Token buybacks are commonly misunderstood mechanism of operations within Web3 ecosystems. However, that doesn’t mean that they don’t fulfill critical roles and functions.
In bear markets for instance, token buybacks can be used within certain contexts to stabilize and provide equilibrium to markets that are in chaos.
We reached out to Tatsuya Kohrogi, CSO at Digital Entertainment Asset (DEA) to provide us with deeper insights into token buybacks and their roles within Web3 ecosystems.
Here’s are his thoughts.
Tatsuya Kohrogi, CSO at Digital Entertainment Asset (DEA)
- How has GameFi fared in the current downturn?
GameFi or Blockchain Gaming has directly been affected by the downturn of the overall crypto market. Compared to the bull market hype it can be a brutal time for a Web3 gaming project. Alternatively, to some projects, this can be a moment of opportunity to solve challenges and shine.
We are now seeing more projects including large gaming studios testing out new game mechanics and redefining the term GameFi. The x-To-Earn era of 2022 with Axie Infinity, Stepn defined the way for in-game digital asset earning and ownership. However many people are now skeptical of the Play-To-Earn or Play-And-Earn model due to the collapse in the dual token model and the nature of the term implying investing and playing in hopes of getting a higher return.
From my observations I can see many investors, Web3 community members, and gamers all becoming more pensive and weary towards x-to-earn and the past model of GameFi. It will be interesting to see which GameFi projects come up successful after this market downturn because the ones that get past this downturn are sure to be the next big project/s.
- Please, can you tell us about PlayMining?
PlayMining is a GameFi platform with multiple award winning blockchain games such as JobTribes, Lucky Farmer, Graffiti Racer, Cookin’ Burger, and Dragon Ramen. We have multiple casual games in which players can earn DEAPcoin tokens ($DEP) by playing the games. We also have our own PlayMining NFT marketplace, on which players can spend DEP to purchase NFTs for use in our games, along with many art NFT offerings. PlayMining has 2.6 million registered users from more than 100 different countries.
- What is the relationship between PlayMining and DEA?
PlayMining is a gaming platform that is owned and operated by Digital Entertainment Asset (DEA), a Singapore-based global Web3 entertainment company. In addition to the gaming platform, DEA also operates the NFT marketplace, the DEAPcoin token and the PlayMining blockchain that all of these services run on.
DEA’s core business is developing blockchain games on PlayMining and also expanding original intellectual property such as in-game characters that are co-created with community members and also with over 100 famous anime and manga artists from Japan.
- How do token buybacks work?
A token buyback program is one way that crypto companies can protect against market volatility by injecting value back into the token. Much like a stock buyback, crypto buybacks decrease circulating supply to reliably increase demand and price. We have decided to reinvest into the ecosystem a portion from the fiat sales of our NFTs.
In this way we can increase the in-flow of fiat into our PlayMining ecosystem and decrease the outflow of DEAPcoin. Every month the DEA team will share a report publicly of the amount of buyback that were initiated over a certain period of time.
Details can be found here: medium.com/playmining
- What has been the effect of token buybacks on GameFi ecosystems?
From what I know, DEA is the first GameFi project to announce a token buyback program. With regards to the effect on our ecosystem, we have noticed a positive reaction from our community and investors, which has had a positive influence on our token price as well.
- Please, can you tell us about the PlayMining NFT marketplace?
Our marketplace sells PlayMining game NFTs and land NFTs for the PlayMining Verse. The PlayMining game and land NFTs are created by creators from some of Japan’s hottest video game and anime creators such as the creator of Final Fantasy, Dragon Quest and Fairy Tail. We strongly believe in fairness and transparency, and to this end on top of production fees we have paid over a total of SG$9 million in royalties to official creators and even community fan artists over the past two years. The main transactional currency on the PlayMining NFT marketplace is DEAPcoin.
- What are the IP monetization activities that are available within the PlayMining ecosystem?
DEA partners with third-party game studios to develop games on our platform. Currently Dragon Ramen (a ramen cooking rpg battle game) is our hit third-party title while our other 4 titles are our first party titles. Third party integration into the PlayMining ecosystem is good for us, as it helps us build out PlayMining’s game library much more quickly. It is also a great deal for large game studios and indie game studios, as it helps them build out their intellectual property (IP) in many ways:
They can sell utility and collectable art NFTs on the PlayMining NFT marketplace and receive royalties from every purchase. We also provide game design support and ecosystem integration support from our experience developing blockchain games for over 5 years.
Third party developers can leverage our experience, existing PlayMining community and earn revenue share from the games. In the future creators and third party partners will be able to launch metaverse projects that supplement their main IP.
