Audio and transcript from the January 13th, 2022 installment of “Conversations with the Coop” with Ryan De Taboada, the COO of Decentral Games.
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Crypto Texan: Hello, everyone. Welcome to Conversations with the Co-op. This is where we source questions from the Index Co-op community to get insights from today's leaders in crypto. I'm your host Crypto Texan, and today we have Ryan, who is the chief operating officer of Decentral Games with us on the show today. Ryan, thanks again for being here with us today.
Ryan: Yeah, of course. Thanks for having me.
Crypto Texan: And before we get into Decentral Games, Decentraland, and ICE Poker specifically, can you tell us a little bit about your background and how you got into crypto and how you ended up working at Decentral Games?
Ryan: Yeah, for sure. So, I was really lucky to have a younger brother then working in the space, going back to like 2017, and he really convinced me about Ethereum, like, I don't know summer/fall 2017. Back then I was doing the whole yield farming thing. Decentraland launched in 2018, and some people who are pretty active in that community were again close friends with the two Decentral Games founders, Scott and Miles. At this point, they were like 22, just graduated from UCLA.
So I was hearing about it there, I remember using Decentraland in early 2018 when there were like a couple hundred users a month, but wasn't super involved at that point. I was working at Amazon in Seattle, doing partnerships and worked there for about five years in the books business. So it was just sort of a hobby, an investment interest. Then sort of fast forward to like 2019 I moved to L.A. working on some other things with Credit Karma, again doing like, finance is my background it's actually game theory.
And so then I was just around Decentral Games a little bit at that point, advising on stuff, hearing about it, and made the jump full time about a year ago. So I think like a lot of folks who are in the space now, it feels like a lifetime, but it really hasn't been that long. Last January, I was working full time for a Web2 company, and Decentral Games the token launched December 2020. The first games were December 2020 and I can give more background about Decentral Games and the history there too.
Crypto Texan: Yeah, but one of the questions I want to ask is, were you doing this as just kind of a side hustle, a side gig at first? And what really convinced you to move all in? I guess, so to speak.
Ryan: Yes, I think it was first like just viewing it as an investment, then started participating a little bit as the more side interest for a couple of years, and then seeing Scott and Miles and how they were getting this thing off the ground building games in 2020 because they go way back and a lot of credit to them being the founders here. Like they built the Maddock building, Finance building, DEX Tavern in Decentraland back in 2019.
That's how they made a lot of the initial contacts and then got some grants to make games on Polygon. So they were the first to design, I would say, non-custodial gambling games where, there's no depositing of funds – the funds remain in your wallet, you're signing an EIP-712 signature to interact with the smart contract that's behind the games. And with that, that was something of a side hustle for them. And it wasn't until they raised money to build what was the first product, a crypto casino, that it became clear probably to myself and others that there was really something here.
And I think from that point, from when they launched to when I came on full-time, was only like a month or two. And so I went from advising first as the brother, to more like day-to-day and working with the team. Now I'm much more interested in this. And at that point in my life where I was not married, didn't have any kids, ETH was going up, I was doing okay. I was like, this is the time to make the jump and go for it in Web3.
Crypto Texan: Yeah, that makes sense. And I think it would be helpful just for those who are not familiar, if you could just give a little bit of background on what Decentraland is because you can't really have Decentral Games without Decentraland since that they're, they have this very symbiotic relationship. So can you just give a little background on Decentraland, and then maybe touch on Decentral Games and how that came about and how those two interact with each other.
Ryan: Yeah, for sure. So Decentraland was arguably the first crypto metaverse to launch. Was almost exactly four years ago, January 2018, with 90,000 parcels of land. And at that point, they were just auctioning off land, it was almost like just a tradable NFT asset. I remember land was $50 or $100 bucks at the time, and it was super cheap.
They started rolling out NFTs that were wearables. Anyone could design their own items in the game and then sell them on the Decentraland marketplace. Small businesses like Meshroom, Polygonal Mind, and then sort of the first iteration of Decentral Games popped up in late 2018 and started building buildings. So it's all Unity-based. People are building 3D assets that are buildings selling them to each other. Art galleries were a big use case, I remember seeing lots of Cryptokitties art galleries. I think nowadays, we're all sort of familiar with seeing like on-cyber sort of galleries or Cryptovoxels and all of that. But that was going on in Decentraland three years ago.
But a year or two in there really weren't any games or experiences beyond like, we're all going to get together and stream music. We're all going to get together and have a chat room in Decentraland. So I'm thinking back and then people started developing games. And I think from developing games to all the interest in the metaverse in the middle of last year, Decentraland went from 20,000 monthly actives at the beginning of this year-- or beginning of last year, to more like half a million monthly actives the end of last year.
