Robbie Ferguson: Immutable - The Web3 Gaming one-stop-shop. Ep. 513

Transcript

welcome to epicenter the show which talks about the Technologies projects and people driving decentralization and the blockchain revolution I'm Sebastian Couture and today I'm joined by Robbie Ferguson he's co-founder at immutable mutable is a platform for building web 3 games and we're going to talk about Webster gaming today uh we're going to talk about the gaming Market we're going to discuss also a mutable uh their whole developer platform and uh some other some other products and understanding uh where web3 gaming is going uh generally so Robbie thanks for joining me today thanks for having me pleasure to be here ah so yeah tell me a bit about your background and like how you

um came to want to focus on web3 gaming yeah of course uh so I've been building technology startups for the last decade as a software engineer originally self-taught and most these I built with my brother and my co-founder James uh in fact we actually started out by Building A League of Legends betting application where you could automatically wager on your own matches uh so I think we had you know we were massive greatness growing up I think with this thesis pretty early on that uh games were incredibly important that the assets inside these games could be valuable and that there was something that was being locked away from Gators you know back then we didn't know the technical architecture of that

um but I remember even playing RuneScape on a shared account I had with my brother and one day I decided to take his account out of the Wilderness I think he had full dragon and I scaled and I lost all his items and I felt so bad that I went online and I spent all my pocket money and I bought in-game gold so that I could buy his items back and the next day the account was banned for Real World Trading six months later jug X rolled out first party support for Real World Trading as long as the issuance was centralized and controlled through them and and so I think it was pretty obvious that you know the impunity with which people regarded these economies and made changes to them even though they were

incredibly important to people's lives uh and and to some extent their financial livelihoods even in web 2 economies where it was limited to a database in fact you could make arguments that the first ever sort of you know Real World Trading of digital assets was probably World of Warcraft um and indeed you know Counter-Strike go through this essentially steam locked database today did 32 billion dollars in volume over the last few years so I I think it's obvious that there's a problem and also that there's a need there's a demand analog in the real world over these assets being traded or wanting to be traded and they're really not being a good solution or infrastructure for it um so we we started building you know more tech companies uh we got into the crypto space in 2014 with Bitcoin uh we

basically just got exposure financially I thought it was kind of interesting I wasn't super obsessed but when ethereum came out I became a you know a Believer uh I remember using etherol and just becoming obsessed with this idea that someone could take what like you know a gambling company spends billions of dollars or the government does ensuring that the payouts on slot machines are compliant that they have uh the probabilities rated between what their payout ratios are 88 to 93 cents here in Australia and they're literally heuristically test this they have to air up the machines and then someone built this little app called etherol it did all of that in 200 lines of code and then it did something that the companies in the government could never do it took

the revenue streams from this institution or this Enterprise and it gave it to every single person who used the protocol through tokens and I was just obsessed with this idea of decentralizing and making companies cooperatives I thought it was the way that capitalist incentives could finally solve some of the inherent problems in society I was sold by this idea of a decentralized uber where all the writers could go in the network now turns out that did happen it just happened with on-chain financial products because the friction was much lower and you already have native products Market fit with these hundred thousand D5 Traders airdrop Farmers early users of web read today as kind of your core um whales who are moving money around and uh we we basically started building

trading Bots for a few years uh on top of poloniex initially and then on decentralized exchanges but we always wanted to build something and so at the start of 2017 my brother and I wrote a white paper called the distributed autonomous bank or dat which was effectively Compact and we hadn't solved all of the collateralization problems of Landing protocols I I don't think they are sold today even but we were about to launch it when five icos went to 50 went to 200 and we just got very cold feet about the space from a reg and compliance perspective we thought a bunch of people were going to jail uh and we wanted to build something that would be long-term feasible and that we would be happy to grow incredibly large without having the SEC

knock on at all when it gets to a sufficient scale and so we scrapped that but serendipitously at the same time um the first ever nfts came out in this idea of a crypto Punk and we we saw these and we said this will be how gamers are in-game items and actually the way we we started was we built the first ever multiplayer game on any blockchain was fully on chain logic uh came out in December of 2017 it was called etherbots and you could basically battle robots and win real uh nfts by by having your your machines went they were composable of four erc721s we've got a fully Unchained perk tree you can play a game today and it'll cost you hundreds of dollars but it can never go down and so I think we learned pretty early on you know what should go on Chain versus

watch it off and that really formed the thesis of how he started to build a mutable which was build first party content much in the same way that steam or valve started out with Counter-Strike GO and then we're able to leverage that knowledge and uh that sort of beach head from the content perspective into building a platform that everyone could use and that really sold core needs and so you know amid all today uh we're nearly 300 people around the world much more if you include the Contracting on on game developments uh we have hundreds of games building on us and we we had more than a billion dollars invested in games building on us just last year and we've significantly increased our market share since then with this polygon partnership and we've raised you know hundreds of millions

from everyone from temasek to 10 cents first investment in the space um and our whole mission is how do we deliver on this promise to to web through Gamers into Gamers worldwide on through digital asset ownership you said something in the beginning which you know kind of struck me as interesting is that you you said that you were you I think it was League of Legends um that you you had bought this gold and and then ended up buying some assets to sort of re make make good on your on having lost your brother's uh assets and that that account was banned for Real World Trading uh well why do uh gaming platforms and uh game Publishers uh prohibit or you'll want to prohibit or

keep or in the case of this game having then allowed Real World Trading why do they want to keep that sort of centralized within uh within their platform so I think before now it the technology hasn't existed I think it's impossible to do with databases uh the availability of being able to change something means that companies will and that means you can't form third-party trusted ecosystem even if the currency wants to make a trusted third-party ecosystem you know people can't trust the incentives and financials enough to actually build real Enterprises you saw this with opskits which is a 300 million dollar third-party Marketplace for csgo skins that basically went Belly Up When valve implemented trade locks and they

