In this post, I break down three key questions:

1. What is STEPN?

2. How Does STEPN’s Economy Currently Work?

3. Is STEPN’s Economy Sustainable?

What is STEPN?

Per the startup’s whitepaper, “STEPN is a Web3 lifestyle app with inbuilt Game-Fi and Social-Fi elements.” To get started, users must purchase a sneaker from the app’s marketplace. Sneakers vary based on type (walker, runner, jogger, trainer), attributes (luck, efficiency, comfort, resilience), quality (common, uncommon, rare, epic, legendary), level, gem sockets (luck, efficiency, comfort, resilience), and shoe minting event (7 allowed per sneaker). As of May 2022, the cheapest sneaker is currently priced at ~13-14 SOL.

Since the public beta launch in Dec. 2021, STEPN has experienced rapid growth - all while the app has controlled demand through activation codes (only 1,000 issued per day). Per the company, STEPN has two to three million monthly active users worldwide. Further, transaction volume and user growth seems to have remained strong despite an overall market correction.

How Does STEPN’s Economy Currently Work?

Per STEPN’s whitepaper, the app’s economy is based on a game token (GST) and governance token (GMT). GST supply is unlimited while GMT token supply is capped at 6 billion and deflationary with a halving every three years. Per STEPN’s litepaper, GMT allocation is as follows: 30% to move and earn, 30% to ecosystem/treasury, 16.3% to private sale, 14.2% to team, 7% to Binance Launchpad (public sale), and 2.5% to advisors. The team has developed an 8-year plan for tokenomics with private round tokens unlocking in 2023 and vesting over three years. As Nat Eliason points out, the slowness of the token emissions and 8-year-token planning shows that the team and investors are committed to the project for the long-term. However, they are still likely to significantly profit even in the case of a sharp downturn because of the probably low valuation for the team’s $5M seed round in Jan. 2022 (current Fully Diluted Market Cap is over $1.5B).

In the app, GST and GMT are rewarded for move-to-earn activities, with GMT earnings only available at level 30 or higher. GST is paid out every minute of movement, with the amount dependent on the type of sneaker, sneaker’s efficiency attribute, sneaker’s comfort attribute, and the speed of movement. Users have a daily energy cap, which can be increased by getting more or higher quality sneakers, as well as a daily token cap for GST (maxes out at 300 GST; no token cap for GMT). Users must spend GST to repair their sneakers and increase their earning power (e.g., leveling up, upgrading gems, minting sneakers).

STEPN takes a 6% fee (2% trading, 4% royalty) on every sale in its marketplace, resulting in the company currently generating $3-5 million in net profits from trading fees per day and earning up to $100 million every month. The 2% trading fee is reserved for operations while no less than 5% of the startup’s profit is given back to the STEPN ecosystem.

Per the company’s blog, STEPN is agile in the management of the in-game economy to ensure the app is “both profitable for established players and price-friendly for newer players.” For example, STEPN introduced cooling mechanisms when GST hit a high of $9 from only being $4-5 a week earlier. In addition, STEPN recently committed its Q1 profits of ~$26M to buyback and burn GMT, which momentarily drove up prices to a height of $3.94 before falling to the $1-1.50 range (also part of a broader market correction).

Is STEPN’s Economy Sustainable?

I’m excited by the financial gamification of real-world activities like fitness and see long-term potential in this trend. My question is whether STEPN will have longevity or simply be an early experiment in a promising space. In its current state, STEPN’s economy is not sustainable in the medium-long term. However, the company is only in public beta and may be able to address key concerns. Below are areas for STEPN to focus on to achieve its mission of inspiring millions to a healthier lifestyle leveraging Web3.

Adjusted In-Game Tokenomics

STEPN’s in-game tokenomics are not sustainable. First, its current sinks are net inflationary - an issue pointed out by GameFi analysts at Delphi Digital and The Block. Current sinks, such as buying socket upgrades, leveling up sneakers, or repairing sneakers, lead to increasing or restoring the emission rate of GST and GMT. Second, STEPN has a “runaway sneaker breeding problem,” which could result in the sneakers eventually losing their value - as noted by Nat Eliason. As Nat states, the end result of these two issues is a potential economic collapse due to insufficient new demand for sneakers resulting in falling sneaker prices or GST’s price falling due to too many people achieving top level sneakers with high earnings.

Improved User Experience

As Quirky Qwerty points out, more players playing for the love of the game than to earn is critical for a game to be successful in the long-term. Having tried the app, I believe that the current user experience is inferior to comparable Web2 fitness apps (e.g., Sweatcoin, Strava) in terms of tracking functionality (e.g., lack of metrics, such as calories, heart rate, elevation, etc. may not appeal to pro users), social features (e.g., no social feed or group challenges), and ease of use (e.g., limited sneaker marketplace discovery & curation, no notification that sneaker efficiency is dropping, separate wallet and spending accounts, etc.). In addition, continuing to enhance the app’s gamified design (e.g., mystery boxes, sneaker levels, energy optimization) will be key in ensuring players spend for the utility and fun of using STEPN, rather than just financial incentives. Per the STEPN whitepaper, the app plans to add social-fi elements, enhance gamification through achievement badges and quests, and improve onboarding through a sneaker rental system.

