Polyient Games will invest in early-stage startups making blockchain games infrastructure

Fibo Quantum

Blockchain gaming has to walk before it runs. That’s why Polyient Games, a spinoff of incubator Polyient Labs, is starting to invest in early-stage infrastructure companies that will enable blockchain games.

Blockchain is the technology that uses peer-to-peer decentralized networking to build a transparent and secure ledger. It is the technology behind cryptocurrencies such as Bitcoin, which fueled a speculative craze (and a bust and a new craze) in the past few years. Polyient Labs set up Polyient Games earlier this year to focus on a part of the blockchain gaming ecosystem.

While cryptocurrency has seen its ups and downs, Craig Russo, director of innovation at Polyient Games, said in an interview with GamesBeat that blockchain makes sense in gaming because it can uniquely identify in-game items or avatars and who owns them. That means it can be used to enable commerce in collectible or unique items in games and transfer them from game to game.

“While big game companies are staying on the sidelines, everyone from investors to collectors to indie gamers are starting to look at blockchain gaming as an opportunity,” Russo said. “We are the first investment firm and startup ecosystem dedicated to non-fungible tokens.”

VB Transform 2020 Online – July 15-17. Join leading AI executives: Register for the free livestream.

Walk first

The latter is one of the underpinnings of the Metaverse, the universe of virtual worlds that are all interconnected, like in novels such as Snow Crash and Ready Player One. While that’s the stuff of science fiction, a lot of blockchain entrepreneurs want to see it happen and they’re trying to build the plumbing of the Metaverse. (We’re exploring doing a virtual Metaverse conference this fall).

In the near term, blockchain is enabling collectibles trading, as seen in games like CryptoKitties and marketplaces such as DMarket. Startups such as Forte are trying to build some of the infrastructure for blockchain games. And Phoenix-based Polyient Labs was founded by Brad Robertson in 2018, and it raised $5 million to fund blockchain-based startups. Polyient Games spun out to focus on the game startups, and it is in the process of raising more funds via its own token to further invest in infrastructure.

“We’re much more interested in investing in the companies that are helping build and establish the infrastructure necessary for the blockchain gaming,” Russo said. “This is the walk before you run analogy, where it’s very cool to think about some of these Ready Player One concepts. But as it stands right now, the the infrastructure — from both a blockchain as well as a gaming integration perspective — would not be able to support such a model. And so we’re really looking at startups that are kind of focused on helping reduce the complexities associated with the blockchain layer.”

Overcoming mistrust

But there’s a lot of mistrust around cryptocurrencies because of the speculative bubble, and mainstream users haven’t adopted cryptocurrencies as an alternative to fiat currencies (like the U.S. dollar). But not every blockchain investment involves cryptocurrency, as the technology can be used for things like non-fungible tokens (those that can be used for one-of-a-kind objects). That can be used to enable trading of items in games by users on a peer-to-peer basis, where the users don’t have to go through a company.

Sometimes, such peer-to-peer markets have been risky in the past, but blockchain instills a level of trust that the item itself is legitimate, and players trading with each other don’t have to give a cut of the transaction to another party like the game company. DMarket has established blockchain-based markets for players in games such as Counter-Strike: Global Offensive.

“At first, tokens had no utility,” Russo said. “But by tagging in-game items to the blockchain as tradeable items, it has created an established market where these items have immediate value. It’s cool to think how that can expand. If I’m a gamer, and I put effort into leveling up my items, I can sell those items to someone who wants to pay to play and doesn’t want to use sweat to level up items.”

Above: Craig Russo is director of innovation at Polyient Games.

Image Credit: Polyient Games

And blockchain establishes true ownership for the players who pay for items, meaning they own an item even if a company decides to shut down a particular game. Also, when players trade with each other, they have a chance to make money on rising prices and demand for an item, which enables the player to personally profit from investing in a game item. Players can also create their own items, as they do in game worlds such as Second Life, and sell them in a user-generated content economy.

In this process, players don’t have to become experts on blockchain, cryptocurrency, or the technology involved. The infrastructure companies can give the game companies the technology to make it happen and they can mask that from the users, making it much easier to adopt blockchain-based tech, Russo said.

“Everyone’s waiting for Bitcoin to go up to $20,000 or $100,000 per Bitcoin,” said Russo. “My own personal opinion on that is the next wave of crypto craze isn’t going to come in the form of the traditional cryptocurrencies. It’s going to come in the form of NFT’s and the applications of blockchain gaming. That’s really how we’re positioning ourselves.”

Evolution of blockchain games

Russo said that Polyient Games is focused on helping startups build an open, chain-agnoistic investment ecosystem devoted entirely to
funding and expediting the growth of early-stage startups that are developing the infrastructure and application layers necessary to scale the blockchain gaming industry.

Above: Brad Robertson is CEO of Polyient Labs.

Image Credit: Polyient Labs

CryptoKitties was the rage of 2017, where players could breed and trade cats that weren’t really part of a real game. It was simply a collectibles trading frenzy that did so much volume that it slowed transactions on the Ethereum cryptocurrency network.

Now the mainstream game company Ubisoft has launched a blockchain-based Rabbids digital collectibles to raise money for the United Nations Children’s Fund (UNICEF). It’s a clear move to try to find gaming uses for blockchain, the transparent and secure digital ledger technology. Ubisoft is also has numerous blockchain gaming startups in its fifth Entrepreneur Lab which incubated international startups focusing on social entertainment.

Atari has also teamed up with Animoca Labs’ Sandbox team to trade Atari-based blockchain assets in the NFT-based Sandbox open world.

Even so, Russo said he runs into mainstream gaming outlets that believe blockchain is a scam. But he drives home the differences between cryptocurrencies and NFTs.

“I think at the end of the day, we’re going to be at the mercy of kind of the Bitcoin hype train,” Russo said. “But as this technology develops, and we’re able to kind of mask that blockchain layer to a point where it’s no longer associated with kind of traditional cryptocurrencies, then people can understand it in the context of items being bought and sold. That’s really kind of how I think mainstream audiences and mainstream publishers will get involved.”

So far, Polyient Labs has invested in companies such as NonFungible.com, an analytics company for the NFT market. Another one is Cargo, an NFT infrastructure company that is creating scalable solutions for the creation of NFT assets without incurring huge transaction fees. It has also invested in Blockade Games, which is making infrastructure for game companies.