So that's a bit of an overview about Decentral where you actually own the land, you own the assets, you have deployment rights over the land to build buildings, you can stream music videos in. And Decentral Games then emerged as we have the most daily active users within Decentraland, but as a builder of games on the Polygon network in Decentraland.
Crypto Texan: Yeah, and so, so that's how this works, right? So the Decentral Games DAO, because it is a DAO, correct? Decentral Games DAO purchases the Decentraland and then builds on top of it. And then I guess within whatever you're building, you can write additional code or write new protocols that create these, I guess, roulette blackjack-type games like, what are just a little more detail and just kind of the nuances there?
Ryan: Yeah, for sure, I could give some nuance there, with the caveat that I am not a developer - I'm more operations, finance side. But yes, people have built mini golf games or car racing games stuff. The first ones that were released, they did like a little lottery machine. They had a slot machine. So we did a slot machine, blackjack and roulette and sort of iterated on that, both with free play tokens and then supporting MANA, DAI, and ETH bets on those machines and then the Decentral Games DAO receives the proceeds of those games.
And it's interesting because we're really on like version 3 of the business model for the DAO. Like the first idea that we had was that people would buy NFTs that represented tables, parcels of land, within these casinos. And as far as we know, Decentral Games was the first to do a passive income NFT. So the idea would be that you would buy a parcel of land within the casino and you would get half of the revenue that the game generated and those things sold for a couple of ETH back when ETH was two or three hundred dollars.
And then after that, we launched the DG token in December. The DG DAO, so those were sort of like symbiotic ideas where the other part of the revenue would go to this DAO Treasury. If you go to Decentral (dot) Games, you can see on the DAO page, the assets there, and then really for like the first half of 2021, the DAO was generating two or three hundred thousand dollars a month, sort of, from the games hosting, I would say four or five events a week with like NFT artists, musicians.
We partnered with Atari to do a building for them, hosted like Dillon Francis and and other artists to come and do musical events, things like that. And then those funds, the DAO votes on how to allocate them, and for example, like a year ago, Decentral Games was purchasing MVI and pairing it with ETH and earning Index tokens at a rate of APY back then was triple digits. And became close with some of the folks that Index Coop there.
But the main use of funds so far has been to purchase more land. That panned out really well. We expanded our holdings of Decentraland land from about 100 to about 1000 parcels of Decentraland land and then over time used the proceeds from the casinos to supply liquidity to our tokens and then ultimately, to support the launch of ICE Poker, which is really like 100% main focus at the moment is our play-to-earn ecosystem that launched in October.
Crypto Texan: Right, and so yeah, it sounds like y'all have a very active treasury management strategy for the Decentral Games DAO in the sense that you do own this, Decentraland metaverse lands, right these ERC-721 tokens. And is that, are you holding those for future potential builds? Are you holding those just to speculate on the potential future value of the land?
And another question I have is you've got, like you said, you've got the MVI, which is the Metaverse Index token, which is an Index Co-op product in your treasury, and you've activated some intrinsic productivity with that from liquidity provision. Who, how are these investment decisions decided? Is this pretty centralized in the sense that you're the chief operating officer and you kind of handle operations and finance? Or are these strategic investments voted on by the Decentral Games DAO? So, yeah, how does all that work?
Ryan: So the treasury is completely managed by the DAO. You go to Snapshot (slash) Decentral Games, you can see, I think just over 100 DAO proposals over the last year, super active. We have, I think about 350 people voted on the last DAO proposal. But to your point, it is true that like a lot of other projects, many of the proposals are coming from the team. So, I can think of a lot of examples where the team was proposing these sort of things, and the community was supporting those or people from the community were proposing ideas for allocations of funds and, but anything that involves the use of the DAO's treasury needs to be, needs to go through a DAO vote. And we use Snapshot for that, which is not on-chain voting, but I don't know if people are familiar with Snapshot . You get votes based on how many DG tokens you have.
Crypto Texan: Right, I think the majority of people in this audience are familiar with Snapshot voting, probably. But I think one of the most important things when it comes to Decentral Games is how you're able to incorporate the odds for each game on the blockchain, right, where you can publish the smart contracts on-chain. And then when it comes to the odds, like I can see the math behind the numbers of how each card is drawn or the probability of how my chances work in blackjack, which is, I feel like it's a pretty good metaphor to what we're trying to build just in a greater sense on the crypto scale, right?