External Cash Inflows

Ideally, STEPN can provide value to brands, organizations, and vendors. As MapleLeafCap writes, these external cash inflows could be used to either stabilize the economy or burn in-game currency in exchange. With the exception of a partnership with Asics for NFT sneakers, STEPN has not yet implemented this strategy. Further, STEPN launched the Asics collection on the Binance NFT marketplace and thus trading fees have not fully benefited the STEPN ecosystem. New Chief Revenue Officer Mable Jiang plans to address this need for external cash inflows. In her recent announcement of her decision to join the company, she writes “the real question lies at how STEPN can bridge *positive economic externalities* into the system, and provide easy access for its community members to monetize from the proof of their physical work, their in-app time, and their attention.” Mable cites potential areas of partnership expansion, including brands, organizations that promote carbon offset and health, and local vendors. Whether STEPN can successfully generate sufficient external cash flows to sustain the in-game economy is to be determined. In the Web2 space, Sweatcoin profits from brand partnerships but consumers can only spend sweatcoins (i.e., in-app non-cryptocurrency tokens) on limited offerings (e.g., discount on Hulu subscription or a first Handy cleaning) that are inferior to straight cryptocurrency/cash. Further, the current bear market and downfall of Luna/UST may be poor timing to convince non-crypto natives about the potential of Web3.

If you have feedback/comments or want to exchange thoughts on the future of X-to-earn, I’m excited to chat!

In recent months, Axie Infinity has dealt with declining token prices and sales volumes, leading to questions over the sustainability of its business model. Meanwhile, venture funds (Framework Ventures; FTX, Solana Ventures and Lightspeed Venture Partners; Polygon and Seven Seven Six) are plowing hundreds of millions into blockchain gaming.

In this post, I break down three key questions:

1. What is Play-to-Earn Gaming?

2. How Does Axie Infinity’s Economy Work and What Are Its Shortcomings?

3. What’s Next for Blockchain Gaming?

What is Play-to-Earn Gaming?

Play-to-earn is a new business model that rewards players for time and investment spent in a game. While app stores and publishers traditionally take 50% plus of game revenue, play-to-earn games enable players to share in a game’s success through earning in-game currencies and trading in-game assets. Advantages of play-to-earn gaming over classic gaming business models (e.g., upfront purchase, freemium, subscription) include:

• Asset ownership and transfer: Players are able to monetize their investment in a game. Further, players can sell their inventory if they choose to stop playing.

• User acquisition: Token incentives bootstrap early community building, solving the cold start problem.

• User participation: Through player-owned economies, players get to participate in the economic upside of the game. In addition, ownership can provide governance rights that enable a stake in the direction of the game. However, securities law may limit what is possible (e.g., recent SEC investigations).

• Composability: Smart contracts enable adaptations and additional features to be built on top of games (e.g., financialization offerings).

• Interoperability: Permissionless interoperability can extend utility beyond the immediate game. While there are some examples (e.g., Ubisoft creating a league with Sorare’s cards), this can be limited in practicality due to games heavily controlling their IP rights or effectively becoming walled gardens.

• Transparency: Key financial data has the potential to be shared openly, increasing player trust.

How Does Axie Infinity’s Economy Work and What Are Its Shortcomings?

Per Axie Infinity’s whitepaper, the game has a “100% player-owned, real money economy.” The economy consists of two tokens, Axie Infinity Shards (AXS) and Small Love Potions (SLP) along with NFTs that represent in-game characters and virtual real estate. Players make SLP by defeating other players in battle and trading in-game assets. In addition, Axies can be “bred” together to create new Axies that can then be sold to other players for profit. The protocol takes a 5.25% fee (previously 4.25%) on marketplace transactions, which are directed to the community treasury, with the remaining ~94% of revenue going to the seller and 1% to content creators (if applicable).

To start playing the game, players need to buy three Axie Infinity characters. As of May 2022, they cost ~$20 each, but the average Axie has cost as much as ~$500 each in the past. Given the high entry cost, guilds (Yield Guild Games, Ready Player DAO) emerged to lend players the NFTs needed to play the game in exchange for a cut of their winnings.

As gaming research and consulting firm Naavik wrote, Axie Infinity’s business model “depends on continued growth in its user base and continued fresh money entering the system to prop up the value of Axies, $AXS, and $SLP.” Once new player growth and capital inflows dried up, Axie Infinity’s financially-driven players started leaving given declining profits. As players cashed out rather than re-invested in the game, Axie Infinity’s economy became plagued by SLP inflation.