limited skins from being created more frequently than once a week and so I think there's actually just this technological impossibility and political impossibility with everything that doesn't rely on you know um open trustless immutable architecture such as nfts but isn't isn't that a design issue though I mean so there may be the technology issue but there's also like the design aspect so you know whether you're building on a centralized database or you're building in a blockchain the designers of say the smart contract or the and maybe this is getting a little bit in the weeds here sort of early on but um the the design essentially is is in the hands of the developer or the issue of that of that uh of that game and so I mean couldn't you build a similar sort

of design in the game where you have like an admin key and that admin key gets to decide who is able to trade or what what the trading mechanisms might be you can so I think the technology is only one half the pick shop and the answer to that in web 3 is I mean if you work really hard you can make things properly trustless and in general they're they're much more trustless for instance if someone does a change they don't like you know people can kind of you know Fork those assets or or find out other ways to bring value to them but in general what we're relying on is incentive alignment which means that uh the Publishers have an incentive to grow the value of that ecosystem and grow the value of those assets because they now have access to things like royalties and

secondary Market fees rather than having to rely on this old model of I sell stuff I deprecate that and make them more useless by releasing more powerful stuff that people want to buy every year and and so I I think it's it's a fair point um and it's it's certainly not you sort of overnight solved unless you're doing fully on chain process games which you know I I certainly not this cycle and I think we're seeing some interesting experiments but it's web 2.5 games that I've got to go Main Street first um but the second question in the probably much more important one is just you cannot accept incentives I think this model hasn't existed before I think it's difficult for games companies to see how they can you know for a long time actually succeed off growing the value of these economies

um and you have to remember as well like in-game items being the biggest portion of spend is also a reasonably new phenomenon free to play gaming only came out in the late 2010s and that's when you had in-game items there's even something that was really important as a vast majority of memorization the majority of monetization is now in-game items uh and we're sort of seeing this pressure towards well how do we actually create better economic standards and better property rights for gamers because of this but 20 years ago this was completely irrelevant because these you know these sort of economies were increa increasingly small and didn't have that much relevance to players um so I think the answer now is it's a bit of both it's how can we prove out to

developers this is a better and more aligned business model while at the same time you just have Innovative dilemma people are going to be disrupted uh the the goal regular going for is we want Gamers to demand property rights they play a game and they get given something a database that should be not good enough and that's the point of which it's no longer sort of Market to to have a game that runs on a database rather than on open property systems yeah interesting we can get a little bit more into this a little bit later but uh I just want to pull that through a little bit you know what is it that people like maybe take a snap back here like what is it that people understand the least about game development you know there's this whole there's this whole uh kind of narrative around web 3

games and how web3 games are inherently better than the the traditional model but like game development is a really I mean it's a huge industry it's like a 200 billion dollar industry games and game development is expensive and like there's all these uh there's there's all these considerations around like licensing and Publishers and distribution and it makes it's a very complex industry um what is it that people understand least about it that you know Bears understanding if they're going to be building a web 3 game or if they want to go sort of in this direction I I think the first thing is probably timelines and how they get produced the reason that D5 bull runs correlated so quickly with D5 Innovation is Andrei

Grande can put together a test smart contract and call it a Productions one contradict in a week right uh like you can build defy applications very very quickly they're all open source they're highly composable uh people can fork and and sort of remix things uh building a gate is not at all like that it's like building a movie you have a budget of roughly minimum five million dollars for anything reasonable unless you're looking at truly Indie ads all the way up into the hundreds of millions of dollars and for sort of you know Bethesda quality games and even then you will not be able to produce a Bethesda game unless you have the capabilities and processes of Bethesda there are very few Studios with sort of that uh internal capability and risk tolerance um and and the time it takes is a lot longer and then you combine that with

the power law of gaming which is that uh gaming particularly free to play games can form to a power law which means that the biggest game will have more revenue or more players or more volume than number two and and to the end and the second biggest game will have more than number three and so on to the end and what that means actually is when you look at why we haven't had a [ __ ] or the one hit we've had was was sort of uh axi which was sort of medium sustainability obviously had a sharp drop off is there simply hasn't been enough shots on goal and one hit is going to dwarf everything else combined and you see this already in in web 2 Counter Strike go doing 32 billion dollars in volume over the last three years or in revenues you see that

same topology and axi then is is roughly what five or six billion and everything else is lower than that combined um and I I think we're we're going to see that but the failure rates are going to be incredibly High to start with 90 to 95 uh and so the reason we have such a broad platform play as we know there are going to be so many shots on goal and all that matters is they have sufficient funding to be one of those hits and then we just have to make everyone as successful as possible and and sort of focus on those top 100 top 200 opportunities and and one of the biggest challenges then I mean like you said there's like 100 games on immutable and you know we've seen other games like axi and there's a whole like sandbox ecosystem

what have we learned so far about web 3 games that we've identified as like the biggest challenges to like hitting those shots on goal and like really demonstrating that this new sort of infrastructure and this new paradigm of gaming is inherently better uh and making some positions here that uh you know than traditional games I think there's probably five big problems blocking successful games being ready now and available and we think about this problem a lot and our goal is immutable is to be the One-Stop shop that we can solve everything for for a mainstream developer if they want to build something I'll go through and I'll say where I think the like the marketers

