Blockchain games and crypto projects don’t have the best reputations. They’ve been dismissed as scams, money-laundering schemes, rug pulls, and environmentally damaging. Hardcore gamers have rebelled against game developers and publishers who are using blockchain-based non-fungible tokens (NFTs) to authenticate unique digital items in games.
But the blockchain faithful believe that blockchain game companies can create something of value that will enable players to earn a return on the investments of time or money in games and let them resell it to others for a profit. This requires the creation of high-quality games with blockchain attributes and an ecosystem of supporters and players.
It could take years for these kinds of projects to launch and convince fans that all of the effort is worth it. And that’s where companies like Mysten Labs hope to make a difference. Founded late last year by former Apple and Facebook technologist Evan Cheng, the San Francisco company hopes to bring good engineering and infrastructure to blockchain Games. Cheng has assembled a team of veterans including Koh Kim, a former Google Play leader who is serving as the head of ecosystem development for Mysten Labs.
“The opportunity he was offering me, being able to create an ecosystem, that was very interesting for me,” Kim said in an interview. “Why are there only 20,000 web 3 developers when there are millions of Web 2.0 developers? How do we bring 5 million developers into web 3? What are the tools, the services, or the framework they need to be able to build?”
The company is trying to address is how to build a better, faster, more secure way for developers to include smart contract functionality, and use a lot of the positives about blockchain technology, but not have to deal with the big security risks associated with current smart contract development.
I caught up with Cheng at the recent Game Developers Conference for an interview about the emerging space of blockchain games.
“The best way to convince people is to show them,” Cheng said.
Here’s an edited transcript of our interview.
GamesBeat: What was your background before this?
Evan Cheng: I’m a technologist. I spent 10 years at Apple, six years at Facebook. Before that I did a couple of startups. I got some recognition when I was an engineer back in the day. I won an ACM Systems Award. I got some reputation as a bit of a pain in the ass of Big Tech. My mode of operation is, “This system you’ve been using for years is trash. You don’t want to deal with it. Give it to me. I’ll build a team and replace it.” On day two after joining Apple I went to a VP and said, “You’ve been using this thing for 20 years. I found this other engineer who’ll replace it with me.” We did it in nine months and went from there, making that into a huge team inside Apple. Our work is running inside every smartphone in existence, pretty much, both Android and iOS.
After I got to Facebook I operated the same way. Anything people found hard, building large-scale systems, doing new kinds of runtime, they gave it to me. I’d just go and build it. When you have a high enough success rate, people put up with you. I’m one of those guys where I’m a pain in the ass, but people respect me for being a pain in the ass. Highly opinionated.
That’s how I got into blockchain. The concept was interesting. I could see how it would change ownership, change product experience, change how people think about transferring value and assets around. But boy, the systems sucked. The systems were absolutely terrible. When I started–this was a couple of years into Facebook. I decided I had a choice. I could go to a startup, try to do my own thing, or I could stay inside Facebook and join the Libero project back then. I decided to do it later, because I didn’t see the kind of talent coming into the space. I knew this was going to require the kind of massive investment and talent, the first-order, first principles thinking to solve the problem.
Inside Facebook we were asked to hold back our ambitions. It was meant to be this payment rail for banks, essentially. It doesn’t require much, other than a focus on stability. Don’t want to ruffle feathers, don’t want to get people worried. It got them worried anyway. We were held back for about a year and a half and then my team decided, “That’s done. People can finish productizing this. We want to build the real thing, the real ambition of what a blockchain should look like for the next billion users.” We designed that, but Facebook was just too slow. They came in way too slow. It’s not their business, either. That’s the main thing. That’s why we decided to drop it and do a startup.
GamesBeat: What year did you start Mysten?
Cheng: My co-founder joined in November of last year. We started discussing it when I left Facebook in August or September. My co-founder joined a couple of months later, the day after their last vesting, actually. Now we’re here.
GamesBeat: What solution do you think you’re working on or providing?
Cheng: We announced that we have a new network, Sui. It’s completely new thinking about how blockchain should look. We’re taking a step back. This is our vision. If you think about the whole concept of Web3, it’s the kind of network where all the assets can be there. You can create assets there. You can efficiently transfer them. They can update and move around. That can be the source of truth for all the assets. If you want anything that’s outside, you can put it there.
