Animoca’s Bet on AI and Altcoins with Yat Siu

26:04And basically what's going to happen is if you don't tokenize, you become irrelevant, right? And that is sort of in the scope of sort of altcoins. That's why also we have the RWA joint venture with Provenance, with Nuva, and also we're doing stablecoins as well in the Asia-Pacific, in our joint venture with Standard Chartered and Hong Kong Telecom. But you also, you mentioned like how you can hedge and do other sort of liquidity operations. I know Animoca also does things like advisory. We do. So is that, that's something that say like, I mean, a liquid fund, I guess, could provide like, you know, some ancillary services to its investments.

26:42Certainly venture funds try to. You mentioned that that's not conducive to a long-term view. No, because they have to liquidate, right? Right. If we invest from balance sheet, we can take a very, very long view. And that's kind of how we think of having better returns. People, you know, sometimes when people talk about sort of soft bank, they have sort of something like, oh, look at the fund, whatever. but we're talking still about$100 billion, the biggest fund in the world in some ways for tech. And they were a small company. And what they did was, because they were investing very much in the long term, they got these incredible positions in like Alibaba and like, you know, basically Yahoo and so on.

27:17And they had really sort of, or ARM for instance, right? And these outside positions had really created the returns that allowed them to sort of continue to grow the space. Now, had they kept their positions in those cases, not only would it have been better, and this is the key point of Manamoka, in terms of returns, which is great for shareholders and investors, they would have had a very guiding, influential voice. So I think where SoftBank kind of was a bit different is that they were very focused on the trade, which is understandable. That's what they do. We're actually focused on trying to sort of steer the ecosystem in the right direction, we think.

27:50And so having these positions gives us a kind of influence and a kind of vote where we can basically sort of help guide these companies as well because it's kind of early. So that's kind of another way to think of it. It's projection of influence, if you will. Yeah, I think that makes a lot of sense. And sort of the flexibility and tools that a corporate structure has versus an LPGP structure. I actually think LPGPs ultimately mid to longer term will probably go away in a traditional sense. And you can see funds already going into evergreen mode, which is a little bit problematic if you're a fund manager, right?

28:21Because, and by the way, this is where I think I've already met when LP in fund where you're like, well, your returns could come anytime when we feel like it. That's kind of tough, right? And, you know, I'm an investor on some of these early evergreen funds, you know, like 500, for instance, an example. I don't think in some of these funds I've received a return yet because there's no need to liquidate at this point, which I understand the issue. So then tokenization is interesting, right? Because if you want to basically have a way in which you have liquidity, you can tokenize the value of that portfolio and then maybe it makes sense, right?

28:53But then still you don't have that long-term view. If you have to liquidate in five or seven years, you're forced liquidating, sometimes in bad timing. Imagine if you had to liquidate in 2023 because the fund mandate said so. Bad, right? I mean, it just doesn't make any sense, right? And the fund manager might say it doesn't make sense, but - My hands are tied. Your hands are tied, right? Yeah. And I think when you deal with volatile assets like this and just general volatility, which I think, by the way, this is not just only sort of crypto. I think all assets are just more volatile, broadly speaking.

29:23You need to have that flexibility and the management becomes more important and you need to be able to be sort of, you know, have long-term views on stuff because sometimes it's just better. I mean, if you just held Bitcoin, independent of what's happening over the last 24 hours, right? If you just held Bitcoin over the last five years, that would have been an outsized return, even if you weren't like trading or hedging or doing any kind of stuff. Yeah, I think it does make a lot of sense. And I love to see the breadth of what you guys do. I mean, you said 600 plus investments is incredible. That's, and I've looked because I read our venture report every quarter for like the last, you know, 12 quarters.

29:56Animoca is top of the list of most active. It's like Animoca and Coinbase, and I think you're probably more than Coinbase. And I wonder, like, with that view, I assume it's mostly early stage. It's most predominantly early stage, but of course we do follow-on rounds as well if that happens. Right, right. But where would you say, you know, maybe can you divide the last few years into sort of phases, if there have been phases, of, like, the hot, like, trends in early stage companies or protocols that you've been seeing? And where are we now? Well, I mean, I think we cut our teeth early with NFTs, metaverse, and gaming.

30:29That's kind of what we were known for. But that's also because we were a gaming studio in the early days. And that's why we understood that best. But, you know, we've done sort of, you know, agentic AI, sort of AI. You know, Deepin was a big trend that we're continuing to invest in. L1, L2s. And the way that we got into the space, by the way, was like, for instance, take the gaming sort of narrative and NFTs. It wasn't until DeFi summer where you came and realized, hold on a second, actually it works. because of DeFi, it didn't work because of just gaming and having NFTs, right? And then we realized, wait, hold on, maybe we need to invest in lending protocols to facilitate that as well.

