And there’s so many stories of this around the world, and people sometimes are just, honestly, not looking hard enough.

Laura Shin:

So, let’s talk a little bit about how you think the nature of work is going to change in the future. I’ve seen you tweet about job openings in the metaverse. So, yeah, tell me, yeah, how you think all this will change how people earn in the future, or how they’re already earning.

Gabby Dizon:

So, honestly, I think the, I work for one company 9 to 5, is dead. Of course, it’s still around, but the model is already dead. What we’re seeing is that if you can come in, participate in a network or a DAO and earn ownership instead of just fees, for example, then it enables you to create a lot of value and participate in the upside by doing something that only you uniquely can do, and this enables you to do a lot of different things.

Like, we’re already seeing streamers, content-creators who are playing on, like, five different phones at the same time, because they may be playing Axie, and then, they run out of energy here. They’re managing their land there, they’re in a different DAO somewhere else, and this is, I think, going to be more the nature of work, where a lot more people will be self-sovereign. They may have specific skillsets that they’re doing, participating in two, three, four, five DAOs, owning your own NFT assets.

Yeah, I think this is where people are going in the future, where you’re really honing your unique creative talents, and finding a way to not just get paid for them, but also gain ownership of what you’re creating and the protocols that you’re interacting with.

Laura Shin:

And in terms of, like, you know, when you tweeted about the new job openings, what are some new jobs that will exist in the metaverse, or that do exist in the metaverse that did not previously exist?

Gabby Dizon:

So, example, a good friend of mine is the best land broker in Axie Infinity. So, yeah, so, there’s a virtual land broker. There are people who are now virtual fashion designers, who are creating clothes for avatars, and they don’t even do this for, I guess, physical clothing. There are people who are creating cars in the metaverse, so, and a lot of content. So, these are just some examples, and it just endlessly fascinates me, because we’re kind of recreating the nature of work, but we’re doing it in a very global level, and we’re not beholden to kind of physical…I guess the laws of physics in the real world, which medium, I can design kind of a city in the sky and populate it, and have people go there. The creativity that people are just bringing into the metaverse is astounding.

Laura Shin:

Can you expound a little bit on what the land broker does, because I guess I would’ve thought that in a virtual world, it would be maybe more similar to an OpenSea type of situation, or, like, a Smart contract. You just make a bid, and then, you know, you don’t have to deal with humans. So, I’m kind of surprised, yeah, what do they do, exactly?

Gabby Dizon:

Well, OpenSea does exist, but the virtual land broker has relationships with the whales, the big, large owners, and for example, Decentraland or in Axie Infinity that may not necessarily have listed their lands for sale. And then, when a new buyer comes in, and they don’t want to dip their hand in the market of how much they have, or they’re looking for something specific, they need someone with deep domain knowledge in the field. So, that’s why specialist brokers exist, because they have the relationships, and they can kind of route people who are finding each other who may not necessarily want to be public about buying or selling something.

Laura Shin:

Okay. Yeah. Well, immediately when you said that they have access to whales, I was like, oh, of course, of course. This is not just, you know, any old regular land, I guess, what people are buying. So, speaking of, you know, high-end things you might be buying, I notice that you are an avid NFT art collector. And I’m sure you’re aware, at this moment, there’s…I mean, the space is so new, and so, it’s kind of confusing to figure out, like, you know, what’s going to have value in the future. Are you buying for investment, or are you buying for enjoyment, and if for investment, then how do you kind of figure out what makes a good NFT investment?

Gabby Dizon:

Okay, so, the thing about NFTs that is very counterintuitive is that the way to make money in it is to buy the stuff you love, right? So, I only really buy NFT art that I enjoy. I like to think myself sometimes as, like, an angel investor to up and coming NFT artists, and the way that I invest in them is to buy their art and hold them for a long period of time. I kind of help them gain more exposure to other collectors. And the reason it’s really important to buy the NFTs that you love is that if it goes down to zero, it’s not worth anything, you can’t sell it, at least you still love it, and it’s in your wallet.

But if you buy something that you love and other people like it, for example, like a Bored Apes, then it starts to gain financial value, and that’s how you make money. So, you have to be incredibly patient in NFTs, and be willing to sit on these pictures on your wallet for a long time, and maybe some of them will be incredibly valuable one day, maybe they won’t. But yeah, if you love them and other people do, then there’s a good chance you might be able to make money on them.