Because if you think about going to Las Vegas and how do you ensure that the odds at the casino are fair in Las Vegas and they've got the Nevada Gaming Commission, which is a regulatory entity that comes in and says, okay, this is fair. This is what certain casinos are allowed to do to ensure fairness, right? And that's really the whole thing behind blockchain and decentralization is that if you have all of the odds published on chain and people can go on chain and verify those odds, you don't really need that regulatory body there anymore, right? If you can audit the smart contracts. Is that, I don't know – do you kind of see that metaphor? And I don't know, how do y'all incorporate the odds for each game on the blockchain? And is there a way for, I don't know, just Joe Schmo to go in there and verify the odds for themselves?
Ryan: Yeah so I know we use chain link VRF for randomness, but beyond that, I couldn't speak to exactly how it works. I would, I can come back and direct you guys to like the GitHub repository. But just not the right person to speak to exactly how that technically works in the blockchain. But I do think like the aspect of the games being on chain and it being non-custodial where you're interacting with these smart contracts, they're audited. That is really important and innovative.
Crypto Texan: Right.
Ryan: In terms– yeah go on.
Crypto Texan: Well I was just saying like, I think there's like a social aspect to it as well in the sense that like I'm not a developer, I can't go to the GitHub repository and verify that these are similar odds to what would be happening in a Las Vegas casino in the meatspace. But there are a lot of people who can verify that, and if the social layers on Twitter there would be, I guess, a lot of commotion if it came out that these were not accurate odds that were being portrayed in the casino. And so I think if you don't have that technical background, there is that social aspect that provides comfort or I guess, security to the players within the games.
But let's move on a little bit more because right now, Decentral Games is currently only in Decentraland. And I'm just curious to know, do you see a future for Decentral Games that moves beyond Decentraland? Or maybe like Sandbox or Nifty Island or some other metaverse? Are there any long term, short term plans for that, that you're aware of?
Ryan: Yeah that's a great question and takes me back to, I mean, you asked about why we've accumulated so much land in Decentraland as well. We're using about, I think we've built on more parcels than anyone else, we're using like 400 out of 1,000 parcels so it's not like we, or just accumulated it for purely investment reasons, like it was smart that we bought land at 500 bucks and now it's $13,000 a parcel, it would be way more expensive to accumulate land at this point versus a year ago. And probably the same is true of other metaverses.
In terms of expanding, we are not actively looking at other existing metaverses. There's really nothing in life that would support the sort of gaming that we're doing. Like that's, I know Sandbox is now an alpha, but they don't have a scripting language to make these sorts of games, and the Sand SDK is pretty restrictive. It's kind of like, could you develop a poker table in Roblox or in Minecraft?
It's like, I do think that Sandbox will come along over the course of this year and probably add features for developers. But as far as we know, the last we looked, you can't really develop games of this complexity elsewhere, perhaps in Somnium Space. Looks like that's Unity based and has a sort of scripting language, but it hasn't been a priority just yet. In fact, a little bit of what I wanted to talk about was the transition from gambling as a use case to play-to-earn, because we have, we routinely have 1000+ people at our events, but never really broke like a 100 150 people doing crypto gameplay over the course of the last year.
And so even with Decentraland going up substantially, it wasn't a super popular use case. It was sort of like whales contributing the majority of the profits to the treasury, whereas with ICE poker, which is a play-to-earn ecosystem we can talk about, we grew to 4000 daily active users over the course of two and a half months. So it's just far outstripped the potential there of the gambling space, both from an active users and revenue perspective we can get into, and we do think that as we approach during peak hours close to 1000 concurrence.
Like 24/7 we have no less than 500 concurrent players playing ICE Poker and it's up to 1000, that Decentraland right now was struggling when they did the Samsung event to support three to four thousand concurrent users, and we worked closely with them as they, you can imagine, expanded their capacity to support these sort of concurrence, which is expensive as required.
But we do see a risk, that as we look to grow ICE Poker on the order of 10x over the next four or five months, that we want to build a browser-based mobile version of the game for a couple of reasons. Also that part of the core audience for play-to-earn when you look at Axie Infinity being one of the majority use cases here, 90% of the audience is playing mobile. And that we could do, sort of simpler onboarding for the came directly through our site, on a browser-based mobile version versus Decentraland, which is you need some pretty substantial hardware to run it really effectively.
And then there's the question of whether you need to onboard into the Decentral Games ecosystem, which in ICE Poker means either purchasing a wearable or receiving delegation to a wearable within our Discord to play the game and onboarding to Decentraland. So I think before we would look to expand the offering into other virtual worlds, we would try and say can we get this sort of potential that we're able to get at the moment within Decentraland and then concurrently be growing our in-house mobile browser based version of the game as well, because it's a risk to our business if Decentraland can't grow at the speed that we're growing daily actives.