app today so I think the five problems are um security and choice of technical architecture two user experience for onboarding mainstream players three developer experience for mainstream developers to build a successful blockchain game without having to touch things like solidity fourth having a sustainable and easily built economy and five the game design itself and and the the actual game production quality kind of getting live um and and that's the one we have the lace control later that takes time uh it takes uh game studios being built um and we've had a lot of that investment so that's kind of you know in progress and we're seeing stuff start to go live and we'll start to pick up the

pace increasingly over the next 12 months um as the rest of the four I think we've actually made massive progress so the first one security I think this is basically now solved um this was always something we were never happy to compromise on it's the reason we didn't go down the path of side chains even then that was the most favored sort of BC thesis that for how you should build a valuable company with building an eight killer or an eight alternative and we always wanted to build on the thing that already had liquidity and had the best security and we wanted to do so inheriting that security which is why we're basically you know the first uh ZK wall up for nfts why why we chose this architecture from day one um the second is user experience and this was in a really bad place another

way in security if you make the wrong choice here you know your platform is dead and you lose all brand sort of security and trust with your customers so this is a non-violable condition that companies have to be incredibly careful about uh and and it doesn't just extend to inherent blockchain security it's also the quality of your wallets are they self-custodial etc etc so I think that's really important decision second is user experience this is probably honestly the most basic but also the most important if you ask a mainstream gamer I I even think friend Tech is a perfect example of this it was able to go viral within crypto and no further because as soon as you have that vile coefficient which might have been just above one within web three you cut it down to like point one as soon as you

require anyone to go through web 3 onboarding if you're required to learn what a wallet is to bridge you lose a huge amount of your use it's 90 to 95 of your users and so we need a way of making this like downloading a game in the App Store and pay uh and I think we've come a very long way here we have Fiat on ramps and off ramps entering maturity we have uh things like immutable passport where you can literally sign up for wallet that's self-custodial in another five seconds sign on with Apple sign with Google sign with email and that's kind of our view for the long term is this has to be completely invisible to the end user while still maintaining self-custody as the default otherwise again we're just building a glorified database number three I think developer experience is really interesting and has

been overlooked by the vast majority of platforms and blockchains a lot of people have invested in better Frameworks for writing smart contracts ebm compatibility they are important but they really service a hardcore use case the D5 Builders and people building right now what our belief is is 95 of developers will just want to build using apis like stripe uh and I think without that usability it's incredibly hard for this thing to take off I mean even you have like co-finance Advanced Builders using uh early version of Viper and then having a re-entrancy back that was not even really auditable um and so it's terrifying to build stuff using open Smart contracts you have brand new

security Concepts that do not exist in web 2 things like re-entrancy which are literally not sort of uh Concepts that you you encounter in conventional programming and then on top of everything you have immutability in financial contracts that that inherently deal with money which I think is just terrifying um as somebody who was originally a web 2 engineer and obviously had to learn solidity and and build on chaining products um the fourth is economies and this one is really interesting because I think that had actually had a sustainable economy web through gaming would already be mainstream because what you have in every shift in gaming is and there's been three major shifts in gaming over the last couple of decades you have the free-to-play shifts the social shift and the mobile shift and then within that you have different game designs emerging

based on each form of distribution but with each form of distribution basically you have early hypothesis a few people taking bats and as soon as someone has a mainstream success there are a thousand copycats that becomes the new default form of distribution huge influence of investment and it basically becomes a commodity how to build a successful game design for that game distribution or genre you saw this with Farmville you know Farmville spawned the social game genre you had Mafia was also Greater by Zynga skin into 15 different games that were literally the Mafia wars code under the hood they just had you know its skin for teenage girls with like a beauty salon uh or lots of different other modes and that's actually what we need in web3 if axi had a sustainable economy

I'm not throwing shade on axi here I'm just saying the reality of it was it was a bet that became extremely viral in advance but if that was sustainable suddenly we'd have all the copycats like step in seeing sustained success and I I think that's what we need it's why we build immutable Studios is that we have to force ourselves to Think Through first from first principles how to design an economy to be sustainable and and work with things like you know the natural growth curves or alternative different games that's incredibly important and that needs to be just super simple Games should not have to go and have to hire like five PhD economists to succeed in web free it has to be like oh cool I'm building a gacha game here's like the open source template for building a gacha game I might add some tweaks and

then you hit like Denton impact but really I'm innovating on call gameplay loops and retention not like some really intractable stuff around economies and then five and actually I didn't even touch on this but like liquidity fragmentation is also a huge problem I realize I'm talking a lot but obviously there's something I'm passionate about no there's a there's a great price so liquidity fragmentation is is like the the hidden demon of the blockchain today it's the reason behind the fact we even have age Killers is because everyone says the Fantastic article chain link God chain rotation pieces you know uh you have a bull run ethereum hits congestion congestion creates the narrative fodder for someone to create an each competitor saying it doesn't scale they raise cash because they need to bootstrap liquidity from

scratch for that alternative blockchain uh and then they are able to seed uh defy and create sort of artificial metrics on that new uh blockchain in order to seed some interest and we've seen that happen time and time again with every single pool Bear Run Cycle the difference with the next cycle is we now have l2s and l3s that can scale ethereum the most secure and most liquid blockchain in the world and our vision is well how do we just remove fragmentation whatsoever how do we make it so no matter what L2 what L3 you're using no matter what wallet are you seeing no matter what Marketplace you're trading on no matter what game you're trading in you can trade com completely atomically completely seamlessly with any other trade in the

world and I I think that's incredibly important because everything I just set marketplaces roll ups uh wallets and user funds that each fragmented to whatever particular product you use in that particular time and so we're having no network value created from everyone depositing and like this is what Apple does everyone thinks it's really easy to pay for things in the App Store is but at one point you actually had to sign up and give them your credit card details you add to kyc or to register your username that's where you can double click with your face and you'll have to do that for a million different times for a million different like liquidity Motors uh onboarding Platforms in web3 when we just need everyone to come onto a single source and and start to be able to use their funds everywhere I think that's kind of