Creators and community members can also have the opportunity to monetize their IP by co-creating characters for our games. We believe in democratizing the game / content development process and give everyone an equal opportunity to own a stake in our games and ecosystem.
Our first metaverse project KamuiVerse.com has monetized their IP as a community by creating line stamps for the LINE messaging app from the characters of the manga series that Fujiwara Kamui co-created.
- What are the metaverse plans for PlayMining?
We are still in the early phase for our metaverse plans and have focused on developing original content and IP that can be transferred to other metaverses. In the short term, instead of creating a platform or game world like Sandbox, or Decentraland we have partnered with the Japanese metaverse provider Synamon. Details can be found here:
- We have a framework to help guide creators co-create their own world with their fans and create NFTs. We have strategically partnered with Fujiwara Kamui, a Japanese manga artist veteran who has created many worlds in the past such as worlds for Dragon Quest.
- We have many famous creators currently in our pipeline interested to create their own worlds with the PlayMining Verse and in the mid term we will begin releasing new projects separate from the KamuiVerse.
- In the long term we will have multiple verses that collaborate or compete with each other on either our platform or a third party platform. We will create the contents and build the communities. The platform or metaverse will just be a place that our contents and communities will go to hang out at. Whether we develop that place ourselves or if we leverage a third party service will all be up to how things progress in the mid term.
- How has PlayMining disrupted the IP industry?
We partner with third-party game development studios under a revenue-sharing model that is much fairer than the burdensome fees charged by major distribution platforms such as Nintendo and Apple, which generally take around 30% of every sale. This recouped value can enable our partner game companies to further invest in their IPs in any number of ways, such as merchandise, spinoff media and so on. They also have easy access to the entire PlayMining platform and 2.6 million registered users who enjoy PlayMining games and NFTs.
We also decentralize the content creation process. The creative industry for example the US media industry, 90% of the industry is controlled by 6 companies. The centralization of content creation can be good but we believe that the intermediaries are taking too much value, the lack of competition does not incentivize creative innovation, diversity representation is lacking, and creators are barely making enough to survive. Solving these issues with the current system is tough. By utilizing blockchain technology, allowing everyone an equal opportunity to participate and own a stake in a project no matter how big or small – you can have a say, contribute to a project, and get rewarded for your creativity.
Please can you tell us about DEAPCoin’s continuous buyback program?
Starting this month, DEA will be buying back DEAPcoin tokens from PlayMining players and other DEP holders on a continuous basis. The buyback will be funded by up to 40% of DEA’s NFT sales purchased using fiat on the PlayMining platform.
The buyback program will help us to sustainably increase our token’s value over the medium to long term, stabilize the PlayMining economy and return profits back to our community of creators, players and token holders.
- Can you tell us about the team of miracle workers behind Digital Entertainment Asset?
DEA was co-founded by two co-CEOs with a ton of industry experience:
Co-CEO Naohito “Goro” Yoshida is a serial entrepreneur who previously IPO’d three companies on the Tokyo Stock Exchange prior to co-founding DEA in 2018. He has over 30 years of entrepreneurial experience. One of his first companies was a game development company that created hit games for Sega Saturn and the original Playstation back in the mid-90s. Goro also serves as chairman of Eole, Inc., a company listed on the TSE Mothers market.
Co-CEO Kozo Yamada was a music and variety show television producer at major Japanese television station TV Tokyo for more than 15 years prior to co-founding DEA with Goro. In addition to his role at DEA, Kozo is an influencer in the Japanese NFT space — he operates the “NFTv” YouTube channel and “NFT navi” web media and is also the inventor of NFT Awards.
Goro and Kozo are backed by myself (Tatsuya “Tats” Kohrogi) and CFO Ryohei Nuka. Ryohei was a Finance department senior controller at Goldman Sachs Japan for thirteen years before joining DEA. I am DEA’s CSO; I previously worked for Meta and Softbank and co-founded a Softbank-funded internal ad-tech service.
- How has DEAPCoin’s compliance enabled faster GameFi adoption rates?
DEAPcoin (DEP) was the first play and earn token that received FSA approval in Japan early 2022. This helped DEA raise awareness around DEP and gave it legal access to the Japanese market. To be honest even though it has been one whole year since being listed in Japan and 3 years since our listing on OKEx I believe we still have a long way to go for GameFi adoption to spread to the masses.
To give you some insight, Japan’s digital payment adoption is only around 35% of the population. It is still heavily a cash country. And roughly only 7% of the population have used cryptocurrency before. We have onboarded many non-crypto natives and non-gamers through the value proposition of playing and earning / owning digital assets while having fun but it’s still very early stages.
- Please, can you tell us about your gaming catalog?
We have five P&E NFT games currently on the PlayMining platform. All of our games are made for casual players, and all feature ways to earn DEP through gameplay. In addition to the below titles, many more games are scheduled for release this year!