Crypto Texan: Have y'all run into any bandwidth issues when it comes to the amount of users that are interacting with Decentral Games?
Ryan: So in terms of, I would say, generally not yet. A couple of weeks ago, there was that issue with MATIC being super congested that was causing a lot of issues for us and everyone else built on MATIC. But we haven't tapped, we haven't hit the upper limit, really, of concurrent users in Decentraland just yet. We're doing okay there.
Crypto Texan: Yeah, so let's transition more to play-to-earn. Let's talk about ICE Poker, how did this idea come to be? Was it, I think I read somewhere that maybe it was an acquisition or maybe a merger of another protocol. Can you just give us a little background on what ICE Poker is and how it became such a big part of the Decentral Games ecosystem?
Ryan: Yeah, not a merger or acquisition built 100% in house, and we had the advantage. Let me, let me take a step back. I mean, we knew about Axie. I think a lot of people in the gaming space have known about Axie for a long time, but between May 2020 and August 2020, maybe September, they grew from ten thousand daily actives to two million daily actives over about four months. And as we're now seeing, that was good and bad for them to grow that quickly. But they just really broke into global consciousness over the summer.
And we had been focusing our development since Q1 of 2020, since we launched blackjack and roulette in the previous December on getting poker right, which was a pretty hard problem. It's a game where you're actively playing against other players, a bit more complicated and as we were getting close to wrapping up poker, we said, what if this was-- like, what would this look like as a play-to-earn ecosystem that was modeled closely after sort of the Axie style dynamics?
So, within Axie Infinity, you need to get three Axies in order to play the game and then the more Axies you have, the higher level they are. You can do more quests, I think up to 12. You can battle other players and things like that. Within our ecosystem, you need an ICE wearable in order to play ICE Poker, which is just poker with some challenges that I can talk about. And then you can earn ICE, so players are earning between $20 and $100 a day playing ICE Poker at the moment. The price of ICE is relatively high. And they complete challenges which earn them experience points, and need experience points to upgrade the wearables' levels one through five. As you upgrade them, you can earn more ICE.
But unlike Axie, we didn't do a breeding model. So the reason Axie was able to grow so quickly is that the supply of Axies can inflate exponentially. Two Axies can make seven more Axies. Those seven can be, make forty more and so on as you pair them. Gets more expensive to breed, but there's a marketplace for Axies and as the demand for them shot out, people are able to breed and create quite a bit more. Whereas in our ecosystem, people mint the wearables during mints like the one that's going to happen in 30 minutes. And so we have a lot more control over the supply - the DAO does, I should say, around the pricing and release schedule of these wearables to meet the demand.
And then within Axie, most of the game is really around this breeding component, so no offense to the Axie game itself, but it's the exact same game every single time you're playing it. The really interesting part is making smart decisions about which Axies to breed with which other ones to make exactly the right Axie you need to do x, y, or z. We don't have that, like complexity around the metagame. It's like a given wearable upgrades to a level two, three, four, or five that just looks slightly different. The hat changes color or appearance, something like that, but the game itself is much more skill based.
So you're playing poker with 2-5 other people, and the main determinant of how much ICE you earn is you start with 3,000 chips at the beginning of the day, and then it's like if you're in the top 5% of performers around chips, you get substantially more ICE than if you're in the bottom 5% and like every percentile going up and down, that's a major determinant of how much ICE you're earning, so the game is a little different each time, and it's skill based around playing poker. But it's not gambling because you can come into our Discord, receive delegation to a wearable, play poker with the chips each day, and you can only make money. So free to play, play-to-earn is one component of it.
And the other one, of course, is the sort of guild component where people accumulate wearables in order to delegate them out for a 70/30 split to the player and that produces passive income to the people delegating the wearables. There's a lot there -- oh, pause, but that was really the pivot from gambling to play.
Crypto Texan: Yeah, thanks for that, Ryan. And yeah, that was a lot there, but I think what I'll do, I'll just kind of share my experience with Decentral Games in a way to kind of summarize a lot of what you're saying. So I do have two wearables and I have delegated both of those wearables out to two individuals that live in the Philippines because, and the reason they're so willing to do this and grind three to four hours a day playing poker is because the amount of money that they make grinding it out on poker with my wearable is more than the average wage in the Philippines. So there's a huge benefit for them to do so. And in return, I get 30% of the ICE that they grind out, ICE being the native token for ICE Poker.
But another thing that being involved in Decentral Games has really helped me with is that it gives me a really great way to explain to people who are not involved in crypto the true opportunities that non-fungible tokens can provide. Because I've had people ask me, they say, I don't get this whole NFT thing, and I would say like, well I own some and they're like, I don't get it. And what they're seeing is just like the very popular mainstream part of NFTs, which are, the Bored Apes in the profile pictures that people spend millions of dollars on.