In February 2022, Sky Mavis announced measures to address the “very high” inflation of SLP with “around 4x more SLP being created (supplied) per day than burned (demanded) through breeding.” First, the game creator eliminated earnings from adventure mode (previously contributing to ~40% of SLP creation) to refocus SLP earnings on incentivizing skilled gameplay. Second, Sky Mavis revamped the PVP Rewards structure, expanding the leaderboard to 300,000 slots (previously 1,000) and increasing the prize pool to 117,676 AXS (previously 3,000). Further, Sky Mavis increased utility for weaker Axies, adding 1 SLP per win for lower ranked players (under 800 Match Making Ranking). Finally, the game creator announced increased burn mechanisms (e.g., special cosmetics and skins, upgraded Axie body parts, in-game emojis).

The game’s future sustainability depends on it appealing to players seeking to have fun, not just looking to turn a profit. In April 2022, Sky Mavis launched a global early access release of a free-to-play version, Axie Infinity: Origin, to tackle this problem. The “more fun, beautiful, and engaging” version of the game aims to draw in more players. Players are provided three free non-NFT starter Axies to experience battle gameplay, but without SLP and AXS awards. After the early access period, Sky Mavis plans “to launch Origin on Android and iOS apps stores and will work towards a full launch that incorporates SLP rewards, NFT Runes / Charms, and have official Seasons.”

What’s Next for Blockchain Gaming?

While blockchain gaming captured 49% of blockchain usage in 2021, it was a niche part of the ~$180B global game market. However, industry forecasts project the blockchain gaming market to grow to a $40B market by 2025. So, how can blockchain games capture this investment opportunity? Below are my predictions for the future, leveraging insights from 15+ founders, investors, and experts in blockchain gaming as well as countless blog posts, Twitter threads, and podcasts:

‘Fun’ games

While early play-to-earn games have catered to financially focused users and offered less than stimulating gameplay, future blockchain games promise to improve the mode. As Quirky Qwerty points out, more players playing for the love of the game than to earn is critical for a game to be successful in the long-term. I believe the next set of winners in Web3 gaming will attract and retain players through developing high quality, complex, and skill-based gameplay. I’m watching AA/AAA game developers and industry veterans taking advantage of the unprecedented opportunity for indie studios in Web3 (Trailblazer Games, Illuvium, Aurory, Neon Media) as larger studios are more hesitant to enter the space (e.g., Electronic Arts, Ubisoft). I’m also excited about games that embody Li Jin’s super-fan thesis, monetizing passionate communities (e.g., ZED Run for horse racing aficionados).

Long-term sustainable tokenomics

I expect continued innovation and experimentation in creating sustainable play-to-earn economies that encourage long-term engagement from loyal players. As Nat Eliason of Crypto Raiders explains, “the primary revenue driver should be in-game activity amongst existing players.” This prevents game dependence on attracting new players, a key issue Axie Infinity has experienced. As Derek Lau of Guild of Guardians writes, one potential solution could be utility tokens for minting in-game NFTs. Then whenever these utility tokens are spent, they could be sent to a collective rewards pool and redistributed in-game via staking (e.g., $CHILL offering in-game utility for Chillchat). Further, a free-to-play-to-earn business model as described by Mason Nystrom could be one way to sustain a robust economy that’s more compelling for mainstream gamers (e.g., Faraway's Mini Royale graduates players from free-to-play to a more economic strategy oriented game). MapleLeafCap outlines additional ideas for economic sustainability, including pursuing external partnerships to stabilize or stimulate the in-game economy and obscuring and capping ROI on gaming assets - approaches that I find especially compelling.

Gamer engagement and decision-making

I’m excited by games taking advantage of the user-generated content and governance/DAO participation possibilities enabled by blockchain technology. Axie Infinity plans to release the Lunacia SDK enabling users to create extensions to the game as well as become a decentralized organization governed by AXS holders. As Packy McCormick writes, “turning Axie Infinity into a platform, and one owned and governed by users at that, can create stickiness via network effects and high switching costs, as platforms are wont to do.” While it is to be seen whether Axie Infinity can effectively execute on this goal, I expect other Web3 virtual worlds and games to iterate on achieving the same mission (recent examples include Yuga Labs’ ApeCoin DAO and Wilder World’s DAO System).

Real-world integration

I see opportunity to leverage play-to-earn incentives to gamify real-world activity in a way that Web2 could not. Fitness (STEPN, Genopets, Step App) and education (proofoflearn, letmespeak) are two specific areas I’m watching. As with play-to-earn games, it will be important that these applications develop sustainable economic models.

If you have feedback/comments or want to exchange thoughts on blockchain gaming, I’m excited to chat!

I came across Genesis and was excited by your focus on “building category-defining technology to onboard the next billion people to Web3.” To start off, can you share a bit more about what you’re working on?

One component of it that is pretty core is the wallet. What I can share about the wallet thus far is that it’s going to be multi-chain. So, it will be able to support at first the EVM chain space and in the future it may move outside of that.