31:02And then, you know, the infrastructure that provided that were the L2s mostly. So, okay, we need to support these L2s because they're the ones who can build the infrastructure around that. And so next thing you know, you're realizing you're actually sort of branching out into multiple areas that originally, you know, in the traditional world, these tend to be siloed for many reasons, right? So, you know, if you're building a game, you wouldn't be thinking about investing in the next sort of AWS infrastructure because it just, or, you know, you would be looking at investing in, say, sort of Unity, for instance, just because you're a game maker.

31:30They tended to be separated because there were no natural tie-ins in this way. It didn't seem logical. But in blockchain, it's different because network effects are very much intertwined, right? So the effect that you have if you're a very successful game on an L1, L2 is outsized, right? And we've experienced that. When we start bringing our gaming portfolio in the past into an L1 or L2, the value drives, in terms of the interest and the attention, which then drives the value of the token, is significant. And, you know, for instance, I think it was like last week where we announced that we started buying Aerodrome and becoming a major voter in this one.

32:07And the token, despite the whole market going down, went up 10%, right? So there's elements around that as well where we can sort of, again, project some of our impact to those ecosystems. Yeah, there's a lot of synergy that can be had, right? Especially if you're investing in multiple parts of the stack. And I think the criticism that people say, oh, spray and pray, you guys are just kind of investing all over the place, right? And what people don't understand in blockchain, you can much more easily invest in these startups because you don't have the heavy lift of the infrastructure. I mean, you know, when before, even when you're building a game, AWS wasn't enough.

32:40You needed someone who understood server infrastructure. And actually, if you remember the early years of the internet, I mean, I was running my own Apache servers. And I had to run basically SMTP servers. and I had to basically run like a Linux server that I built myself. You know, like all these things is a heavy lift. You needed all these people in-house. And then came AWS. And actually what happened with blockchain, with essentially Ethereum or Solana as an infrastructure, suddenly all of that super heavy lifting infrastructure was just done. Like you had basically a banking grade sort of secure-based infrastructure that can deal with assets like money without actually having to hire the most efficient and most experienced database guy in the world who used to work at Goldman Sachs, right?

33:27And that mass amortized that access. And so it's much more easily and scalable to do that, which I actually think, from my perspective, I think we need to do much more investments. I don't think it's less. I don't think there's such a thing as, let's go for the one winner or let's go for the five best companies in the space. I don't think that works in crypto. Yeah, how multi-chain from the infrastructure standpoint do you think that, I don't know, some future end state of this ends up? I mean, you've got a couple, you know, I would say a couple of blockchains and L2s today that have significant usage, but a pretty long tail of additional options that don't really happen.

33:58Do you think we're going to, are we talking about, you know, 50 chains? I mean, where does it, how much infrastructure do you think is needed for that future where, you know, you have to tokenize or be forgotten? No, I mean, I think first of all, there's, I think there's a differentiation between set of chains and essentially sort of tokenization. I think everything has to tokenize. Everything has to be tokenized or your business has to have a tokenization strategy. Otherwise, you become irrelevant because you're sort of unreadable to that digital economy, particularly when it comes to agentic AI.

34:28But also, as more people go on chain, if your asset isn't available, you can own it. To me, it's like distribution. It's like if you want to enter the American market, you've got to be discoverable. If you want people to find you, you've got to be on TikTok. So if you want to be discoverable in the world of crypto, if you believe billions of people are going to be in crypto. You have to be discoverable. So I think there's not really a choice around that. But I think when it comes to chains, so my mental model on sort of L2s, for instance, is like ISPs. And L1s is like telcos. And so they're valuable.

34:59Like, you know, AT &T is, what,$200 billion or something? That's valuable. But in comparison to Apple, Facebook, or Google, who leverage that infrastructure, you know, they're smaller because most people won't care what that infrastructure is like. Like in the future, if we have true mass adoption, we're not going to have people caring whether it's built on Ethereum or on Solana or on various L2s. In fact, they're probably building on L2s. Security layer provided by something like Ethereum. Great, fantastic. But the end users are going to be using a product. They're not going to think about NFTs, digital collectibles, in the same way that we don't talk about MP3s anymore.

