01 Oct 2021 11:16 AM +00:00

The Future of NFTs and Gaming: An Interview With Aavegotchi Founder Jesse Johnson

While March 2021 does not seem too long ago, it has been an explosive six months for the cryptocurrency and NFT spaces.

In that time, Aavegotchi, a DeFi-enabled NFT game developed by Pixelcraft Studios, has found success running on Polygon.

Last week, Planet Crypto spoke to Jesse Johnson, the founder and COO of Aavegotchi, to talk about Aavegotchi, NFTs, and the intersection with gaming.

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The following interview has been edited for clarity.

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What Is Aavegotchi?

Planet Crypto: What separates Aavegotchi from other Play-to-Earn (P2E) games in the NFT space?

Jesse Johnson: When you hear about P2E games, you typically hear that they’re a platform that is requiring you to earn NFTs or use NFTs to earn a cryptocurrency. I think that’s one aspect of what’s possible with P2E. But with Aavegotchi, we’ve already existed for some time, and so we’ve been delivering on P2E since March of this year. And the difference is, it’s more of an intrinsic experience.

It’s the intrinsic rewards versus something on the outside. And the way we refer to that internally is we like the term playable NFT. So it’s not like you’re plugging into a big RPG or game, as cool as that may be. But just like the Tamagotchi, the game is in the object. We really started with this simple concept.

We realised that CryptoKitties doesn’t live up to this idea of a crypto pet very well, because a crypto pet should be something that you want to interact with, like a Tamagotchi. So that was our original idea. How do we improve and live up to this idea of a crypto pet? And what we came up with was something like a Tamagotchi, but that instead of a keychain and a screen, it’s an NFT.

PC: Vine creator Dom Hofmann also created his own on-chain pet based on the Tamagotchi called Wagmigotchi, where thousands of users would virtually take care of the pet by inputting commands. Do you think that’s an idea that could take off, is there any way Aavegotchi could do that?

JJ: Yeah, I’m in that thread, and I responded to him. And he may have had thousands of engagements on the tweet, but I don’t think it has anywhere near 1000 users.

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One big reason being that he basically did the Aavegotchi model, but on Ethereum. And that means that every pet, every feeding, if it’s an on-chain experience, you’re talking about $30/$50/$100 to do each one, which makes no sense. So I don’t really think he’ll get traction with that unless he moves to Polygon or some other L2 solution.

What he laid out there was the Aavegotchi mode, the intrinsic NFT I’m talking about. You have to pet your Aavegotchi. If you’re not proving that you’re interacting with your Aavegotchi, you’re not going to get paid. And so we have different leaderboards for different ways to be incentivised to engage in the community. And if you pet your Aavegotchi, that’s one way you can improve your kinship score.

So it comes back to the P2E side. I don’t know if Dom has thought that through more than he deployed some contracts and kind of threw it out to the masses. It’s basically Aavegotchi with a Dom twist.

Anatomy of Aavegotchi on a blue background
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Credit: Aavegotchi

Play-To-Earn's Role In The Crypto Market

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PC: Do you fear that at some point the P2E market could burst like the ICO bubble of 2017? Is there a risk of oversaturation in the future?

JJ: NFTs are going to grow in all directions at once, and we’re going to see certain things fall in and out of the market.

Look at the profile picture (PFP) market. That became a whole idea by itself, once the Bored Apes really defined it. Everything is a game, and once you define the rules of the game, you get more content creators to create spinoffs. Maybe this will be a model that in its current form runs for maybe six months, maybe a year, but I think that’s about the extent of it in its current state. And then you’ll see a new kind of Bored Apes or something, maybe hopefully with more utility, and you’ll see other things come through.

NFTs as a whole - not going away. Trends within an NFT space come and go fast. Going back to Dom and Loot again, I love Loot. But that was the fastest rise and fall of a project I've seen yet. And I hope out of the ruins we get a Phoenix. I know a lot of big brains are working within that. He basically gave a framework, and it's up to the community to organically create something of value there.