But beyond it being a wallet, the other things come downstream of the word “wallet.” You see a lot of existing products that look like mobile banking accounts that have pictures in them, which is reflective of how early wallets are. We are pretty constrained by the name “wallet.” One of the things that we’ve experimented with is what does it mean to expand the language system around wallets and what does a wallet actually do. And perhaps how do we change the signal word to define profile, identity, passport, and what have you into something a little more general that gives you more flexibility to use the wallet in the way that best suits your use case for crypto and being a person in Web3. So, we call Genesis “a system.” A previous iteration was “operating system” - that didn’t land with people. It was too confusing. People thought we were building Windows for Web3.

To sum up, we are building an interface for web3 and one of the features of that is a multi-chain wallet.

Prior to starting Genesis, you worked in product at enterprise data automation startup Hyperscience. How did that experience influence how you are approaching building Genesis?

A lot of people are like “what” when they see that. The story starts before then. While Hyperscience and being a PM was very instrumental generally entering tech, I think it was relatively inconsequential with starting Genesis, specifically this company and this space with this kind of product.

What I mean by that is I grew up as a musician and really interested in gardening and landscape architecture design. My mom’s a designer and I had this design orientation for a really long time. I went to school for genetics and studied interior design on the side. I’ve been doing that for a long time and I’d say that’s more directly impactful to Genesis. The way I see Genesis is if ultimately you think Web3 is inevitable, these products should be more like friendly consumer interfaces that use Web3 as an infrastructure. In other words, music NFTs, if we are right about this, don’t remain music NFTs. They’re just music. When I ask “Have you listened to the last Taylor Swift album?,” you don’t say “I bought that album on iTunes” or “I have the CD of it.” You assume I’m asking if you just steamed the new album. So, I think that Web3 is on a similar trajectory.

From a company building stance, I joined Hyperscience when they were a Series A company and they skyrocketed from an 80 person company when I joined to a 450 multi-national enterprise company. There, I was one of the first PMs that built general processes so I was a technical writer, a program manager, a PM, and a design researcher. So, I learned horizontal tech sensibility because previous to that I was in design, medicine, and furniture and it wasn’t really tech. Hyperscience was a crash course in that.

What was your first exposure to crypto or Web3? Led you to ultimately to double down on the space and start a company in the space?

I think it’s two big moments. The first one, I was in college in 2017 and started working at the Apple Store and was working on the floor in Santa Monica, California. That’s a pretty touristed, popular area of L.A. One day, a guy came up to me and wanted to buy six iPhones, which is kind of a red flag. I talked to this guy and he wanted to pay in cash. By protocol, I had to tell my manager that this person has a lot of cash on the floor. Long story short, he said he wanted to gift me something and that something ended up being half a Bitcoin. At this point, I’d heard theoretically about Bitcoin but I didn’t really know what it was. I thought it was a stock or something like that, at least functionally. What happened next was he said to download this app, go get a piece of paper and a pencil from the back, and make sure you cover the camera from seeing what you’re about to write down. And of course, he helped me sit up my first Bitcoin wallet. When he sent me half a Bitcoin, it didn’t register as half a Bitcoin. It registered as a few thousand dollars or I think at that time it was $850 or $1,000. Of course, from then I went home and Googled and learned about Bitcoin and became interested in Internet money.

But, I basically forgot about what happened there until 2019 when I started learning about NFTs through different organizations in tech that were speaking on primitives for new media. DeFi didn’t really catch my eye as much as NFTs did. NFTs as programmable media and simply a primitive of any kind of format clicked with a lot of the intuitions I had around how you use this as creative infrastructure that becomes extensible to an existing craft. For example, with musicians, this is very easy. You split off stems into NFTs. Those become trackable and you have programmable royalties. So, doubling down on crypto was a service towards understanding programmable media but also in thinking about that media as infrastructure for creativity in others. My mission is I want to catalyze creativity in other people. If you can create tooling or applications that make that more possible for people, I’ve done a good job. Genesis is a catalyst for creativity if we’re successful.

What do you believe are the biggest obstacles to onboarding the next billion users into Web3?

It’s two concepts that are wrapped up in the same bucket. I think education and design are both parts of UX. UX is sorely lacking in crypto. In particular, the initial, no put intended, genesis point - the wallet. So, if you want to start a wallet, it’s a fairly painful process where you have to use an old, cryptic mobile banking app except you have to write down these words and if you lose these words, you lose whatever’s in that portfolio. Or it’s just super expensive and you don’t really know why you’re paying to set up a Dharma or a Gnosis Safe. It’s not particularly clear why you’re paying a few hundred dollars if you’re a new person entering the space. Design and education are part of UX because good design has embedded educational components that make the process of being a new Web3 user more clear. Providing expectations of you as a new participant in this, imbuing principles of self-sovereignty, and making it clear what it means and implies to own your own keys are a big part of how UX could be better. That’s a huge impediment to a lot of adoption.