35:32We just have music, right? So I think that's kind of what's going to happen in the mid to long term. And that's where we have success. And all of these systems will grow in value. But ultimately, the systems that we use on a daily basis will capture most of the value because they have most of our attention. That's games, it's front-end user applications. Entertainment, front-end user applications. And the difference is, right, is they're going to be much more financial in nature because of blockchain. And, you know, one of the, I would say, if you think about blockchain gaming, I think one of the things that was a bit of a miss in the early days of blockchain gaming is the integration of finance wasn't truly thought of and integrated in that sense.

36:12And the traditional game developers, who many of them are actually quite socialist in their thinking, so they just don't like money. And they don't like how money could usurp the sort of fun and entertainment. They were sort of railing against it. When in fact, the whole point about basically blockchain is money was made to be fun. So what we observed, and this is why we're sort of investing in this space, is that money is a game in itself. And it becomes more real because you have something at stake. So that's kind of one element. And when you think about Gen Z, Gen Z doesn't trade like older people do, from my generation, shall we say, where we think in terms of, well, this is my asset class, and you get worried when you're liquidated.

36:55I'm not saying you want to be liquidated. My point is that it's viewed more like a game rather than a job, if you will, right? And this also comes in partial because the younger generation has grown up in an area of much more abundance. So the mindset is generally thinking more along those lines, right? versus the older generation grew up in a time of much more scarcity. I mean, my parents' generation going even extreme, even had to worry about food on the table. And world wars. Yeah, exactly, right? So you come in a pretty different environment. So we treat these assets differently, right? So that's why when you look at whether it's hyperliquid or when you look at polymarket, one way to say, oh, protection market and DEX, another way to look at it is just a new kind of game, right?

37:34Just a more sophisticated game with different rules. But it's gamified for that attention. So I think the world of finance is becoming gamified because all of our kids have grown up in the culture of games. So you speak that language, right? And if you don't speak that language, then essentially that audience is invisible to you. Yeah, I think you can definitely see that in like the mobile UXs of things like Robinhood. Absolutely, yes. Even, you know, Fidelity, where I used to work, they have their mobile app. It's not so much that they've added gamification features. You know, I'm not getting a gold star when my stock gets up or anything, or, you know, social points or whatever.

38:09But the feel of it feels, you know, friendlier and more interactable. It's not like calling your broker at PricewaterhouseCoopers. But you have leaderboards. Yeah, that's right. I mean, and the leaderboards is essentially another form of social kudos. This is a major thing, by the way. I remember the Poloniex leaderboard. They have the Trollbox. They have BitMEX at a leaderboard, right? This is a major thing. Hyperliquids, obviously, is followed. Yeah, and so all of these are essentially just an example of essentially gamifying it. But you could say it's not the mechanism of gamifying just because of psychology.

38:40It's what that generation knows and understands. Yeah. We're speaking their language. It's very interesting. Let's pivot just a little bit here. I want to talk about just the market this year. Because it's been, we're getting a lot. Right now as we record here on November 4th, Bitcoin is at$101K. And I think this is fitting. wasn't this basically the price when we recorded with Michael Saylor in Miami last December? So some people, and I'm sure you're getting this from your network as well, are saying, you know, what the hell, man? And also, or even if it's not, you know, if they're not upset, it's just what is happening?

39:19How would you characterize this year in crypto markets generally? Because it obviously started with almost unbounded optimism with, you know, we know that the new administration is coming in the US. we don't quite know what they mean to do, but we're pretty sure it's positive. And we got really bid up and then we've sort of been up in the tariffs and it's been all over the place this year. But as we sit here, we're almost flat year over year. Yeah, I mean, I guess I could sum it up with one word from our perspective, it's Trump or the Trump effect, if you will, right? And I think while Trump has been incredible for our industry, there's also been moves that have been made that have been very damaging.

39:57So the verdict on Trump, and I think it's very reflective on where the price of Bitcoin is, as in flat for the year, is 50-50. And I think the reason, and again, I don't believe that the policy changes or the things that are made around were unrelated to crypto. The policies around crypto were incredibly positive. It's just that the other policies around tariffs and especially what's going on with China and all of these sort of other actions that are taking place actually have all sort of been negative for crypto. and in particular, so I think this is the thing to understand, I mean, you know this very well, of course, is that it's very much been an institutional era of crypto for the most part.

40:35That means new retail hasn't really entered. If you look at, for instance, the growth numbers on things like Coinbase, you know, it hasn't been that fantastic. I mean, it's growing, but it's not like, oh, post-Trump, you know, we've grown our user base by 300%. No, right? You know, it's not like TikTok, right? So it hasn't had that effect. So the exuberance and excitement on token prices actually came from the same people who already had crypto, right? But then, you know, start of the year, Trump coin followed by Melania really wrecked the market. And there was some recovery around this time. And then, of course, you know, the mass liquidations that took place, you know, somewhat triggered by tariffs and other things altogether, really sort of caused a lot of damage.