the the really important underlying Network that every bit of value has to be approving to um so those are the five things we think about I think the majority of these are either solved will be sold in the next six months um so we're finally the point where games are actually capable of succeeding purely based on the infrastructure that they're using so all these all these points like these five challenges you cited what you when you were going through them to me they just seemed like the same challenges they're they're crypto challenges they're not just get crypto gaming challenges they're the the challenges for any crypto adoption whether that's social networks whether that's D5 whether that's whatever application you want to build on crypto

uh and I think some of these are getting solved right onboarding is getting solved security is getting solved um liquidity fragmentation I think we're in the early stages of solving that with trust minimized bridging and stuff like that I really think that that's going to be one of the big uh leaps ahead in the next cycle the next four to five years uh developer experience we're doing quite a lot of work here I think on uh on a couple of things which is a lot of book which basically Aggregates and propagates liquidity to every Marketplace that integrates uh with uh wallet which is self-custodial but doesn't lock a liquidity per game uh which is what the majority of other sort of you know easy sign on well let's do

as well yeah I want to talk about the wall to passport but so I read I read on one of your blog articles that uh it says that immutable so you you guys sort of expect that 40 of the 200 billion dollar gaming industry will shift to wet three in two to two and a half years that I I read that and I was like that is a very bold claim um do you think that in two to two to five years all these problems will be solved and there will be enough incentive for 40 of the gaming Market essentially to drop what they're doing and and move to web three I personally think this this claim is is a little bit

uh optimistic yeah I I don't actually I don't necessarily agree with that claim except I think the timelines are a bit aggressive on that uh but I it you know it could be referring to you know 40 of the market being um sort of the minimum buy of the amount which are in-game items uh and you know our conviction is suddenly that's going to shift I I think it could take a decade to shift for the whole thing um but I think we'll start to see it snowball as soon as you have like I think the key inflection point is there's probably two coming up right the first hit that says sustainable and then second is this ability to go to cost like customers in web 2 and say Here's a much more effective model for running your games and something we're not just choosing out of people interested in

building their pre-games this becomes something you can pitch to everyone and it's like pitching them hey you should also launch your game on consoles not just PC because this is now a thing that makes you way more money and is a way more successful way of of doing games you guys were just at a gamescon uh in in Cologne so for those who don't know like Amos Khan is like the it's like the Devcon of games right it's this massive conference that happens in cloning every year actually I was surprised to find out uh that it's more like a BDC conference than a B2B conference which I find is interesting but but basically it's like you know the biggest games conference in the world all the game developers are there all the big publishing assets that the whole the

entire industry is there I'd like to get a sense from you like because I asked a friend who was there like we're just down the street from from Ubisoft here like I have a couple of friends who uh who work there and so I was asking a friend like hey like you know were there a lot of web 3 games there and his sense was that like there weren't that many or like he didn't get a feel that a sense that it was it was a big part of like the The Narrative at the conference this year um so I'm curious if if you like Echo that sentiment and what is the general approach that incumbents like Ubisoft like 2K like EA like these big game Publishers you know how do they look at uh web3 are they adopting it do you know

I guess my question is like is it similar to the way sort of Finance looks at defy like they're a little bit reluctant to adopt it they think it's a little bit scammy or or they like wholeheartedly sort of like throwing a lot of resources within this so that they can really sort of like be at the Forefront of this Tech there's certainly a big difference I think in the promotional activities around web 3 games just in terms of how much of a splash they're looking to make versus last year there was so much hype last year people were trying to launch a lot of tokens and do a lot of Speculator up on primary sales which meant a lot of noise I think people are now more focused on building games that have row as so can they profitably grow and can they have sustainable economies I vastly

prefer that I think this is a very healthy shift in the industry the game developers we have applying to us today are a very different profile or composition than a year ago a year ago it was mostly D5 devs or people who have been able to raise cash who were trying to build a a game on top of it and some of them will succeed but most of them don't have the experience and build like unless you've shipped a game to you know 10 million people we're not that interested in in sort of uh or we rate our confidence of you succeeding a lot lower which I think is you know just inherit back to the game it's a very specialist uh job is sort of shipping successful games the majority of people buildings today and now people have successfully built things before who are incorporating web 3 into their

economies and we much prefer that and I think their their goal of sort of how do they drum up as much fanfare pre-launch as possible is less um the data point we see Sev is you know over the last four months which we call a cycle we've onboarded more games than any other cycle in immunables history more than our you know the peak run Etc and obviously part of this is the increase in market share but we are still seeing a very healthy uh flow of sort of credible web true developers um in terms of how we think about the market and sort of incumbents approaching it I think there's two things what is there you know some of the names you mentioned are already building a web three they've already launched projects uh I think the West will have a sort of buy build partner analysis approach

which is how do they hedge the risk uh in the future of knowing how to build successfully in web 3 without throwing all their eggs in the basket right now because it doesn't make sense that the beneficiaries of the kind model they are the incumbents who are able to sell 100 billion dollars of digital assets without ever having to back the value of those assets as a labeled in the future without having any ongoing obligations so of course it's a model that they're a fan of and these are risk minimizing Enterprises uh but that being said out of the top 20 Western developers do you think in the world a team would have full-time large teams staff to look at web 3D whether it's now whether it's longer term you just said Zynga announced Sugar Town and obviously some of these with Asian Roots but