What is being built today doesn’t even come close to that. You have to think on internet scale. You have to keep up with the demand for growth. What we have today is almost equivalent to–if something’s hosted on AWS, you need some kind of token for using AWS as a consumer. It’s very fragmented. It’s very hard to use, very hard to move things around. It’s hard to program against. Everything is foreign to both the users and the developers. We keep on asking game developers the same question. “Why do you think you need to write smart contracts?” Because ultimately our goal is for them to say, “If I have an in-game asset, an RPG hero with a name and a class and an experience level and attributes that will change, an asset that lives right now in an internal database, I want to see what happens if I move him to a public ledger, and for the gamer to really own that.”
It could be almost just like a trophy. But with all the information attached to it. Maybe they want to resell it after they’re done with the game, or transfer it or rent it out. It could be that there’s a second part of the game that’s going to come later and they want to bring it to the next game, or they could want to take it outside the game and interact with a website through crafting and changing other things. It could just be a way to show off what you have.
What if you want to do that? Why shouldn’t that be as simple as, rather than storing it in an internal database, just storing it on a blockchain? But for that to be possible, you need to have the same way of representing assets, which current blockchains don’t allow. They have to conform to some arbitrary standard. The entry becomes a URL pointing to some asset. The current blockchains are only networks for ownership records. They’re not networks for assets. Also, they don’t have scale. Combine all these blockchains together and they maybe do tens of thousands of transactions per second. It’s not internet scale. It’s slow. It’s expensive.
The worst thing about it is there’s no guarantee. If you have network congestion, because it’s so limited in capacity, the whole thing falls apart, or your fee becomes huge. You can’t build a business like that.
GamesBeat: You can put a link on the blockchain, but it’s probably referring to somebody else–
Cheng: Right, a company off the blockchain.
GamesBeat: That’s where the full description of everything you own lives, how you can build it and transfer it and move it around. But if that goes out of business–
Cheng: What do you own? It’s not intentional. But when you want to own, do you only want to own the record of ownership, or do you want to own the assets? The blockchains, how they represent everything is wrong right now.
GamesBeat: And the assets are too bulky to put on the blockchain.
Cheng: It’s because these blockchains were designed incorrectly. This is where we come in with something completely different. A couple of things are fundamentally limiting with current blockchain design. One is the data model. Right now it’s a bunch of bytes owned by a smart contract. Let’s say the Bored Ape smart contract handles 10,000 Bored Apes. All the data is inside the smart contract and owned by the smart contract. It keeps an internal mapping. These bytes belong to this instance. Any time you want to touch anything that’s a Bored Ape, anything that belongs to the smart contract, it’s contending for the same resource. There’s no granularity, no encapsulation. That model makes it very unnatural for people in gaming to use the blockchain. That’s why they need smart contract developers and all this complexity comes from there.
In our system, everything is an object. It’s fully encapsulated. All the information related to the assets lives on chain as an object. Now you take that model and you realize the other problem with the current blockchain design. It goes through the same global consensus. I send a transaction if I want to read or modify this object. Somehow, a whole bunch of other transactions that may modify this object, they form a block, and there’s some kind of ordering of all these transactions that’s completely unrelated. There has to be an agreement on who goes first. You have to wait for this quadratic algorithm to finish computing before your transaction goes through. That’s not a good form of a distributed system, creating a global lock and waiting for other people before you can move forward.
That comes from a lot of the limitations of the data model and the general design of blockchains. With our model, these are distinct objects. All the transactions that modify these objects, we can easily tell that they’re distinct. There’s no contention. We can parallelize it. Only these that modify this object, the ordering can be determined trivially because the model is correct. We order them, but it’s trivial. You take this and apply it across a lot of different assets, you realize you can parallelize things at a massive scale. Everything is parallelized after that.
While every other blockchain is struggling to do a few hundred or thousand transactions per second, despite their claims, we’re saying right now, running on a Macbook Pro, a consumer-grade machine, we’re already doing 120,000 transactions per second. Once we start to distribute some of the work to larger machines, it’s easily going into the hundreds of thousands and millions. That’s what I mean by internet scale. You need to get to the point where you can provision capacity to needs at peak demand, so everything is stable. The cost is stable. The system doesn’t go down.