41:12So the very people who were trading these assets are actually no longer in the market or really struggling to do so. And so really what's propping up the market, I think, is in large part the very tokens that are held institutionally. You could say, oh my goodness, Bitcoin is flat. But actually, if it wasn't for the ETFs that are out there, Bitcoin would be lower, right? And the same is true for Ethereum. I mean, Ethereum, actually, I think net on net, I think start of the year was more like in the 2000s, I think it was, right? So it's still doing better than before because you have DATS and you've got people like Tom Lee basically championing the cause.

41:44But broadly speaking, it hasn't been as good as people had hoped because the existing retail side, the DGN traders actually are the ones who have suffered the most. And I think the point is that they were very optimistic. Crypto, to me, is like an open polymarket. The sentiment is very clearly visible. And if you're looking at tokens and how they move, it gives you an indication of the sentiment. And right now, because of the elections, and we don't know what the results are at this moment in time, but I think most people would say, and if you look at polymarket, it's not looking good for Trump, right?

42:23Which then puts into a lot of questions. This is a referendum on what possibly could happen in the midterms, which is not a good sentiment for crypto. Although I would argue that it's oversold because everyone's worried about the Warren effect, so to speak. But crypto has, I think, become much more bipartisan. Yeah, so maybe a pendulum swing back away from the supportive political environment that crypto has had. You're saying that these elections, municipal and state elections that are happening actually today, in the United States, including in New York where we are, if they don't go well for, I guess, crypto-supportive or even Republicans, that it could portend also that the midterms may...

43:01By the way, midterms tend to go against the sitting president's party, historically speaking. But, you know, I actually... So I think that's the narrative. And again, our industry is very narrative-driven, generally speaking, right? Tokens are basically sort of indications of attention and narrative. And so people believe that. By the way, I think that's uninformed, right? I don't think Democrats are as anti-crypto as it is. I mean, depending on what happens in these elections, nothing is so clearly indicative of the fact that they're really against crypto per se. It's not that they've gone out and said, we don't like this at all.

43:34I think the negative perception on this is mostly because they don't like that the Trump family is in the business, which is a bit different from saying we're against the industry as a whole, right? I think that's right. Yeah, and that's why I think that's being translated this way. And that's why people are sort of coming out. The other thing, of course, is that, you know, people are talking about the cycle, right? And everyone's like, oh, you know, four-year cycle, we're hitting this, you know, we're at the end of this. To me, that's a little bit religious, right? It's a little bit like, you know, to me, it's kind of the equivalent of sort of, you know, it's like Mercury retrograde.

44:06Okay, we got to do something, right? Yeah. And these cycles sort of are very belief-driven. But, I mean, you know, Bitcoin started off very much as a belief system. So it doesn't surprise me at all that we are sort of, you know, but and it's part of the calculus. Yeah. Because who hold these assets are the people who believe these cycles. And if they believe these cycles, it's almost a self-fulfilling prophecy, but they hold the asset. And if they say, oh, I believe in the cycle and they're going to sell now to buy back later, then it's going to happen for the time being until we have more wider adoption distribution away from sort of that group of people.

44:41Yeah. And I think we've seen it, at least in Bitcoin. I mean, most cryptos aren't that old, but Bitcoin's 16 and a half, 16 and three quarters of a year old. Ethereum is, what, 10 years old about? So it has some early OGs that own a lot. We've seen significant distribution by early holders. I was just pulling some numbers before we talked. And if you look at coins that were five years, haven't moved in five years or more, so five-year revived supply on Bitcoin. The last two years, the totality of that metric, 43 % of all Bitcoins that have ever moved in that metric moved in the last two years.

45:19But in dollar terms, it's almost 80 % of the value that ever was dormant for five years and then moved has moved in the last two years. Unprecedented distribution. I think Jordy Visser called this in a piece over the weekend, Bitcoin's IPO moment. not meaning necessarily yay celebrate, but more like that's when the early investors exit to the new believers and it's sort of a necessary hurdle for maturity of an asset. I agree though. You need to have much more distribution more widely held at this point in order for Bitcoin to reach that next level, not just because you're creating more believers, but also frankly to break some of these cycles around the assumed traditions.

45:58Like having the whole celebration on having to me is like Christmas. you know it's great it happens and it's become a tradition right in many ways because the impact of having honestly I don't think it has an impact the way that it used to that's right right just because of you know how many more Bitcoin can it's a tiny percentage it's a tiny percentage so it doesn't make sense however you know it's a tradition and the same people who have followed this tradition can you do this as humans we do this all the time right like if we grow up as a family and that's a tradition you know whatever that is you celebrate the tradition you celebrate the tradition right Like, you know, we have turkey and Thanksgiving.