- JobTribes is our flagship game, having launched three years ago. It’s an occupation-themed trading card battle game that boasts around 60,000 MAU and a solid 1.5 million USD per month in sales (our record was more than 5 million USD in one month!) We partner with around 100 well-known artists and illustrators to make NFT content for JobTribes.
- Cookin’ Burger is a multi-task cooking game that launched last summer. Players take customer orders at a burger shop and aim to build the shop’s reputation. Cookin’ Burger is free to play, and also features optional shop NFTs that enhance the game experience.
- Menya Dragon Ramen is a cooking RPG and restaurant management simulator that launched in October last year. Players manage staff at a ramen restaurant and send them into dungeons to defeat monsters and collect rare ramen ingredients. Employee NFTs can be leveled up and combined to create even stronger employees to battle in PvP events or in the dungeons.
- Graffiti Racer launched in November 2022, and is a game that combines coloring and racing in a fun new way. Players collect NFT sheets which they can color themselves and use as avatars which they race in the game. NFTs can also be leveled in-play, making the rarest NFTs truly unique. Compete in PvP races for prizes.
- Lucky Farmer is a farm-themed coin pusher game that just launched in December last year. Players collect medals from an in-game slot machine, with various combinations triggering special abilities from farm pets or making it rain down medals in torrents. NFTs are available for both character avatars and farm backgrounds, with certain NFTs making it possible to win more DEP through play.
- What is IP value loss? How can IP value loss be prevented in GameFi environments?
Independent game studios lose a great portion of their profits to other stakeholders, such as the middleman distribution platforms that they must partner with to reach their audience. This can make it very difficult for smaller game studios to monetize their IPs, as they have much less overhead to use for marketing and side-projects. This is the reason why the biggest game IPs are usually those that are developed in-house, such as Mario and Sonic, etc.
Also I was just talking to a famous creator last month and he mentioned how the famous IPs he created close to 30 years ago are still used and recreated until this day but he gets zero revenue when his creations are being used. This is another form of IP value loss to the creator as the company takes full credit and ownership without providing any royalties to the originator. I believe not only GameFi but using smart contracts, tokens, and blockchain technology can help such creators keep earning passive income long after their original work has been released. Instead of IP value loss, value appreciation is the future.
- How can developers drive up value and prevent IP value loss in Web3 environments like PlayMining?
Web3 platforms tend to be much fairer than standard content distribution platforms, and the blockchain technology they use makes them much more transparent. The popular OpenSea NFT marketplace, for example, charges a low 2.5 percent sales fee. Compared to the 30% taken by other major (non-Web3) distributors, the difference is night and day. Rather than charging fees per sale, PlayMining uses a beneficial revenue-sharing model to help our partners focus on creating excellent content.
- Please can you tell us about your recent game launches?
Four of our five games launched last year. Cookin’ Burger launched in August 2022 and Menya Dragon Ramen, Graffiti Racer and Lucky Farmer launched in October, November and December, respectively. We’re definitely on a roll, and building fast! Menya Dragon Ramen is PlayMining’s first game title developed by a third-party company, Fly Penguin Studios. We have more third-party game content coming this year that we are very excited about sharing soon.
- How effective is GameFi for those who think adoption only comes from “serious” utility projects?
Depends on what you mean by effective and what the bigger goal is but GameFi or blockchain gaming is definitely a gateway for people to learn more about creating wallets, trading crypto and NFTs. Compared to other NFTs, gaming NFTs are easy to understand and can have more utility if you have a solid game. The more Web3 games that are built, the more mainstream it will become.
Just as new gamers joined the hobby when video games made the transition from arcade to family consoles, GameFi will inevitably bring more and more non-gamers into Web3 gaming. And as can be seen in some countries in Southeast Asia where the Web3 movement is really taking off, GameFi is taken very seriously by people who rely on it for supplemental income.
Check out some of the real life stories about the above topic from our players in the Philippines:
Related: What are the Opportunities in Web3?
Are there any benefits for creating GameFi ecosystems?
The top 3 benefits for creating a GameFi ecosystem are:
1. that it diversifies our portfolio and helps us test more to keep innovating.
2. By creating an ecosystem, it allows for opportunities for more people to get involved in many different ways.
3. It is easier to keep growing as you can cross promote new game titles, provide more value to the community and scale learnings horizontally.
- Are there any plans for PlayMining in 2023?
We will focus on development for our upcoming game releases, including Hero Spiral and Soul Fusers, and our first metaverse project, KamuiVerse, will be expanded with community co-created content. We will also be expanding our IP collaborations and working together with large Japanese gaming companies. And of course, there is the DEAPcoin continuous buyback program launching this month.