um I I think that kind of leads into how we see the large studios in Asia approach this and you literally had in Korea next on one of the largest gaming studios in the world putting their Flagship IP maple story and the blockchain uh you have fumio kishida the Japanese prime minister saying web 3 is the new form of capitalism and identifying nfts and web3 gaming as one of five core areas of national interest you have mufg Mitsubishi group investing in web 3 gaming so we we see really interesting leading metrics from Asia and this makes sense because Japan and Korea have always been the Vanguard of shifts in distribution rather than reacting to it they were the ones who ushered in the free-to-play uh new game

design genres they're the ones who helped to usher in a lot of social gaming and I think they see themselves as hey if we can you know if we can win on this and this will be a huge Boon and this is a really important experimentation for players benefits um the final note I'll just say on all of this step is like I I really believe web3 you know web true's margin is web trades opportunity and that's the case in gaming so the people who will be most motivated are not number one it's number two it's the underdog and in gaming there's many of these and they're reasonable sizes but we think it's going to be just getting the lights on back here uh we think it's going to be companies who want to compete with the biggest incumbent to the World by leveraging the growth

strategies of web3 and we've just seen in my opinion the most interesting real world of example of this of token driven news rap position ever played out which is with worldcoin where they were able to effectively like bootstrap from nothing a giant token and then leverage the paper fdv to incentivize 20 million people to scan their redness like say what you will about whether you think this dystopian or utopian it's an incredibly effective way to essentially do a a vampire attack in real life and have massive incentives while giving people ownership of the underlying Network cool well let's uh this is really interesting and I I'd love to spend more time kind of like asking you know talking about the market and where you think this is going but I do want to talk about the tech a little bit and talk about immutable as a as a developer

platform um you guys are doing some really interesting things there um and have just announced the ZK EDM on polygon it just happens we get Sandeep on uh last week or two weeks ago uh to talk about the polygons uh work in ZK so yeah what is immutable as a product like who is this product for and like you know talk about the different aspects of this product and how they're uh how they're useful for people who want to get into web through gaming you know either nude web3 developers that are looking to to build a game or existing gaming developers uh that want to shift to you know web3 economies for sure so immutable is we describe it as the One-Stop shop for web free uh games if they want to build anything uh

we can service it everything from having an incredibly easy wallet to onboard their customers to having uh the entire blockchain design done for them uh to be able to use any Marketplace instantly via our Global audiobook so if you list an asset the sale on immutable it lists on every Marketplace that interests immutable which means you're vastly increasing your volume and it's a much better platform for marketplaces because they have much more volume that they can take these on we have things like enforceable royalties uh and mints so that you can easily write a primary sale or you can easily take ongoing clips of assets no matter where they trade if that's a really important part of your business model like it is for you know digital adapter or uh some of these bigger games moving in from Web Two uh

and all of this kind of comes back to we're trying to operate it the most important layer of the stack where we can help unify what would otherwise be six different tactical choices and this is a really important reason behind why we did this polygon partnership you know at the end of last year polygon was by far our biggest competitor for gaming we we both had roughly 40 market share we were both competing pretty viciously in market and you know rad pricing was going up astronomically for top deals we had this vision of saying well actually there's no reason for us to have to compete we could have it so that players can use the immutable platform and under the hood they could be using the immutable ckvm which leverages uh polygons ZK VM and technology and by far they are the best developers of this in

in the world right now they're the closest to production you know vitalik has said this a couple of months ago um and by combining the two we just simplify the developer Choice hugely I think that's why our win rate has essentially doubled over the last six months since launching this partnership and why we've been able to have such you know success in the market and the reason I like that is it means game these games spend less time wasting around what technical infrastructure should I use and more time building quality games and then the final really important part to immutable and I think probably what resonates with these game developers the most is we are Gamers and we build games I think the reason why even though we started out with far less funding than any major blockchain in Market you know uh and and we pretty

much until um early last year didn't have any War chest that was akin to these and obviously we now have a pretty sizable War chest um the reason we are able to compete and gain this market share is you know the salon is the world the the you know eos's whoever was relevant back then they cared about everything they cared about winning D5 pfps Collectibles gaming uh rwas all we cared about was winning gaming and helping to usher in you know real property rights for the 3.1 billion games around the world we had built several games internally where we're now publishing three more and I think that radical Focus meant that we built a product that was fundamentally designed for this use case but then we also understood things on the economic

side if they were struggling with the App Store we were struggling with the app store because we were also at the coal face building things with them and I think that's been really essential to the sort of uh DNA of our product and product teams to that as well let's talk about the underlying platform here so I I learned that there's basically like two Roll-Ups right there's immutable acts that's uh built on starkware and you guys just launched this ZK AVM on polygon uh why did you you know shift to polygon what was the what was the impetus to do that and you know what will is the idea for immutable X to be phased out or you know are there still sort of like some types of customers that'll want to use immutable X but but they're

continuing to to run we we maintain and upgrade both of them continuously and I think you know Stark X is exceptional technology as well and ultimately we we needed to solve a couple of things um when it is sold an evm compatible uh offering so before then the only ZK technology when we wanted to go with CK for security reasons was an app specific roll up which meant you couldn't just use solidity or copy paste your contracts to meet that one uh and that was the choice that we had to make I'm very happy with that choice but now we have the first ZK ebms coming on the market and it's essential for us to have this product off right ultimately we still think 90 of developers will build using apis but the people building now and a lot of the

hardcore uh you know more advanced game development companies D5 companies want to build uh with their own smart contract which means evm compatibility makes this a lot easier for them but the second thing was more pragmatic which was sort of by by partnering with uh polygon with their CK VM technology we were able to provide this joint offering to game developers which was this end game Tech stack and also this endgame commercial stack where they could find it much easier rather than having to choose between Poly on or immutable they could simply have a unified solution and I think that's you know pretty much everyone who's originally deciding between the two has come to us and said it's so much easier now like we find this much better we get support from

