One of the biggest web3 hits of 2022, the horse racing game Pegaxy, generated over $200 million in sales, second only to Axie Infinity during that period. After building heads down during the crypto bear market through the end of the 2023, the company behind Pegaxy, Mirai Labs, is ready to ride again, now with its second game, Petopia, a top-down roguelite shooter. With its fresh and innovative take on guilds, fractional ownership of teams, and passive income, Petopia is looking to invigorate the play-to-earn (P2E) genre, having absorbed many lessons from the prior web3 wave.

To learn more about the origin story of Pegaxy, what Petopia is doing differently, and the Mirai Labs roadmap, your host Niko Vuori talks with Corey Wilton, Founder & CEO of Mirai Labs. 

Mirai Labs: https://mirailabs.co/. You can find Corey Wilton on LinkedIn.

We’d also like to thank Overwolf for making this episode possible! Whether you're a gamer, creator, or game studio, Overwolf is the ultimate destination for integrating UGC in games! You can check out all Overwolf has to offer at https://www.overwolf.com/.


This transcript is machine-generated, and we apologize for any errors.

Niko: Hello and welcome to the Naavik gaming podcast. I'm your host, Niko Vuori. Today, we have a great episode for you. We are talking to the company behind one of the biggest web3 hit games during the heady days of 2022, the horse racing game Pegaxy, which generated over 200 million in sales during that period.

The company Mirai Labs has since expanded significantly, launching a large portfolio of gaming adjacent products, as well as their second game recently. Petopia, the team of about 70 based out of Australia and Vietnam, which are of course, big hubs of web3 talent has big ambitions and to talk about those ambitions, I'm excited to welcome Corey Wilton, the founder and CEO of Mirai Labs to the show. Welcome to the pod.

Corey: Thank you so much. I appreciate it. I'm quite excited to be here. I've been following Naavik for a very long time. Thought it was for the elite. So I'm glad to make it here for the first time in my life.

Niko: All right. It's all downhill from here. If you've reached the pinnacle, there's nowhere else to go.

Nowhere else to go. I'm just kidding. Just kidding. All right. With that out of the way, let's get right into the episode. Corey, I always like to start with the background of the guests. Tell us more about who you are and your journey into Web3.

Corey: For sure. For me, it all started in, in 2017, 2018, just as a consumer, some friends told me to buy what we would call a shit coin.

Hopefully I can say that on here. I apologize if you need to add that out, but yeah, they just told me to buy a shit coin and I lost a lot of money there and I was like, all right this seems to be the place to lose some money. So I was just a slight dabbler. For a couple of years there and actually started my first crypto company just as a community support company.

So I recognized during the ICO days. If you're around back then it was when companies started to do public fundraising. So they would ask the people to buy a token and then then it would go public. So what I really did was recognize that these guys are raising a lot of money. They didn't have any people looking after the community.

And I had a couple of friends who were based in the Philippines. They decided to build a company and support those ICOs and throughout 2018, 2019, that did pretty well, but then bear market destroyed literally 100 percent of those companies. I then actually just stayed in crypto as a basic consumer, but not much was happening.

And I moved into e commerce where we randomly started a toy gun store, which resulted in becoming Australia's largest toy gun store. So we're very blessed there as well. It did quite well. And I eventually expanded that one in toys are us and toy kingdom in the Philippines as well. And then in.

It would have been about 2020 I did feel there was a bit of energy coming back to Crypto, and I dove in, and one of my passions is F1 Delta Time, or I should say F1, and I saw F1 Delta Time by Animoca back in the day. That was one of the main games that was getting a lot of energy back then, and I just thought it was perfect for me.

So I dove in again, and Lost a lot of money, but I was like, this is what I want to be. This is what I want to be doing. It sounds like a lot of fun. So I actually just made a video because it was like a game in alpha and it didn't have any tutorials or whatever else. And crypto gaming was in its very early stages.

So connecting a wallet and all that type of stuff was very difficult. So I wanted my friends to play. But I didn't know how to explain it to them, and I was just like, Alright, I'll just do a video, I don't want to explain it 20 times. And that video got 50, 000 views, something like that, and it just happened that one of the viewers ended up being one of our co founders, and he just messaged me, he's You want to build a game?

I was like, I don't know how to build a game. So no but that changed pretty quickly. He was like, I can build the game. I was like, okay, so here's our CTO. And one thing led to another and we recognized there was opportunity in the space took some of the goods, some of the trending stuff.

And from there, the rest is history.

Niko: Nice. We have a very similar introduction to crypto. I got into ICOs as well. And I got into crypto initially about 2016, 2017 timeframe. Initially just, Bitcoin and Ethan, I still actually hold pretty much all of those positions. So I'm still very long on crypto, but I also lost a lot of money on all the ICOs which Was not so much fun, but nonetheless, it was very exciting.

It was my introduction into the, to the ecosystem as well. Okay, we're going to get into your games in a second peg scene in particular, cause I've been actually been following that game from the very early days. And that's the reason, the main reason I wanted to have you on the pod is because I just was a big fan of that game and very interested to see.

Both see and hear how that's evolved over the years. But let's start with your company, Mirai Labs. What is the company? What is it doing? You have a lot of initiatives, obviously way beyond games where you started talk to us a little bit about that, how that's evolved over the years and what you guys are up to.

Corey: Yeah, I think Mirai Labs over the last two and a bit years has definitely evolved into something much larger. Actually, believe it or not, we're at about 110.

Niko: Oh, okay. My information is outdated. Thank you for correcting me.

Corey: Yeah. Yeah. When you said that, I was like, all right, that's my bad. I should have reviewed this.

But yes we're at about 110. Now we're growing decently quickly. Over the last, six months. And the reason for that is obviously we still do have a huge focus on gaming, but we recognized pretty early that value capture was important. And this kind of ties in. I'm not sure if you want to go into this now, but this does tie into, the Part and parcel with success of Pegasy we recognized a lot of things that we could have done better.

And there's a lot of opportunity that we left on the table during that time. And we basically, we told ourselves that we won't let that happen again and just built a lot of infrastructure. So in a nutshell, what you could look at Mirai as is a mobile technology company, purely focused on the crossover between web three and mobile.

