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Have you heard your parents tell you that playing video games is a waste of time and money? When a gamer plays those popular video games like Grand Theft Auto or Call of Duty, they first have to spend some real cash just to play the game, and any progress made or resources owned within the game are often rendered useless in the real world.

Do you know whats even worse? What if a gamer spends their hard-earned money on a game, only to discover it's not just bad—it’s downright unenjoyable? They've lost both their cash and their fun. It’s a double blow that leaves them frustrated and disappointed.

Now, picture a different reality powered by blockchain technology. A world where gamers have real ownership, the power to trade assets, and a voice in shaping the games they play. 

With the introduction of blockchain technology, it has crawled its way into almost every single industry due to its revolutionary features and effective operations. One such industry that has implemented blockchain technology to create a new user experience is the gaming industry.

These games powered by the blockchain are often called as Web3 games in the crypto and gaming industry. Although it is relatively young and yet to reach mass adoption, there are developments in this entertaining space, proving the age of Web3 games has arrived.

While the Web3 game is still new to some, The Byteline exclusively spoke with Yat Siu, Animoca Brand’s Executive Chairman and co-founder, to help you understand more about the gaming industry that has started to implement blockchain technology

How do you see Web3 transforming player ownership of in-game assets, and what impact do you think this will have on traditional gaming?

Before, when you thought about a game, owning an item inside the game required permission from the game company. In Web3, blockchain changes this by allowing items to become your assets through NFTs, or tokenization. This innovation is game-changing, as it could revolutionize the gaming industry by opening up all gaming worlds.

Digital ownership represents a paradigm shift. It's not just about owning an item—though that's fundamental—but about the implications of ownership. It connects gaming worlds and communities. Ownership means you become the co-owner of the game and a verifiable participant. For example, in current non-Web3 games like Fortnite or Roblox, proving you're a player is impossible without sharing your account details. In Web3, ownership is authenticated and visible.

Ownership also enables trading items, but making money in-game is only a small part of the benefit. It’s equally about building a digital reputation. This shift opens up new business opportunities in gaming. In Web2, assets exist to support the game. In Web3, the game supports the assets, flipping the dynamic. Ownership becomes more significant—not just for monetary reasons but for its broader context.

Account security is another critical difference. Players often lose accounts to hackers, who misuse in-game currencies. Blockchain and Web3 can help prevent this. Blockchain proves ownership and the provenance of assets. 

However, if someone steals your assets, enforcement becomes the issue. It's similar to car ownership: the car company doesn’t decide who owns the car, but external frameworks protect property rights. Blockchain can prove theft but not enforce recovery—that requires external mechanisms.

For instance, if someone steals your digital skin, proving it in a Web2 game requires witnesses or confirmation from the game company. In Web3, ownership is on-chain, making it easy to prove possession and theft. While proving stolen Bitcoin is straightforward, proving stolen in-game currency in Web2 is more challenging.

Beyond ownership, safeguarding Web3 ecosystems from exploitation is vital. Web3 operates in a capitalist system, meaning there’s volatility and risk. This mirrors the transition from physical to digital commerce. Before the internet, we only transacted face-to-face or at physical stores. Trust came from personal interaction. The internet introduced global transactions with strangers, initially considered risky. Over time, trust grew through mechanisms like seller ratings and buyer reviews.

Similarly, Web3 will require reputation systems. Trust will stem not from the chain itself but from a participant's digital reputation and transaction history. 

For example, you’d trust a transaction with Vitalik Buterin but not with a random, unverified wallet. Web3 reputation is more scalable and decentralized compared to Web2. In Web2, platforms like Instagram verify and confer trust by indicating a user has a million followers. In Web3, blockchain allows you to prove ownership of assets like 100,000 ETH without relying on third-party validation.

In your opinion, which economic model holds the most promise for the future of Web3 gaming—Play-to-Earn, Play-and-Own, or any other model? And from your perspective, is there a particular model that you personally favor or find most sustainable for long-term player engagement?

Generally speaking, I would say that the principle goes back to ownership. Ownership is the main thing, and then all the economics around ownership become available.

In real life, when you own a house, you have the ability to sell it. Yes, that's a basic example, but you could also rent it, mortgage it, finance it, or fractionalize it. You could do all these things, right? Additionally, because you own a house, someone might come to you and want to do business with you on the basis of that house.

Also, because you own a house—if it's a nice house—someone might want to do business with you because they think you have money or understand that you have some value. To me, it's exactly the same thing. That principle doesn’t change.

So I think it’s not so much about one specific economic model—it’s still capitalism, right?—and it’s based on ownership. But it’s not just one model. It’s more about building a true capitalist economy in a game because of Web3, which changes everything. It includes play-to-earn, play-to-own, rental, deals, DeFi—everything. I don’t think it’s limited to a single term or concept.