both uh we're able to be much more successful in market so I think partly uh you know a product decision I think that that ckvm technology is exceptional they obviously had what I think is one of the most successful examples of M A and the web 3 history buying three ZK teams uh two years ago and for roughly a billion dollars all up and and those teams have now turned into the the kind of CK Technologies they're using today but also on the commercial side it just makes a ton of sense how is this going to improve the developer experience and I guess you know for for uh let's say like a traditional game developer who wants to you incorporate web 3 aspects into the game you know they might choose something like immutable what's the

learning curve for that developer to have to learn to build EDM smart contracts all the concepts that that introduces security re-entrancy like all these all these things right that like takes people years to to uh to learn um how's that fare for traditional web uh gaming developers that are uh entering the immutable ecosystem the cool thing is that you can use Smart contracts if you want to but you don't have to and in fact you can sign up and create a web free game while never writing a smart contract you can use apis uh for minting and for trading you can basically uh use our template contracts and and soon be sort of almost entirely automated for deployment of

Collections and manage them via apis with much more to shares here with immutable Hub where eventually you can manage all of this through a GUI and I think that is incredibly important so our vision has always been make this as dead simple as possible for developers uh we have a very high NPS on on that but we're sort of working continuously to make that develop to make that easier and I think as soon as we hit this inflection point from this being a really interesting sort of heavily funded niche of game design to being a horizontal because this is not a vertical right web through gaming is not going to be a category web3 is going to be the way you own Assets in multiplayer games and at that point this has to be just be like building incredibly easily on you Unity SDK or in unreal or with

stripe-like apis and so a lot of what we also do is our ecosystem Integrations we have Integrations coming out of the box from day one physically via mainnet for Unity and for unreal where you could basically leverage rsdk from day one interesting and so you know the talk about a bit about the SDK and like what's what's possible to do with the SDK like you know say You're Building A game would you want to start using that SDK early on or is it possible to take like an existing game and sort of like strap on the SDK toward it in order to incorporate web 3 mechanics yeah so look the majority of the stuff right now is initiating things like transfers trades uh mints uh even things like forging so you take say five assets

you destroy them and you mint something um that it's required input output and that's like upgrade it say you know five common alleles into a rare illusion uh five common gods and chain cards uh and we we've even launched things like permissioning where you can basically have this done automatically under the hood up to a certain value threshold which is how we think about decentralization um so users can always set kind of almost the parameters for how much they're happy for the game design on their behalf and then they can kind of say well I want to you know uh specifically approve or sign thing as above a certain value threshold which to me makes a ton of sense and it's the right balance between the two as long as they're always the ones in control and the technology is architectured to be self-custodial

um so the the vision is you'll be able to initiate all of this incredibly easily through like sdks we expose to pretty much every version of uh of unreal of unity uh and obviously trying to work with the app stores as well what's it like working with the app stores because I realize it's probably well one one of the big challenges of uh uh for the for the web 3 gaming space is uh some of the barriers of having to work particularly I think with apple or having Apple sort of approve certain types of um of applications is that getting better do you think or uh are we still sort of the same place we were a couple of years ago

so the trend is toward more open permissions for app stores for digital assets and lower phase we will see exactly how that plays out I don't have a crystal ball that you know she's some really interesting things one you have a lot of increasing economic pressure there are more Alternatives be able to download things you have the EU forcing side loading within the EU which is a you know a really big deal of apps so you'll usually be able to download apps through any app store not just the the one provided on the device uh you have Google uh basically allowing nfts inside of their apps which I think was a pretty Landmark announcement I mean that provided just a ton of sort of compliance Clarity to a lot of people

building I know a lot of people are building for sort of Android first onboarding uh you have epic store which is very pro-web three as well and you have you know already I think 20 web 3 games live on there godson chain went live in there in the last few months um which is a massive source of distribution so I I think there's this really interesting sort of pressure mounting on the biggest incumbents as to how they can actually clarify permissions and fees um ultimately you can use say the iOS store today if uh you you do two things one is off platform nfts uh not used or use all the utility inside the game and the second is you pay Clips on these assets uh and and you know you just kind of pay that Apple tax it's very tricky

obviously with secondary Market that's went to to sort of add attacks onto it so um I'm pretty bullish on where this is going to get to over the next few years I think there's already sufficient Clarity people launch mobile first games where suddenly focusing on it at this point I think they need the first ones to mainstream success but uh you that is kind of the the billion or trillion dollar question is how will App Store rules interact with this uh open ecosystem so I'd like to also talk about about um passport which is your I guess like non-custodial um sign-in or wall identity solution yeah what is passport and what's what technology is it leveraging uh MPC

um yeah how does that work it does so passport is uh easy onboard wallet that is completely self-custodial and is your Universal wallet for every single game or Marketplace or roll up you interact with and this is our vision of the full passport the only easy onboarding wallets you had used a single state MPC system where in order to both maintain security but also have easy user experience they basically generated a new wallet per user per game they could give that game escalated privileges for transactions because it was localized to that game's ecosystem but it meant that for security reasons you can't expand that to your general funds and this is

obviously terrible if a user plays 10 games you have 10 different wallets and there is no unified liquidity or network value being created if I'm on boarding into web 3 I can't use that cache to go buy assets from you know another game like in Counter-Strike GO I can't trade with someone in League of Legends particularly easily and so our vision with passport was to solve that problem while not compromising on self-custody and while not compromising on user experience and the way we solve this is with the multi uh seek architecture system it averages two NPCs uh one is in immutables custody and we actually act as basically a a guardian so we basically will refuse to sign