And we think that's, It's in a very early stage. Like I would go ahead and say that crypto is probably the only major industry. If we could call it major yet has pushed us back 10 years. We have for some reason gone in adopted browser. And we're like, okay every industry that we want to penetrate within crypto, which is like social finance, gaming, they're all mobile, like predominantly dominated on mobile, but we do it on desktop.

And for us, that feels a little bit backwards. So obviously it started with gaming and that's our bread and butter, but there's a lot of other areas that we we feel that we're good enough to focus on as well. So hence that there's probably three main initiatives.

Niko: Yeah. Why don't you tell us a little bit more about this?

We'll get into the gaming next, but I just want to get an overview for our listeners of what Mirai Labs does predominantly that if there's three main arms, let's talk about the three main arms

Corey: For sure. So you've obviously got the gaming. That would spend from like Pegasy to Petopia.

And we've actually got some other games that I can mention in a little bit. This is something that I want to get into as well. It's like the, yeah. Porn or telegram ecosystem that I'm sure you've probably been paying attention to as well. And the other two are just basically a combination of infrastructure.

So this will be around like consumer applications. So for example, like the Mirai app, what that will evolve to in the future. And then at its core, like. Fundamental infrastructure regarding like decentralized payment processes, single sign on services. This is like a user experience infrastructure as well.

Really all of this if you put it all together, that the initial goal was actually just to provide the best user experience for Web3 gaming on mobile. But what it eventually becomes is its own vertical over time. Because there's such a demand for it, no one's really focused on it. And there's a lot of game developers, for example, just in Vietnam in general, there's enough games over there to cover web three.

The industry isn't big enough for how many game developers there are. But they just didn't have that infra. So we just took it under our belt to, to build that.

Niko: One of the interesting things that I have from most web three guests who have stuck with gaming, but also have gone through the crypto winter and now are, had enough funding slash support to, to get through the, through that tough patch.

Almost all of them have had a similar story where they started with gaming. They recognize that this is a great use case for web three. And of course, as a game developer myself near, dear to my heart, and I agree. But everybody realized the same thing, which was you didn't have the infrastructure to support the wallet technology.

It was very friction full. It was not like you would have on mobile where it's just a thumbprint or a face id and like B batch, bosh, you've got yourself a in app transaction. You can do it a hundred times a minute if you want to without having to wait for any like blah, blah, blah. That's a a through line for all of the folks that have come on to this, the show, not all, but most curious to hear your thoughts on that. Is that something that somebody else should be solving? Because I'm personally of the opinion that game developers are game developers. They, you should special, specialize in one thing, right?

Make great games, make great user experiences and stick to that. Just like we have with the app stores with AWS now with chat, GPT and AI, like those are tools that you as a game developer shouldn't really be developing. That's my opinion at least. And most game developers agree with me, but they all recognize that in web three, all of these primitives or most of these primitives Don't exist.

And so you have to build them yourself. So I'm going to hear your thoughts on that kind of philosophically. Is that something you want to be doing and you think you have a competency in? Or do you think that this is a means to an end or a necessary evil, if you will, on the path to a better user experience for your games?

Corey: This is a tough one, right? Like, when we first started building we were almost certain That we didn't want to be the ones to build it. We were like, why this is so many resources, this has millions of dollars that you need to dedicate out of your company's runway that you made from doing something else that you're good at someone else is going to build it, so let's just wait and focus on what we're good at.

And then no one was building it. And we're like shit we have an end experience that we want to execute and we know that we're capable of doing it, it just requires resources and money and absolutely, it's more risk on the company overall, and in a nutshell, of course, we're going to have to increase our burn.

But what happens if we build the best user experience and should we wait? It's just like a snap decision where it's do you wait and maybe they never build it and then you miss the opportunity. Let's say that the bull comes we're very dependent on the market conditions and web three.

Or do we just. Spend that bear market in the absolute trenches purely focused on shipping something that we believe will bring in that next wave. And instead of waiting around, just try to execute it. And we just went with the latter. We would prefer to build instead of sitting around what I think is the most important thing to ingest is that a lot of these founders are probably just extremely ambitious and which is I don't want to say it's a bad thing by any means.

You want an ambitious founder that wants to do something but at the same time I guess it can be I don't know. Misguided because in theory we should be, have should be having patients. It's just the reality of the situation is that we want this thing to work so well or we want this thing to work so badly.

I should say that we're willing to take that risk. And in this technology, I'll be totally honest with you is not like. The most complex thing in the world, single sign on or account abstraction type system. We could dedicate two team members out, our CTO could build something like that himself.

Building a blockchain isn't the hardest thing in the world. It's borderline copy paste these days. So. While maybe three years ago was a serious undertaking because it's never been done before, right now it's more so just increase your burn a little bit, put it together in a package, and to put it into the game so that it makes sense, and it should be worthwhile.

So that was the way up. I'll be honest with you, when we first attempted it, we were like, this is a huge undertaking, and we recognized over time that It ain't all that bad. It's not that difficult. It looks like it's just been a bit of marketing for the last few years and people saying, it's really hard.

You should use our services. And when we went in there, we were like, it ain't all that all all right.

Niko: Yeah, it's just it's interesting to hear that everybody ends up solving the same problem over and over again. And I'm just I'm still waiting personally for, Who is going to solve all of that?

Who's the Amazon? Who's the, the, yeah, AWS, the EC2, the the app store, like the app stores, ideally you want to be yourself if you can, of course, because if you control the app stores, you control the demand and that's a nice position to be in. But I don't know if you want to be the Amazon on the AWS that's building all of the infra that goes behind the scenes, lucrative business if you control the, again, control the demand, but.

A tough one to win in if you're also trying to build content on top of it.

Corey: I think what we're seeing is Avalanche pushing towards that direction. They seem to brand in that direction as well, is that they want to be the AWS of web three. And someone like Mirai in, our current funding versus someone like Avalanche who has a billion dollars liquid probably not.

Smart to fight. I'm gonna be honest.

Niko: Yes. Yes, exactly. Okay. Let's so thank you for the background there. I appreciate that. Now let's dive into the games themselves. We're going to start with with Pegasus, which is again the main reason I wanted to have you on the pod is because that's one of the OGs in the space blew up in 2022 ish timeframe, which of course was your.