To me, this is how we create deeper network effects and deeper connections. When you think about making an experience deeper, it’s because you can do more things. Now that I own the object, I can just play—that’s what I can do today. But I can also do a hundred other things because I own it, including renting, selling, trading, mortgaging, or collateralizing.

These are all additional things I can now do that I couldn’t do before. Suddenly, I have a dozen or more utilities just because I own something. This means I have another way to look at utility. It’s actually a dozen new kinds of experiences I can have because I own it.

The experience becomes richer because of ownership. Even if users own their in-game assets, they still want flexibility. They want to be able to go to different chains.

What are the biggest challenges in making in-game assets truly interoperable across different games and platforms, and how can these be addressed?

If I have a virtual car in one game, maybe I can use that car in another game—possibly, okay? Some people will do that, and others might say, “If you have a car in my game, it can be a horse in another game.” Sure, right? That’s the benefit of user-generated content (UGC). People can be creative, mash things up, and do that because they want to target the customer.

But I think the biggest, high-level aspect of interoperability—the one I think is most valuable—is reputation. Ownership of assets, whether a token or a non-fungible token, is actually a way to prove interoperability cross-chain based on reputation.

If I play a game and own certain assets, that establishes a reputation. For example, now you know I have this reputation, and that might mean you’re willing to give me a discount, an airdrop, or something else. To me, that’s interoperability, because it opens up access. The fact that I own something opens up a new world for me in another game.

In the physical world, we spend a lot of money marketing to audiences, and we target them based on what they own. Do you own a Ferrari? Okay. Do you like the Rolex page? That’s how we approach it, right? Of course, if we could advertise only to the people who actually bought Rolex, that would be ideal. But we don’t have that information.

So instead, we target people who like Rolex, which creates a gap. For instance, there are 10 million people who like Rolex, but maybe only 100,000 of them have actually bought the watch. You’re essentially aiming for a very tiny hit rate, hoping to find the right audience through traditional advertising.

In Web3, though, I actually know every customer who owns an asset because it’s in their wallet and it’s an NFT. That, to me, is the real foundation of interoperability. I’d call it the trade of reputation. That’s the most important thing, and that’s what we’re trying to achieve with Mocaverse—to make interoperability truly cross-chain and reputation-based.

How can Web3 games keep players engaged long-term without relying on speculative rewards? Are there strategies in Web3 gaming for fostering loyalty and sustainable communities?

First of all, most of the people who play Web3 games today are not typical gamers. It’s important to understand that the people who play Web3 games are a different type of gamer, at least for now. The person who plays Axie Infinity, for example, might play some Web2 games, but most of them don’t. It’s a different category of gamer for the time being.

Until recently, we didn’t really have a Web3 game that was as appealing to Web2 gamers. This is partly because it takes time to launch such games, with all the development work and associated challenges. Phantom Galaxies was an early attempt at bridging that gap. The quality of the game was very high, but it hasn’t yet unlocked all the possibilities because it’s somewhat multiplayer, but not fully.

There’s another game in our portfolio, however, called Off the Grid from Gunzilla, and it has that potential. It’s already available in the Epic Games Store. I just saw it yesterday, and it’s actually ranking well in early access there. To me, that’s how we’ll achieve gaming mass adoption.

To give you some context, there are about 3.4 billion people who play games—that’s the Web2 audience. Then there are almost 3 billion people who do not play games. Most of the people in Web3 are coming from this 2.8 billion: the non-gaming audience. These are people from places like the Philippines or Venezuela, where they might not own a console or a PC. They might have a mobile phone, but they don’t play the typical games. For them, Web3 gaming is a completely new experience.

On the other hand, we also have the "Gunzilla-type" players—those who are traditional gamers. So we’re seeing gamers come from two directions: the non-gamer audience and the traditional gamers. But it’s only this year that gamers have started to see Web3 games they would genuinely enjoy playing.

For instance, Phantom Galaxies was an early entry, but as a space game, it appeals to a niche audience. First-person shooters, by contrast, are much bigger and more popular. That’s why a game like Off the Grid is so exciting.

How do you balance the user experience with blockchain’s complexity? How do you envision onboarding traditional gamers who may not be familiar with Web3?

I think this is a question everyone has been waiting for. The general response is that it’s all about account abstraction.

So, what’s the best way to implement account abstraction for the non-Web3 gamer? The goal is to onboard them on-chain in a decentralized way, though we recognize it’s a journey to get there.

Web3 gamers already understand this, but Web2 players do not. They are accustomed to logging in with Google or Facebook accounts, so it’s essential to make the transition easy for them. Over time, we guide them through the journey toward decentralization. Full decentralization is where you can fully leverage the capabilities of DeFi and other exciting features.

I’m optimistic that the ecosystem will eventually shift toward full decentralization because its benefits are evident. When fully decentralized, you can perform various activities like staking tokens or engaging in other decentralized operations, which are often more challenging with controlled wallets. While these things are possible with controlled wallets, they tend to be more cumbersome.