As the demand increases, you’re not just going to see fee increases. You can increase the supply as well to keep up with that. That’s how this is going to happen. You’ll have a system where any product, games or otherwise, can decide that they want to integrate with the blockchain because some aspect of their product, they want to decentralize it. They want to give ownership to the user.
For example, we’ve been talking with some platforms. Imagine if you want to do some kind of loyalty card or coupon reward for your users. You want to put it on blockchain because that will give you a way to do it where they fully own it, and maybe other platforms can recognize it. You don’t need to tie it to a centralized entity to verify it. You can’t do that today. Say Amazon wants to do this for Prime users. They’d have to ask millions of customers to download a wallet, go to Coinbase, buy some tokens, transfer them to an address, and send the address to Amazon. Then they could drop this NFT to them. That’s a non-starter. Onboarding the next billion users through an application they already use every day is impossible with the current model. They have to deal with all this complexity, which defeats the purpose, because it has to become centralized again.
With us, when you create a million NFTs, a million coupons or loyalty cards, you can move them to a million fresh addresses. You can email the seeds of those addresses to customer emails that they’ve already registered. When they receive it they just have to press a button and say, “Rotate my key.” Now they fully own it. Rotating my key is equivalent to setting or resetting a password. Because it’s so cheap to store this massive amount of objects on chain. It’s easy to define the object as you want it, to say what information you want to accumulate in the object. Storing things on chain is limitless. There’s no limitation. Only through these kinds of leaps in infrastructure can you enable the experience that can be fully integrated into everyday products that consumers use. That’s what we’re about. It’s the same with gaming.
GamesBeat: Is there just a more efficient way of keeping track?
Cheng: It’s because the blockchain doesn’t have limitations. You can store data on chain. With every other blockchain it’s extremely expensive and very limited. It’s completely horizontally, linearly scalable. We can just keep on adding to it. How we manage tracking the states is very different. We can move it off the critical pass. It all comes back to this very different model of representing data. It allows us to parallelize everything, the whole life cycle of the blockchain transaction.
Everything you know about blockchain, basically, changes here. The dial-up modem era is over. Stop trying to stream 4K video over a modem. We have broadband now. We have an iPhone now. Stop trying to program for Blackberry.
GamesBeat: How many people do you have now?
Cheng: We have more than 40. We have a lot of blockchain expertise among the founding team and early members. We’ve been thinking and designing all this for a long time. We’re very senior people. We’re too old to mess around anymore. And then a lot of the people we hired are just experts in other industries. They have transferable skills. We have people who understand the gaming side of things. We’re building our business and marketing operations. It’s just a group of experts from all different domains.
GamesBeat: Do you have to convince people that your blockchain really is the right one? How do you go about that given there are so many alternatives out there?
Cheng: The best way to convince people is to show them. Our partners are able to integrate with our blockchain as a new kind of experience. The one we just demonstrated was bringing your Bored Ape into your game. This is a fully owned asset. How do you bring it into a game as a playable character? Or how do you integrate new experiences in a virtual world? They did it in two days after we shipped them the SDK. We’ll do more of these and show people what is possible.
At the same time, our early partners are the ones coming from gaming. They’re already in gaming. They’ve already built big games with a lot of users. The experiences they want to bring just aren’t possible with other blockchains. That’s the best way to show people what’s possible. It’s not about quantity with the early partners. It’s about quality, the kind of scale and the kind of experience that people want to see.
Pretty much everyone we talk to is excited about it. They see what’s possible. The gap in capabilities is very big. They understand it right away. We just need to build out the team and the bandwidth to work with them, building more of these examples. People learn visually, right?
GamesBeat: How many people do you think you ultimately need?
Cheng: We have enough firmly in place right now. We’re going to find out how much we need to hire. But it’ll be substantial growth. We have a strong core engineering team already, a product team in place. It’s going to be a lot of people who are potentially partner-facing. We’ll easily double in size. We’ll see after that.
GamesBeat: How soon do you think things like games will be coming?
Cheng: We’ll have a lot of launch partners when we go live in the fall. We’ll do the same show-off as we’ve done here. Look at these games. They’re fun and you own the assets. You can see these assets transform. They’ll gain value through utility rather than just arbitrary scarcity. We’ll have quite a few of these. It’s not just games. We’re working with finance products and e-commerce solutions as well.