The peak of Crypto Bull did extremely well, was very polished for its time, I thought compared to many of the other kind of very primitive offerings at that time. So why don't you tell us a little bit more about that game, how it did, some of the metrics, as much as you can share, and then tell us a little bit about how is it doing now, how did it weather the crypto winter, and what did you learn about that experience as you bring, presumably, some of those learnings to Patopia your second game and your other offerings beyond?

Corey: Great question. So I think with Pegasi version 1. How did it come into play? It was quite a simple one for us back in 2021, like at the, probably like First or second quarter of 2021 is when we decided to build it. It was just myself and my co founder, right? And we looked around Axie hadn't really taken off just yet.

But it was definitely trending in some form with the small community that existed. And Zedrun as well. We looked at Zedrun and it was at those early stages very simple. And we were like, beautiful. Zedrun is simple, very easy for a user to adopt. Axie required a bit more thinking. And then Axie's sister that was.

Discovered by the community which was this scholarship system at that time. There was a lot of rumors going around how this system could work and what I basically decided to do was go and play Axie and figure out what this flywheel is that the community figured out, how they're giving their rentals and all this stuff to the community.

And I was like, okay, there's clearly something here, but it's not scalable. Meaning that this is basically a loophole that they found and if they wanted to scale it, they need to have. A hundred different wallets and seed phrases going everywhere. There's a lot of risk involved. So I just took a step back.

I went to my co founder and I was like, what happens if you build an escrow on chain, essentially a rental system on chain that would allow these people to scale from a singular wallet. And it would do the payout automatically. Meaning that let's say you rent a horse to me. I play the game, and we split it 50 50.

You're not responsible for paying that out. You can't scam me as the person who's doing the work. In that, from the top of my head, when I was thinking about it, I was like, this solves basically every problem that those communities in Axia are experiencing. So that's what we dedicated to building a very simple auto horse racing game, which was just 2d like basically an arcade game at that point because it would allow us to go to market quickly And during that period of time it would have been like Four months, five months that we decided to build it.

Cause it was basically just us two, Axie blew up, Axie was going crazy. And we were like perfect. We're definitely building in that direction. We didn't think that we would be the first on chain escrow model. We were certain that Axie was going to adopt it because it was clearly their growth level.

But actually just never adopted it. And when we went to market we basically decided to, a very simple strategy was to keep the campfire hot. And we were like, all right we're going to do the NFT sale on the back of that one, just one week later, we're going to do the game release.

And then the week after that, we're going to do the token launch. It was something in this order, right? It was just back to back energy. But actually the main mission was to remain small. We knew we had paying audience and customers around that point in time, things were selling out, but The game was in its most primitive MVP form.

We wanted to go to mobile. We wanted a 3d player controlled game. And we were purely dedicated on executing that. We were like a weekend, hundreds of thousands of users are coming in millions of dollars per day. And we're like, all right, clearly they don't care if we develop in the direction of a 3d player controlled game, what they like is this core flywheel.

Of speculation, building their teams and renting it out. So really what we did was pivot a slight bit during that period of time, recognizing that we have already given them what they want and what they want now is tooling to make decisions around, what their rentals or what they predicted earnings could be the best meta on the market, trading, breeding, all this stuff.

So we just built tooling around this core 2d. Auto horse racing game community loved it and on statistics, there was about 27 million unique wallets connected I think peak diu was 400 or 500k from the top of my head for the first version. That did about 200 million dollars in native NFT trading.

And we were blessed enough to make about 8 million dollars from that game itself. I think if you look at it on like a, per employee basis. It was an extremely profitable endeavor to take that route. And then what's another stat that there was just some obnoxious numbers in there, right?

And we felt extremely blessed to be able to firstly time it perfectly. If we were. Four or five months later, I think you already know that the market was not there anymore. It was essentially gone at that point. We just timed it perfectly. We had the right system, the first to do on chain rentals.

We recognized the growth level and we executed it quickly. All of these played a factor in the success now. From there, of course, the bear market came. Basically everyone, That said that Web 3 gaming was dead. We went through that point and what we recognized was that flywheel just doesn't work anymore.

Quite clearly it worked. We did incredible there but it's not going to continue at this point. There was iterations after us who tried to do similar and every single time, it just, That loop just went quicker and quicker down. So it was pretty clear that it didn't work as we thought it would. And that other people thought it would.

And we just spent, honestly, we spent that bear market from the end or mid 2022 to towards the end of 2023. Honestly just trying to learn as a game studio, how to be better at game development because this was our first game that we, as a company had ever built, and we were like, all right we've been blessed Runway let's spend it learning and getting in the trenches and that's where basically what we did was continue the mission with Pegasi version 1 because we wanted to do that for the people who were still there for that year and a half that were after the game hit its peak.

We promised that we would build a player controlled mobile Game. So that's what we've done. It's still in it's like MVP alpha stage, but it's there. And then at the same time, we recognize that as a company, you probably shouldn't bet absolutely everything, the entire house on that single IP, whether, because when we, honestly, we didn't know whether they gave a shit about the IP or it was just that.

That meta right? So right opia needs to come into play here, which is a completely different vertical. That one's essentially a mix between arch, hero and Brawl Stars. It's like a dungeon crawler. And eventually we'll become like A-A-P-V-P arena type game. We're just about to release the MVP of the PVP arena stage.

We just wanted to test our skills as well and go to market and see what we're actually good at. Because when you hit. I think you get a little bit jaded when you hit Success your first try and you're like, all yeah, we're damn good. Might not be the case might just be a might just be a perfect storm.

You know what I mean? So that's basically what we did. We spent that about a year shipping all the way to the mvps of both games expanded the team a little bit and just purely focused on testing. And this comes back to doing traditional UA traditional game design as well, and tokenomics and all this type of stuff was on the sideline until we recognized that we had a good foundational flywheel.

And where they are today is still there in that, what we would call an alpha stage mid alpha stage pushing towards a beta where you would consider like it being a. A regional soft launch for those two games.

Niko: And what's the, with the obvious, tokenomics piece, what's different about the mobile versions of Pegaxy?

Corey: I think this is a question that you have coming up a little bit later as well, but regarding like tokenomics, I think it's, Probably the most difficult piece of all of this. And yeah, especially for sure. Disregarding the app store reviews, I think obviously no one's done it. Ones that we could say did it right.