So once that initial hype goes, it's always interesting to see what remains, and usually, they'll be the ones that have developers ready to ship. That’s why we’re pretty bullish on Aavegotchi for longevity, because I think we’re up to 25 full-time devs on the team at Pixelcraft Studios.

PC: How disruptive will P2E be on the wider crypto industry?

JJ: I see these jokes on Twitter where it’s like “So when we get a little bearish with DeFi, we just rotate over to NFTs, and when we get bearish with that we rotate over to DeFi.”

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I don’t know how much truth there is to that, but at times it feels that way.

With NFTs, you’re digitising culture, and the gaming industry is absolutely massive. So if just a few of them prove the use case, then the sky’s the limit. Yeah, crypto is taking on money, which is the basis of all society, but you could argue that culture and in some of these activities we do, could be even bigger.

I think [NFTs and crypto] are going to run side-by-side, they’re going to be equally disruptive. For a long time, we suspected that blockchain would disrupt more than the central banks. Every day now it’s becoming more clear that we’re coming for the central banks, but a lot of other stuff too. Whatever the metaverse is going to be, it’s going to be built out permissionlessly without any one company at the head of it. And it’s going to be probably running on a bunch of different blockchains all at once.

The Gaming/NFT Collide

PC: What future intersections do you see between gaming and crypto industries in the future?

JJ: I think we’re just a year, two years max from P2E or playable NFTs dominating the conversation at your traditional mainstream gaming events, like E3, for example. I don’t think we’re one or two sessions of E3 away from it being like half NFTs.

It’s like when I would go to FinTech week in Singapore. The first year I went, there were two or three booths for crypto. The next year I went, someone from Ripple, and from the Federal Reserve were sharing the stage in the primary talk. I mean, that’s E3 next year, hopefully not Ripple, but Aavegotchi.

But it’ll be that kind of shift where suddenly it’s the dominant talking point throughout the whole industry, and I don’t see how it doesn’t happen. Because we’re getting to the point now where it's like “I’m putting hours and hours into this game and I get nothing for it.”

Look over here, they’re getting paid, or at least have ownership of the game items. It’s very powerful.

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E3 2021 logo on white background
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Will NFT games make an appearance at the next E3?

PC: Digital ownership comes up a lot whenever you talk about P2E games. The games industry has a lot of under 18’s who play their games. Where do these players fit into the model? Is there a space for them in P2E games?

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JJ: With Aavegotchi, you might think we’re creating a game for kids because it's quite childish in its presentation, but it's actually more nostalgia from the 1980s. So ironically it's like 30 and up, basically my age demographic.

It’s something that’s going to take a little more time because of regulation. This can be one of the most sensitive parts- you’re playing with real value. This is something we constantly talk about. So, at least in our case, we are not using any of our marketing to talk to them. It just doesn’t make sense at this point.

We’re moving towards a digital metaverse, and at some point, you’ll probably see Gen Z and whatever the next generation is called just natively slide right into a digital world at a much younger age, because physical attributes go out of the window and all that is left is your mind and ability to comprehend. We might be surprised. It might be a new legal limit, or you can own an NFT once you're 10. I don’t know what’s going to happen. But yeah, it’s probably going to go the way of the dinosaurs.

PC: It's certainly getting harder to ignore crypto and NFTs in gaming. While there is pushback, it might just need that first major game developer to implement P2E and NFT mechanics for the floodgates to open.

JJ: You’ll probably start with your safe ones. You’ll start seeing some of your sports games have trading cards, so when you play enough hours you earn yourself this NFT badge or something, but that’s just the toe in the water.

I have this theory that any time there’s a new technology, you can either look at the outside IP - the Mickey Mouse’s of the world - they’ll come into that and have their success, but they won’t be the defining IP. The native IP that’s born out of that new technology, and the celebrities, is what rises to the top. So I think that’s going to be the case for different NFT projects in NFT gaming. You’ll get your EA Sports and sometimes it’ll be good, and sometimes it’ll be forced.