GamesBeat: Do you have something like a metaverse strategy? Is that something you want to drive toward?
Cheng: “Metaverse” is a loaded term. It’s just a model universe. You have these virtual worlds all combined into one. You have the real world. The whole point of metaverse, going back to something like Ready Player One–that’s the science fiction image in my head. But I can take my assets and go into any world. I shouldn’t have to reload. I shouldn’t go to this world and load these assets, and then go to that world and have a different inventory. I just take my stuff with me.
This internet of assets is part of that if you want to go there. That’s one thing. You want ownership recorded there. That’s part of it. We don’t want to trivialize the product intercompatibility aspect. That’s a much harder problem, in my opinion. We’re about solving the asset ownership aspect, the representation aspect. But how different products, different universes visualize or represent, that’s a product problem. One game’s assets can’t use another game’s assets. That’s not trivial. I don’t like this talk about interoperability as if blockchain is just going to solve that. It’s part of the solution. It requires the kind of scale and capability we just talked about. But that alone is not going to be sufficient. The metaverse is very far off in terms of that Ready Player One vision.
We’ll probably see some experiments on a more limited scale. What’s being built today is mostly technology, front-end technology, the visualization technology on the VR or AR side. We’re also seeing a lot of these private virtual worlds. Maybe there’s some compatibility inside that world. But this truly anything goes, I can go anywhere and take everything with me, that’s very far off. Still, it’s exciting to work toward it. There is going to be this world. We’ve already seen that when you create assets, people love their assets. Then people can start building worlds, interactions, games around the people who own those assets. That’s exciting. We’ll see these different experiments happening.
GamesBeat: When we see debates about NFTs now, the arguments don’t usually convince anyone. Everyone’s already made up their mind. But I am wondering how you can successfully convince people that blockchain has these benefits.
Cheng: Right now, unfortunately, a lot of people equate NFTs with collectibles. There’s a lot of speculative activity. It’s no wonder you have very strong views on both sides, the people who believe in this and the people who don’t. But an NFT is just a way to represent any kind of asset that’s unique, that’s non-fungible. It’s a technology to digitalize assets. Some are native digital assets and some are not. Some are digital representations of real-world assets.
The best way to convince people is for technology to fade into the background. The consumer needs to benefit. The example I talked about before–if I get a coupon from this platform, I fully own it, and somehow another retailer comes through and recognizes it as well, that’s familiar. In the real world a store can sometimes recognize another store’s paper coupon. We can have a digital version for all the e-commerce sites. The consumer benefits. They don’t even need to know it’s an NFT. It’s just an asset to them. Then it makes sense to them. They get familiar with it.
We shouldn’t be throwing buzzwords around, focusing on what an NFT is or what it can do. It should be in the background. We should focus on the consumer experience, the product experience. That’s what’s important. Then all this debate will go away. It just becomes another tool you can use.
GamesBeat: Do you inherently address things like energy usage and sustainability?
Cheng: First of all, we don’t do proof of work. It’s proof of stake. That’s already taking away the one biggest concern. The other one is, we are by far the least computationally intensive blockchain. The transaction throughput is so high because the per-transaction computational cost is so much lower than anyone else. These other big blockchains that can do a few hundred or thousand transactions per second, on the same scale of machinery we’ll probably be going into the hundreds of thousands or millions. That makes it very clean, relatively speaking.
We’ll do an assessment and compare it to the normal cloud infrastructure. That’s where things get really interesting. But there are other things we can do to offset the carbon footprint as well. We can have part of the fees going into buying credits and all that. We’re thinking about these things. It’s very important to us.
This is another wave. A lot of people are experimenting and trying things out. We hear a lot of excitement, a lot of interest, and people are facing a lot of frustration as well. Developers are realizing that this is not quite ready for prime time. It’s hard to use. It’s expensive. It’s slow. The situation requires a breakthrough. Sometimes you have that leap in capability and the technology does benefit.
GamesBeat: I wonder about how to segment this audience, who likes it and who doesn’t. It feels like it’s hard to figure out. There are people who love this kind of experimentation. The Asian market seems to like it. You have a lot of crypto natives. People who were whales in the earlier days of free-to-play seem interested. But so many western gamers and game developers hate it. There’s a lot of argument going on.
