Dialogue with YGG's Head of Ecosystem Development: Not relying on Axie Infinity, now is the time to double down

Interview: Runsheng & Kit, ChainCatcher

Guest: Andy Chou, Head of Ecosystem Development at YGG

Riding the wave of P2E and its typical blockchain game Axie Infinity, and leveraging the decentralized philosophy and unique "scholarship" profit-sharing system, the Philippine gaming guild Yield Guild Games (YGG) has gained immense popularity in recent years, becoming a shining presence in the blockchain gaming field. According to the crypto data platform Rootdata, since its inception in October 2020, YGG has completed four rounds of financing totaling over $22 million, with investors including renowned venture capital firms such as a16z and Animoca Brands.

YGG's success stems from a unique "triple-win industry structure," which helps blockchain game developers quickly attract users, lowers the entry barrier for players, and allows YGG itself to profit, rapidly growing into a leading guild in the blockchain gaming space. However, amidst its fame, there are also criticisms regarding the homogenization of the blockchain gaming guild model and an over-reliance on Axie Infinity.

At the end of last year, several institutional platforms, including BlockTempo, co-hosted the largest blockchain and NFT carnival event in Taiwan, "NFT Taipei," attracting significant attention from Chinese Web3 entrepreneurs. After the event, ChainCatcher invited YGG's Head of Ecosystem Development, Andy Chou, for a dialogue.

Andy has cross-cultural work experience in Asia and the United States. In the conversation, he discussed his personal motivations for entering Web3, as well as YGG's development history, plans, and management experience with SubDAOs. Additionally, he shared his thoughts on popular topics such as blockchain games, the P2E model, the FTX collapse, and the crypto bear market.

According to Andy, YGG currently has 8 SubDAOs and over 80 game and infrastructure partners, and does not overly rely on Axie Infinity. In his view, during a bear market, the focus should primarily be on controlling costs and concentrating on building, and now is the time to double down. Below is the full dialogue.

1. ChainCatcher: Please introduce the main reasons that drove you to enter the crypto industry.

Andy Chou: I joined YGG around January 2022, and my time in the blockchain gaming field is not very long, but blockchain gaming itself is also a relatively new area. I entered the crypto industry mainly for two reasons: the first is accessibility; anyone can access cryptocurrency through smartphones, computers, and internet connections without going through centralized institutions to obtain financial services, which is very appealing due to its global nature. For YGG, in 2021, when millions of Filipinos lost their livelihoods due to COVID-19 prevention measures, YGG co-founder Gabby was able to lend his Axie Infinity characters to community users, allowing them to earn game tokens and ultimately have a positive impact on the local economy—this is a cool example.

The second reason is related to freedom and ownership; cryptocurrency brings freedom and personal ownership. This is true digital ownership of items, where these digital assets can be traded and rewards can be earned through playing virtual games. The increase in ordinary people's freedom and ownership often leads to more social change and improvements in various aspects of the economy.

2. ChainCatcher: How does YGG position itself in the Web3 space? What development milestones has YGG achieved in its two-plus years of existence?

Andy Chou: YGG sees itself as a community; we acquire NFT assets and connect blockchain gamers from around the world. YGG's goal is to build a network of gamers, allowing players to help each other in the early stages of engaging with Web3 games. About a year ago, YGG created its Southeast Asia branch, YGG SEA, and has since established SubDAOs in Latin America, India, Japan, and other regions. We believe that anyone, anywhere in the world, should have access to crypto games.

Regarding development milestones, YGG had four in 2022. First, the cooperative network of game partners and infrastructure partners has significantly expanded. Today, YGG has over 80 game and infrastructure partners. Second, regional sub-networks continue to grow, with 8 SubDAOs now established. Third, we created a Web3 university, where YGG badge holders can learn new skills from educational content from specific channels. Fourth, the guild advancement program, launched by YGG in 2022, is an achievement-driven community token distribution protocol that rewards guild members who contribute to the YGG community.

3. ChainCatcher: A year ago, YGG began establishing SubDAOs. How does YGG coordinate the relationships between SubDAOs? What experiences have been gained in DAO management?

Andy Chou: The key to coordinating SubDAOs is regular communication. When we first established SubDAOs, we thought about how to replicate the model built in the Philippines in different regions, starting from the basics of how to establish a guild and operate game assets. Now that some SubDAOs have matured, we hold regular SubDAO roundtable meetings to discuss almost everything, including finances, product plans, and team collaboration. In November 2022, YGG hosted the Philippines Web3 Festival, where many SubDAO members met for the first time.