But when I tell them, yeah, so I have an NFT that is a wearable for my avatar in a game that grants me access to an exclusive poker room in the metaverse, okay, and then I tell them that I own that wearable. I own that NFT and I can sell it if I want to, I can use it to gain access to that poker room, or I can delegate the benefits of that NFT to someone else, okay, I keep it pretty simple. I say, I delegate it to someone who wants to play and I get 30% of their winnings.
Like you said, there's more nuanced things than that. It's not just like 30% of their winnings, it's 30% of the earnings they receive based on the achievements that they hit within the game. But it really just opens up their eyes and they think, oh, well, yeah, I would do that - where do I buy one? And these are people that don't even have a MetaMask set up yet. So I think these play-to-earn games are a huge opportunity just to open up people's eyes to what the potential for this type of technology can do.
And I don't know, there is just so much potential here, and I think, like you talked about earlier, the moving from desktop only to mobile could be a very huge potential unlock for Decentral Games because I think having a desktop, a desktop only game is a little bit more restrictive, I think. And so outside of moving from desktop to mobile, what other things are y'all doing at Decentral Games, I guess, to attract demand for new players.
Ryan: Yeah, for sure, and appreciate the story there. Definitely see a lot of demand for players, so, or I should say a lot of demand from players. In fact, I would flip the question a little bit, because at the moment, play-to-earn is really attractive for players. We've seen ecosystems spring up and get to 10 to 30,000 active players over the course of a few weeks and then generally crash to zero over the course of a month or two.
I could think of a ton of examples that launched over the summer and fall, where Axie Infinity has a lot of staying power. But things like CryptoMines, they're the first iteration of a Wolf game, others that crashed really quickly. We're actually not very focused on how we attract players to the play-to-earn ecosystem, which is probably a surprising answer. Like we could have grown this substantially faster than we have from 0 to 4,000 players over the course of about three months, and the reason for that is that that explosive growth-- there's couple of other reasons I can speak to why I think that Decentral Games should fit in that Axie category as like a sustainable play-to-earn ecosystem. We've only been living three months, we have a little longer to prove it.
It's more about, we're focused on designing a fun game people want to continue playing, like would people play poker if the rewards were lower than they are now? And an ecosystem, an economy that is sustainable, where there are reasons for people to reinvest in that ecosystem beyond just making more money immediately tomorrow, right. Like a lot of the mechanisms that these games developed that have come out recently are like, stake token to get 1.5x more token in a week or stake NFT item to inflate item where I put item in staking for three days, and then I get two items out at the end of that.
So deliberately we built in mechanisms where, when you upgrade an item, you take level one to level two, but that level one is burned. And we, the second sync that we have, Jiho at Axie often talks about faucets and syncs for the play-to-earn tokens. So the sync would be, like even at the scale we're at now, we're paying out about $140,000 a day in ICE token. That's 1.2 million, 1.4, 1.2 millions ICE at 12 or 13 cents, something like that.
And so how is that sustainable? And the answer is that about 50% of that ICE that goes out gets reinvested into upgrading the wearables as it's combined with XP. And there are guilds, could say small businesses almost, that are interested in accumulating these higher level wearables have a lot of delegates 10, 20 of them. And the numbers are set up in such a way that they're accumulating these experience points to upgrade wearables at a faster rate than they're earning ICE. So the owner of the NFT gets all of the experience points because they're the one who can upgrade it, but only 30% of the ICE.
So we see people who have many delegates going out on the open market on QuickSwap and actually buying ICE. So how do you generate a sustainable source of demand both for people to earn ICE and burn it to upgrade items, but also for people to buy ICE? Upgrade wearables within their guild? And then thirdly, we often do mints done to, in ICE that took quite a bit off the open market.
So two and a half months in, we watch these numbers very closely at a high level, about half of the ICE that's gone out has come back in the form of burning or upgrading, and then another around 30% was bought up for the purpose of doing an ICE mint. And then that up burned by the DAO and then another roughly 20% got bought up by these sort of guilds or speculators in order to-- this was ICE that wasn't earned, but was purchased to then upgrade wearables.
So watching very closely that like nothing is free, basically. You can't just pay out six figures a day indefinitely if you don't have money coming back into the ecosystem, reinvesting into it. So I would say the focus is more so on getting those ratios right, the incentives right, both within the poker game itself and in this metagame of upgrading the items. So I think that if we minted 10,000 more items, they would sell out and we would find 10,000 new players fairly quickly. But a lot of these ratios would get really imbalanced quickly. So part of why Axie I think was able to succeed is that they had this like two or three year runway, and it took them two years to grow to 10,000 daily actives. A lot of these games are getting there in 10 days and then collapsing because they'd have to design the economy, right?