Like for example, we can use Axie Infinity as a prime example. I don't think that is a wise one for the industry to. Compared to, or try to become because their supply side demand is in the hundreds of millions, and that's just not a reality or a reality. Tokenomics in these games a sustainable tokenomics should have an extreme amount of demand if it's a permissionless type system, unfortunately getting hundreds of millions in demand is a Binance listing and a Binance listing is not something an everyday game developer is probably going to be able to manage.

I think it's just when we look at tokenomics right now, basically it's one largest experiment, a continuous experiment of trying to figure out exactly what is a potential flywheel and pushing on with that.

Niko: Got it. Okay let's move on to Patopia then because obviously that's your second game.

Now you presumably learned a lot from the, first time around spent a good amount of time taking the learnings and then building out this game. I haven't had a chance to play it, full disclosure. Looks good. It looks polished. It looks, it looks good to to put it bluntly.

Talk more about the gameplay there. It's very different, obviously in, in genre wise. One of the things I always challenge my guests on this pod is if they're working in multiple different genres, they're most game developers, like they specialize in one genre and they're really, Like they do that for years and decades and they just polish that one genre and they just get better and better at doing that genre.

It's very hard to do multiple different genres. So it, this is both a question and a bit of a challenge to you, which is you're going after a very different genre. What makes you think. That you can marry the best of web three and blockchain technology, which obviously makes things harder in many ways, obviously opens up very exciting design opportunities as well, but it makes things harder in many way.

And then take on the challenge of doing something in a different genre to what you've. Learned from your first game. Te tell us a little bit more about Utopia, how does it work? And then talk a little bit about the kind of challenge that I'm throwing at you here.

Corey: Sure. I guess you look at Utopia as a bit of a closer to Midco robe light taking inspiration from Arch Hero Archer A we would possibly consider more on the casual side. It's a horizontal feels like a bit like a MO controls road. Easiest way to put it quite unique in the sense that we didn't take massive inspiration from any specific economy while we, there's a lot of fundamentals from both of the games that we took inspiration from.

There's just purely a lot of experiments and the direction that we, similar to what we did with Pegasi version one was intentional ignorance in a few areas, meaning that there's a lot of, A lot of opinions out there and typically pulling us both ways and. We wanted to apply a scenario where you have the opportunity to potentially be lucky.

I think that's important, like what we did with Pegasi version 1. Most game developers, traditional game developers, would have said that game is Impossible that it's going to blow up because it's a 2D auto horse racing game. Just browser based and very ugly. How are you going to get distribution?

How are people going to be interested in it? And this is actually advice that I heard from Scopely's CTO, Ankur. I'm assuming maybe you have met him before but I met him in NFT NYC about two or three years ago, and he basically just wanted to ask questions because Pegasy was doing well.

And he said like, how did you guys get to this level? And what is it that you did to, to achieve it? Because I believe that they were potentially trying web three of some form. I'm not so certain anyway, really what it boiled down to was that we were doing things that they deemed probably incorrect.

And I was asking him for a lot of advice. Come on, it's scopely. We were like, how do you guys do this X, Y, Z? And he was like, yeah, listen, I can tell you a thousand things right now. But sometimes ignorance is what leads to your success. And really, I actually just wanted to live with that mindset was that while there is a million fundamentals and there's proven directions Us directly competing with the exact same blueprint of Scopely, they have unlimited money.

There has to be some sort of, there has to be something for us to be able to differentiate ourselves, and if we don't know, because we don't have 15 years in the trenches like them, fortunately or unfortunately, it may actually have to come from An accident for ignorance and I think that's just something that we wanted to explore.

I know this is probably a very weird answer, but—

Niko: No, this is a great answer. I actually appreciate the honesty. Like a lot of the time you'd be surprised by how people tried to bullshit their way out of them. Something where it's like. No, we didn't know what we were doing. I bet I love the answer because sometimes you get true innovation comes from we don't know what we're doing.

We think there's something cool going on here. There's definitely some, the makings of something exciting. There's a revolution potentially going on here. But we don't know what we don't know. And hence we're happy to be lucky. And I think a lot of entrepreneurs will tell you like, it's, sometimes it's 90 percent luck.

Never a hundred percent luck because you got to have that, like the guts to try and go to be there. So yeah, you got to be there to be in it, to win it as they say. So no, this is a great, it's not a weird answer at all. This is a great answer. And I'm actually really glad you're saying this because way too many guests on this, I shouldn't call out guests on this podcast, certainly not calling out anybody by name, but way too many people I speak to in the industry they take too much credit for their own personal Like brilliance.

And oftentimes, especially with new industries and new technologies, it's not actually that it's just right place, right time, like the guts to try some stuff and then something just works and that's great.

Corey: This is the right answer.

Niko: I appreciate it.

Corey: That's where we were. We were sitting at. I'll be totally honest with you.

And actually anchor also told us building multiple games typically isn't, it was in that same conversation. I believe I met him in San Francisco. Again, that one was for GDC. And He just said building multiple games typically isn't the smartest decision With them what they do is what they is like I think they verticalize internally very similar to supercell in some form which is it's a unique team individual team There's no association with each other and they'll kill very quickly And I emulated similar I'm very inspired by Supercell's org, I love that plan, and from the earlier stage we recognize if we're going to take on this second game, it's going to double our burn if we are attempting to scale and push out, and that's really just what we did, we wanted to make sure that there wasn't A huge overlap.

If there is a very basic resource, sure that they can help on both games, like a backend of some sort. But in reality we recognize that it's a huge endeavor. And I honestly think it actually purely came from our ambition to be on mobile and loving arch hero and brawl stars. And it was like, all right, let's go for a team.

Because I'm not sure how big a horse racing game it can become. I don't, I've never. Put before web 3 played a horse racing game and that sits in the back of your mind like is this going to be a dominating game. I'm not sure It was a web 3 dominating game. That's for sure. But sometimes you just have that reality check in We went for it And that's Julia.

Niko: No, great answer. I had a last episode, which actually hasn't aired yet, but we'll be airing next week. My old former colleague from Zynga, early Zynga days, Michael Martinez, very different company. They're making casual word games nothing to do with web three. They're essentially competing with the New York times and wordle and connections and all those games that have massive success.