Laura Shin:

And out of curiosity, were you interested in art before the NFT art movement took off, or did this get you interested in art?

Gabby Dizon:

Not in the same way Like, I don’t really have a background in kind of classical art. I deal with art because I work in video games, and I work with a lot of artists. And a lot of the art that’s popular in crypto are kind of the same kind of art, maybe fantasy, science-fiction, that is kind of popular with the collectors have, because a lot…like, crypto people are just huge nerds, and they buy the art that they like. So, it’s not kind of the same, wherein you’re buying a lot of contemporary artists.

Of course, that’s happening now, but it’s actually opened up the field to artists that may never have been able to display their art in a museum or a gallery, but people are buying their NFTs.

Laura Shin:

All right, so, we’re going to switch back to games. Obviously, as we’ve discussed, the most well-known play-to-earn game is Axie Infinity, but what other play-to-earn games are you interested in, and/or do you think will take off in the next year or so?

Gabby Dizon:

Sure. So, we’ve invested in assets in over 15 games at this point, and we like them all, but I guess I’ll name some. Guild of Guardians is something that we’re pretty interested in. It’s kind of Diablo-ish, like, action RPG. Yeah, that is very exciting. Amber Sword is going to be kind of a full, like, fantasy, massively multi-player game. Yeah, we’re very excited about that, and own a lot of land in that game as well. Games like Cypher, CyBall, which is 3d3s soccer. There’s just so…

Laura Shin:

Wait, what’s a 3d3?

Gabby Dizon:

It’s a CyBall, it’s like a 3 versus 3 soccer. So, it’s like Axie Infinity, but you’re playing soccer against each other. But yeah, there’s just so many different games coming out, and that kind of variety is great, because some people may not like the gameplay of Axie, even though it’s a good game. So, they can find another game that suits them, that they can be good at.

Laura Shin:

And are you finding that these creators are from across the world, and that they’re not in the traditional areas that, you know, as you said earlier, the ones that have been the game creators?

Gabby Dizon:

Yeah, absolutely. Like, I think it’s really opened up, where we’re seeing teams from all across, like, Vietnam is pretty strong. There are teams in China. There’s, of course, a lot of teams in, like, the LA, but what we’re also seeing is that a lot more of these teams are more remote and global as well, and this is a trend that’s been kind of blown up since COVID started, where people realize we actually don’t have to be in the same office to get stuff done.

So, more and more, even though parts of a team, for example, like YGG, a lot of the kind of core community members and the founders are from the Philippines, but we consider ourselves a global community, a global network as well.

Laura Shin:

All right. So, this is coming out at the end of 2021. Do you want to make any predictions for 2022, in terms of either NFTs or blockchain-based games?

Gabby Dizon:

Okay, so, wow, for 2022, I think we’re probably going to see over ten million people playing a blockchain-based game every day. Yeah, we’ll see when this happens, but I think it’s going to happen next year.

Laura Shin:

Okay. All right. Well, we’ll have to check back. Where can people learn more about you and Yield Guild Games?

Gabby Dizon:

Sure. So, Discord.gg/ygg is where the core community lives. If you want to read more about, articles about us, you go to our media page YieldGuild.media.com, or the web site, YieldGuild.io, and you can find us on Twitter, Twitter.com/YieldGuild. And lastly, we have an 18-minute documentary called Play to Earn on YouTube that documents the initial community members in the Philippines, that found Axie Infinity, and started playing the game as a way to escape poverty during the COVID lockdown late last year. So, yeah, just go to YouTube and look for the Play to Earn documentary there.

Laura Shin:

Yeah, and for those of you who may recall the director, I believe, Leah Callon, I’m just blanking on her last name…

Gabby Dizon:

Leah Callon-Butler.

Laura Shin:

…Butler, right. She was on the show, and so, you can, I will put that in the show notes so people can check that out. All right, Gabby, thank you so much for coming on Unchained.

Gabby Dizon:

Thank you so much, Laura.

Laura Shin:

Thanks so much for joining us today. To learn more about Gabby and Yield Guild Games, check out the show notes for this episode. Unchained is produced by me, Laura Shin, with help from Anthony Yoon, Daniel Nuss, and Mark Murdock. Thanks for listening.