46:34Right. Why? No one knows. Exactly. Supposedly, there was a banquet or a feast that happened, you know, 275 years ago. Yeah, exactly. Right. And we decided to adopt it. I'm not even actually sure that happened. Maybe it did. I'll believe that I wasn't lied to. Yeah, exactly. But the thing is. But it's purely tradition. It's purely tradition. And then somehow we never break it because it's just part of that. And so if you're in that set and you keep going, then we, you know. And then Bitcoin has this outsized impact still on the market, right? In crypto. And they're different, and there are interesting other...

47:05Somebody told me there was 35, 40 million coins in existence. I think the simplest way to think of this is at the end of the day is about trying to analyze and understand human behavior. And we are affected by storytelling. We're affected by narratives. We're affected by traditions, by our legacies in question. And unless more Bitcoin is being held by an AI agent, we're not going to change the narratives of the space. and if most of the Bitcoin is held by people that view these as norms of traditions, whether they're logical or not, because most of our traditions are technically not logical, then that's the reality we face.

47:41And so I think people need to understand that. At the end of the day, humans hold the asset. And so human behavior is what we need to know more than the asset in itself. And I think a lot of people in crypto don't understand this because they say, well, code is law. Sure, code is law. I get it from a rule standpoint. but who holds that digital asset? It's still a human. Yeah, I think that makes a lot of sense. And that's sort of a, you're saying this in response to our discussion about like the weakness that Bitcoin is showing and they're sort of, I'm not saying it's necessarily Bitcoin dragging down the market, but very hard for other coins to perform well when Bitcoin is sort of squishy like this.

48:18But we're sort of saying that as a, well, yeah, we'll react to that. Let me respond to that. So while it is true that of course, Bitcoin is macro and it's larger and so on, actually it's an opportunity for call them slightly smaller tokens or altcoins as it were to stand out. So I may give you an example for instance after the flash crash one of our tokens in our ecosystem called EDU open campus went really really low but actually what happened was that a lot of people saw to buy an opportunity because it was low enough we ourselves consolidated some of that position as well because it just seemed ridiculous and it is one of the best performing assets since in fact even today after today's crash it is higher than it was post flash crash.

49:00But that comes down to the fact that we had conviction and other investors had conviction that this was a good token because it was, in this case, building stuff out in student loans. It's much smaller. I mean, we're talking about a$120 million market cap token. So this is not like anything at a Bitcoin level. But if you have conviction, and that's why I say institutions are important, if an investor or a set of investors have a conviction, they don't care if the market cap is$10 million,$50 million,$100 million, 1 billion. They're there for the long haul. And that's why being in the capital markets and being public makes sense, right?

49:30I mean, Tesla wouldn't be where it was if you didn't have long-term investors who had conviction or any company that's out there, for instance, right? And, you know, I look at the, and this is why the US markets are so powerful, because you have institutions that can take a long view. So there's other stock markets in the world. I often give this comparison between the Taiwan stock market, which is a pretty dynamic stock market, but it's all retail. There's not much of an institution. And then basically the US stock market, which of course has retail too, but has institutions. Broadly speaking, the American one is much stronger because institutions can take a long view.

50:00Taiwan has no institutions and it's very retail and it trades like meme coins. Yeah, it's very frenetic and volatile. Exactly. It's very frenetic and volatile. A little bit like I guess they're parliament in some ways. But the point is that that's the point that we see. Crypto has been, and particularly altcoins, have been so much driven by the sort of the degens and the retail side. And now what's happened is because many of them have been smoked basically over the last friends, unfortunately, the institutions coming in backing specific tokens are the ones that are rising for the most part, right?

50:29I actually also think that's one of the reasons why, for instance, Hyper is doing much better because, you know, it's not just individuals. It's actually institutions saying, I like this. I see the future. There's a long-term perspective, right? So that's a much bigger token. But as an example, people are holding onto this. And in many ways, you know, you could say, yeah, Ethereum isn't doing so well, but it's doing well. It's doing relatively better from the start of the year than Bitcoin, for instance. And again, it's because you have institutions holding it. Interesting. I want to ask you a little bit about sort of the, I wouldn't call it divide, the differences between the East and the West.