And he was actually saying something. Adjacent to what you just said about I don't know how big a horse racing game can be. He was, I asked him like what they had done mid core games previously hadn't worked out. And then they are now doing casual word games, very different genre. And I asked the same question like, okay what makes you think that you can do casual word games?

When your expertise was mid core and he had a great answer. He was like if we go after mid core or any of those genres that are big and are big enough for an EA or a scopely or a Zynga or a supercell or any of these big companies that have big, Unlimited funding, unlimited resources. Then we're competing head on with multi billion dollar organizations.

And as a startup, we can't afford to do that. What can we afford to do? We can afford to build smaller, lighter, more casual, quicker to market products that don't cost a lot if they fail and we can learn from multiple titles. It's interesting. You said the same thing. You're coming at it from a slightly different direction, but I would actually say Some of the smaller genres that don't make as much money as like the big developers need them to make are actually more attractive for startups and more attractive for entrepreneurs because they're overlooked.

So don't knock horse racing. Don't knock 2d horse racing in web3.

Corey: It led us to where we are. It's impossible. And I think this is where ignorance is bliss. Zed run showed us that it clearly works. And we just needed that little bit of inspiration. And sometimes you go back to a very logical mindset, which is me questioning it.

Is this is this the way, but in reality, I like you come back to your senses and you recognize it, it has to be millions of people played the game. It is scalable and it makes money and it's enough for us. We're not scopely. We don't need a billion. A couple million is fine.

Niko: There you go. There you go.

Yeah. Michael Martinez, this company, FunCraft, I'll do a little shout out to him because a friend and former colleague of mine they're on a revenue run rate of about 35 million a year with a seven person team. So that's huge. Yeah, that's what I'm saying. This is legit, right? It's legit possible to find relatively small niches that are overlooked by the large organizations, but with a, You have a hundred person, 110 person team.

You could be doing, you could be doing a billion dollars. Anyway, I don't know, I don't know what a web three word casual word game would look like. But that, that may or may not be possible. But you never know. Okay. All right, let's shift gears a little bit here. We talked a little bit about the games.

So good luck with Patokio, by the way, what's tell our listeners, what's the kind of timeline on that? You said you're an alpha. I looked on online. It seems like there's a lot of. Coming soon type stuff going on here. So where are you guys at and when do you think it's going to be a full on playable, like it's almost ready, although games of course are never ready.

Corey: Yeah. Yeah, I would say like we're pushing towards close to the end of the year to where we would be confident to doing like a a global push. At this point we're doing very small UA tests. So we're really at the retention stage, just testing the retention and adding more on content wise.

And then. Definitely pushing towards more that Brawl Stars feel right now. It's felt basically like arch hero. There's some pvp elements in the sense of like How would I say? Not directly pvp where it's like a live pvp. But in short. Yeah Towards the end of the year is where we'd be confident To tell people go play right now.

It's there's a Like a hundred or 200 K downloads or something like this. But this is like purely Web3 focused that our core audience. No, your way.

Niko: Yeah. Yeah. That's still, that's a legit number. Couple hundred thousand. That's not nothing. But for web, Web3, yeah. Yeah, for certainly for Web3, but really for any game.

So yeah. Good luck. Good luck with that. And love to. See how it goes. Okay, let's shift gears a little bit. I'm gonna talk a little bit about, I always like to talk about the kind of the more novel web three elements that are being adopted by game developers when we have a web three focus episode.

And so I want to talk a little bit about play to airdrop. I since realized that I say you're not the first. First or only ones to use this phrase, but it's not something I've seen very often. But obviously we had, play to earn when Axia came out initially, and then there was play to own and play to win and play to, all kinds of play to some things you got played to airdrop.

Talk to us a little bit about play to airdrop. How does that work? And what's the impetus for adopting that?

Corey: Yeah, I think it's the foundational motivation for most users in Web 3 are all the same and eventually what they're trying to do is trade their time or a small piece of money for a larger piece of money.

Some people may like that there's money involved in the game, some people may not like it. I think it's important probably not to have an opinion and just recognize that's the reality. And where we stood with something like this was that play to earn the original model had a very specific flywheel and it worked originally because a majority of people did not know what would happen, did not know the end result and did not know how important demand was within a flywheel like this.

Obviously over time we learned we figure out that flywheel doesn't work. It just took. 10 billion for us to figure that out. And. With the others, the new iterations, play to own, play to win, like play to win, I think it's just a game, I'm pretty sure we're all trying to win, I'm not sure really what that one meant, we had a short phase of that one play to own, essentially that's just translated, a translation from Earning tokens to earning an NFT or an item inside of the game.

But play to airdrop is fundamentally coming back to that core flywheel play to earn. However, this is earning these tokens prior to a token listing, the token being live. So really what it does is it gives the developer, like the game studio, the ability to balance, because when you have the play to earn mechanism.

Mechanic inside of the game, you're very dependent on the token's price whether people are willing to play or not is purely dependent on if your token is doing well. With Play to Airjob, it's basically the belief in the game and the team comes from the player and the player is hoping or believes that team is then going to do something large and great with that token.

So what they're doing is playing to earn, in theory, points inside of this game, and those points will eventually be redeemed for tokens. Whether it's a 1 to 1 ratio, it might be a 1 to 100 ratio, either way, really what they're doing is collecting as many points as possible to get a token reward at the end of whatever the campaign may happen to be.

It's just a unique scenario. Again, it's just it comes back to the original flywheel, play the game, get rewarded, and hopefully you'll earn some money. But we don't have that baggage of One day your tokens up and all of a sudden you wake up in the morning and your tokens down 50 percent and you don't know why, but it was purely based on market conditions.

Bitcoins down. All of the tokens are down and that can heavily affect your attention, your monetization, all that type of stuff. And play to airdrop is really just that. another attempt at a solution to that problem. We don't know if it will work. I'm looking at some of these other other companies like Heroes of Marvia.

They did an enormous one, drove millions of downloads, got a huge listing. I think their market cap or FDV was significant. Tens of millions of dollars. So clearly people like that speculation fly well. Whether it works for everyone, we don't know, but it's just the current flywheel that these players like.

Niko: Yeah, I think the cynical question would be doesn't that just kick the ball down the road? Kick the can down the road? You're playing to airdrop now, you're delaying the potential fluctuation in the token value, but at some point it converts into tokens or something of value and then that something of value will eventually start to fluctuate.