The other part of this is cost. If we’re assuming Ethereum mainnet, it’s still pretty expensive to transact on Ethereum. If you’re rebalancing your portfolio and buying, minting, and trading NFTs, it costs potentially hundreds of dollars to do pretty trivial actions. So, the lack of really strong adoption of Layer 2s is a pretty big impediment. Solana is an interesting blockchain that makes some of this more accessible to people. I have yet to develop a strong opinion on Solana’s value in the space beyond the blockchain that’s really, really cheap and fast. The fact that the blockchain goes down pretty frequently is a difficult thing to reconcile. But, the fact that it’s becoming modular, is cool.

The onboarding obstacles can be summarized in UX as well as the financial inaccessibility of Ethereum in particular.

You’re currently in beta. What’s next for Genesis?

The immediate is we want to publicly announce what it is that we’re building in very specific terms with the features that come next. I can’t share a date for that but it will be very soon. At which point, the beta will be available to a wider audience of people than it is now.

Rapid Fire:

• Web3 trend to watch this year? In-person events and how they become tied up with Web3 artifacts like NFTs, coins, and perhaps POAPs

• Project you’re excited about? OKPC. I think that team is really sweet. They had this functional aspect to their NFT where you can own one of these frames and there’s an app where you can sketch the art for your NFT. So, there’s this interactive component to it that’s really sweet.

• NFT collection you love? Solvency by Ezra Miller

• Alter ego in the metaverse? Someone who’s a woodworker in a full-time position because when I’m not building Web3 stuff, I make furniture. I would love to be the woodworker of the metaverse.

While the decline has led to prophecies of a “bubble,” I don’t believe NFTs are going away. Rather, I expect to see them move beyond speculatively traded assets to productive digital goods. So, what will bring us to this next phase?

Based on 20+ founder interviews, countless hours of podcasts and reading, and too much time browsing OpenSea and Discord, below are specific enablers I’m watching:

Onboarding

Top Enablers

• Vertical marketplaces: As Mable Jiang writes, “we are on the verge of the hyper-verticalization of the NFT space.” Just as eBay spawned numerous specialist marketplaces in Web2, fit-to-purpose marketplaces have emerged across gaming (Fractal, Hawku), art (Foundation, SuperRare), fashion (The Dematerialized, Artisant), metaverse land (WeMeta, Parcel), music (Royal, Sound, Decent), video (Glass), photography (Sloika), professional trading (Blur), and more. I’m bullish on marketplaces that offer fit-to-purpose curation and discovery, competitive fee/royalty models, passionate community, and tailored UX and features that aggregator marketplaces are unlikely to prioritize.

• Creator tools: As Li Jin writes, “the new monetization capabilities for creators via crypto can be life-changing.” As more creators move into NFTs, infrastructure enabling them to easily mint and monetize (Manifold, Metaplex, Remi Labs), simplify payments (MoonPay NFT Checkout, Winter), and manage collections (Reveel) will grow with it. In addition, gaming infrastructure (Mythical Games, Magic Eden Games) will be key as creators and developers seek to integrate NFTs in their games.

Other Potential Enablers

• Discovery platforms: Discovery is a key problem if NFTs are a mechanism to onboarding the next 1B users into crypto. While social browsing platforms (Context.app, Gallery.so, Pulsr) and curated opportunities (Future NFT Mints, Premint) are helpful for collectors and traders, games or virtual worlds will likely be the gateway for mainstream users (Axie Infinity and NBA Top Shot as early examples).

Financialization

Top Enablers

• Pricing mechanisms: Regardless of what takes off at the intersection of DeFi and NFTs, pricing will be the key first step. As Maria Shen writes, “lack of accurate NFT pricing creates 2 problems: (1) most NFTs do not have liquidity & (2) financial derivatives cannot form on top of NFTs.” As Nichanan Kesonpat explains, algorithmic-driven models (Upshot, NFTBank) are likely more suitable for low value or “floor” NFTs while appraisal based tools (Abacus) may be more useful for higher value or 1/1 NFTs. While algorithmic-driven models aren’t ideal for subjectively priced NFTs, they’re more scalable and applicable to a broader market.

• Insurance: Recent NFT hacks (OpenSea users, collectors) mean an emerging opportunity to provide mechanisms to safeguard NFT value. Risk Harbor and Nexus Mutual set a precedent in the DeFi space.

• Aggregators: As marketplace fragmentation increases, aggregators (Genie, Gem) have a role to play in enabling purchases across various marketplaces in addition to offering enhanced liquidity.

Other Potential Enablers

• Lending: The widespread adoption of lending as a source of liquidity depends on consumer interest moving down-market toward lower asset values. As Jason Choi writes, lending with NFTs as collateral is “largely tied to the growth of the NFT collectibles/ art market” while lending out or borrowing NFTs is “more tied to the growth of P2E games.” I agree with Jason that collateralized lending startups (Arcade, NFTfi, Backed) face potential competition from existing DeFi players while NFT renting/sharing protocols (reNFT, Vera Labs) are subject to market risk given reliance on scholarship models, experimental markets, and game compatibility.