Crypto Texan: And is that part of the reason why Decentral Games is doing these NFT mints like twice a month, is to monitor those ratios of how much ICE is going in and how much ICE is going out? Or is that or is there another reason for that?
Ryan: Yeah, exactly. We're, we have 4,500 items in circulation this month, we'll release about 4,500 items, which is like a comparable month over month growth to last month. So yeah, that's exactly right. We're closely monitoring these things, and I think we have plenty of player demand. Look, the demand is going to be there from players to make, on average, $30-40 a day. I would say that the sort of middle 50 percentile, percentiles, are making that like $30 or $40 a day range. The demand is going to be there.
We're seeing the demand to buy these items on OpenSea, the floor is like about an ETH for the items on secondary. But I want to make sure that continues to be the case, that there is more demand and supply of the items so that the items retain their value and that ICE in roughly equals ICE out, so that ICE is retaining its value. ICE is the, ICE has had some volatility, the play-to-earn token, but it's the same price today as it was two months ago. So it's been much more stable than any other play-to-earn token.
Crypto Texan: Yeah, from a price action standpoint, I've noticed that it usually hovers around 10 to 15 cents, maybe goes up to 20 when there's high demand, when you're using ICE to mint the NFTs. But what, is there a roadmap to how many NFT wearables Decentral Games will mint for this, for ICE Poker? Like is there a target number of NFTs by the end of year or in the next three, five years? What goes into that decision process?
Ryan: So, I think three to five years is too far out to think about exactly how many users I think we would have.
Crypto Texan: Right.
Ryan: Yeah three or five years is hard. In a year we've said that our targets are about 200,000 by the end of this year, probably pretty ambitious. And that we're looking at about 20,000 by April of this year. So they grow from about 4,500 to 20,000 over the next three months or so. And then at that point, I think we would know more about what the potential growth is within Decentraland. Hopefully, by April, we have a beta version of the mobile experience, potentially sooner. It's being worked on in the background.
And then I can sort of imagine that we would have, getting really in the weeds about the items, you would have NFTs that worked for the Metaverse and worked for mobile and then you would have mobile only NFTs that were perhaps cheaper and have lower rewards. And I can imagine rolling out faster to mobile than we have to the metaverse, so maybe by the end of this year, we have like 50,000 people playing in the metaverse and 150,000 people playing on mobile. But I would say it is, I would be wary of anyone in the crypto space trying to forecast out a year. It's tough. A year ago, our business model was completely different, our focus six months ago was very different than it is today.
Crypto Texan: Yeah absolutely, but I think it says a lot about the DAO and the organization, and that you have the ability and the willingness to pivot where you see trends in the industry or opportunities elsewhere in a similar subsector. And so you're talking about potentially there will be mobile only or mobile compatible NFT wearables versus maybe desktop only or desktop compatible wearables.
That kind of goes into one of my questions where some of these NFT wearables for ICE Poker have, they're a 1/100 NFT wearable versus, I think a lot of the other ones who have come out, or the past two or three mints recently have been 1/250 type of wearable. So do you see any advantages in the future or are there any advantages now of owning a 1/100 NFT wearable versus a 1/50 NFT wearable? And I'm assuming, like later on down the road, there'll be like a 1/500 or a 1/1000, is that maybe where the mobile compatibility might play in or what kind of advantages are there currently?
Ryan: Yeah, that's a super interesting question. So we did four sets that were 1/100, there are five items per set, so that's 500 x 4, 2000. And then we've done two mints of 1/250, which is 1,250 each, that's how you get to this 4,500. So we have like 2,000 items that were 100 count each and 2,500 that are 250. We've seen that the market just values the rare wearables more, like it's kind of like in NFTs, that maybe there's nothing special about the gold ape or the, trying to think of another example, really whatever, really rare. There's not like a per se additional utility to have like a zombie CryptoPunk other than it demonstrates that you were in the ecosystem early or that it is just rare, like flexing, so to speak, like rare metaverse clothes has been a thing in Decentraland for years. We're seeing that pick up like RTKFT's sale to Nike, Bored Apes and Adidas, along with Pixel Vault.