transactions that don't comply with the either the economic missions that you've set or a general set of um sort of heuristics we use to analyze bad behavior and of course the other one is the the user's uh self-custody uh which is held uh in cloud storage in in their legal self-custody by our NPC um and the multi-stick architecture and making it kind of opt out of this at any point means you can default to help custody while still letting them sign up in under five seconds we've just run a b tests this converts 250 better than you know your default wallet and we're looking to increase this drastically and that's already huge so you're already spending less than a third in user acquisition costs if you use passport versus a traditional wallet today for

onbody so you say it's fully self-gusting I I understand that uh I mean I'd say it's more of a hybrid custody because immutable does have like another piece of that Shard so technically immutable could if it wanted to um withhold or censor transactions or I mean I guess probably not because you can't see the action transaction you can just see the signature request right precisely and they can always uh remove us unilaterally so there's there's no ability for us to say sensor transactions if we really wanted to okay the user can remove you from from the NPC uh so it's a knocked out system right okay and are are there because I mean we're

dealing with like users that are you know fairly you know not like necessarily super technical uh are there ways for the user to recover their uh like are the recovery mechanisms say the user loses access to uh to their uh is it like a lot like an email login or like how how does it work on the user side yeah so we use oauth at the moment so you can log in with apple you can log in with Google you can log in with your email exactly and it's friends to your address okay and so the and so the user then sort of like backs up their Shard uh in you know in in any number of uh you know Cloud providers it's encrypted like with a password I guess yes or ultimately that that's

automatically set like saved in the MPC database associated with your email if you get access to your email you can access that um that wallet but our vision here is really where so you can be able to like zero to a hundred or two hundred dollars at Value if you want to store large chunks of value we think that's the point you say well hey here like here's the options available to you here are the risks associated with each I I think that's kind of the way it needs to be done okay and are there options I mean can you just also decide like I don't want to use passport like I I have a ledger I have like some other custody solution I might use like an NPC wallet or like a custody so you can log in with that as well yeah absolutely we we support everything

out of the box um you know passport is just the offering that we have I think the last thing nice thing with passport is because it integrates in a vertically integrated manner with our control of say like the ZK technology and the order book and the wallet it makes we can do things like say you know shared sequencing or Crossfire liquidity in really seamless ways but other platforms can't because they only have one layer in the stack and so our vision is no matter what asset you're trading on any Marketplace on any game on any roll up using any wallet you can do so atomically and seamlessly uh with no loss in in security or or sort of uh custody with anyone else and and this is this vision of this sort of universal liquidity for digital value

yeah tell me a little bit more about um you we talked about this before the show the enforceable royalties uh what's what's that about yeah so this is obviously pretty topical um you have uh the marketplace was the last couple of years first as you had that blurs and the the uh xdy choose the world basically say hey we're not going to respect royalties and suddenly so got this huge chunk of pro trading volume then you have our open C card with some solutions and sort of you know contracts people use to to make sure that they can only be traded these collections on royalty respecting uh Market Isis um and and smart contracts um I I think this is all indicative of the fact that this really has to be sold

in a product layer just to kind of understand the problem here the problem is that when you have assets that are tied to royalty so like I I I create like some uh some Suite of assets I I put those out on say openc uh unless uh that contract has royalties built into it at the contract level you're sort of trusting the in the the platform to uh extract and deliver the royalties um that and that sort of issue where if you take those assets somewhere else if you like just you know send them to someone those royalties are not being uh perceived by the the sort of the creator precisely so basically it's really hard to enforce royalties with traditional

nft smart contracts and NFC marketplaces there have been various attempts to solving this but ultimately it appears as though the game theory particularly on ethereum layer 1 is to converge toward a zero or no royalties world because that's the world in which you have to be in order to have any meaningful market share as a Marketplace will these Pro traders who are doing the vast majority of volume today uh our approach has kind of been from day one make this enforceable at the protocol level uh which we can we can do due to sort of you know a couple of things we've designed on immediable X it's because you know we we have a single sequencer we can kind of enforce these royalties uh from from day one uh with immutable ckdm it's going to be more of a decentralized solution where you know um we're actually sort of

engineering the ways that uh smart contracts respect royalties and people can can opt in um but I think both the principles are we firmly believe that in forceful royalties have to be available protocol wide in order for marketplaces to be able to fairly compete and gain their market share and game developers to be rewarded and the thesis is quite simple which is you know if you have Counter-Strike GO or Magic the Gathering matter the Gathering has an estimated secondary market cap of 10 to 20 billion dollars of cards but every year they've got to make new more impressive cards than everything else in existence making them less value sell my old magic cards yeah like they're they're tremendously valuable right but MTD the company has

no way of tapping into that the value of what they've created that's why they have to basically dump on everyone else every year I created this new more powerful stuff and so suddenly we could have a business model that doesn't rely on that that's like hey magic just gets five percent of every trade Magic's only incentive would be increased volume which might mean make new cards that make the game better and grow the player base it might mean throwing more tournaments might mean creating an Esports League whatever they can do to increase the the value to players of that economy and so you have completed incentive alignment even though it can be an incredibly profitable system so that's why I've been so passionate about it is it actually enables a much better more incentive aligned business model that we must protect in order to you know

essentially not have adverse selection uh or this kind of you know tragedy where we we do a short-term benefit to players by giving them cheap trades and there's no incentive for game developers to build or to build based on this much better business model so why is it that this is not enforceable at the Smart contract level I mean couldn't we just build like a better your c721 kind of contract or that would enforce royalties is that possible it is but it's just very hard to enforce if the collections themselves aren't uh originally a sort of and written to be to be opt into those smart fun facts and so a lot of the volume say in nfts has been in Legacy collections which were incorporated into this um so I think that's partially what what