Additionally, I want to emphasize that YGG introduces a certain level of decentralization within the organization, not top-down management or control, but more about suggestions, discussions, and mutual learning. SubDAOs indeed maintain a high degree of autonomy.

4. ChainCatcher: YGG's creation of SubDAOs aims to provide a localized approach to attract people to join P2E gaming guilds. Specifically, how is localized development achieved?

Andy Chou: Considering the community and focus, guilds are fundamentally very localized. What works in one place may not necessarily apply to another. For example, in Discord channels, there are users with specific languages and cultures. Therefore, it is essential to find suitable local partners to best understand the region.

Regarding SubDAOs, they maintain a high degree of autonomy; they are not subordinate models or franchises. SubDAOs have their own treasuries, decide which games to collaborate with, and seek local talent to operate and establish new models. Different regions have different gaming habits, and each SubDAO has its own focus, which we are still exploring.

5. ChainCatcher: With the current market in a significant bear phase, what impact does this have on Web3 games? How will YGG adjust its development strategy?

Andy Chou: In the broader market, the macro economy has been in a downturn over the past year. All factors affecting the broader market are also impacting Web3. Regarding Web3 games, I see that the main focus now is on controlling costs and building truly attractive products.

In fact, this issue was also mentioned in YGG's recent quarterly report; we believe it is more important to control costs, and we will continue to review expenditures. At the same time, we will continue to maintain existing pathways and actively seek new sources of revenue. Of course, these are common in the entire crypto industry and in other fields as well. I think now is the time to double down. This has been said many times, but it also comes with a lot of noise and hype. We need to focus on real building rather than getting caught up in trivial matters.

6. ChainCatcher: Did the FTX collapse affect YGG? How do you view the FTX incident?

Andy Chou: From a specific business perspective, YGG is doing well. The FTX incident was unfortunate, and from a broader perspective, it highlights the importance of self-custody. While everyone in the crypto world knows this, it may not be as significant for the broader user base. I think self-custody may have been overlooked before, and now it should be better understood for its importance.

7. ChainCatcher: YGG's past development has been closely tied to the success of Axie Infinity. How will YGG reduce its over-reliance on Axie Infinity?

Andy Chou: Axie Infinity is indeed very popular, and it promoted local economic development during the COVID-19 lockdown in the Philippines. Regarding YGG's reliance issue, I want to clarify that YGG already has over 80 game and infrastructure partners and does not overly depend on any specific game project.

8. ChainCatcher: The P2E gaming business model has recently faced criticism regarding sustainability. What are your thoughts on this?

Andy Chou: P2E is not a new concept; players have been earning money by playing games for a long time, and blockchain simply provides a new toolkit for players to participate in value. Regarding the sustainability of the economic model, games must be fun and sustainable; there is a lot of exploration ongoing, and games will continue to evolve. Fun is somewhat abstract, but it is definitely a meaningful term. There are many different aspects to what is fun.

Zero-sum may be important in some ways; the inflow of funds needs to balance with the outflow. But I think this is not just about the financialization of the game itself. Just like people spend money on skins in games to showcase their status, to some extent, this is seeking some form of social return. In discussions about the unsustainable economic model of P2E, we must also consider the fact that it needs to maintain a balance with the external economy or non-virtual economy. Some things go beyond the game itself and are beyond many people's control, belonging to the realm of macroeconomics. Perhaps, after more foundational construction in the gaming industry, there will no longer be excessive extraction and financialization.

9. ChainCatcher: What stage do you think the Web3 gaming industry is currently in? What are the main challenges it faces?

Andy Chou: Time is an important consideration. Many Web3 gaming ecosystems started a long time ago, but it will take time to see the fruits of labor. So, this is not a real challenge; it's just that some things need time and resources to create.

As for what development stage we are in now? I recently saw an observation report on gaming from CoinMarketCap, comparing the number of Apple apps and gaming apps, showing a sharp increase in the number of gaming apps over time. Currently, there may be fewer than 2000 blockchain games actually running, but there is a very large room for development, which encourages me.

10. ChainCatcher: How do you view the development of the gaming industry in 2023?

Andy Chou: 2023 will be a year focused on building, with many different gaming products and models emerging, providing players with a better experience. Some fundamental concepts proposed during the last bull market are still applicable today. Just like the idea of having digital ownership reveals what may happen next, such a significant paradigm shift will attract many young talents into this field, leading to the continued development and maturation of Web3 gaming.