And so it buys you time. And maybe allows you to balance the economy before you're ready for an influx of speculators. But yeah, that would be my biggest question mark would be doesn't that just kick the can down the road? But like you say, nothing wrong with experimenting, nothing wrong with experimenting.

Who knows if it'll work. Try it out, see what happens. And yeah, there, there may be something there. Okay. Cool. Let's talk a little bit about some decisions you've made on the technical side of things. And this is a curious one because we've had Immutable on the show multiple times including Robbie Ferguson, their CEO, just earlier this year, they've been obviously making a huge push into gaming.

That's their big thing and they're building out a lot of infrastructure. Now, the reason I bring this up is you announced that you're moving and already maybe have moved, you can tell us more about the actual details and the timing of all this, but you were on Polygon and you're moving. To avalanche and you announced this at the end of 2023.

So fairly recently, I'm curious to hear your thought process there. You were the first and that's not to say there aren't others, of course, but you're the first guest we've had. Who's gone in that direction. Most if they have migrated to a different chain they've been going towards immutable.

In large part, because I think they're offering a lot of incentives. So that's, that's always a good fund reason. And or Ronan that's, those are the two kind of recipients that have been benefiting from developers migrating from some of the kind of more obsolete chains. So very curious to hear why Avalanche what made you decide that?

Definitely makes you unique among my recent guests who've made this decision to migrate.

Corey: Yeah, great question. Firstly, Robbie being Aussie. I love that. I hope they continue to have massive success. I'll be completely blunt with you. There was two, two reasons. The first one is at two years.

When Pegasy blew up Polygon, we didn't have a very solid relationship in the sense that it seemed that they weren't so interested in supporting, by far, the biggest game on their chain. I'm not sure why I don't blame them. They were busy as well, I think. When we went to Polygon I'll be even more blunt.

It was Polygon or BNB. And we chose Polygon because someone told us don't go on BNB. It was a very it was someone that we trusted at the time. And it was a very simple choice. Polygon was the only other one and we were able to get connected to their founder at the time. We thought they were going to invest.

That's not something that ever happened. But after that they blew up we blew up and there was just not much happening, the chain didn't perform so well and through that period of time, like back when Polygon is potentially going to invest, we were also speaking to Avalanche back in the day and Avalanche for those two years before we decided to migrate, maintained a relationship and never ever asked us or tempted us or offered us anything.

They just actually. Wanted to be friends. It was very interesting that I could speak to these guys as if they're one of the boys and it was never about, so like when you're coming to Avalanche, when there was never any backhanded questions, they never asked. So when we were deciding where to go, it was just a message to them.

We're considering and for our, for my co founder, our CTO For him it was just availability of documentation and how much we could build without needing to speak to someone. I know that sounds weird but We didn't want to have to ask for help. We wanted a little bit of freedom here.

So Steve our CTO, we went there to check the documentation and we could essentially build everything from zero to 99 percent without asking them. And that's what we did. We built basically everything. And then I went to the boys and was like, by the way, we built this. And what the heck are you doing?

Why didn't you tell us in all this type of stuff that like, of course, we're going to help you. Like we already did it. And. From that, they just went honestly above and beyond. They wanted to help us, get us out there, let people know about us and have supported us immensely just in the areas that we felt that it mattered because we didn't get much or really anything before.

I just thought it was, like, I don't want to talk down on Polygon because it's just the situation of that time, but I just thought it was very odd when we were Basically second to Axie Infinity, but Polygon, I can't find a single piece where they ever mentioned us in media or publicly. And I felt like that's unwise.

They just focused on new games coming into the ecosystem, which is just fine. Maybe that was their core focus. But again, I just rubbed us the wrong way. So the decision, firstly we had the existing relationship. They just wanted us there. And. My CTO felt that it was something that he would be happy to work with.

If a mutable, for example, let's say one of the senior people from a mutable or I had met them in person or they had ever messaged us maybe I would have been interested, but I only had a basic contact of a a BD, but the BD didn't work there anymore. So I didn't have that relationship, unfortunately.

And It's nothing else. There's no, unfortunately we didn't go in and weigh up our financial options. It was just, we're ready to execute. We wanted a chain that we can build on our own as a subnet. And actually it came down as well to the user experience that we wanted to have and having our own chain, like the layer one that Avalanche offers as a subnet.

Allowed us to be able to pay the gas or the transaction fees for the user for mobile. I think that's super important if you want an on chain action, but you don't want to use it to go through on ramping on boarding all of this other BS. The web 3 comes with it. That was a solution and that was as easy as that.

Niko: All right I have not built on Immutable, but I all I can say is that they are making a pretty. Big push at the moment. And they, we've had them on the show multiple times actually. And they're great. They're great guests. All right, Corey. So let's talk a little bit more about one of the other cool things, or I think it's cool certainly sounds cool that you guys are doing shards.

This is one of your non do. Directly gaming initiatives, but gaming adjacent initiatives that I hinted at the start. You've called it social five for games. And I'm absolutely fascinated by the kind of hint or slash teaser descriptions you put out there. What is shards? What does it do and how does it work?

Corey: Yeah, shards at its core is actually like a spinoff from some alumni within Mirai. So some of the core team who we initially wanted to build this in Petopia as an experiment and they loved it and they wanted to go ahead and build it. So that's basically what it's become. It's become its own vertical.

But in short what is shards and how does it work? Easiest way to look at this is a what we branded as is a new monetization layer for web three. And the idea for it came back in 2023. What it allows users who are players and non players to do is speculate on the teams within the game.

And it creates a flywheel where the teams are in the game studio, earns more money and the users who are speculating have the potential to earn. If they make a good decision easiest way to, to explain this. I'm. Not sure. You're familiar with YGG and Gabby from YGG,

Niko: Of course, we've had Gabby on the show a long time ago, but yeah, a couple of years ago, but yes, absolutely.

Corey: I'll use them as an example. So let's say YGG wants to join a game. It might be like something like shrapnel. And when they join that game, this shards, it's essentially just an SDK. So shrapnel would just integrate the SDK. And what happens is that, It fractionalizes and tokenizes YGG as a team within that game.