But there have also been like, I can't answer the question exactly what we'll do with like bonuses around these, because it's an open question the, in the community where someone outside the team did propose that we say that the mining, the-- sorry the earnings bonuses change based on the rarity of the wearable. There hasn't been a proposal around that yet, but you could imagine that the 1/100 wearables earn ICE at a 20% higher rate than the 1/1000 wearables. So that's not decided, that's something that was proposed sort of informally so far. So that could be something that happens, but I would say that the OpenSea floor on the wearables is 1 ETH, but the floor on the first collection, the ICE suit, is 3.5 ETH. They earned ICE at exactly the same rate as all the rest, but people value the first collection at 3.5x, I think just due to the rarity of it and it being first.
Crypto Texan: Yeah, so maybe the value there is a combination of utility and clout, I guess, which when it comes to like the profile picture, I mean it's a combination of that, right. Like the Bored Apes, there is certain utility that you get with owning a Bored Ape, but it's mainly clout at the end of the day. So I understand that that's where probably a lot of the premium for a lot of these NFTs come from.
So what about other poker related games for ICE Poker? So I love poker, I love to play poker. But right now, the main game of choice or the only game of choice in ICE Poker is no limit Texas Hold'em. And I was wondering if there's anything on the roadmap or any discussion about implementing games like Omaha, seven-card stud. Maybe even like, I don't know, 5-card draw, just some other poker games. Or, and outside of that, currently all of the tables are six-handed, right. So do you think there's any potential or discussion to expand it to like a standard nine-handed poker table?
Ryan: That's interesting, so right now yeah, you can play with a minimum of three at a table or up to six. I would say right now the development focus is on assigned seating to prevent collusion within the game, and that's been a really contentious issue within the community, because we would like it to be a social experience, but then also I think as a poker player, if you're playing with someone else at the table and you guys know each other's cards, that's an enormous advantage over everyone else and a big problem.
So that's actually probably the biggest gameplay problem that we're trying to solve right now is complaints that collusion is taking place, and we did just launch this in late October, so two and a half months ago, and we are, there's always little improvements that can be made to the existing game and making it smoother. We recently updated the blinds by a vote. We've got the cards dealing faster. A lot of UI changes are going on. To answer your question, I think that that's a really interesting idea to offer. We've thought about offering different blinds at different tables because there are some people who want to play a faster paced game with higher blinds, and people who want to play with lower blinds.
Implementing a different game like the seven-card stud or Omaha, I think wouldn't be too hard and is probably a good idea there. There have also been questions about whether our other games like blackjack and roulette would be brought into the ICE ecosystem. I think the answer there is probably not because the game needs to be player against player, sort of social in that respect. I think it's not clear how roulette exactly fits into that, plus roulette is just an EV negative game, so in general, you would see players losing over time. We could say that you could bet your chips and that would count towards your multiplier on these other games.
And then, we hope to see other games experience like what Axie talks about all the time is that the reason they've spent so much development focus on the Ronin chain is that now they have 2.7 million users with funds on Ronin, who are familiar with the ecosystem using Ronin exchange and SLP, and that they want other developers to develop games within that ecosystem and build on Ronin.
I can imagine that, whether it's by partnership or acquisition, like as we get this ecosystem off the ground, it'll be great to see the DAO have other games being brought in, but it's just really early. There isn't a comparable level of development game arguably within Decentraland just yet to partner with, it's like a social game of this kind. But definitely see the vision being beyond people buying a wearable, and that just allows you to play Hold'em poker being like the end game of the play-to-earn economy and ecosystem.
Crypto Texan: Yeah, and maybe another question we had was, outside play-to-earn, where it really is just peer-to-peer gambling against another person right now it's just like a very different version of poker, the way ICE Poker is set up. And do you see a future where you can actually sit down and play like a cash table, like with your ether or MANA tokens against other players? Or maybe just like a true poker tournament in the traditional sense? Do you see anything like that taking place?
Ryan: I don't want to get too far out ahead of what the DAO has voted on here, but at the moment. So it's like a bit of alpha for people listening here, like it's really hard to build these cash games on these truly decentralized chains. People are trying to do it on ETH, and they got blown out of the water by ETH fees. We used to pay 1/10th of one cent on MATIC fees, now it's more like 5 or 10 cents. So still profitable, but coming up against the edge and probably the way to build sustainable on-chain crypto gains is to build your own sidechain like Axie has done, which just isn't a development focus for us.
And when you look at the amount of transactions that like on chain poker requires, it wouldn't be, with where MATIC fees are now, it probably would not be profitable for the DG DAO to host on chain, on MATIC network poker. Whereas ICE Poker has been hugely profitable for the DAO and hugely profitable for players and investors so far, so it's just been, the focus has been on the ICE ecosystem versus on chain, on MATIC gambling, where, I'll give you an example, so it's noncustodial, to be in these smart contracts. It costs about 5 cents to do a transaction. You place a bet, that's a transaction, at the end there's a second transaction which sends the funds to the DG DAO treasury or sends them to you, plus the 2x. So that's about 10 cents.
