‘If games don’t adapt to web3, they’ll die over time’: Balthazar CEO John Stefanidis is on an equitable gaming mission
Aussie-founded web3 gaming platform Balthazar has a goal to seamlessly onboard traditional gamers into the blockchain gaming space.
How? With a new direction as a DAO* and with the launch of an innovative new digital wallet called Babylon.
Stockhead caught up with founder and CEO John Stefanidis recently to learn about that, as well as his views on the web3 gaming sector more broadly.
Hi John. We understand Balthazar has undergone something of a major pivot since you first spoke with us about a year ago. Can you tell us a bit about that?
Yeah, that’s right. So we started as a [play-to-earn-focused NFT gaming] guild, mobilising a geographically diversified team in places including the Philippines and India.
But we’ve largely moved away from the asset-acquisition and renting model into an infrastructure-focused one.
As a gaming platform and creator of web3 gaming infrastructure, ie. our Babylon SDK [software development kit], we’re focused on creating and accelerating the growth of a more equitable gaming industry. That’s the mission, that’s what we’re trying to do.
We’ll ask you a bit more about Babylon in a sec, but what have been the reasons, do you think, for that inequity that’s existed in web3 gaming? And what made you pivot from being an out-and-out gaming guild?
We saw the writing on the wall, even when there was still a lot of money to be made as a guild – it was almost like a yield-farming model. We came to realise pretty early on with it, though, that the guild model isn’t sustainable for the space. And that’s because you’re contributing to creating a lot of sell pressure for these games.
It’s just very difficult to see a world where you have a lot of different guilds with web3 games able to sustain economies – it’s counterintuitive, right? It doesn’t really align with the promise of what web3 gaming can actually deliver.
Does the idea that “play to earn” as a diminishing narrative tie into the reasons for the shift in Balthazar’s direction?
I actually think play to earn is finding its place. And I still think it’s a really good marketing mechanism and a really cool way to incentivise gamers to play.
It’s more that gamer onboarding is a massive issue in this space. For a lot of these web3 games, the narrative of 2022 was: raise money, sell NFTs, play to earn. And now they’ve done that and a lot of games are really well funded.
Now, though, the question is how do we actually get people playing a web3 game? And for that, the game needs to be fun, so the model and focus has changed.
Using play to earn as an incentive can be a great way to acquire customers. But for us, we identified that we wanted to work on fixing problems that were harder to solve, but also more useful for the space.
Web3 Gaming hasn't taken off due to the lack of user experience.
Users don’t want to:
– set up a crypto wallet.
– buy $ETH and send it to their wallet.
– worry about security.
We have to build a better experience than the existing.
If we can do this.
It's lift off 🚀
— Ben Simpson (@bensimpsonau) April 6, 2023
So, the MO for the Babylon SDK is to solve the barriers to onboarding gamers into web3?
Yeah, absolutely. Super-easy gamer onboarding is the goal, because the lack of seamless or easy user experience is a major barrier to entry.
The process for signing up to play web3 games is generally very complicated and unintuitive, especially for gamers who are not familiar with blockchain technology. This includes using and understanding crypto wallets, private keys, and gas fees.
So we like to call it zero click, or maybe one click, but essentially we’re setting out to enable gamers to play a web3 game with just a few clicks.
What’s the SDK comprised of and how does it operate?
It’s essentially a decentralised, non-custodial digital wallet system. So how that works is, if a game was to install the Babylon software, then gamers can start playing to test out the game while a wallet gets spun up in the background for them, which we call a burner wallet.
They can just play the game, and when they want to save their progress, if they’ve acquired assets, or they’ve acquired tokens through that experience, they can press “save my progress” and a full Babylon wallet system is created.
What makes it a non-custodial system?
It’s non-custodial on our part, because the user has access to their assets’ private keys at all times. The idea is more that perhaps the user may not care about the assets that they’re acquiring, if they don’t like the game.
So, if you play for, say 15 minutes, and you get five cents worth of a token, or you get an NFT that you don’t really care about, you know, that’s fine and you might want to move on.
With Babylon, you don’t have to go to the effort of setting up your seed phrases and downloading a Chrome plug-in and bridging and so forth.
It allows gamers to test out games without even needing a username and password. Once they decide to play, the gamer can then create an account with a wallet consolidated automatically.
Can existing web3 games just as easily use the software as well as newly created games?
Yep, both new and existing games can install Babylon SDKs, which, by the way, support the most widely used game development platforms across Unity and Unreal Engine.
Where are you at with Babylon’s development and have you collaborated with any particular games for this technology?
The product is actually going live soon – we’re aiming for the end of April for the full version of the product – we’re currently in a closed alpha stage at the moment.
As for games, we have a really good relationship with over 300 of them. And we’ve got about 1,400 gaming projects in our database that we’re casually speaking to. So, we feel like we’re really well positioned to go to market.
What/who are some of your major partners backing your misison?
Animoca Brands is a major backer of ours, and we have a lot of VC backers, but also some buy-in from entities like the Fantom Foundation, Algorand, Tezos Foundation, and we have a good relationship with Polygon and Avalanche. So we’re tapping into a mix of VCs and protocol partners.
But we also naturally have a good inflow of leads just purely because of the research and content that we put out, too.