• Liquidity pools: As Nichanan Kesonpat writes, liquidity protocols (NFTX, NFT20) “open the pool of buyers to those that want to acquire any NFT of the same class, offering faster time-to-liquidity than ordinary marketplace sales.” Decentralized market makers (Sudoswap, FloorDAO) can leverage these protocols, building services on top of them. So far, traction is limited with market leader NFTX capturing only ~$60M in TVL.

• Fractional ownership: While enabling wider access to NFTs and composability, fractionalization protocols (Fractional.art, Bridgesplit) have yet to gain significant traction. Further, Web2 collectibles fractionalization market leader Rally only has a valuation of ~$170 million per Pitchbook. If solely investing for financial returns, the diversification enabled through fractionalization may be better realized through NFT funds (Bitwise, Curated, Flamingo DAO).

Utility

Top Enablers

• Physical world bridges: Early NFT real world value has been primarily derived through social events (Azuki Garden Party, Ape Fest) and merchandise (Bored Ape Yacht Club Store). I’m excited about continued explorations at the intersection of physical and digital. Further, opportunity exists to bring documents, such as education credentials, concert tickets, and property deeds, into the world of NFTs.

Other Potential Enablers

• Mobile: As Gaby Goldberg writes, “we will first see the emergence of mobile-native web3 applications to shepherd in the casual consumer.” Geolocation (Dropverse, Superlocal) and augmented reality (Anima), especially in conjunction with virtual worlds and gaming, could be areas where NFTs and mobile collide.

• Intellectual property: While early days, Molecule is an interesting example of using NFTs for the transfer of IP ownership for medical research. I expect to see other startups creating liquid IP markets via NFTs.

If you have feedback/comments or want to exchange thoughts on the future of NFT infrastructure, I’m excited to chat!

I’m excited to connect given your startup Anima is at the intersection of AR and crypto. Can you share more about what you’re working on?

Anima is based on our belief that augmented reality is going to be the first and defining platform of the metaverse, connected to our real lives, approachable, and shareable. There’s no ownership in AR. It is seen as purely a way to experience things or as a distraction and when it’s added to an existing NFT, it’s typically an add-on versus the core experience. What we’re building at Anima is a way for creators to make experiences, objects, and artworks that bridge the real and digital worlds, and sell them as NFTs.

Prior to starting Anima, you led product engagements with Fortnite and the Epic Games Store. How did these experiences influence your views on AR, NFTs, and the metaverse?

Tim Sweeney at Epic is an iconic figure in gaming and the metaverse and a real tech visionary. His DNA definitely runs through Epic. I think Epic's version of the metaverse is something closer to Ready Player One where you go to another world and people can build things in it and it’s complimentary to real life but specifically something you go to. AR is a more optimistic version of that future. It isn't something you disappear into. It’s a version of the metaverse that makes your life better. While I played around with some AR projects when working with Epic, the biggest things I learned were more around behavior with virtual goods and virtual economies in Fortnite. The changing self identity that’s happening in the world where your digital identities become just as important to you as your digital lives. We just want to do everything we can to merge those two versus keep them separate.

Before that, you were head of Product at Ultravisual, a mobile app and visual network, that was acquired by Flipboard. What led you to revisit the space of mobile curation in Web3?

Ultravisual was started by Neil Voss, who’s my partner at Anima. I joined that company right at launch because I was so amazed by what they were building. I became their Head of Product and Neil’s one of my best friends now. Ultravisual was a mixture of Tumblr and Pinterest. The idea was you could create things and slice them together. Everything ended up looking better than you expected it to. It was a way to express yourself around shared interests with videos and images you own in your phone camera. I still very much believe that. I think what’s special about what we’re doing now is that we’re creating a digital layer on top of that versus just saying you can cut up, edit, crop, and share photos and write text on them. There’s an entire world that exists on top of that you can create. So, it feels very much like an evolution of that even though there’s not an obvious link.

I think the biggest learning from Ultravisual is being creator-centric gets you to places that you wouldn’t have expected to go. Building the platform and the tool for creators to make things in a new medium is how you dictate what will end up being interesting about that medium versus trying to be prescriptive and saying this is how this should be experienced and this is what people want to see. We’d rather build and inspire the toolset for that.

Anima recently collaborated with iconic street artist Demsky on a collection of AR NFTs that evolve interactively through global exploration. What inspired this collaboration?

When we started Anima, we made a list of artists we were interested in working with someday. Both Neil and I are huge fans of Demsky who has this sort of retro futuristic style and looks like a vision of a future from the past. We thought that contrasting views would work in AR, which is an interesting medium that is neither real nor fake.