The house edge on blackjack is about 1%, it's like 0.7, let's say 1% for simplicity. So if you're betting $10, then you're expected losses are 10 cents. And the transaction costs are 10 cents. Now, our average bet sizes are larger, 20 or 30 dollars, but it used to be that this was a trivial percentage of the bets, and now it's more like a third to half of them. And we see this becoming more of an issue. So I'm being as transparent as possible that I don't think it makes a ton of sense to focus on the crypto gambling side, and in terms of revenue to the DAO, this month, I would expect the crypto casino side to make the DAO about $300,000 and for ICE Poker to do about $6 million of revenue. It's not a focus.
Crypto Texan: Right yeah, that no, that makes perfect sense, yeah, no I appreciate you answering that so candidly and we're running up on time here, Ryan and I've really appreciate, really appreciate you coming on and talking to us about this really exciting project. Obviously, I'm involved, so I like it. Is there anything else that you wanted to touch on that maybe didn't get a chance to touch on?
Ryan: The one other thing I would note is that we recently released field management tools that are comparable to what YGG and Merit Circle are trying to do around Axie. So we were the first game to put delegation into the experience itself, so we actually have trustless splitting of that 70/30. Huge problem with Axies, people finding delegates to play for them for a month and then just not paying them at the end of that, because it's a trust-based delegation. And so the guilds are trying to solve for that. The guilds take a 10% fee.
We've built like, many guild management tools and delegation into the experience. I posted in the General for what this looks like, if you have many items and you're trying to keep track of how your players are performing. And so we think that this, it protects players, it allows people managing their guild to see the data. To not spend a bunch of time like digging through on chain data, and will hopefully lead to better gameplay as it weeds out the people who are not playing as well.
So like you, you have to be, I think, pretty into the sort of play-to-earn space to see why this is important. But Merit Circle and YGG are both over a billion dollar, fully diluted valuation projects where like, the majority's case is like this problem that shouldn't exist in the first place. And frankly, this took us like a couple of weeks to roll out, seeing that this was the problem. So I would, if you're in the audience and you're thinking about rolling out like a play-to-earn game or ecosystem or you're in one now like, those games should really be building it into the experience itself, rather than having like a third party extracting 10% of the ecosystem value to solve this problem for you. That's my throwing shade at the guild management tools that exist third party.
Crypto Texan: Well yeah, and I've checked out the guild management tools that Decentral Games has on its website right now and it's great. It's very helpful because previously I was just having the people that I've delegated to, send me screenshots of their progress every day. And then I would just have to go back and check to make sure that that is actually what happened on chain, and this is a much simpler, easier way to do it as well. So are you delegating any wearables, Ryan?
Ryan: Yes I am. I've minted several times and have bought quite a few on secondary, and I think it's important for, we fair launched them, so everyone on the team has had to either mint or buy them on secondary. We've also done no partnerships, but we did no OTC deals or something like that, so I had to buy all of them. And I think it's important that the team delegates at least a couple so that they can, and hops into play from time to time so that we like to understand the player experience and the delegator experience.
Crypto Texan: Right, and that's part of the thing that I've kind of tussled with a little bit is, I've got two wearables. I don't really have the time to play and I want to make these assets active. So I've delegated them. But at the same time, I want to play too, and so, yeah, I'm going to try to mint another one today. And yeah, we're right here at time. It's minting time in Decentral Games. So why don't you just tell people where they can learn more about you and Decentral Games?
Ryan: Yeah, absolutely, so I would say hop into the Decentral Games Discord. If you follow us on Twitter - @DecentralGames. Hop into the Discord, go to Decentral (dot) Games. Are probably some great resources there. Trying to think, what else? Resources like, we've got our white paper for ICE Poker at ICE (dot) Decentral (dot) Games. And, but I would say, like just joining the community via keeping up with us on Twitter. Joining the Discord, seeing what's going on there, you'll keep up the pace of announcements. And then if you're trying to get involved in all things metaverse and gaming, like start coming to some Decentraland events and Decentral Games events.
Crypto Texan: Yeah, absolutely. Well, Ryan, thanks again for being on the show with us here today. This is being recorded, so we'll get this out in about a week and everyone else have a great weekend. Thanks again, Ryan. Really appreciate it.
Ryan: Appreciate you as well, thanks for everyone who listened.
Crypto Texan: Alright, bye everybody.
Host: @Crypto_Texan
Audio Engineer/Mixing: @LloveraFrank
Marketing Image: @crypto_diller_
Transcript: @qjuniperus
Conversations with the Coop - Ryan De Taboada - Decentral Games