The interview to Yat Siu, Executive Chairman of Animoca Brands

The Cryptonomist interviewed Yat Siu, Co-Founder and Executive Chairman of Animoca Brands, to talk about the future of NFTs and metaverse thanks to gaming and education.

Here below you will find our interview with him.

What are the trends that you believe will drive the Web3 space in 2024?

Generally speaking the trends that we think will drive this cycle is basically culture, very heavily driven towards gaming and of course distribution narratives. So that means that on the culture side whether it’s like GAMI or like Mocoverse, or digital identity, the gaming narratives are going to be big things because they’re going to onboard users.

And in terms of distribution narratives, things like TON, for instance. Telegram helps solve a really big problem when it comes to Web3 user adoption and onboarding. GAMI now has 3 million daily active users because of Telegram and the TON blockchain. So to me, those are some of the things that I think become really important drivers in all of this.

I believe that over the next 12 to 18 months, we’re going to see over 100 million users join Web3 because of gaming that’s happening to distribution outlets like Telegram. So that’s one of the big trends to look at. So it’s quite consumer-focused and of course that means things like gaming, entertainment and also education ultimately will become very big narratives in Web3 over the next 12 to 18 months.

What are some of the biggest regulatory challenges facing Web3 companies today, and how can these challenges be turned into opportunities for market expansion?

I think when it comes to regulation, it depends on which markets we are operating in, right? So our focus has been Asia and somewhat the Middle East. So the regulatory framework depends on where you are, right? And so we would say that since we don’t really operate that much out of the US for the time being, we don’t have as much of a regulatory concern around what we do in comparison to maybe some of our peers.

Because in Hong Kong and in Japan and in Southeast Asia, where we operate a lot, that market in Asia has been quite friendly to Web3. The rules have been fairly clear. And the focus has been on the regulation side, principally on more sort of exchanges, for instance, in service providers and custody providers, rather than people who do web-3 gaming or make investments like us. 

So it hasn’t really affected us as much. But obviously for our portfolio, especially the portfolio,the investment portfolio that has US exposure, obviously they’ve had to grapple with some of this and we have to see how we can support them on the legal side, on the advice side type of thing, and then thoughts around this and also help them enter other markets.

As a pioneer of the open metaverse, how do you envision its evolution over the next few years?

The evolution of the metaverse is centered very much around digital property rights. We think that’s the main focus for us. And that’s also the mission of the company. We don’t think that the metaverse is around VR, AR, and goggles. That’s one way to access the metaverse. But that’s not the reason, that’s not the principal way that you engage with the metaverse. The principal way to engage with the metaverse is by owning digital property. So in other words, if you’re in Web3, you own NFTs, you own tokens.

From our vantage point, you’re already basically in what we call the open metaverse, in which you have digital property and you can begin to construct from that. But it starts with your ownership and you build it from there.

And we’re already in the early developing stages of that. We think there’s a lot of activity happening there. If you look at, for instance, like Play to Earn Gaming like Axie Infinity or Pixels, for instance, if you look at what’s happening with the NFT space at Mocaverse, these are growing ecosystems and more users are joining them. More people are being onboarded because of that. And as far as we’re concerned, these are already in the metaverse. They’re just not Facebook’s version of the metaverse. They’re in the open metaverse, which is basically the Web2 metaverse.

What strategies do you recommend for driving consumer adoption and engagement in Web3?

I would say when it comes to adoption, it is games and content. And content, we think, is perhaps the most important thing because content is what you engage in.If you think about content in terms of distribution outputs like Game of Thrones and HBO. HBO might be the distribution output, but people won’t use HBO if they don’t have Game of Thrones. The content is king in this case. So we’re very focused on the content layer. We also have to make sure that distribution has users that are available to you. And that’s one of the reasons we made such a big ecosystem investment in TON, because we think Telegram will help solve a lot of those distribution issues.

What are the strategies that you are adopting or the investments you are doing to follow these kinds of trends?

For Animoca, the philosophy of the way that we invest is a little different in the sense that we invest based on the kind of future we think we want to build. So we’re quite focused around being targeted towards investment strategies, towards an ecosystem approach, rather than looking at following an investment thesis. We create the investment thesis and then we invest. 

And so this investment thesis is focused around gaming, education, and distribution. And so last year we made a big investment in Telegram and the TON ecosystem. We almost invested in over 150 gaming companies because we believe gaming will be a big driver for that.

So we have over 500 investments in the space today already, and we have three, of which over 150, actually maybe 160 of them are in gaming. That’s probably our single deepest portfolio to top all that. And of course, education is a new area as well. So we’ve been actively making investments. This year alone, so far, we probably have done over 70 deals already. Not all of them have been publicized. But to give you an idea, we are basically putting our money where our mouth is effectively.

What do you think about the market of NFT right now? Will it go up again? 

I don’t think we should hope for a bubble. I don’t think that’s the point. NFT can be used in games, can be used for IP rights, can be used for a whole bunch of things, right? But at its core today, most of the NFTs, whether it’s a virtual land, or it’s a crypto punk, or it’s a Beople, right? What are they? Their status is, at this current moment in time, that they’re cultural capital, right? 

In some ways, it’s not that different from owning a Ferrari, or a Birkin Bag, or a Rolex watch. You don’t buy a Rolex watch each time, you don’t buy a Birkin Bag, it tells something about the social status. So basically, what happens in this community construct is that when you have generated a lot of value in the native Web3 ecosystem, you want to signal your social status  as we do in the real world, based on the items that are representative of that generation and of that ecosystem. 

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So in other words, if I make money or if I achieve a certain status in Web3, I will want a board eight, or I will want a Cryptopunk. 

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So NFTs currently are doing about half a billion dollars of volume sales a month. So it’s obviously not as big as it used to be. But it’s also not right. So I think it’s and I think it’s and it’s also summer. So typically post summer period, when the market activity picks up, you’ll see more volumes and trade and activity. That’s I think it’s also a seasonal thing as well. Typically, that is true for all markets. 

Can you give us a comment about your idea of returning to the stock market in the future?

So, first of all, when the journalist interviewed me, they asked me the question and they said, “do you want to go public again?” And I said yes, because we’re already a public company, right? We’re just a list, we’re already a public company, we have 2,000 e-mail shareholders. In some ways, Animoca is kind of almost like a DAO because we have to go through voting and everything in our registry. So we do want to go public, that’s a fact. But I did say it will probably be in 2025 or 2026. So it’s not just 2025, it’s somewhere between those two.

And there’s a lot of work that we need to do. We need to do a domicile, we need to move out of Australia, we need to decide which market we want to list, we need to hire an advisor. So there’s still a lot of work that needs to be done. But it is true that we do intend to go public.

When you take a company public it can’t happen in one month, it takes a while.