Now, anybody within the game natively or outside of the game. So me and you can basically buy a fraction of that team. It uses a bonding curve inspired by friend tech as the next person buys a fraction of that team, the price goes up and if they sell the price goes down, so people are speculating back and forth there.

And there's a fee every trade 5 percent of all of that trading volume. goes back to Gabby or YGG. So basically they're, they've been given a business model. Their job is to go out there, become popular, get people to speculate, start some drama with other teams. All of this stuff dominate within the game.

Their motivation is pretty high, and this is a revenue stream for them. For the game studio, like the motivation behind them integrating is quite simple as well. It's a new revenue stream. They get 4 percent of all of the trading fees within the game. So any team that is traded. All of the volume across the board they take 4%.

Now, really their motivation is just to create a competitive game, which they should have been doing anyway. And the guilds are competing on a leaderboard, whoever dominates will get the prize pool. And then, Shard's business model is also very simple. We take a 1 percent fee across the board for all game studios All trades.

So the core business model for shards is as many integrations as possible across as many games as possible. And it's a free SDK. Very easy to integrate. So yeah, that's really it. That really, what we want to do is sit beside the NFT sale. The token launch as that third vertical for monetization, because in that.

Bear market of 2023, when we're ready to launch an MVP or someone's ready to launch a web three game, but nobody's buying NFTs and no one's token launches are destroyed, no one's doing them. What's the monetary value prop for web three for these games studios? There wasn't really one. And we wanted to be able to provide the industry with an option, a third option to potentially make money within web three that, that.

Actually requires web three technology. So a bit of a long explanation. I know.

Niko: No this is why I was, it's fascinating because I, the financialization of games of, web three I always appreciate guests who lean right into it. Like Luke for one, certainly lent into, Hey, no, this is.

We are plates are and plates are at his back, baby. And we're leaning into it. And so I actually appreciate developers who are intellectually honest about what they're doing. And I, again, hasn't yet fully worked. It's worked for short periods of time. But it hasn't actually really taken off.

But I do appreciate that. There is a lot of innovation around more financialization of gaming and this concept of shards. That's what kind of caught my eye. I was like, okay this is yet another way to monetize and it actually is potentially more sustainable because it's more of an ecosystem play as it rather than speculation on a specific token.

Yes, there's speculation, like a metal layer. Yeah, it's a metal layer that actually is It's almost like a harmless add on that really, just adds value if it works and if it doesn't no big deal. Like you're not putting a lot of MSN into it. So very interesting. Do you have any early metrics to share on that?

Like how's adoption been? How are you getting in front of developers? How many people, how many devs have actually integrated the SDK? What's it generating, on a per game or user basis?

Corey: Yeah, I got a basic one here just from the top of my head. I apologize. I didn't prep anything. In advance, but we have,

Niko: I'm a numbers guy. I like to talk about what's working and what's not. And numbers are the best way to tell that story.

Corey: For sure. For sure. Right now there's about 32, 000 trades that have happened and that's, it's only integrated into or launched on three games natively. It is still new and there's about.

Between 15 and 20 from the last time I checked games that are currently in the process of integration. And there's been a close to six or 600 or 700, 000 in trading volume natively within those platforms. So just between those three games, what we've got to recognize is that Essentially, these are mostly people who aren't even playing these games, like we're going to this, either we do it inside the game if we really want to, but in reality we don't need to download the game.

We just go to the website, we choose the game, which might be Petopia for example, we know that there's a competition happening and we're just going to buy a fraction of the guild that we think is going to win. And a small piece that I didn't mention here, which I think is very interesting and why I love this flywheel so much is that This is probably the first time, at least that I have seen, that games are monetizing non players.

Meaning that we don't even need to play, and the game is making money from us. I think that's a really unique situation and we really want to push in that direction, to where the game studio has to do less UA, and can depend on a platform like this to make money. Which means more, hopefully, more game studios survive.

But we'll see. Still pushing quite hard on this.

Niko: Yeah, a lot of experimentation still going on and I do love that. Okay, I have my second to last question. The last one is a fun one. This one is more of a meta question. Um, I still believe that Web3 gaming is going to work. We've seen a lot of experiments, we've obviously seen a lot of venture money for it.

Flowing in, we've seen a lot of different kinds of approaches. Games do take a long time if you're building a kind of a triple a or double a kind of game, they do take time. So I think the cycle from the last round of, venture funding during the boom, the bull run has yet to really show what, Can be done with that capital and what kinds of games are possible from, people who theoretically at least know what they're doing on the gaming side of things.

But we have to acknowledge, I think we all have to acknowledge that number one, Web3 gaming is entirely has entirely been driven by the price of Bitcoin and an ETH, right? That's what it is. Has done so far. And right now we're in a mini bowl or at least stable at a higher level. So everyone's a bit more excited again, but the core of web three gaming, the core concept of NFTs, ownership, financialization.

It like we've said, you've said it, I've said it, we've all said it multiple times. It works until it doesn't. And so it can work for a period of time, but at some point it becomes a pyramid shaped thing and, only new people coming in. Fueling the demand is going to ensure that the people who are wanting to cash out, have somewhere to cash out from.

Gosh, long winded way to ask the question what do we need to see for web three gaming to break through? Is it really high quality games with less emphasis on financialization? Is it leaning in more heavily into the financial aspect? Because that is what has worked at least in the short term up until this point.

Is it more revenue streams like what you're experimenting with shards? Is it all of the above? What, in your opinion, is going to be the catalyst that actually pushes web three gaming into. Not even the, it doesn't even have to go mainstream, but pushes it to the next level where it's clear that there are sustainable revenue streams.

There are ways for developers to actually tap into customers and demand that is not just fleeting and it's not just there for a quick buck, but it's actually there for the longterm for whatever reason, for fun, for earning potential, whatever, but for the longterm, because it needs to be sustainable.

Corey: I guess the question is here and I might be thinking about it wrong.

I'm not sure. We talk about sustainability and all of this type of stuff, the game lasting a very long time, but let's also look at someone like Voodoo. In their heydays, they were shipping a ridiculous amount of games. The life the shelf life of that might have been a month, and sure, they made a ridiculous amount of money on that game, and then they move on.

I don't think many people were saying that Voodoo is doing it wrong. In the sense that oh, the company's making money, but their games continue to die. That was just their play and it worked for them. Now they're moving to hybrid casual because it wasn't working. I don't know. But they made millions and millions of dollars.

