Yat Siu, the founder of Animoca The cornerstone of the Metaverse is digital property rights

Yat Siu, the Creator of Animoca Pioneering Digital Property Rights at the Core of the Metaverse

Wen: Wu Hongtao

Animoca Brands was founded in Hong Kong in 2014 and is a company focused on the digital entertainment industry. It initially started with traditional game development and currently specializes in developing and releasing products based on blockchain, GameFi, and artificial intelligence. Animoca Brands is also one of the most successful investment institutions in the Web3 field, having invested in over 400 blockchain companies related to NFTs, including Axie Infinity, OpenSea, Dapper Labs (NBA Top Shot), Yield Guild Games, and other star enterprises.

In September of this year, Animoca Brands announced an investment from Japanese company Mitsui & Co., marking its 19th financing round. According to Yuanli Society’s estimation, the disclosed total financing of the company is already close to $1 billion, making it one of the true giants in the Web3 field.

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Animoca Brands is a major beneficiary of digital technology development. As the digital world continues to evolve and the line between virtual and reality becomes increasingly blurred, people’s understanding of ownership and forms of interaction will also change. How to adapt to these changes and find new opportunities is the main question faced by every professional in the field.

Recently, foreign media interviewed Animoca Brands’ co-founder, Yat Siu, who talked about his views on the integration of Web3 and artificial intelligence, as well as his insights on cryptocurrency development in Asia and the investment opportunities in Hong Kong’s new cryptocurrency regulatory framework and the Asian market. Below is an excerpt from the interview:

1. What do you think is the biggest obstacle to the adoption of Web3 applications? What measures can the industry take to address these issues?

Education and awareness are crucial. A significant portion of people still have uncertainty or misconceptions about the meaning of Web3 or metaverse—the shift from platform/publisher ownership to user ownership in the digital world. This misconception is caused by some bad actors who associate blockchain, cryptocurrencies, and Web3 with scams. We must continue to build Web3 and show the world its true potential and advantages, especially its ability to enable true digital ownership.

Currently, the user interfaces and experiences of many dApps can be challenging for those who are not familiar with Web3. As blockchain technology develops to a level where users can seamlessly interact with it (even unknowingly), we will see a significant increase in adoption rates.

Improving regulatory clarity is also crucial. A clearer regulatory framework will restore confidence weakened during various crises in 2022. In this regard, Asia is setting a good example, with regions like Hong Kong and Japan drafting relevant policies that have been promoting adoption.

2. What are the key factors for the success of Play-to-earn games in mainstream markets?

Play-to-earn is just one case that illustrates what is possible once there is true and complete ownership. This is why it is now commonly referred to as Play-to-earn; making money is one of the reasons you can choose to participate, but not the only reason. In terms of value, what can be earned in games goes beyond just money, it can also be reputation, social status, or cultural value.

Another key factor is the successful adoption by mainstream players. We will soon see more 3A-level Web3 games entering the market, such as our subsidiary Blowfish Studio’s “Phantom Galaxies” and nWay’s “Wreck League”. These high-quality games will help traditional gamers realize that the quality of Web3 games can be on par with the games they are familiar with. This recognition of quality and familiarity will encourage more traditional gamers to participate in Web3 games. By participating in these games and truly owning virtual items, they will directly experience the benefits and potential of digital ownership, such as economic freedom for the items they own.

3. Can you explain your vision for the metaverse? How do you think it will impact our daily lives?

We firmly believe that the metaverse is the future trend. It can be described as the internet of ownership, where the foundation is true digital property rights. People tend to think of the metaverse purely as a VR or AR environment, especially one built on the outdated “walled garden” model, but this is a big misconception.

For us, the metaverse has nothing to do with VR glasses, specific virtual worlds, or games. As envisioned by most developers in the Web3 industry, it is an open, decentralized system and network of interconnected environments, facilitated by true digital ownership, interoperability, and community governance.

The open metaverse is built upon the “meta” level of digital ownership, which is why it is such an exciting and powerful concept. Property rights are the fundamental basis of any capitalist economy – property rights and capitalism are closely intertwined. The freedoms enjoyed by capitalist economies are directly related to their strong property rights (ownership of something also grants economic freedom over that thing). These rights and freedoms are the foundation of the most successful and prosperous nations. The digital counterparts of these concepts underpin all layers of the open metaverse experience, which include not only often-mentioned VR but also any other digital interfaces.

This fundamental shift towards digital ownership is currently happening in the Web3 world, and its momentum will only grow stronger, similar to the rapid development of the internet in the late 1990s or the rapid growth of mobile internet around the 2010s. Blockchain technology is driving the continuous development of the internet.

4. How do you see the intersectional development of gaming, blockchain, and the metaverse in the next 5-10 years?

For decades, games have had a profound impact on the physical world by driving advancements in numerous underlying technologies. These advancements have not only improved the quality of games but have also strongly propelled the development of industrial infrastructure. Just think about how games have pushed the progress of GPUs, display technologies, control devices, processing power, and storage. As smartphones evolved into advanced gaming devices, they also became viable production tools, leading to their initial widespread adoption. The intertwining of content, culture, and technology is a key factor that has driven this progress.

