Multiplayer Fellowship FOCG Demo Day

The authors or their affiliates have ownership or other economic interests or intend to have interests in BTC, ETH, SOL, RON, Axie Infinity NFTs, and may have ownership or other economic interests or intend to have interests in other organizations and/or crypto assets discussed as well as other crypto assets not referenced.

In June we kicked off a new Multiplayer Fellowship cohort focused on fully onchain gaming. Multiplayer Fellowship is a pre-accelerator program that Sanctor Capital runs together with Press Start Capital. We have had a great time working with these passionate, talented teams, and are excited to announce that their Demo Day will be on Tuesday, September 10th at 12:00 PM ET. You can sign up for the event here.

With the gaming industry going through a second year of a major slump, and CT filled with doomsday “crypto gaming is dead” rants, we thought it was important to explain why we have such high hopes for FOCG, and why you should tune in for this event.

Ownership, Composability, Immortality

The original vision for blockchain technology in the gaming space, was to give users full ownership of the gaming worlds they lived (characters, assets and all), make those worlds permissionless-ly extensible (UGC, mods and the like), and make their lifespan indefinite and not dependant on any single developer or publisher.

In the early days of blockchain, the infrastructure was not mature enough to support these lofty aspirations, and so a compromise was made in the form of 2.5 games. The games would incorporate as much web3 technology as possible and gradually incorporate more when it made sense.

The concession was necessary at the time, but it led our ecosystem down a troublesome road. Surface level integrations of NFTs and fungible tokens, have opened up speculation markets, but did little to address the original vision, and left studios struggling to explain what web3 integration adds to the gaming experience.

Since many of the 2.5 games continue to use traditional data structures (in many cases even the NFTs point to centralized BEs), true ownership is hard to find, composability is relegated to IP integrations (Fortnite style), and any game world can die with a flip of a switch.

Tokens gave studios the ability to monetize early, and opened up UA opportunities through P2E, but it’s hard to say that these opportunities were the product of the technology. P2P markets have existed in gaming long before blockchain, and as the recent surge in idle clicker games like Banana have shown, P2E can be executed without web3.

FOCG is The Road Back to The Original Vision

Fully onchain games change how games read, write, compute and store data. With the gaming world existing entirely onchain digital assets start to obtain tangibility. Afterall, what is a digital item if not the sum of its digital footprints.

This means that any item (irrespective of its initial scarcity) can become a collectible through a set of in-game experiences. Just as a game worn jersey is valuable because of the history it was a part of (and not how many identical jerseys were made), so can a digital skin obtain collectible status through gameplay and social interaction.

Since the item’s data is not gated, its provenance can be made part of the in-game experience of the original game, surrounding mods, and a host of other seemingly unrelated games. Game world GDP grows through organic activity generating revenue in the form of fees.

Extensibility and cross-game functionality becomes possible because games no longer have to trust each other. Since everything is onchain and interactions are governed by smart contracts, different games can incorporate the same item relying on programmatic predictability of how the data comprising this item’s identity will be stored and updated.

A fully onchain world cannot be unilaterally shut down by a studio or a publisher, it can be permissionsly extended, and everything in it can be owned by gamers. Effectively, players become citizens of the worlds they populate.

The Infrastructure is Ready to Support FOCGs

The vision outlined above isn’t something new, but it is finally possible. Over the past few years, advancements in blockchain infrastructure, distributed storage and compute have unlocked low cost, high scalability performance necessary for consumer applications.

Moreover, gaming focused frameworks have been developed across major blockchain ecosystems to facilitate the development of fully onchain games by studios. Lattice, Cartridge, MagicBlock, Argus and Lync, as well as others have offered tooling across, EVM, SVM, Cairo, and Move making FOCG more accessible to newcomers to the web3 space.

Thanks to advancements in abstraction, fully onchain games are finally able to overcome UX hurdles that have been the bane of studios in the web3 space. No need for clumsy wallet set ups, no need to sign every transaction, you can even buy things using a credit card.

That’s not to say, that things are perfect yet. Throughput and transaction cost issues are still pertinent, interfacing with game engines is still a challenge (although teams like Blade Games are doing their part to address that), and latency issues still limit the type of games that can be deployed at the moment.

However, the stack has matured to the point when game designers are no longer limited by technology but rather by their imagination.You can build real games, and attract real gamers to play them.

Gaming teams and investors are noticing, which is why you have star powered teams like CCP and Proof of Play raising massive rounds from top gaming funds like Bitkraft and a16z. Others are looking, but many prefer to still focus on the infrastructure layer.

To Move Forward We Need Better Content

The early adopters are in, and a lot of progress has been made, but the average gamer does not care about technology, or even token farming. They want entertainment. So we need quality FOCG for the broader gaming industry to take web3 seriously.

The bigger studios are still just getting their feet wet with 2.5, and even that is a slow and arduous process. So FOCG content will likely have to come from the indie space for the foreseeable future.

This is why we wanted to dedicate a Multiplayer Fellowship cohort entirely to FOCG. This cohort brought together 9 passionate teams that are building games in the space, and we wanted to help strengthen those efforts.

We brought in gaming subject matter experts from Wargaming, Magic the Gathering, traditional indie gaming, as well as web3 veterans like Luca Netz to help accelerate the learning curve for these next generation studios.

Our hope is that as their content matures, they are able to attract a mass audience in an organic sustainable way, but also become mentors for those currently watching on the sidelines. These are the gaming trail blazers, and we want to help them.

The Virtuous Cycle

A lot of the excitement around gaming in web3 is driven by the expectations of infrastructure utilization that will come from it. After all, what is the point of having so many different L1/L2/L3s if they are not being used.

We are already seeing the first positive signs from Pirate Nation, an FOCG that had to migrate to its own infrastructure because of scalability needs. The rising number of transactions the game is generating is a welcome sign.

Moreover, we can expect ecosystem patterns to follow in FOCG much like we saw with 2.5, as was exemplified by Ronin. First there was a game (Axie Infinity) as it hit the infrastructure ceiling it moved to its own chain, then DeFi applications (Katana) were added, there was 3rd party development (builder program), 3rd party IP and then new infrastructure (Polygon CDK).

FOCGs should do the above on steroids, since the fully onchain principles simplify the creation and composability of surrounding services from DeFi to modding, to digital fashion and other UGC. As soon as quality content attracts users, we will see this effect, which will lead to more transactions (and fees).

Fully onchain games will showcase the web3 trickle down economics that the industry has been touting, but had trouble actualizing because of a lack of consumer demand that would have onchain impact.

Seeing is Believing

On Tuesday, September 10 at 12:00 PM ET, the FOCG cohort will demo what they have been working on. So come watch, play and become a part of gaming industry history. Fully onchain gaming has so much to offer to the space, and these 9 teams are building to make a difference.

To join the event please register here.

Disclaimer: This commentary is not investment advice. It does not purport to include any recommendation as to any particular investment, transaction or investment strategy, or any recommendation to buy or sell any investment. It does not reflect any attempt to effect any transactions or render any investment advice.

This post is solely for informational and entertainment purposes. It is inherently limited and does not purport to be a complete discussion of the issues presented or the risks involved. Readers should seek their own independent legal, tax, accounting, and investment advice from professional advisors. The views reflected in this commentary are subject to change at any time without notice.