One of the things that’s been a constant for us has been our research and data. And that’s allowed us to build a good ecosystem and community, which we were originally harvesting towards play to earn when we were a guild model.
But, because of our research reports, games naturally want to speak to us because we create value for them by helping to write about them – especially if the games are good.
Let’s talk about web3 gaming a little more broadly. What trends are you seeing? Where’s it all heading? And… ‘Wen triple A’?
Well firstly, I think one of the interesting things we’re seeing is something like at least 60% of games are building on EVM [Ethereum compatible] chains. Gamers are looking for reliability and familiarity. We did a survey on it and pulled together that data from a decent chunk of the space, so there’s a bit of an EVM-first trend, which is interesting.
And as for ‘wen triple A’… it might take another two or three years for the proper triple-A games to come out. But I don’t necessarily think that those games are going to be the ones that drive all the growth.
If you look at something like DotA 1 for example, in the mid 2000s, everyone was playing it and the graphics were rubbish compared to some of the games that were on the PlayStation 3 and some of the PC games.
So it’s not always just about the best graphics or the best game quality in those terms. Sometimes you just need a really cool, addictive game that people can play with friends. And… if you could own your assets while you’re doing that, then how good, right?
We can make it easy for people to access those games, people who may not even be aware of the value within – people who almost just stumble across the value of owning their gaming assets.
Just on that trend you talked about there regarding EVM first. Are you an Ethereum maxi when it comes to web3 gaming?
No, we have a cross-chain ethos. So fundamentally, we’ve committed to the possibility that any chain could “make it”. And I believe that a lot of the protocols have brilliant communities. A lot of web3 gaming communities are formed on a protocol level, more than nearly anything else. So I think that’s really important.
I think that as the space grows, there will be room for a lot of people to come through and create better technology. That said, I do like the consolidation of the EVM narrative and sort of just seeing a little bit of stability there at the moment.
Do you think it’s inevitable that the traditional gaming world will embrace NFT and blockchain tech?
I do. And the reason I do is because I just think that the value proposition is better for the user.
I don’t know when that’s going to be embraced in terms of mass adoption and a majority of market share shifting to web3 versus web2 gaming.
But the logic is this… let’s say you have two games with an equal game experience, with a similar number of users, and in one game the gaming company owns all the assets, and you spend 150 bucks for a disk or to buy something online that you own no IP around. And then, in the other game, you might buy a $150 NFT, which you can potentially increase the value of, then I think it’s a no brainer which is the more equitable model.
And [mainstream, web2] games can sell nothing but make a ton through in-game purchases – it’s a really profitable model for them. And it’s growing rapidly, globally it’s massive.
But… I believe what will happen is, if games don’t adapt to web3, they will die over time.
Web3 games will be created that are equally as good, and people will eventually understand their value. All it will take is one friend in one social circle to say, “Oh, I made two grand off one of my skins”.
Do you see the negative view of crypto and NFTs that mainstream gamers have changing over time? NFTs – even that acronym, is it a marketing problem for crypto?
It’s a great point. I believe that the negative perception has to change over time, and it will naturally.
I know that a lot of projects we’re speaking to are very open about not wanting to use terms like web3 or NFTs in any of their marketing.
And in one sense, I get it, because of the stigma of the space. But the truth is, I don’t think we should be ashamed to use those words. Yes, some people associate them with trying to cash grab. But what they don’t realise is that the technology is facilitating a transfer of value to the user, giving value back to them. That’s the point.
People are currently moving away from those terms somewhat, but what I’m saying is that I don’t think they should feel that need to – because it’s such a brilliant piece of tech, and there’s so much value to go back to users. It’s just a shame that is the stigma, but that’s the reality of it right now.
Are there still opportunities within the web3 gaming space for serious gains for investors?
So obviously, without recommending anything to anyone, and not giving any advice to anyone, I think that if you find a project that has a vision you really believe in, and if you can get in early with them, there are still possibilities within the sector to make some good returns, yes.
But keep in mind, like always, about who the team is and what are they actually saying they’re going to do? And have they done it before?
The fact is, it’s going to be extremely rare to make what some influencers call “generational wealth opportunities” – the serious gains you’re talking about, especially in the long term if you plan on leaving it, you know, just backing a horse.
But it’s a tough one. I think for that, the vision has to be massive, and they have to be proven operators and have a plan for execution. And so I think that it’s hard, but it’s not inconceivable that those sort of opportunities still exist.
Are there any specific games or gaming styles that you’re bullish on?
I like a lot of the first person shooters with really cool NFT skins. I love that idea. And I think trading card games are also really cool.
I tell you where I would love to see an NFT game, though, and that would be something replacing FIFA Ultimate Team. The amount of money people spend in FIFA Ultimate Team every year, only to have all of their progress wiped out when the new game is released, it’s insane.
I’ve been that person – having spent a few grand on it one year and then next year, it was all gone. I might’ve had a lot of fun with it, but at the end of it, it’s, “Oh man, what did I do, where did it all go?”
You can learn more about Balthazar and its upcoming Babylon SDK and digital wallet here.
This interview was edited lightly for clarity. This is not a sponsored piece. None of the contents of this article should be construed as financial advice.