We reached out to Demsky. We didn’t have an exact idea yet. Together, we worked on the creative. He’d been doing these physical sculptures that look like the AR version we did and had been playing a lot with location. He did an art show underwater that he released the coordinates on and didn’t really tell anyone about. He was a well known graffiti artist and one thing that’s interesting about graffiti is the context of the work is as important as the work itself. The building that it’s on is just as important as what it is. So, that felt really relevant for us and what we’re building. So, we came up with this idea that we proposed to him, which is that his objects would change based on the context and location. That’s what we built with Mirror.

We’ll be rolling out a feature shortly where anyone who’s bought a mirror can place them in certain locations around the world and have them change permanently in unexpected ways. It plays with the immutable nature of NFTs where they are immutable unless you choose to go do this thing with them and then they’re changed permanently. It checked a lot of boxes for our vision of what AR could be.

In the weeks since launch, how have you seen buyers engage with their AR NFTs? Any creative locations that they’ve featured them in?

We’ve seen them on every continent except for Antarctica. It’s funny seeing a mix of comical and inspiring, beautiful pictures. There’s one in the Swiss Alps that’s a pretty incredible picture that we didn’t take but we’ve shared as if we did because we got permission. We just love that shot. We haven’t released the location based feature yet where it will change so we’re really looking forward to that. I think people will be surprised about how it works and what they get out of it.

Usually you don’t create work and see it in different locations than you thought. We usually carefully curate a show and it goes on a wall or you put a sculpture in a specific location and oftentimes a buyer is sourced who’s going to display it a certain way. AR is not that at all. They’re put in areas that make them look not as cool and they’re put in spots that make them look incredibly interesting in ways we would never have planned.

You talked about the location based feature you’re adding. Overall, what are your priorities for Anima in 2022?

We focused most of the last year plus on augmented reality technology and developing features that we think will be interesting for users and creators to play with. We have an augmented reality platform, we have our marketplace, and we have a studio that we work with creators on. We’re accelerating all of those. We have a chance to finally show off all these tech features that we’ve built. Demsky was a really specific example where we are showing off what we can do with location but there will be other projects where we will be showing off lots of other similar bridges between the physical and digital world soon. Objects will change based on what they’re near, what’s around them, the time of the day, or the phase of the moon. There will be shared experiences where you can see the same thing as the person next to you at the same time. We’re thinking about those features and we’re building projects that use them in unexpected ways.

Our studio arm works with creators in-house to make projects that showcase the potential AR features so that people want to use them. It’s not enough to say that you can do things with location and optics will change. It’s okay, what can we do with that where people will get excited about it and really want to use it. This year we’re really accelerating that.

What applications are you most excited about at the intersection of the physical and digital worlds?

There’s a future where there is both the reality that we see and there’s an alternate reality that sits on top of it that could be defined by creators. So, being able to build the tools that allows an entire world that exists on top of this that’s filled with art, collectibles, and games and just unexpected authentic experiences that you can’t see unless you choose to see them is what gets me most excited. I’m most excited about the things that haven’t been thought of yet that will be developed with the tools we’re building.

Rapid Fire:

• Web3 trend to watch this year? I think we’re entering the utility phase of NFTs where NFTs will go from being speculative to having purpose.

• Project you’re excited about? I like the FLUF World team and what they’re doing with AI built into it.

• NFT collection you love? Forgotten Runes On-Chain Wizards

• Alter ego in the metaverse? The metaverse is on top of reality. So, it’s still me. It’s just digitally enhanced.

Thank you so much for taking the time to do this interview. Let’s start with your childhood. You launched your first fashion brand at 15. How did you make your way into fashion and entrepreneurship at such an early age?

I had a bit of an unconventional childhood in that I sailed from the U.K. to New Zealand with my parents when I was 13. So, I basically spent two years on a boat finding ways to entertain myself while I was at sea. A lot of that was sketching and designing and creating a plan for what I wanted to do when I was on land and had a bit more normality.

By the time I arrived in New Zealand, I was pretty set on wanting to go into fashion. The way that the education system worked in New Zealand meant that I had a lot of free time on my hands because it was very easy compared to in the U.K. So, I decided that the best way to learn the ropes of what it meant to run a fashion business would be to start something and figure it out. I knew that design would be a very small part of the bigger picture. I wanted to learn how to do wholesale, how set up the supply chain, how do marketing, and how to do tax returns. So, I had these strange circumstances that gave me space to do that and try it out.

At 23, you founded Charli Cohen, a technical fashion brand that led to you being featured in Forbes ‘30 Under 30’. What’s technical fashion and what inspired you to launch the brand?

Technical fashion is fashion using technical sports performance fabrics. Since the beginning, I’ve been working with mills that produce for the Olympics teams and military, and using those fabrics and construction techniques for streetwear and fashion. Technical also from the perspective that there’s always been a very digital component to my work. I’ve always been quite involved in world building one way or another. I got into AR and VR quite early, finding ways to link physical garments to digital experiences.