But the games like Aavegotchi that are actually building around it, and have a true understanding, are just going to go much further because naturally, they have an understanding of what it’s really capable of. There’s already so many out there building: Gala Games, Animoca is investing in so many, too.

Finding the right business models is going to be key, and I’m very proud of what we’re doing. We’re striking that balance between a DAO controlled game and then still having that agility of a core team, able to make those faster decisions and respond. We think of our DAO not just like voting, we look at our DAO as voting, making proposals, and executing them, but the other half is just a vibrant, active community with a way to channel their proposals - it’s already like an advisory board. It’s like having an amazing alignment of big brains in the room that can help tell the core devs what to do.

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The Future of Aavegotchi

PC: In Aavegotchi and other P2E games you have to put some money in to buy an NFT - the last time I checked an Aavegotchi cost $100. While you may earn this back through holding, this initial cost may see some unwillingness or unable to invest. Given the gaming industry’s move to the F2P monetisation model, can P2E games can get to mass adoption with those costs.

JJ: We have some very specific ideas on how to address exactly what you just described. If it was $100, that’s a gaming console, that’s a couple of AAA titles. But unfortunately, that number is actually much higher. I think the floor is like maybe 500 GHST. GHST is $1.70 today- you’re looking at almost $1000, and definitely north of $1000 for any decent Aavegotchi.

So with that in mind, we have a very interesting supply method. We have supply by consensus. The primary job of the DAO was to set and manage the supply issuance of future Aavegotchi. So they’re looking at popularity, and how they want to approach adoption. So we recently had the Haunt 2 of Aavegotchi, where we released 15,000 more portals to summon one Aavegotchi per portal. And that was really cool, because the first time it came up for a vote, I endorsed it, and it got voted down. So our DAO is not a rubber stamp.

So that’s cool but it’s not enough. Even now, we more than doubled the supply, and the supply actually rose. So it’s kind of crazy how that works. So what we want is when the Gotchiverse Realm comes -our virtual world or metaverse game that’s basically a DeFi RPG - that’s going to launch in December. It’s like two phases.

The first phase is called the Citadel. You’re inside a safe area where it’s all about the farming of tokens and building. You’re kind of nurturing your garden, or parcel, more like Crypto Voxels. But, the thing I don’t like about those games is there’s no element of danger. There’s no risk, no loss, there’s no destruction. It’s really not a game.

The second phase is going to come in Q1 next year, and that’s when the drawbridge comes down from The Citadel. Aavegotchis can flee out into the wider world called The Grid, and out there they’re gonna be hunting for all sorts of ERC-20 tokens and competing for them against another NFT character we’re introducing called the Liquidator. These are little robots that are the arch-nemesis of Aavegotchi. Lore aside, the key insight is we’re throwing the idea of NFT scarcity out the window. With NFTs, you’re always obsessed with what’s the cap. That’s just the first use case of NFTs, but it doesn’t have to be the only one.

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So we’re going to basically have a faucet mechanism where we can make as many of these things as we want. We can airdrop them to communities, we can do questionnaires to get yourself some free liquidators, and what they become is, they can’t own parcels, they can’t do everything an Aavegotchi can do, but they certainly can enter the world and, like a giant game of Pac-Man, compete for these ERC-20 pickups that are scattered along the map.

That’s one of our answers to that P2E F2P conundrum. To introduce a character that is an NFT avatar, but does not in any way obsess over its scarcity. If someone wants to collect them, I guess they could. But the majority of people are going to be able to easily access these for either free or near free, and then join the world. And so that’s a big part of our adoption play.

If we’re going from today, maybe we have 5000 active users on Polygon on the main game experience, maybe closer to 10,000 if you take in all GHST holders across Ethereum and Polygon. We should be able to increase the eyeballs and attraction to this world because people are going to want to come check it out and hopefully once they pick up their first ERC-20 token for free using their robot tongue, they’re gonna be pretty hooked. So we’re trying to build something that’s very addictive, and in a good way, where you can play as this F2P NFT.

Read More: Best NFT Projects: What Are The Top NFT Projects And Most Expensive NFT Sales?