Mark Cuban talks about how he would fix Axie Infinity in a recent interview with Altcoin Daily on their YouTube channel August 7. They covered several important points about the crypto gaming space including the Metaverse.
Here’s the full Altcoin Daily interview:
If you don’t know what Altcoin Daily is, it is YouTube channel founded by Aaron and Austin Arnold. Since January 30, 2018, they have been publishing YouTube videos covering Bitcoin and crypto news and information.
On the other hand, you may be wondering who Mark Cuban is. He is the proud owner of the National Basketball Association’s Dallas Mavericks. He is also an American entrepreneur and investor.
In this article, we’ll cover Mark Cuban’s take on Axie Infinity, the Metaverse, and more.
Mark Cuban on Axie Infinity
When asked what excites Mark Cuban on play-to-earn, he explained that play-to-earn is typically subsidized.
“With Axie Infinity, they were smart. They were first, and they had a huge sponsor base where they went out there and got groups to sponsor people left and right,” said Cuban.
“And it just blew up, and why wouldn’t it blow up? It’s free money,” Cuban exclaimed.
“It’s going back to the old Silicon Valley way for software – ‘We’ll subsdize the cost for you. We’ll subsidize the cost of bandwith or storage to get you to use it and view it as a marketing cost.”
However, Cuban is quick to point out that it’s still a “traditional ecosystem” where you either subsidize it or generate revenues to buy the tokens that are being created.
“If you don’t generate the revenues to buy the tokens, either you have to have new subsidies continually coming in or you have to have new players coming in to subsidize the existing players,” continued Cuban.
“The minute the musical chairs stop, it collapses,” he said.
This is unless you have an ecosystem or economy there that can continue to buy the tokens to make it worthwhile for people to play if they’re playing for some reason other than the fact they just love the game.
Back when Axie Infinity had a maximum number of players, Mark Cuban recommended to them, “Now’s the time to sell NFTs to people outside, not to the players themselves.”
He gave Philippines as an example. “Somebody in the Philippines who’s playing this game generated this NFT using their artwork that they’re selling for SLP. They can sell that and it generates revenue.”
Mark Cuban recommended Axie Infinity to do the same thing. “Create NFTs based off on play, the best plays ever. And then people outside can buy those.”
He added, “You take that revenue that comes in and use that to buy the SOP and AXIE tokens, or you go to Coca-cola and say, ‘We’ve got x number of people. Here’s a demographic breakdown. Here’s a geographic breakdown. Advertise and we’ll slip in.'”
He likens it to video games where there’s sponsorship involved. “Because we have millions of users around the world, we’re going to charge you 3 million dollars,” Cuban said as an example.
He continued with his example, “We’re going to take 75 percent [where] 25 percent goes into our treasury of operations and 75 percent goes to buy SOP and AXIE, which creates a virtuous cycle.”
This means there’s always going to be a foundation for pricing as long as you have players. “That makes it more sustainable,” Cuban believes.
“Without that sustainability and ecosystem, it just doesn’t work,” he said.
The Why Question
When someone comes to Cuban with a play-to-earn game, he always asks them the exact same question:
The player comes in, they earn your equivalent SLP or whatever you call it – gameplay token. Now they’re ready to sell it: Why would somebody buy it?
“There’s got to be a reason for somebody to buy it,” added Cuban. He believes it applies to everything: work-to-earn, learn-to-earn, etc.
“You always have to ask yourself: ‘What is the reason that a second, third, [or] fourth level buyer will buy?’ Otherwise, it’s going to die,” he concluded.
When Mark Cuban started AudioNet in the early days of the internet, one of his key selling points is this: “You don’t have to send people other places to buy.”
Before the internet, you had to go to the store. Once the internet hit, as long as there’s a link to buy whatever it is they’re pitching, you just order.
“It’s the same now with Web3, but nobody does that,” Cuban said.
For example, if there’s a digital product, a movie to own or music to own as a download, and when you click it, it clicks off one AXIE token – and it’s to deliver to you immediately, now you’re making some money.