51:01Animoca is headquartered in Hong Kong. What are the differences in crypto? I mean, obviously there's a whole giant region of different builders and investors, but how would you sort of characterize the two markets? And I guess I'm leaving Europe right out of this. Yeah, so Asia is much more, I mean, has a huge retail component. Right. By market number is the largest in terms of number of users. And I would argue still the largest in terms of growth, right? And I would also say that there is not so much of a divide between the perspectives on capitalism. That's the other thing. So people in Asia, you know, Japan accepted, are very happy to be making money and openly so, culturally.

51:44versus, let's say, well, Europe is one side of the extreme, which is, you know, you make money, but you don't talk about it. And most people don't understand it. I grew up in Austria, so I have some experience around that. Like a dinner table conversation, you don't talk about money. You don't talk about the price of real estate or an interesting investment. Most of my friends there would look at me weirdly and say, is this all you care about? Dude, I just like, it's interesting. You're like, it's not all I care about, but I just find it interesting. I find it interesting. You talk about, you know, the value of things, right?

52:12you know whereas when and in us i think it's 50 50 right which somewhat can be divided between really the two camps red and blue in many cases but not necessarily always and then in asia i mean you go to hong kong you go to korea you go to taiwan you go to china it's very normal to talk about the price of things right um and um you know and this is the thing i remember you sort of when i first came to to to to hong kong like i don't know 25 years ago something crazy like this oh Oh my goodness. And coming from a place like Austria. And I was in the train going to Shatin, which was on the way where they had one of the horse races.

52:50I wasn't going there to see the horse races. I just happened to be in the train to go there. And a father was teaching us, maybe five or six or seven-year-old kid, how to bet on horses. The European in me was horrified. I was like, what are you doing? Turning your son into a DJ. That's terrible, right? But I came to realize afterwards, that's just the culture. It wasn't turning him into some addicted gambler. He was just teaching him about his ideas of taking risk and whatever, and it was fun and it was a family event. The math and... Yeah, all that kind of stuff. And then, you know, when you walk in the streets, and you probably see this in Chinatown here as well, I presume in some of these places, you know, the sound of mahjong, sort of, you know, the sort of, I guess it's kind of like a Chinese poker, right?

53:30The mahjong tiles, the clanking of that, right? And they're all having fun and basically betting a little bit of money, right? You know, table stakes, right? And it's fun to do so. So the culture and the relationship with money is much more healthier. So introducing crypto in that space is much easier. And look at the space. So many of the founders, whether they are overseas or in Asia, clearly, are essentially Asians because of their natural propensity towards it. So you have a lot of them. I mean, just look at the biggest exchanges in the world. I mean, Chinese, right, for the most part. You know, Hyperliquid, you know, today.

54:06Singapore. Singapore, basically Chinese, right? Hokkien, but it's all part of that. Through Binance, OKX, right? Even Hyperliquid, many, many. Yeah, and then you look at Korea, for instance, right? Which, of course, doesn't have free flow of capital and more capital control, so it's all very much contained. But something like 60 % of the youth under 30 generally have sort of trade crypto, right? And it's super high, right? Wow. Which is also the reason why it's such a political topic because, you know, one of the reasons crypto trades so high there I think at the start of this year in Q1, Korean One was traded more widely than U.S.

54:44dollars for a very brief period of time. And that's because you don't have capital gains tax on crypto assets. And why is that? Because the young people are trading them. And if any politicians out there are saying, well, we need to tax your asset, oops. So that's why it's constantly deferred. I mean, they're trying to fix that. But the thing is, it's tough. If you want to go into power, you want to make sure that voter base goes there. So they keep bringing it up but then not following through. So it's still there. It's still there. So they're trying to do something, but it's still there, right?

55:10That's super interesting. So again, same thing, right? And much more sort of obvious attitude around that. So that's a real different perspective, which is why, for instance, play to earn in Asia and blockchain use in gaming, for instance, is very much welcomed in Asia, right? You've got big companies like Nexon and NHN and Sega and Square Enix all looking at blockchain games and European and Western companies are like, no way. Yeah, that's so interesting because Ubisoft famously was going to do something with NFTs. They're the only ones. They were going to, but didn't they also, their users revolted at one point or something?

55:45Absolutely, exactly. And they hated it. And everyone's like, when are we going to get NFTs in Fortnite? And Epic is not interested, apparently, or something. Yeah, but also I think for Fortnite, they make so much money basically not for NFTs. And actually, NFTs would be arguably... It would probably take away revenue from them. Well, I mean, depending. If they thought of themselves as a platform, no, but they think of themselves... I agree with that. I had thought that because they sell so, I forget the, I think this was the stat. It's been a while since I cited this. But if something like in the first year, they sold like$4 billion worth of aesthetic, I mean, what are they called?