has driven this decision with openc uh but be the the kind of more simple solution is if it's relying on individual say marketplaces or individual collections to make this decision it's just going to be an incredibly thought debate the answer just has to be sort of protocol wide this is an available standard that that can be enforced okay so you guys enforce this by having the sequencer uh include the the sort of the royalty or like extract the royalty uh when uh when building the block precisely so that that's on a middle X on on stockx at absolutely roll up but we can do that on amidal zkdm we're gonna have a slightly different approach um I think we'll be we'll be sharing more details soon

okay cool so I want to talk a little bit about the token so this is IMX token um which uh which is actually like yeah trading today and you know I checked there's like 13 million dollars of trading volume uh somewhere around that and you know actually I I found the token price like you know over time has stayed I guess like pretty consistent except for you know one one Peak were I guess probably during the during the bull market but um hasn't uh hasn't lost a lot of its value compared to I guess like when it was initially launched so I guess that's it's a good good thing I guess um how much you think of that volume is speculators and how much is is tied to actual platform activity I guess maybe a

pre-core source that question is what's the token use what's the utility of the token yeah look so the the tokens utility is basically um immutable operates very differently to most other blockchains in terms of our business model and rather than having say uh sort of this this uh L1 chain thesis um around value occurring to the Token the chains and we will obviously IMAX is gonna be the core gas currency of immutable ckbm I think we're now you know capturing a lot of that narrative which is really interesting but our philosophy has always been we think a much better and much more aligned business model is to make the lowest most liquid value-add platform possible for web through games and take two percent of every trade uh and in this way we can build something that has completely

aligned incentives with developers when they make money or when users trade we're making money uh and every single time those assets are traded 20 of the fees must be paid for an IMX and so I'm actually actually has sort of you know clear fundamental utility um which I think is you know people can sort of uh look at that and sort of you know build their utility models around um rather than sort of Alternatives in in market so that's that's our utility that's been uh the clear goal since day one is to really have this integral into play colon and how we add value to every single trade and then yeah the the volume you know how much of the volume you think is or do you have a sense of is that something

you're tracking somehow I mean like how much of that is tied to actual activity on the platform and how much of it is uh speculative well the vast majority would be people uh trading based on uh you know what what they they sort of uh perceive the utility today um I I don't I wouldn't necessarily call that speculative um but you know I can up to the reader's interpretation I I think the most important thing is this thing has a clear utility right kind of that way we've set in stone since day one um and our vision is to construct really just some of the most sensible tokonomics in the world so the few things that really excite me about the token um obviously a middle you know doesn't generate this this is run by the

digital worlds Foundation but is one every single person who trades unreadable can own part of the protocol and that's because every single time betrayed you're earning IMX tokens uh and the vision of this is really cool because you have 3.1 billion Gamers if this takes off everyone can own a part of this open ecosystem of what the future of digital property ownership is going to be and I that's that's probably my favorite thing um and the second thing you know you talked about how the price has been quite stable um obviously you know not hit a comment on prices but uh the the circulating Supply is much higher than most Alternatives it's it's sort of and used a lot more and we've been able to maintain that ranking or improve that ranking from 150 to 50 over the last year and circulating is apply even

despite everything unlocking I think that's because uh of sort of the you know the the utility in the long term alignment we have from holders today uh and then the final thing I'd say is that uh obviously the vast majority of IMX allocated to ecosystem grants the vast majority of these grants will Overture issue by the foundation are almost completely underwritten so we don't just give them out uh for to games in exchange for grads the games actually have to deliver volume to the protocol in order to earn those grants and right now in order for roughly 180 million of tokens which have been allocated over 12 billion dollars in protocol volume has to be achieved in order them to even be given out um so in terms of ecosystem uh allocations we run you know the

recommendations here are incredibly efficient in terms of how they're structured for Grants versus returns and game developers love it because they know that ultimately you know there's no supplier just going out there no value being brought everyone has to contribute to the ecosystem in order to sort of end up owning part of the protocol which I think is really important very cool um yeah I mean maybe to wrap up here what is the um yeah what's the road map and uh what should people be looking into when it comes to immutable how can people follow the protocol also in the project and um yeah any uh any final thoughts yeah look uh testnet just midlife two

weeks ago we have pretty much every game on the platform side up to passport we've just done our biggest uh quarter of onboarding games ever in the company's history off the back of this polygon announcement basically you know increasing our win rate by 75 and we've got over you four years of Runway way over the long term but it takes a year to get to that hit or four and we're here to change digital ownership for good uh and and the thing I would say is look coming up we have uh mainnet in quarter four we've got uh God Sunshine Going Mobile end of this year gold of Guardians Shard bound uh infinite Victory all immutable titles being published this year and we've got a ton of our biggest games on the platform um On The Rise yeah across the ages number one in in France

uh strategy game in Australia um you have uh eluvium going out of that open Beta imminently probably one of the most hyped games in in web 3 right now and we're really just excited by the continued rays of the caliber equality uh of games right now and you know as I said you can't wear the magic one on the timelines but it's pretty clear that a single hit is going to pull gasoline on everything and and catalyze what has already been a very heavily invested in category so personally we're actually thrilled uh with with the pace and progress of things I think it's just continually builted Despair and help people get to these hits faster more profitably and more sustainably right Robbie thanks for for coming on and uh

telling us all about immutable and also I mean I've learned a ton about about Webster gaming so this has been great thank you thanks Deb thanks for having me pleasure