The transition from Web 2 to Web 3 not only requires blockchain infrastructure but also cultural factors. These factors can be social, entertainment-oriented, or consumer-driven, but they are all game-driven, ultimately facilitating the mass adoption of this infrastructure. Take the internet, for example: while connecting to the internet links us to the infrastructure, its primary appeal to people is not just the impressive technological achievements but rather the access it provides to content and services.

The Open Metaverse – a virtual society empowered by digital ownership with tangible economic impact – represents the next logical evolution of our digital lives in the next 5-10 years. In the Open Metaverse, our time provides value and meaning for ourselves, not just value and meaning to platforms that exploit our data and attention within the current Web 2 paradigm.

5. Can you introduce the main criteria and overall philosophy behind Animoca’s investment opportunities?

Our investment strategy and process are deeply rooted in our belief that Web 3, blockchain, and NFTs have the potential to fundamentally change how we interact with the digital world through ownership. So far, we have invested in over 400 Web3-related companies and projects using our balance sheet, as well as operating numerous subsidiaries such as The Sandbox, Tiny Tap, Darewise Entertainment, Blowfish Studios, and more.

We particularly favor companies and projects that emphasize openness and interoperability, have the potential to drive Web3 mass adoption, and make significant contributions to the development of the Open Metaverse. This includes any companies and projects that enhance network effects related to NFT ownership. It encompasses projects building the Open Metaverse as well as those providing true digital property rights on open and interoperable asset foundations. This includes platforms and protocols, marketplaces, consumer products like games and virtual worlds, and more.

6. How do you think the new licensing system by the Securities and Futures Commission (SFC) will impact retail investors’ attitudes and sentiments towards digital assets in Hong Kong?

The new licensing system by the SFC will add a layer of legitimacy and security to digital assets in Hong Kong. It will help clarify the rules of engagement, making the digital asset market more transparent and reducing the risks for retail investors.

Due to stricter regulatory requirements, some people may initially see regulation as an obstacle, but in the long run, it will enhance the confidence of investors and consumers. Retail investors will feel more secure knowing that the platforms they are using are regulated and have appropriate protection measures in place.

This will ultimately lead to greater participation from retail investors and attract more institutional investors – both of which will promote the overall growth and maturity of the Hong Kong digital asset market.

7. Did the JPEX fraud case affect people’s perception of Hong Kong’s new, more open digital asset policies?

The JPEX incident highlighted the need for clear and robust regulation to protect retail investors. It must be acknowledged that most innovations, including early internet innovations, always carry inherent risks and the potential for abuse. We believe that the Hong Kong government will continue to work with relevant parties to establish rules and standards that can deter malicious actors without stifling innovation. Hong Kong is one of the world’s major financial centers and has tremendous potential to become a global hub for innovation and the digital asset economy.

8. What misconceptions do you think the West has about Asian cryptocurrencies, and what aspects of the Asian cryptocurrency market should we pay attention to?

An often overlooked aspect is the speed of development and the openness to innovation in the Asian cryptocurrency market. There is a strong entrepreneurial spirit and a high level of technical literacy, providing an ideal breeding ground for the development of blockchain and cryptocurrencies.

In addition, Asia, especially places like Hong Kong and Japan, is establishing clear frameworks for digital asset regulation. This is crucial as it creates an environment that promotes innovation while protecting investors. In Asia, we see the internet moving towards a more decentralized direction, with a focus on digital ownership and user autonomy. In this region, we expect to see even more remarkable growth and innovation in the coming years.

9. We are currently in what I call a “mild” bear market, but it is certain that interest in Web3, NFTs, and the metaverse has waned and been overshadowed by technologies like artificial intelligence. How should investors, startups, and users navigate the current market environment?

Web3 is still in its early stages and has not fully realized its potential. Artificial intelligence and Web3 are not mutually exclusive, and they may actually coexist and develop together. If we envision a future where AI entities can autonomously trade, it makes logical sense for those transactions to be conducted using cryptocurrencies. It is predicted that 70%-80% of transactions in the future will be carried out by autonomous AI agents, and the decentralized nature of cryptocurrencies makes them a fitting choice.

If we all have reason to believe that Web3 will completely change the world (just as its predecessor Web2 did), then the current market conditions should not be seen as a hindrance. Our focus should still be on driving technological advancements, educating the public, and creating transformative dApps for greater benefits. In due time, regardless of market fluctuations, we will benefit from true digital property rights and a more equitable digital economy.

In addition, considering the upcoming launch of various Bitcoin spot ETFs and the recent influx of funds into Web3 projects, I believe that while overall activity may be lower than the peak of 2021 in terms of quantity, it is still quite positive.

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