56:15Items, game items. In-game items and skins. Skins, yeah. Which you couldn't even trade and sell. By the way, you know what happened with the whole sort of Counter-Strike skins and Steam, right? Yes. They just rugged or something. They literally, they changed the rules. Because people were figuring out how to trade those sort of on black markets, right? Well, so they had their own marketplace, right? And then you had people literally coming up with market makers. I mean, we're talking about$6 to$7 billion worth of assets in essentially in a closed ecosystem, right? Crazy. And they're like, we don't like this because they weren't making fees on the assets trading outside.

56:46And they basically did the equivalent of basically a kind of QE, if you will, where basically people who didn't pay for these items could somehow earn them differently and suddenly devalued them, creating sort of mass drop. I mean, basically they devalued the ecosystem. This is kind of what Vitalik talked about. Yeah, about Warcraft. Yeah, about Warcraft. Yes, exactly. It's so interesting because you have this, it's the same thing to Fortnite, but I guess definitely apply here with Counter-Strike. Yes. They think that they're losing money, right, by not owning the entire, or that if they were to open it and make it a vibrant economy that they would lose control over it.

57:21But don't you think it would grow that much bigger? Well, it's the difference between a closed market and a open market. I mean, it's kind of a North Korean move, I would say, right? Like in the sense that, you know, it's like this doesn't benefit the state. Right. So we're going to clamp down on it. Right. And these large organizations are the new state. I mean, whether it's called Apple or it's Epic or it's, you know, Steam or Valve. Certainly in their domains, which are vast. They are. And they're digital worlds. I mean, they are digital kings in a digital world and they decide whatever they want.

57:50And people are realizing, wait, that's an issue. And like literally people are like picket fencing and saying, I want my assets, you know, and to restore it. And they're like, I don't care because they don't have to, right? So, yeah. So it's already happening. And that's why I think essentially blockchain, crypto, NFTs, even if they're not going to be called that, are so critical. But people don't understand that they can secure it that way. The moment they can, that's when they get red-pilled. All right. So maybe I think we've touched on a lot of what you might answer here. But step back, call it 2030.

58:22So five years from now, how do you think either gaming or tokenization we haven't really specifically talked about tokenization how does the world look different for us in animoka's world like paint us a picture of of where you think we're headed yet so i think by 2030 um i mean that's like you know three or four years away right everything's going to be tokenized or everything is going to have some kind of path of a token and we're all going to be using ai agents in some form fashion whether it's three, four, five, ten. I'm of the view, for instance, that we're not going to have one AI agent.

58:55We're going to have different ones doing stuff. And they're all going to be dealing with crypto assets. It's a native currency. They're going to be trading with each other, doing stuff. I actually believe that these AI agents are going to do much more than just dealing with trade an asset or something. They're going to do take care of shopping, paying of bills, do that kind of stuff. And how do you take care of your bill? Well, you need to have some way of having money. How do you do this money? Oh, it's going to be a stable coin. Yeah, we don't think it's going to be an API into a bank, right?

59:20No. and I think one of the other things is also you have to trust the platform as well so you know and again when you think about and this is the other thing for AI agents to really scale in a massive way you need a rules based system so my mental model on AI especially when you think about hallucinations they more and more mimic human behavior and they do crazy stuff so what is the mechanism that actually keeps AI sort of let's call it in a rules-based system, blockchain. And we have this in the human construct. In the human construct, it's called the law. And we have government that enforces the law.

59:59And humans hallucinate all the time, by the way. We innovate, we create crazy stuff, we fantasize, right? But we have laws that keep us grounded so society can operate. And that's basically what blockchain will do to that. And I think that's going to extend the world and they're going to be trading all sorts of tokens, mostly altcoins, right? Bitcoin becomes a reserve asset. It becomes essentially your collateral asset, right? That's its biggest value. Ethereum is going to be one of those places where you have essentially the highest TVL, the greatest security, and everything's building on top of this, whether it's an L2, L3.

1:00:30I think there's going to be a ton of app chains. So my view is that we're going to have millions of app chains, not because app chains are sort of, you know, like the biggest and best brightest innovation, but because they're the best way for applications to interface. They're basically the open API frameworks that you can build. and anyone can now build a kind of API interface by launching a chain rather than, you know, building an SDK is tough. I mean, you know, if I wanted to open my network of some form, it's kind of hard. And now, hey, through blockchain, I essentially create essentially primitives that you can develop on top of.