I discovered these interests both in sports performance tech and also in digital world building while I was at university. I got to really explore that though my graduate collection, which garnered a lot of press and attention. So, I used that momentum to launch straight away. It had been my intention to launch a brand at university. It was the perfect set of circumstances to be able to do that.

In 2019, you began partnering with gaming companies to create digital-physical fashion collaborations. How was your first foray into blockchain and NFTs and what excites you most about the technology?

We started working with the gaming industry a little bit before blockchain came into the picture. So, we were working within the walled garden of the traditional gaming industry where we were creating in-game items and skins that were only available within that particular ecosystem.

I fell down the NFT rabbithole as I was trying to find a solution for interoperability. We were doing more and more of these collaborations and that was a real frustration for me. NFTs were a way that I could maybe solve this problem. As I started investigating, I discovered the whole community around NFTs — all these people working and building at the intersection of crypto, culture, and technology. I really felt like I found my home versus the traditional fashion industry where I’d always felt sort of out of place.

I really threw myself into the community and started using the collaborations we had as a proof of concept experiments for dabbling with NFTs, trying to get very traditional companies comfortable with the concept of blockchain and their fan consumer base comfortable with entering that space. We started really looking at how can we handhold people into more a user-friendly version of this space — kind of like a web 2.5. That’s really what we’ve been doing over the last couple of years.

In 2021, you partnered with Pokémon and Yahoo Ryot Lab to create Electric/City, a virtual city where you can shop for physical and digital garments. What inspired this collaboration?

It was once again a fortuitous set of circumstances. We signed the Pokémon license at the end of 2020. And shortly after that, Selfridges approached us about creating a metaverse experience for them. We hadn’t decided exactly what we wanted to do with the Pokémon license other than their celebrating their 25th anniversary so we decided we could make a really big splash by trying it with this major luxury store, which Pokémon loved the idea of as well. Ryot we had worked with earlier in 2020 on a big immersive virtual reality project and we knew that they had the right resources and team for us to build out this metaverse experience that was very consumer-friendly. We brought them in and created something that’s probably my proudest project to date. We built out this whole world in Unreal Engine and created a really easy way for users to be able to navigate around it and buy both physical products and metaverse ready digital products from within Electric City.

You are currently founding a new startup, RSTLSS. What do we have to look forward to?

Through doing all of these projects with Charli Cohen, one of the challenges has been how convoluted the process has been working with all these different stakeholders. You have the license, different game environments, partners, and the physical supply chain. Everything’s been very slow because it has to go through us, back through the licensing, and back to the partners. Within Charli Cohen, I was trying to figure out some kind of platform to streamline the process and that evolved into the idea for RSTLSS.

We can work with IPs to allow their fan bases to customize wearables and then choose a bundle of different metaverse and game environments that they want to export that design into, as well as being able to redeem a physical design. It’s kind of a one stop shop that allows fans to work with their favorite brands and artists to design garments, export renders for all sorts of different worlds, and be able to access a physical versions of the designs too.

On Twitter, you call yourself the “The Ray Donovan of the Metaverse.” What’s the origin of this nickname?

I’ve had a number of quite high profile companies approach me to solve issues that they’re having with integrating with the metaverse, whether it’s that they don’t know where to start or that they have had issues with the crypto community being a bit of the wild west. They seem to be looking to me as someone who can solve those problems for them, hook them up with the right partners, help them with the right strategy, and so on. It just got to a point of ridiculousness in the last couple of weeks and then one of the people that I was working with described me as the Ray Donovan of the metaverse.

What opportunities are you most excited about at the intersection of digital fashion, crypto, and NFTs?

I’m excited about being able to give people real control over their identities in the metaverse. They can have flexibility whether they want to have a consistent identity everywhere or create numerous different identities on different platforms. I’m excited about wearables and cosmetics that enable people to express themselves fully in digital. And then the other piece is wearables and cosmetics are a really great way for artists and designers to monetize and compete with the traditional industry, which has had a lot of barriers to entry both in terms of the actual costs but also network. Wearables give this accesible point of entry to artists and designers that are looking to make a name for themselves.

Rapid Fire:

• Web3 trend to watch this year? Obviously, wearables. Something that I’m betting we’ll see this year is the beauty industry starting to enter the metaverse.

• Project you’re excited about? My most beloved project at the moment is Capsule House, which is with the artist Seerlight. They’ve already done a really impressive of job building game mechanics into their project.

• NFT collection you love? One of the other projects I love is CrypToadz. It was the first major project to be a CCO and to really give the community power over bringing value to the project and they’ve done it in such a nice way. They have such a lovely, open, and welcoming community. The pixel artist behind it, GREMPLIN, is a legend.

• Alter ego in the metaverse? Personally, I’ve been doxxed since day one. Every way that I express myself in the metaverse is an extension of me so far. I’m sure there will come a time where I could explore the anonymous alter ego.