We, the industry we push for sustainability and I think our vision here is that, we're building games that last literally forever. Um and possibly the ownership and the financialization of that, we believe can enable them to last beyond what a typical casual game would, if the shelf life is 12 months, now they're going to last 5 years because we have money involved.

Maybe we just think about that wrong. Maybe that is just how it is, and people get bored. I'm not sure. I think it's just something that we, while it's the mission, I just think it's something that we should, Consider what is actually wrong and what are some of these studios goals? And what is Sustainable.

I would prefer to question those more directly and At least for us like our pure mission is build a studio that can produce obviously great games that people love and if We get to a point where, Pegasy is, I don't know, 10 years down the road still doing incredibly well.

Perfect. That would be amazing and possibly that's enabled by financialization and the crypto side. But this is something that perplexes me, the, just the general thought process behind it because I think it's just, Too much of a philosophical question that it possibly can't be answered.

I just yeah. Yeah, that's—

Niko: It is very philosophical and I can get philosophical on Uncertain days. So maybe this is a day ending in and day Week day.

Corey: And I'd love to know your opinion opinion.

Niko: Ah, I have so I was building in web3. I continue to be extremely like I mentioned to you at the very start.

Like I got into Bitcoin and Ethereum a long time ago, 2016 almost a decade ago. Now it's 889 years ago. That's forever. And crypto world and I see so many applications for. Crypto more broadly, blockchain technologies more broadly including in gaming. Gaming has always benefited from new technologies, whether it be going mobile and the smaller form factor, touching your touch screen here, everybody's got one of these things like pinch to zoom and, swiping around like different interaction forms.

I was working in voice technology when speech recognition was blowing up and Amazon and Google were doing the big voice assistant fights. I can't say their names because I have. One of each in my, in this office and it'll start talking back if I mentioned them. And, sometimes it's a bigger impact on gaming.

Sometimes it's a smaller impact on gaming. Mobile obviously was huge, absolutely huge, absolutely massive. That didn't exist free to play. Was huge in app purchases, micro transactions, huge voice, not so much. That didn't quite work out. Not a big enough market there. And I think the jury's still out on web three, theoretically huge, but in practice, who can say so philosophically, where do I land?

And I want it to work because I always want game developers to embrace new technologies, to embrace new form factors, to embrace new metas for lack of a better phrase. Change the narrative and make things more interesting. Make it like I used to say when I was building in web three, I used to call it the financialization aspect makes the game more spicy.

It's like adding this there's a little bit more, yeah, there's a little more reason to care. Now again, we still haven't seen it break through and be sustainable. We saw obviously a huge bout of speculation around the Axias story and plates are, and more broadly Then we saw the bear.

And now we're back in mini bowl territory, so yeah, what do I think? I think it can work. It just hasn't yet. And I'm curious, always curious to talk to developers who are doing interesting things, but they have to be truly interesting things. They can't just be copying others. And I think the reason I wanted to have you on here is because a you were awesome.

Early with Pegasy and, I figured something early out especially around the, your novel approach to escrow, right? . But you also have stuck at it, kept with the thesis and continued moving forward and you're doing some really interesting things like with shards, for example.

So kudos to you. Like I said, I don't have the answer. It sounds like you don't either. And that's fine. Nothing wrong with that. Just keep plugging that in and seeing what works and taking swings swings at the bat shots on goal and all that. And yeah, fingers crossed. See where it lands.

Okay, final question here. I asked all my guests what three games, we're a gaming podcast. What three games are you playing at the moment? Whether web three or elsewhere, not your own games. And then what are you most excited by? In the game space, either or works for me.

Corey: Might sound crazy, but. The game I play the most is Royal Ranch. Oh, yeah, great game. Very different. I don't know. 2D horse racing. Everything we're doing. Yeah, of course. I just we take a lot of inspiration from them, actually, like the PvP, but not live PvP elements. Um, I think they're an incredible team. One I was playing before that was BeatStars as well, which is another amazing team.

They do a lot of insane stuff. Yeah. I honestly lean on the more casual side typically on, on mobile as well just for convenience. My wife is the absolute opposite. She plays the most hardcore games on, on, on desktop. Yeah, right now leaning to more, The casual side. In Web 3, I'm actually pretty focused on the Telegram slash Ton ecosystem with hypercasual.

I do think I think this, again, might be interesting for you to explore. I don't know many builders out there by, by name, but there are some studios that are doing some Huge numbers in hypercasual for web three on that telegram ecosystem. I do believe that web three is entering its hypercasual era where it's definitely not working in web two.

These guys are making tens of millions of dollars off a game that cost them 15k. Yeah. Yeah.

Niko: I've been curious to explore that. Actually. I had my very first normie friend actually refer me to a telegram I forget which one now. It's one of those, like not coined as hamster combat.

Corey: That's the one.

Niko: Thank you. Hamster combat was the one. And so that to me is always a moment where if one of your normie friends refers you to a game, that's like definitely esoteric and a bit weird and they're onto something. Yeah if hamster combat folks are listening to this podcast, we'd love to have you on as well.

Yeah, there you go. Lots of guests, those ideas,

Corey: those those games, so something's definitely happening over there. So we're paying attention and we've got about three games in development focused in that area. So we'll ship them out in like mid July

Niko: and,

Corey: See what we can do.

Niko: Nice. Nice. All right.

More shots on goal. I love it. Okay. With that, we're out of time. So just wanted to say this was really interesting. Thank you so much, Corey, for coming on. Learned a lot as always. I love this. Mika. Who might learn from ambitious doing lots of weird and wonderful things. That's what you got to do in web3.

So good luck with all your initiatives and yeah, come back and tell us how they all did at some point in the future.

Corey: Thank you, Niko. I appreciate it. Thank you. Now like podcast for having me. Thank you so much.

Niko: Absolutely. And of course, as always, a big thank you to all of our listeners. We will be back as always next week with more interviews, more insights, and more analysis from the weird and wonderful world of gaming.

So until next time, friends, stay crypto curious and feel free to send questions, guest recommendations and comments to me. My email is [email protected].

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Again, that is www.naavik.co. Thanks for listening and we'll catch you in the next episode.