For now, the focus is primarily on account abstraction, similar to how Gunzilla Games approached it with Off the Grid.

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Are there any emerging trends in blockchain gaming that excite you? What are you hoping to see develop in the next few years?

Well, I mean, obviously the exciting thing in the short term is games like Off the Grid. But there are many other mature titles that Web2 players would enjoy. That’s one step forward, and I see it happening already, which is great.

For example, we have a game called Torque Drift, a racing game. When you play it, it essentially works through rails, but as a player, you wouldn’t even notice. It’s a great example of how such games are evolving. Categories like racing games, fighting games, shooting games—all of these fit into the concept of tokenized gaming.

We also have Cosmic Bomber, which is similar to the classic Bomberman, coming out soon. There are more and more high-quality games emerging in this space, and it’s very exciting to see where things are headed.

That’s on the Web2-to-Web3 transition side. On the native Web3 side, there’s significant innovation happening around asset ownership, which is the next big step. Web2 players are primarily engaging with basic tokenization, but Web3 players are interested in staking and deeper participation in the game ecosystem.

For instance, they might want to run a node. When we talk about app chains, we’re looking at opportunities for players to own and participate in the game by running a server or node. This represents the next level of interaction.

I think this is where Web3-native players will want to engage and understand. As you mentioned earlier about decentralization, we are still on this journey, and true decentralization is yet to be fully achieved.

How important is community governance in Web3 games, and what role should players have in decision-making processes?

I think it's very important. In fact, that’s why blockchain is so powerful. Whether it’s a DAO or another mechanism, the reason blockchain and tokenization are so useful is that they give players a true vote.

When you think about Web3, the benefit isn’t just about having a token, being able to vote, or having ownership. Those are important, but what’s truly powerful is that the token has value because it is economically utilized. This gives the player real power.

This is the essence of decentralization. The distribution of power becomes more widespread. When we talk about decentralization, it’s not for its own sake. It’s about redistributing power so that all stakeholders have a voice and the ability to contribute.

In a Web2 game, players don’t have any stake. The only thing they can do if they’re dissatisfied is quit the game. That’s their only option. The money they’ve spent on the game still remains with the game company, with no possibility of a refund. Players have no power, and their opinions are often met with, “Thank you, we’ll take it under advisement,” and that’s where it ends.

In contrast, Web3 provides players with ownership. For example, if you don’t like the game, you can sell your tokens. You can even encourage others to sell their tokens. If enough people dislike the game, it creates consequences for the game company. The money isn’t locked away, and players have a way to make their dissatisfaction known, whether by selling tokens or influencing the token’s value.

This dynamic forces game companies to listen to their players because ignoring them could result in significant financial consequences. That’s why community governance is so powerful. It’s not just about voting for the sake of voting. While most decisions may not interest players—just like in a democracy where you don’t vote every day—important decisions require input.

When there’s a critical decision, players should have the right and ability to vote. This is what decentralization and community governance are all about. It’s not limited to Web3 games; it applies to anything within the Web3 ecosystem.

This is why Web3 is so powerful—because being a stakeholder in an ecosystem must carry weight. If you’re told you’re a stakeholder, but you don’t have any real power, it’s meaningless. Stakeholding must mean something, and the ability to influence the system is what gives it value.

As we approach 2025, could you share insights on the company's vision for the future? What are some key milestones or upcoming projects that highlight your approach to decentralization, player ownership, and community engagement?"

Well, I mean, we continue to make investments and grow the space. So far, there have been some articles—we haven't done the counting ourselves compared to others—but they claim that we are the most active investor in 2024 in Web3. That might be possible.

We continue to grow the ecosystem and aim to do that next year as well. Our focus is on growing the ecosystem, participating, and investing because it’s all about building the ecosystem. That's the principle.

We believe gaming is going to be really big, but we also think digital reputation will be significant, and education is going to be very important. These are three of our key areas: digital reputation with Mochaverse, education with Open Campus, and, of course, gaming, which we see as a critical category.

There are other areas, like meme coins, L1, L2, and similar topics, which will progress naturally. However, our focus areas are on the Metaverse side, gaming, and related fields. We believe these will be important, especially with many excellent titles expected to launch.

Another area we are focused on is distribution. For instance, the TON ecosystem is one of the biggest and most powerful ecosystems out there. We started getting involved in TON last year, and it has been a key area for us.

As an investor, what we look for in a game or project is quite general. Of course, we evaluate teams, quality, and other standard factors. What we are primarily aiming to assess is how powerful and strong the network effects of a game are, and the potential of that network.

In simple terms, having lots of users is great at the start, but not every game starts with many users. In such cases, we analyze the potential strength of the network connections. One of the reasons why TON and games on TON are so attractive is because they already have a large user base, which makes it easier to bring in more users.