Everybody spent so much money trying to hook whales in free-to-play, justifying this enormous advertising spend that ended up being money developers couldn’t keep. By the end they had no money to reinvest in games. But when the crypto projects started taking off and everyone was raising money through tokens, it felt like that was attracting all the whales. You had the people who already had money, who were willing to spend money. They backed these projects and collected tokens to resell. But it feels like if that’s the beginning of whales adopting blockchain, that’s a good thing. You get them up front. You don’t have to spend money to get them. They just show up. That should lead, early on, to profitable games, games that will take off and reach the mainstream.
The only worry I have is, if these are super-rich crypto people, and if they’re also money launderers, then their behavior is aberrant. They’re not normal consumers. They’re just using this to park some money. Maybe just sell it off once the money is made. But they’re not normal players in the way they spend money.
Cheng: Right. They’re not investing in the actual ecosystem.
GamesBeat: On the one hand, they can support a lot of these early games and projects, and that helps those projects get off the ground, but then the mainstream market may never show up.
Cheng: They’re going after the same audience, this very small audience. We kept hearing about play-to-earn early on in places like the Philippines and Latin America. But those players aren’t normal gamers like you see in the western world. They’re doing this primarily for income. That’s an overgeneralization. There are some people who enjoy playing as well. But it does seem like a fairly niche audience. There are a lot of copycats going after that same niche audience. The early success will just go away. There are only so many eyeballs. It still has to come down to reaching the mainstream, not just a few early people.
A lot of these early experiments, we’re already hearing them say, “We raised all this money by dropping NFTs,” and that’s all good when the market is hot. But once one, two, three, four of them fail, whether it’s an outright rug pull or they simply never deliver anything–this happened in gaming before in the heyday of crowdfunding. People will lose interest. That’s not sustainable. It comes back down to producing a product people love. Games are about fun. And on top of that it’s cool if, through your effort, you get something that you actually own, and you can more frictionlessly sell it. It’s already happening. But we can expand this tool kit, expand the model to be more frictionless.
This is where things get exciting, where a lot of developers are going to experiment with different economic models. How do you give ownership to gamers? What does that mean for them? What does that mean for the developer? That’s where things get interesting. I don’t think it’s fully figured out yet.
GamesBeat: As long as you have people who are investing to find fun games for a mainstream audience, the industry will be okay?
Cheng: It’s definitely going to be okay. I’ve seen the numbers saying that 60 or 70 percent of developers hate blockchain. For something this early, something so limited today, if you already have 20 or 30 percent developer interest, that’s huge. That’s a massive start. Imagine after we improve the tooling and the experience. When we have the real capabilities, those numbers will just keep going up. That’s the way I look at things.
Yes, there’s going to be a hard core. “No way in hell will I ever use blockchain.” That’s fine. You always have that in every industry, until things dramatically change. But I think a lot of developers are open-minded. They’re just waiting for the right infrastructure. They’re waiting to see and understand an example of what they can do. Then they’ll embrace it.
GamesBeat: How long do you think it will take until you’re ready to show players something great?
Cheng: We have a few examples already, these early prototypes of games. We’ll continue to work with our developers. When we launch in the fall you’ll see something pretty phenomenal. Something different. Larger-scale games using blockchain in completely different ways. Not just trivial static NFTs. You can actually see things change on chain. You can take them out of the game. You can do mini-games on a website to engage with your gamers, or do crafting, that sort of thing. That’s coming this year. I’m pretty confident there are going to be many of these examples.
I’m a gamer myself. Not a huge gamer. I’m playing Elden Ring. I love that it’s so serious. I would love to own something from that as an NFT. After I finish playing the game, right? Even if it’s just to show off. Something I can take outside the game and say, “Here, look at my collection of stuff I earned in this game.” Even something like that is already a big step forward.
This is my passion. I’m new to the game industry, but I love to interact with game developers and people who are knowledgeable around gaming. It’s great to explain what I’m thinking and get feedback. We want to make sure we’re building the right things for developers. We want to spread the message and educate. We’re not just saying that everything is great with blockchain. We’re taking a balanced view. It’s about building real stuff.
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