1:01:04And that's the power. Because when you've got something on chain that's open, a third-party developer who is vibe coding his way into it, he doesn't even have to know how to do the code. He's like, I'd like to do this and I want to draw the data from that. and then because it's interoperable because it's basically all on-chain and we won't actually bother about where the asset sits which is already getting better and better by the day. You just know that it's going to work. And the app chain reduces cost. The app chains also allow more composability with certain restrictions that you may or may not want to do.

1:01:33So I think it's going to be an on-chain world all along. I do believe we're going to have much more activity on-chain than we're going to have it on centralized exchanges outside of trading. And the utility use cases will go. So I think we're going to hit over a billion people on chain. So why outside of trading, though? You think trading, you know, like the top of the Binance order book will probably still be the most liquid, the tip of the spear in markets? Well, when it comes to trading, I don't think you can compete with a centralized exchange in terms of efficiency, right? But at the end of the day, you want the transparency, sure.

1:02:04But if you want to trade super fast, I think centralized exchanges will all have a marketplace. Or at scale. Yeah, at scale, you want that. There is something to be said around having that kind of centralized efficiency, right? So like volume, though. But the average person or their agents needing to like, oh, I've got this asset, but I've got to pay Alex's taxes and they want this asset. Oh, they can do that on-chain. Yeah, and that's not like the – but for big, deep liquidity. I mean if you want to go and trade large amounts and you want to do it quickly, fast. And I think no matter how quick you can do it on-chain, I think a centralized exchange offers value.

1:02:35Also, at the end of the day, there's more regulations. There's going to be some kind of security attached to it. People will be more comfortable. I don't believe in a world where everything goes sort of decentralized, right? You just need to have enough of it being decentralized. However, because the primitives are on chain, people can start building things. Yeah, anybody can build something. You know, all that stuff becomes really powerful and important. And I think it becomes a really strong enabler for, you know, smaller companies. You know, when you think about what open source did for code, it completely democratized, essentially a two or three person organization could like literally take on the largest organizations in the world because they've got this sort of pool of assets or knowledge.

1:03:13Well, basically what tokenization and blockchain does, it basically opens up this entire world of liquidity and financial assets in a way that we've never done before. And the overall prediction I have is that the world becomes significantly more financially literate. And so imagine if you have over a billion new people in the world that are now financially literate in a way that today only the top 2 or 3 percentile are. and not only are they financial literate they have a stock portfolio or a token portfolio if you think about right now I think the stat I read was globally and of course exceptions in places like New York would be different the global percentage of people that have a stock portfolio any kind of investment is less than 10 % that's crazy and yet we say we live in a capitalist world when only 10 % of the world are truly capitalists and yeah New Yorkers are capitalists although you guys are probably going to have a less capitalist...

1:04:12We're like probably an hour away from finding that out here on November 4th. Yeah, exactly. Who knows? But New York being a bit of an exception, even if they sort of vote Republican, they're probably not capitalists because they don't have a portfolio. Novo talks about these stats all the time in the U.S. It's some tiny percent, some small percentage, especially if you take out retirement assets, which, by the way, are in some cases required by law. It's not like, you know, it may not even, it would be less probably. Exactly, right? So they're still sitting in their mind in a labor economy because they don't understand money, right?

1:04:47And that to me is a transformative power, right? And imagine what the world will be like, and especially with AI, because AI will help you with these decisions and it can teach you that kind of stuff when you have such a large percentage of the world that is now financially literate. They'll have less financial scams because they kind of know what's going on. I think it'll change some of these rules as well. If you already understand money and investing, then do you really need to have some of those high net worth type of rules? Oh, like accredited investors. Accredited investor type of stuff, right?

1:05:16Maybe it's different. Maybe we can move the needle a bit. Because really, that's some of the opportunities around tokens, right? And of course, assets become more distributed as well because now I can buy assets in America when you have an RWA that could give you access to certain kind of yield generating products that are in different countries. There's just a much more wider form of distribution that you can have as well as an opportunity. I think the world will become more capitalist because of tokenization. All right, well, let's end it there. That was phenomenal. Yatsu from Animoca Brands, thank you so much.

1:05:45And congratulations on the impending reverse merger and enlisting in the United States. Thank you. That's it for this week's episode of Galaxy Brains. Thank you to Yatsu, our guest, chair and co-founder of Animoca Brands, and our friend Bim Nettabibi from Galaxy Trading. Everyone have a safe and happy weekend, and we will see you next week.

1:06:08Thanks for listening to Galaxy Brains, the weekly podcast from Galaxy Research. If you enjoy the show, please like, rate, review, and subscribe wherever you get your podcasts. To follow Galaxy Research, sign up for our weekly newsletter at gdr.email, read our content at galaxy.com slash research, and follow us on Twitter at glxyresearch. See you next week.