This incentive subsidizes and plays the game. Cuban believes that if your play-to-earn doesn’t have a way to generate revenue outside just the tokens, you’re screwed.
Why Mark Cuban likes Crypto
While we’re in the subject of crypto gaming, let’s talk about Cuban’s background in blockchain investing.
Since Cuban is an enterpreneur, he is always looking for new ways to innovate and push the industries forward. He gives an example when he started a company in 1994 called AudioNet, which was the first-ever commercial streaming company.
Essentially, they looked at new applications for using the internet right when it was still in its infancy. And in 2000, he started the first all-high definition TV network.
Emergence of Crypto
When crypto gradually emerged, Cuban paid attention to how it paved the way to unique technological applications such as smart contracts.
Cuban said that the beauty of NFTs isn’t because it is an NFT itself. “It was the fact it was an application in smart contracts and what else smart contracts could be used for.”
“You start digging to the decentralization side of it, and I’m not one of these guys [who say] it’s all about centralization for the trilemma and all that kind of stuff,” Cuban added.
New ways of doing business
Cuban saw NFTs and crypto as “new ways of doing business.” That’s what Cuban is looking for. As he reasoned, when you find new ways of doing business, you find ways to disrupt existing businesses.
This alludes to the fact that in the infinite game of business, only players with the high capacity of will and resources can they stay truly in the game.
Innovation disrupts tradition, and when innovation becomes tradition, something else will replace it, making the cycle continue on.
“What can you do that’s different which disrupts an industry that’s always been doing it the same way,” said Cuban. He pointed out to Austin Arnold that it’s not just about eliminating the “middle man”, but also doing things “differently”.
From the conversation, we can understand that Cuban is saying that NFTs, crypto and smart contracts are disrupting the way traditional business is being done, and so his interest naturally lies in such industry-defining innovations.
Biggest Opportunity in Crypto
Mark Cuban states that the biggest opportunity all comes down to application. “If you guys got great ideas, I’m wide open. There’s a great analogy with what happened in Silicon Valley like SaaS software and other applications even like Uber where tons of money came in and subsidized all these apps,” Cuban said.
He added that Uber is just now starting to make money 12 to 15 years later. “I’m never a big fan of raising hundreds of millions of dollars to do tens of millions in business, but that’s exactly what happened in crypto,” continued Cuban.
He believes that crypto was “distorted” because people looked at the token valuations.
“What would happen is they’d go out and do a token sale and generate a bunch of capital, or even worse, they’d raise hundreds of millions of dollars from VCs and use that money to create a fake yield,” he said.
He gives Anchor Protocal as an example. “We saw that with Anchor where it was like we’re offering you 20% and then they hope they’d be able to generate enough loans to cover the 20% – never came close,” added the entrepreneur.
He continued, “All that yield was subsidized.” Those yields have always been subsidized by investors.
“Now, with those investors not willing to subsidize anymore, you’re not seeing the crazy yields and you’re not even seeing the infationary yields from the blockchains anymore,” Cuban pointed out.
He gave an example. “If you stake this, we’re going to give you 4% or 8% or 12%. They can’t even afford to do that because if you inflate too much, there’s not enough intrinsic demand to cover that inflation and your token price is going to drop.”
“It ignores the fact that to be a real business, you have to be a real business.” He believes that crypto doesn’t change any of that basic principle.
Cuban on the Metaverse
While we’re talking about crypto, Mark Cuban opposes the idea of buying land in the Metaverse, dubbing it as the “dumbest” thing ever.
He describes the Metaverse as a sort of “community” that we create for ourselves as we use technology to enrich our lives. In the interview, they liken the term to “cyberspace” in the 90s.
“After you create a community – not beforehand – you can find places depending on how that community works that can have perceived value because of access,” said Cuban.
But if you’re selling land beforehand that’s based on a traditional real estate model, Cuban strongly says it’s “dumb”.